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Tuesday, May 31, 2011

The Triumph of American Pop Culture

Over the years, I have spent a lot of time monitoring and studying Consumer Behavior. Often described as the psychology of marketing it really is the convergence of nine different disciplines: Marketing, Advertising, New Product Development, Anthropology, Sociology, Branding, Economics, Psychology and American Pop Culture.

The last element, American Pop Culture, is very powerful but does not always get the attention and analysis that it deserves. This may be because it is a difficult concept to articulate but it absolutely permeates much of the Consumer Behavior in the US and also around the world.

Some define American Pop Culture as America “dumb-downed” or everything that is left after high culture (literature, the arts) is taken away. Others deem it to be everything that is superficial or consumerist in nature.

For me, it is more commercial culture meaning things mass-produced for mass consumption. Pop Culture ideas typically appeal to a broad mass of the population.

Over the last 50 years, American Pop Culture has traveled very well—foreigners in developed countries may complain about American influences but they love blue jeans, Coca-Cola and Pepsi, Hollywood movies, our musical tastes, Disney, our love affair with the automobile and increasingly, fast food.

As a young child, I remember people laughing at those who wore blue jeans. Only farmers did that. Then came the 60’s and the lifestyle revolution and now it seems that the whole world is bathed in denim. In emerging markets, American Pop Culture seems almost aspirational for many people.

In recent years, Americans have definitely lost their taste for Kentucky Fried Chicken (KFC). Sales have been flat at best in their 5000 US stores. But in China, they continue to roll up double-digit same store gains each year. A new KFC is said to open every day in Mainland China. Their mascot “Chicky’ is even better known that Ronald McDonald although the golden arches is now opening a new location every 3-4 days in China.

Coke and Pepsi have paper-thin margins in the US but their profit growth is explosive in Asia, Latin America, and Eastern Europe. One of the most successful Initial Public Offerings this year has been Arcos Dorados (ARCO), which is the South American franchise stores of McDonalds (Arcos Dorados means “Golden Arches”). Other Pop Culture icons are catching on as well in the developing world. Those new to the middle class want the logos and the American identification that they signify be it the Nike Swoosh, the Polo Pony even the Marlboro man.

Critics say that Americans needs to start rebuilding their industrial base and fast. They certainly have a point. But American Pop Culture, though no longer potent in Western Europe and Japan, continues to tear up the track in emerging markets. We may look down on it but those brands are repatriating billions to our shores and will likely do so for a few more decades to come.

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

Saturday, May 21, 2011

Brands in 2031

Twenty years from now, the world will be a different place. Media, as we know it, will largely be gone and the ability to garner information and the gadgetry involved will almost seem like a science fiction scenario compared to what we can do today.

Some say that brands will be diminished tremendously as the world struggles with climate change, oil shortages, a lack of clean water, overpopulation, and less arable land.

My take is sufficiently different than most and a few readers have asked me to share it with you. Here goes:

Historically, if you want development in a nation you need four things---steel, oil, cement, and an abundant water supply. Americans are approximately 4.5% of the world’s population yet we consume 25% of the energy. Commentators say that we are addicted to oil; the reality is that we are addicted to CHEAP oil. I have followed alternative energy, particularly wind, for over thirty years. My conclusion is that alternatives can play an important bridge for us over the next three decades or more as fossil fuels become more expensive. Fossil fuels, however, will still be the dominant player as time goes on. Developing nations want to live as well as Americans do now. The US consumption of 25% of the world’s energy cannot continue much longer as others want the same resources and are willing to pay more, perhaps a lot more, for it. We will need to learn to conserve, go to alternatives, and use more nuclear power despite the current scare from Japan. Our massive domestic natural gas reserves could help a lot. As energy prices rise due to international demand, more local agriculture will pop up. It is becoming chic to be a locovore meaning you consume largely locally grown products and avoid transportation costs.

Water is something that we do not dwell on in the United States except for low rainfall areas such as Arizona. Around the world, it is different story. Some may see clean and abundant water as a basic human right, but more than half of the people currently hospitalized around the world are there because of having ingested bad water. Great strides are being made in water purification but the price for water will go up dramatically in many parts of the world. A water pipeline from Canada to Arizona sounds farfetched today but such a solution will happen somewhere in the world.

Over the next 20 years, we will have an additional two billion people on the planet. As a result, plus the energy, climate and water issues, there are people forecasting massive famines around the world. There may be situations where certain countries will be hurt badly for a brief period but I take the optimistic view that technology will trump geology and weather issues.

Think about this for a minute. Two billion more people actually will translate in to two billion new consumers. Will all of these new people be middle class? Of course not! But right now, some 20 million people in China alone join the middle class each year. Throughout Asia, India and Latin America a similar trend is going on. Imagine a young man from rural China who moves to Shanghai to work in an office. Or consider a young woman from a remote island moves to Manila. Finally, a young fellow from the mountains of Peru settles in Lima. These young people go from being virtual peasants to a modest middle class lifestyle. They purchase soaps, laundry detergent, dishwashing liquid, razor blades used almost daily, shampoo, ties, and business suits. In their leisure hours, they may visit a McDonald’s, knock back the occasional Budweiser, and sadly, smoke a Marlboro. If things go well, they may even buy a Toyota someday.

Two billion new consumers all eager to have some stake in the lifestyle that we take for granted. This translates to explosive growth for brands that are wise enough to build a presence far outside the United States or their home markets. The big multi-nationals have been doing this for decades.

New York may be the hub of the advertising world but for how long? Right now, some 80% of advertising dollars are spent in North America, Western Europe and Japan. That ratio will shift downward and quickly over the next decade.

The future for brands, marketing, promotion and advertising has never been brighter. Just make sure that you make the world your oyster rather than your provincial back yard.

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

Saturday, May 14, 2011

The Two Americas and The Future of Media

Everywhere you turn and at every conference you attend, a few very smart people are willing to make their unhedged forecasts about the future of media. They focus around new platforms, new gadgetry, the speed of transactions and the impact this will have on the future of advertising and marketing.

Virtually all of them are well thought out and quite plausible. But, to me, they all miss something. What they lack is the acknowledgement that all Americans are not as cutting edge as they are. One thing that I have learned over the last four decades is that consumers lag technology. Just because a new platform exists or a new application is available does not mean that most people will embrace it immediately.

A few days ago, I was leaving a meeting and two people who should have known better remarked, “Well, everyone now has Netflix.” I checked and found that in the U.S and Canada combined they are now at about 18% penetration including me, a very satisfied customer. But, that means that 82% do not have the service. Hardly everyone. Way too many pundits look to peers and friends as the benchmark of acceptance instead of the facts.

In his ill fated runs for the presidency disgraced former Senator John Edwards did make a very inspiring stump speech often referred to as “The Two Americas.” He complained that present day America had two tiers of healthcare, education and opportunity. I thought his solution to the dilemma was completely wrong but, if you had a conscience, the speech itself was moving.

Well, in marketing we face the same thing. Virtually all of you reading this will embrace the new technologies and your use of media options will expand and likely become more pleasant. But, just because you, your friends, co-workers, and clients have hopped onto the bandwagon does not mean that everyone has or will.

Did you know that approximately 17% of American adults are functionally illiterate, 25% have no credit card, and 18% are unbanked? They still buy beer, groceries, fast food, and pick-up trucks but they are not comparison shopping with a digital device or ordering stocks on line for a $7 commission.

And, how about the graying of America? People now in their sixties may live 30 more years. I hope to be one of them. ☺ Will we continue to upgrade our technological choices or will be still be paying a cable bill 25 years from now? Many of us will have the money but will we embrace all of the new offerings that will come at us with increasing frequency?

My purpose here is to plea for balance among marketers. Lots of things such as TV, couponing, some radio, and definitely newspaper do not pack the wallop that they once had. But the underclass and the mature, both upscale or not, will definitely not keep up with the changes. This will give conventional media a longer life that some futurists currently think.

So what do I think will happen? A few quick forecasts would be:

1) The data explosion will continue in all forms.
2) New gadgetry will amaze us all and become obsolete relative to newcomers every couple of years.
3) Mobile will boom either via phones, i-pads or new inventions. It will eventually largely replace promotional activities such as printed coupon vehicles and let you negotiate at retail by showing competitive offerings to a salesperson.
4) More and more media will become subscription based and some TV as we know it will go to a paid format and be available on a dozen or more devices.
5) Some video will be global in scope. Google has sat on YouTube for a few years. At some point, they or a competitor will start a network or two that is 100% digital and knows no borders. Actors will love the instant global exposure and marketers can advertise worldwide cost efficiently. The English language may spread faster as a result as well. Sorry, Mandarin.
6) Measurement of the emerging media will get much better but media executives will still struggle to optimize the media mix.
7) Direct response in all forms will grow. Some of that will come from product placement in programming where you can stop a program and order the sofa seen in the sitcom or set up a test drive for the car the star is driving.


I remain very excited about the future of media. Not a day goes by where I do not wish that I could start my career all over again as I ponder the amazing opportunities to come. But, remember, consumers lag technology and there remains a strong minority of Americans who have yet to enter the on-ramp of the information superhighway. Some never will.

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

Saturday, May 7, 2011

Political Talk Radio

This past week with the elimination of Osama Bin Laden talk radio probably had a nice audience spike. Virtually all of us were relieved after nearly ten years and were justifiably proud of our military specialists, our intelligence community and our president.

The whole area surrounding political talk radio is very interesting to me. It is not new at all. Radio historians tell me that evangelist and huckster Aimee Semple McPherson had a talk radio show way back in 1924 and eventually bought a station. Detroit clergyman, Father Charles Coughlin, had a program that reached millions in the 1930’s. During the 1932 presidential campaign Coughlin endorsed Governor Roosevelt over President Hoover by proclaiming “Roosevelt or ruin”. A little while later he turned against Roosevelt and the New Deal and became increasingly strident. His superiors silenced him and he was banned from broadcast for life.

Political talk radio, as we know it became to get traction in the 1980’s and 1990’s. Many of us who are media analysts feel that it saved AM radio during that time period. Music was no longer viable on the AM dial when people could get the high fidelity sound of FM.

Other than sports talk which we covered recently (Media Realism, February 4, 2011) talk radio tends to focus on conservative talk, hot talk and liberal talk. Hot talk tends to be targeted at Men 18-49 and is devoted to pop culture although it sometimes veers into politics.

When most of us think of talk radio, conservative talk comes to mind first. The leading personalities in that arena tend to be Rush Limbaugh, Sean Hannity, Glenn Beck, Mark Levin, and Michael Savage. Limbaugh is an interesting character to me. When I first heard him around 1990, he was different, even refreshing. Whatever your politics were you had to admit that he was one heck of a broadcaster. What impressed me at the time was how he played things straight. He was conservative for sure but not in a knee jerk fashion. And, for a guy who had been a sportscaster a few years earlier and had struggled a lot, he appeared to have a philosophical base to his comments. I remember vividly him giving a young caller a primer on what books to read if one were interested in the conservative viewpoint. The list off the top of my head included “The Conservative Mind” by Russell Kirk, “Capitalism and Freedom” by Milton Friedman, and the very heavy “Human Action” by Ludwig von Mises. It was stunning to hear that on talk radio. He fired bullets at both parties and was tough on Republicans who appeared inconsistent.

Then something happened. As his audience grew, he became more strident and his comments were not as fact based as they had been. George H.W. Bush invited him to stay at the White House and after a night in the Lincoln bedroom, he suddenly seemed to become a complete apologist for the Bush 41’s administration. Soon he was a leading spokesperson for the Republican Party whether the leadership liked it or not.

Many other conservative talk show hosts came on the scene and did quite well. The audience tends to be male, middle aged plus, and very conservative. Why has it worked? Well, many people say that they have an ability to tap into the anger of many of their listeners. Some view them as an outlet for those who are bitter or angry or scared.

There are some talk radio players on the liberal side of the ledger as well. Air America was launched a number of years ago as a counterpoint to conservative talk. It has not fared nearly as well. One of the stronger players, comedian Al Franken, left his talk show seat and won a seat in the U.S. Senate from Minnesota. But, generally, liberal talk has not caught on. Why? A brilliant young political analyst and a real progressive says that she feels liberals want to solve problems. They offer up complicated solutions and are policy wonks. That does not play well on talk radio where sound bites and clever interactions with callers reign.

One could also argue that liberals see government as the solution while conservatives see government as the problem. Whatever the reason, there is not a liberal talk show host on radio with a huge national constituency.

To me, the long haul picture for political talk radio is not very bright. In many markets stations simulcast on AM and FM and some have gone to FM alone. As a radio expert put it “many people under 40 have never listened to AM so they have to move to FM.” Structurally, there is a strong media problem. Simply put, the older you are, the more TV you tend to watch. As the talk audience gets older and retires or works part time, they are going to find outlets on TV that can give them what they want. On the left, MSNBC has many programs that are great substitutes for talk radio and Bill O’Reilly and Sean Hannity on Fox News fulfill many of the right’s needs. It is not clear but it is likely that part of the decline in political radio talk has been due to cable news/talk offerings and the trend should only accelerate.

In a free society, freedom of expression is important. Political talk all but bailed out AM radio. Its future is strong but it may take on other forms via cable or Internet options going forward.

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