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Thursday, September 30, 2010

We Have the Best People

In recent weeks, I have been working on a major project regarding the future of advertising agencies with the primary emphasis on mid-sized shops. I will be interviewing a large number of people via e-mail, on the phone and as many as possible in person. My plan is to distill the findings of the full report into two or three Media Realism posts. The really granular data will be kept proprietary and no one who participates will be identified.

One thing is quite striking as I talk to people all over the country. Not a single agency principal denies that their shop and peer group of mid-sized agencies faces major challenges ahead. But many dismiss the structural problems that they need to address with a comment such as: “we are going to be okay no matter what happens because we have the best people”.

Now, I think that it is important for leaders to be proud of their teams. But many strike me as completely unrealistic. The other day someone told me that his digital media supervisor was the best in the U.S. Gently, I probed, “do you mean the best here in Louisville?” (the market was NOT Louisville) He said no, simply the best anywhere.

The young fellow was wildly enthusiastic about what he was doing but he basically worked alone. His CEO had never sent him to any media conferences or symposiums on digital issues. He read everything that he could get his hands on and he even told me that my blog was interesting but would be obsolete in a few years as traditional media declined. I had to agree with that and thought he had strong potential. But it seems obvious that others in major markets who work with more peers will pass him by unless his efforts are absolutely Herculean.

In the digital space in New York, Dallas, Chicago, and Los Angeles people often get together and share ideas, e-mails, and blogs. When they stumble across new venues or ways to work with them, they talk across agency lines. When they get together, these kids are on fire. The enthusiasm is akin to fans going to a Star Trek convention. Many may come off as geeks but they are totally engaged and in love with their jobs. My new friend in “Louisville” will have little of that if he stays put.

Others tell me that they are going to be okay because the senior team has been together for years and they all get along. That is very helpful for new business presentations where people can finish each other’s sentences, help a colleague who is having a bad day presenting, or just illustrating that there is real chemistry among people who genuinely like each other. And, the workplace has less tension if no one is abrasive. But, I have worked at places where people were very effective and created great advertising who did not like each other at all. Also, friction sometimes helps a group change and get stronger. Every now and then a new injection or two into the management gene pool can shake things up and usually it is for the better.

For decades, we have all heard the old cliché that an agency’s assets go up and down on the elevator each day. Just because it is a cliché does not mean that it is not true. And, great work is being done especially in creative in places such as Lincoln, Nebraska, Milwaukee, Salt Lake City, and Portland, Or. The climate is changing fast and becoming more challenging for the mid-sized players. Regional accounts are drying up and every week it seems that some national business that a mid-sized shop has and cherishes goes away as a major multi-national firm buys their client. Another growing problem is that agencies in the hinterlands do not pay as well as they used to and the best minds often go elsewhere when choosing a career.

There are remarkable talents out there in the land of mid-sized shops. But can these outstanding young men and women morph into renaissance players in our industry if they stay in a 50-100 person shop with little outside contact?

Many people are kidding themselves. They do not have the best people. Not even close.

Much more to come on mid-sized shops.

If you would like to contact Don Cole directly, you can reach him at doncolemedia@gmail.com

Wednesday, September 22, 2010

Guidelines for Managers

Several readers paid me a very meaningful compliment recently. They asked me to compose a post about what qualities a good manager needs to be effective. So, here is my list. None of the items are probably original in your eyes but you may not have seen this mix of attributes before. Here goes:

1) Provide constant encouragement—this to me has to be the number one attribute that a strong manager must exhibit every day. All of us need encouragement and most of us do not get anywhere near enough in our private lives or on the job. I once worked for and with a man who was wonderful with entry level people. He told them what bright futures both they and the industry had. But his senior team never received the slightest hint of encouragement. I asked him about it and his response was that if he was paying someone $100,000+ per year they did not need encouragement. Smiling, I countered with something like “aren’t the senior team people, too.” He truly did not get it. I made it a point to encourage him especially after new business losses (he had many as all of us do). He really seemed to appreciate my pep talks but could never seem to do it to many who needed it the most. Encourage everyone above and below you. We all crave it and need it.

2) Manage by walking around—I always did this well. For nearly 30 years, I made it a point to talk to every team member every day. I did not meddle but I tried to get the pulse of what was happening. After a while, people would come to me for help or suggestions. Too many managers hid behind e-mail and do not communicate well. E-mail is wonderful but face to face meetings especially informal, ad hoc ones are far more valuable. So, get off your butt, leave your comfortable office and talk to the team. You will learn a lot.

3) Hire people who read—Ask people whom you interview what they have been reading lately. Often the best hires are those who are well read and continue to stay current. They stay up to date on the fast moving trends in our business and will feed you articles and film clips that you need to see. It is like having a private research service down the hall. You also have people to talk to. It can get very lonely being a manager of people who merely do the letter of the job but have no real interest in what is going on outside their tiny corner of the world. Staffers who read a lot make for a more interesting workplace and you will get some great ideas from them. Be very wary of people who say that they are too busy to read material that you ask them to review. If it is a single mom with three kids, cut her some slack. She may be a living saint. Anybody else, not having time often means that they are watching too damn much television or addicted to Facebook.

4) Hang on to the best people—stand on your head to keep the key staffers. They make you look good and hold things together and give the whole firm a chance to grow. These days not many can hold you up for more dollars as they have few places to go but if you create a good environment they will want to stay.

5) Don’t ask people to do things that you will not—I had a few bad experiences as a youngster in the business. One jerk would come to my desk around 4pm with a pile of assignments. He would say “have this completed by 9:30 tomorrow morning” (that was when he showed up). Another would call me from a golf outing asking me why I had not put more money with the media vehicle that had taken him to Florida or simply given him a Wednesday off at posh country club. I vowed that I would never behave that way and never did.
If my team was busy, I was busy too. It cost me some late nights and too many Sundays at the office but I don’t think that anyone resented me for the amount of work that they did relative to me. Years ago, in Texas, I ran into our Chairman on Friday night as we were both leaving the office. He asked about my weekend plans. I told him that I was coming in with several media staffers to work on a plan that was due Tuesday. At noon Saturday, he showed up and talked to everyone and people were thrilled. He then took off and we continued to grind. An hour later he returned with a gourmet Chinese spread for all of us. He thanked everyone for giving up their weekend and stayed to help collate copies with the weary team later in the day. The man was a leader and a thoroughly decent human being. He could not write a media plan if his life depended on it but he won everyone’s respect that day and still has mine.

6) Listen—when a staff member is talking with you look up from your keyboard, put down the phone, look them straight in the eye and listen! People are trying to tell you something. Give them your attention. It will pay you rich dividends.

7) Praise in public; reprimand in private—sadly, I have seen too many senior executives humiliate someone in front of others. Save the dressing downs for a private session. They may deserve it but you do not have to undercut them in front of their peers.

8) Hire the best—keep interviewing people even if you have no openings. You will have people leave and you always need to upgrade if you are to grow stronger as an organization. If a new person will not make your organization stronger, why bother?

9) Be very nice to nerds—the odds are overwhelming that you will end up working for one some day!

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Thursday, September 16, 2010

America's Discount Culture and the Future of Brands

We Americans love to shop and we love to buy things on the cheap. In recent years this has become an integral part of the fabric of life in the United States. Back in 1956, only about 6% of merchandise was purchased on sale. A lot has changed since then.

To look at our discount culture clearly, a good angle to view it from may be by taking a careful look at outlet malls. These out of the way entities are growing globally; you see them popping up in Europe, Japan, even Hong Kong. But, it is in the United States where the approximately 300 outlet malls are having the biggest impact.

You might be surprised to learn that they are not a fairly recent phenomenon. The earliest outlet location that I could find goes back to 1936 which was right in the middle of the Great Depression. In my home region of Southern New England, Anderson-Little, a mid-ranged purveyor of men’s suits opened the first outlet store. It was located a long distance from existing stores and they sold “seconds” which were items that were slightly defective in some way. Back in 1936, there were no interstate highways and not nearly as many people drove so there was little danger that their outlet location would cannibalize sales from their mainstream stores.

Today, outlet malls are a destination venue for 55 million + Americans each year. What they lack in convenience is a perceived big trade off in price. Most are bare bones in appearance and are full of serious shoppers. Conventional malls have issues with teenage “mall rats” who spend little money to speak of put roam around often in large groups on weekends. Seniors, too, haunt malls. It is not unusual to see them doing measured walks around malls in groups. This is especially prevalent in the South and Southwest. The outlet mall patrons, on the other hand, appear to be 100% shoppers.

Out west going to an outlet mall can be a major event. Busses often take a fair proportion of the citizens of small towns to an outlet mall 200-300 miles away. The group shops till they drop, meet for dinner in a large private room, stay in a local motel, shop the next morning and sleep on the long ride home. Most data that I have indicates that shoppers at outlet malls spend 80% more at a bare bones outlet mall than at a fully loaded regional mall.

Whenever one visits an outlet mall, you can get the vibes of a quasi Vegas mentality if you listen a bit to the shoppers. Invariably, somehow will say how she “beat the house” on a spectacular deal on some expensive brand name products. Well, you do not have to be particularly savvy to know that in Las Vegas the house always wins over time. I would say the same is true with outlet malls.

Originally, outlet stores were like the earliest example from 1936. The products were perfectly serviceable but slightly defective in some way. A great example was Coach. The owner sent his children out to Long Island to run their first outlet store. They had big problems early on as they almost always sold out 100% of the stock very quickly even though none of the outlet merchandise was perfect. As time went on they and many other players shifted gears on the nature of outlet store merchandise.

Today, many retailers sell merchandise at their outlet stores that is explicitly produced for exclusive sale at the outlet locations. The list includes Ann Taylor, Brooks Brothers, Coach, Donna Karan, The Gap, and many more. A very clever young shopper observed to me that if you look closely you can often tell the difference quickly. She commented that some items are from the actual retail store and of the highest quality but the goods are a few years out of style. Or, the colors are a bit different even zany. And, the sizes are either tiny or huge. The rest of the stuff that 85% of the people would want is of lower quality and specifically manufactured for the outlet store.

I have noticed different tags. Until recently, the outlet manufactured goods often had an “F” for factory outlet on them. Today, price tags are usually far more discreet.

Also, look out for “reference pricing”. That suit listed at $900 and now selling for $250 may have been produced exclusively for the outlet mall. It was never offered anywhere at $900 but your perception is that you are getting a world class bargain.

Even mainstream discounters are getting in to the act. Wal-Mart and Target often have electronic gear, lawnmowers, grills, etc. with brand names but a comment on the tag says made to “Wal-Mart” specifications. You are not getting a Webber you are getting a Wal-Mart grill. The brand name has really lost all meaning in cases like that.

So what is going on here? All of us have spent our careers either selling to or working with people who ferociously defend their brands against competitors. And, they bore you to tears talking about the integrity of their brands.

And, what of the customers who love going to the outlets and spend a lot there?

Here are my theories which are largely personal as it is hard to find a lot of data on this topic:

1) The outlet mall customers get a lot of pleasure from buying there. Going to the outlet mall is an event and a major event for many in the Rocky Mountain and Central time zones. Even the smartest shoppers feel that they are getting something close to major brands and the accompanying quality when they shop there.
2) The major players are not stupid and they have to study income data and demographic data as much as all of us in communications. The blue collar work force has not really received a raise in 30 years when you adjust incomes for inflation. The middle class, as we know it, is shrinking. Since 2007, it is safe to say that maybe 7-10 million have slipped out of the middle class. And poverty levels released today from the Census Bureau put us at the highest level in 40 years.

So are the retailers just facing facts? They merely sell the dream. The merchandise is not nearly as good as their conventional stores but people perceive that they are getting the original brand or something close to it. One retailer gets as much as 80% of their sales and I would assume most of its profits from its outlet store base.

Long term, this would seem to dilute the value of the brands significantly. But, if our wealth as a nation is slipping relative to the emerging eastern powers perhaps the outlet gambit is a clever way to keep the music going in people’s minds for a bit longer. If “most people truly lead lives of quiet desperation” as Thoreau put it, then the façade of gentility at outlet malls could have quite a long run.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Thursday, September 9, 2010

Apple, Google, The Elite, and the Future of TV

In the last week or so, both Apple and Google have introduced their new TV products. Briefly, they seem to be making the step we have all talked about for years—your TV and your computer will tend to merge. Both promise the ability to call up statistical data from your computer about a player or a team while you watch a football game on conventional TV, for example. There are hundreds of applications some of which are quite sophisticated. My only surprise is that Google has said that they currently have no plans to develop their own programming. Google TV is a new platform that appears to meld the Internet almost seamlessly with TV. You will be able to search by name for a specific movie or a TV show and you can watch it on cable or the web. You will be able to customize your own home screen for a specific web series, programs, or cable channel. Apple says that they will charge $99 for their version; Google has not gotten specific yet. It is hard to tell a clear difference between the two but early on it seems that Google has fewer restrictions and is more of an open source platform than Apple or other smaller players in that space.

Prior to these announcements, I was noticing a trend. Yes, fragmentation of audience was still continuing. Several writers talked about how young upscales often were not subscribing to cable or a satellite service. They got by with Hulu.com, streaming video online, and a heavily used Netflix subscription. I have pursued this and found that it is absolutely true but only for a VERY small number of people. They tend to be young urban dwellers who graduated from elite schools. They are very busy with their careers and social life and do not watch enough TV to justify a $100 monthly subscription fee. Last year, I joined them for a few months and found that 90% of my needs were covered with a similar approach. Students at the best schools are also often TV free but not video starved.

Within a larger group of young affluents, some of the young men said that ESPN (and Fox Sports) were the only thing that really kept them with cable or satellite. If they could buy select games a la carte, the subscription service would get the heave ho. Also, many say that they are buying plugs at Radio Shack that allow them to take Hulu and other on-line content and view it on their larger screen TV sets. A few people have approached me about a la carte purchases. They would gladly pay a few dollars an episode for a favorite show or a specific game but have zero interest in a subscription given their very low level of viewing.

My point here is that many of the young people writing these alternative viewing reports and those actually living that way are a VERY small group. Most people in their 20’s do not live in Manhattan or San Francisco, get very well paid, work long hours, and are socially hyperactive. Every person who chooses a virtual non-TV life hurts advertiser supported TV and cable but there are probably only a few hundred thousand of them at best. And, with the emergence of Apple and Google TV the press will focus on the dogfight between the two titans. What you need to keep your eye on how many people that Apple TV and Google TV pick off and how many cut their viewing of advertiser supported broadcast and cable sharply as a result.

As I said several weeks ago regarding the future of cable, there is a great deal of inertia out there among the mature. They want to kick back in their LA-Z-Boys with a cold beer and they want instant access. Young people are a lot more open. They will toggle back and forth from TV to computer and will wait a moment or two to call something up. To save a $100 a month they will do a lot more especially when they are not heavy users of TV as we know it.

The cable and broadcast people have to be careful. Newspaper people a generation ago said that young people would endorse their product once they owned a home. They would want the daily paper on the front porch just as their parents did. It did not happen. Then they said they would give away the paper for free online and once readers hit a certain age, they would want the hard copy delivered daily. That did not happen either and many newspapers are fighting for their lives.

So, here is how I see it playing out. Both Apple and Google TV will make inroads across the board but do especially well with the young and particularly among the well educated. Some of the elite will stay away as now but will likely flirt with the free aspects of the Google product for a while. And, if you have lived a life without TV, will you suddenly get cable or satellite when you turn 30 or get married? Become a parent? Maybe, but I am willing to bet that an annoying number will not which will make advertising media planning and advertising sales more difficult.

The fragmentation in TV viewing that started 30 years ago will continue relentlessly as we go forward. But it will not destroy the broadcast advertising model overnight. The Apple and Google entries will however, speed up the process. Going into fall, 2011 planning media strategists may need to shift more weight out of traditional TV options that they had planned even a few short months ago.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com