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Friday, November 26, 2010

Bought and Paid For

Charlie Gasparino is a tough guy. He is easily the most pugnacious financial journalist that I have ever seen or read. Yet he is also the most unpretentious, dogged in pursuit of a story and ever loyal to his blue collar roots. As he has risen from the New York Post to Newsweek to the Wall Street Journal to CNBC and now Fox Business Network and the Huffington Post, he never seems to have been sucked in to the lifestyle of the major league success that he is. He has lost none of his outspokenness or sense of fair play.

Mr. Gasparino has a strong new book out entitled, “Bought and Paid For” (Sentinel, 2010). The subtitle is “the unholy alliance between Barrack Obama and Wall Street”. The book turns a lot of conventional wisdom completely upside down. Most people view Wall Street as full of Republicans who lobby hard for lower taxes and deregulation of the financial industry. At the same time, Democrats are the main street little guys who detest the financial leaders and all that they do. Slowly and convincingly, Gasparino builds the case that such assumptions are way off base.

The book starts off simply a listing of financial contributions by Wall Street executives to political campaigns since 2008. Surprise! They gave $20.1 million to Democrats and just under $14 million to Republicans.

The major thesis of the volume is that the Wall Street boys benefit from an increasingly larger government. When Bill Clinton set a goal for 70% home ownership, Wall Street obliged with new mortgage products that made it easier to bundle and re-package mortgages. They made a tidy sum in the process. And now, with the economy still moribund, and the middle class struggling just to hold steady, Wall Street is on a tear again. But, the average taxpayer will pay for Wall Street’s mortgage mistakes for decades. And, as we pile on more debt and still more debt, Wall Street gets a cut of that as well. So, Wall Street is not too adverse to a Democratic president despite the folklore.

There is also a fascinating portrait of Senator John McCain as presidential candidate McCain in 2008. He never was able to muster much support on Wall Street while the leading commercial bankers and investment bankers saw Obama as a moderate who would support them. McCain, a former POW who was tortured by the North Vietnamese “couldn’t stand being in the same room with guys who compared trading bonds for a living with warfare. As a man who had survived the brutality of war in the most literal sense, he found their talk unbearable.” Being from Arizona did not help either. Financial services were not an industry that he had to cater to in his House and Senate races over the years.

Now, Gasparino indicates that the tide may be turning. Wall Streeters are seeing that the president is not really oriented towards business at all. He stops just short of saying what some people suspect and it is this—no matter who gets elected Wall Street really runs things. Jim Carville, Bill Clinton’s enormously entertaining and engaging former aide, said back in the ‘90’s, that “when I grow up, I want to be the bond market” as they can stop anything. It appears that in the battle between Main Street and Wall Street, Wall Street has won and won easily.

I highly recommend “Bought and Paid For”. You may, like I, agree with parts of it. But Charlie Gasparino does not mince words and gives you a refreshing viewpoint that you are unlikely to see anywhere else. And, importantly, he, like most of us, is an ardent believer in free markets. He just wants to see the game played fairly.

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

Sunday, November 21, 2010

Aging (Media) Brands

It is quite clear that times change, our culture in is in constant flux, and above all consumer interests change. Often I discuss with people how their brand or more often media brand is no longer in tune with the times. Some agree, while others disagree with great vehemence. Here are some of the questions I ask of all players. It may come in handy for you some day.

1) Has you market changed? Do you face new or stronger competition? How well does your experience stand up to the people with whom you are competing?
2) Have new market solutions (like the internet) or customer preferences caused consumers to lose interest in your brand? Does your brand promise still hold water?
3) How is your brand identity? Do your logos or taglines seem out of step with cultural trends or current design looks?
4) What of your brand message? Is it in sync with current consumer tastes?

What I often suggest is that people do a brand audit. If one is unusually honest, this process can be done internally. Nine times out of ten, however, you need an outsider to smoke out the current strengths and weaknesses of your brand.

Is your USP (Unique Selling Proposition) or the distinguishing characteristics of your brand of increasing or lessening interest to the consuming public? Does your brand attract the people you aspire to reach or is it business as usual?

Sometimes entities such as cable channels can erase previously established value and start all over and actually grow stronger. To have such a transformation you need to have energy, total commitment and be very focused. Few do it well.

In a world where we all have to change or be left behind there are several caveats that sadly most still ignore. They would include:

1) Listen to your customers. Most don’t so you will have a tremendous leg up if you do.
2) Change and adapt as your customers need change. This is subtle and hard but pays incredibly rich dividends.
3) Many brands fail due to death by a thousand tiny cuts. By the time they realize that things are bad, they are too weak to change. Small mistakes add up. Protect your brand image jealously. Watch the details relentlessly.

If all this sounds like basic fundamentals, so be it. I was talking to a broadcaster the other day that was very enthusiastic about these ideas. He called 48 hours later to say that he was starting all over. The solution was that he was hiring a new weatherman!

Well. I wish him all the best but he seems to have missed the point. The real issue is whether he should still be doing news, period. His market is not large and he is in fourth place in a daypart that attracts an increasingly old and downscale audience. The addition of a new meteorologist does not strike me as the silver bullet that the station needs to turn things around.

Do you need a brand audit? Will your brand be better off in ten years? Will it still be around? As the Coast Guard’s motto says, you need to be “semper paratus” (always ready).

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

Sunday, November 14, 2010

Fado, Fatima, and Futbol

Antonio Oliveira Salazar is usually described as Portugal’s dictator from 1932-1968. Often considered to be a clone of his neighbor in Spain, Francisco Franco, Salazar was quite different. He was an economics professor at the ancient University of Coimbra. When asked in 1926 to help the military junta in sorting out the economy, Salazar stayed in Lisbon, the capital, and studied the situation. After a few weeks, he said he would only work for the government if given complete control of revenue and expenditures. The generals said no so Salazar calmly retreated to his economics chair at Coimbra.

By 1928, with the economy facing bankruptcy, the military gave Salazar the power that he wanted. Things turned around fast under his leadership and in 1932 he was named prime minister. During his entire term, the country lived as a military dictatorship with Professor Salazar the civil administrator. He was not your dictator from central casting. A lifelong bachelor, he was a quiet introvert and a serious scholar. The main similarity with Franco was that he shamefully encouraged the police to use informers and he censored the press.

Many observers said that Salazar kept on top with a cynical credo distracting the masses known as the three F’s: “Fado, Fatima, and Futbol”.
1) Fado is the oldest urban folk music in the world. It is often described as the soul music of Portugal. Salazar did not like it but it became a national craze and he went along with it.
2) Fatima is a religious shrine in central Portugal where in 1917 the Virgin Mary is said to have appeared to three peasant children. While widely followed in Portugal, Fatima is what is known in Catholicism as a private revelation. No one is required to believe it or take it seriously. Most popes since Pius XI have been devoted to Fatima but many priests dismiss it and I have never seen a poll among the Catholic populace on how many accept it. Salazar’s “regime” played it to the hilt, however, with some officials claiming that the Virgin Mary kept Portugal out of World War II.
3) Futbol—this is simply soccer. The Portuguese love the game beyond all bounds and the regime encouraged clubs and participation everywhere. The press was said to be encouraged to extend futbol coverage even though they needed little. At the same time, Salazar, a brilliant and serious scholar himself did nothing to improve education. By some measures, literacy rates fell during his era.

Long before 20th century Portugal, regimes had their own distractions. In ancient Rome, the poet Juvenal wrote that the way that emperors retained power and control of the people was to get them involved in self indulgence and trivialities. As the empire tottered toward collapse the people seemed to hope for two things—free bread and circuses. Things reached a low point when there were nearly 100 holidays per year.

Sometimes, lately, as we face a difficult future, I wonder if we in America are getting so involved with the trivial that we lose sight of what is going on. Sports are a great pastime but for many they are now bordering on obsession. It is not unusual for an adult American male to watch 8-12 hours of football (not futbol) on a fall weekend. People have a right to do what they want during their free time but it is almost as if many live vicariously through what others do in a stadium on a weekend afternoon. Their happiness is not with what they have personally accomplished. We in the media have only encouraged this by pouring larger and large amounts of advertising dollars into sports programming.

We had what many feel was an important election on Tuesday, November 2nd. Many Americans did not bother to vote. In many European countries they vote on Sunday so that more people can get to the polls. Can you imagine U.S. turnout if we held elections on November Sundays? I think many lazy boys would curl up on their La-Z-Boys, pop open still another beer, and vote for football.

Actually, the day after the election something happened that struck me as vastly more important than the mid-term voting results. The Federal Reserve introduced QE2 which injected $600 billion more dollars into the economy. QE stands for Quantitative Easing which is employed when all other avenues are exhausted in an economy (QE1 occurred during the financial crisis when over $1 trillion was created to prop up the economy). Usually the Fed lowers overnight interest rates to stimulate economic activity but it cannot do that any longer as the rates are nearly at zero. Financial writer David Dittman put it this way: “It does not involve the printing of money. The central bank (the Fed) will, with the simple stroke of a computer key, increase the credit in its own bank account. This newly formed money will buy whatever the Fed pleases—government bonds, equities, houses or corporate bonds from banks.”

Well, I agree that there is no printing press in the basement of the Federal Reserve building where a few fellows are stamping out $600 billion in new currency. But the effect is the same. And, immediately the dollar tanked giving us a backdoor devaluation of our currency.

I was upset about the QE2 event and spoke and e-mailed with a number of people about it. The next day a friend e-mailed me that, according to Google tabulations, the number of people who Googled QE2 or the Federal Reserve on November 3rd were only a small fraction of those who checked to see the availability of the McRib at their local McDonalds restaurants. Are we maybe getting just a bit wrapped up in the trivial?

Better hurry, folks. The McRib promotion will be gone in most McDonalds by December 5th. QE2? Not to worry. If it does not work as I think it won’t, Fed chairman Ben Bernanke is sure to give us QE3, QE4, and QE5.

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

Sunday, November 7, 2010

Women on the Rise

Across the western world, women are getting better educated, having more economic clout, and are far more prominent in top management in business and politics. Over the long term it is increasingly clear that the 21st century economy is a place where women will often be holding the cards.

This does not appear to be a short term trend to me. Demographically, things are in place in the United States for women to increasingly gain more economic power going forward. The first and most telling place to look is in our colleges and universities.

Figures vary slightly but it appears that women are approximately 58% of the enrollment in U.S. colleges and universities. And, women have significantly higher graduation rates than men. Some 60% of students in masters degree programs are women, and law schools and medical schools currently have an even split between the genders. MBA programs are 40% women today. In 2010, we had a first where there were 28,962 newly minted women PhD’s in America and 28,468 males with new doctoral degrees.

Why is this happening? Some sociologists claim that schools are more geared toward women these days and they value the self control and focus along with verbal skills that seem to come earlier to girls rather than boys. Maturity certainly plays a role as well. Virtually all educators agree that women seem better at time management than men of the same age. Culturally, there have been shifts as well. Today’s women are taking advantage of opportunities that earlier generations did not have. They work harder at an earlier age as many still believe that to succeed they have to be more focused and more productive than their male counterparts.

Men, on the other hand, seem kind of stuck. Jobs that used to attract high school educated men here in the states and provide lifetime employment are but a memory. Increasingly, boys are dropping out of high schools and colleges. Forty years ago, 34% of men went into industrial jobs; now it is 11% and dropping. Men are not adjusting to the knowledge based economy while women, on a relative basis, are thriving. Young men seem to be the last casualities of the end of the era of US manufacturing. There are declining male voting rates in the U.S. No one seems to be encouraging, motivating, or preparing men for their now inescapable future. As more boys fall to the wayside, what can be done?

Colleges are very sensitive about gender imbalance. Few administrators or admissions officers want to talk on the record. While the truly great schools will likely have gender parity as they can pick the best of the best, lesser schools have a real issue. If they move toward parity, are they really engaging in “affirmative action” toward men? Off the record, administrators sometimes confirm that they fear academic standards will be lowered if each new class is approximately 50% male.

Now, let us fast forward about 10 years. In 2010, 51% of people in the US with managerial titles are now women. That number has to be higher in 2020 given the emerging education gap between men and women.

On a social basis, the education gap will cause some discomfort as well. Traditionally, most of us date and eventually marry people who have approximately the same level of education or intellectual curiosity. The common statement from young adults generally is “I want to meet someone on my level.” If, in a few years, 10%+ more women will be vastly better educated than men of their age, how will many women find a soul mate? Today, many successful women say that it is often hard for them to find men who are not threatened by their intellect, impressive jobs, or lofty income. What happens when there are millions more of these women and the available men of the same age seem way behind?

Demographically, people are marrying later than they did 40 years ago and fewer are marrying period. It would seem that fewer professional women will marry as time goes on in the U.S. And, those who do may face some unique problems. Can fragile male egos deal with a wife who earns two or three times what they do? Right now, in two earner households, the wife usually stays home when a child gets sick. That will not happen going forward if the wife is the member of the couple with the high powered job. Big earners will have husbands who will work part time or not at all in some cases.

Interestingly, in countries such as Denmark and Norway where the state provides extensive day care as well as maternity and paternity leave, men seem to help out a lot more in the household. And, they are having larger families than countries like Italy where men do little household chores after work. So, something will have to give in lots of households in the U.S. It is very unlikely given our financial stress and center right political tendencies in the U.S. that America will move toward a Northern European style provider state. Men, then, will have to get more involved in the homely aspects of family life if things are to run smoothly.

Have you thought about these changes that are in motion and cannot be turned around for at least a generation? Can young men become academically competitive with women? Importantly, how this will affect the advertising business? Messaging will have to be different. Right now, a great deal of advertising is aimed at housewives even though relatively few still exist. If men start doing the laundry far more often than now, will Tide start advertising on ESPN aggressively and maybe during the day as millions more men may be at home? Financial advertising will shift as they will aim more at women. If she is earning the money, she will want a huge say in where it should be deployed. It is likely that auto advertising will likely change significantly as well.

Demographics are destiny so these changes are set in motion and will occur. Be ready for them and if you have a son, give him a little extra encouragement and preparation.

If you would like to read more about the topic, there are two recent sources that you might find interesting:

1) “The End of Men”, from Atlantic Magazine, July/August, 2010
2) Influence by Maddy Dychtwald, Voice Publishing, 2010


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