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Monday, March 19, 2012

Shifting Gears in 2012 Media

A number of years ago someone whom I know very well was diagnosed with a very aggressive form of cancer. He visited some doctors, read widely and came away a bit confused. It seemed that surgeons all recommended surgery and radiologists all recommended radiation treatment. The surgeons essentially said that with radiation you might not get all of the cancer or that it could come back. The radiologists to a man stated that invasive and delicate surgery could have terrible side effects. He finally made a decision and it worked out well for him.

Each group of doctors was not really being defensive. They were working in their area of expertise and their comfort zone. As our new world of media evolves, I see the same thing happening with agency and corporate media strategists.

Despite protestations to the contrary, most of us do not really like change. So media staffers over the age of 45 or so nod and smile when digital is discussed and they can navigate their way through the buzzwords with growing fluency. Off the record, many tell me that their heart is not in it. One fellow whom I do not personally but who is an active reader of this blog writes, “I am a TV guy. The young kids just want to recommend online, Facebook, and soon mobile on their plans. They treat me like a dinosaur. Maybe I should just take early retirement.” At the other extreme, a young reader hit me with “why do you bother talking about spot broadcast in your blog. It is so 20th century.”

Well. With respect, I feel that they are both wrong. When I look back on my career, it is clear that I am/was a spot TV guy as well. I probably placed more money there than all other media put together. But, it is no longer 1982 or 1992. We have to work in the present. At the same time, TV, radio, magazines have not dried up and blown away yet. So, some sort of balance is required.

Over the last few years, I have stressed the need for constant testing and experimentation with emerging media. With each passing year money will move away from conventional media and in to less conventional venues. This trend is as certain as the sunrise. The trick will be how to manage the withdrawal from legacy media into our emerging world. For example, I personally believe that mobile is perfectly positioned to be the big thing over the next several years. Right now it is underutilized and more people should be testing in that space. Soon, however, people will begin piling in to mobile much as they did online or Facebook a few years ago. Some will be disgruntled as they misallocated their budgets and placed either way too much or do little in mobile early on in the game. With careful planning a smart strategist can avoid getting caught up in the cavalry charge into mobile that is sure to come (we will discuss mobile in detail in upcoming Media Realism posts).

There is another issue out there that is slowly getting traction. It is the growth of Integrated Marketing Communications (IMC). Big companies have been involved for some time; medium size players tend to pay lip service to it but are learning and the small fry tends to say, “What’s that.”

Simply put, IMC, is the coordination of all marketing and communications activities. The academics say that there are seven pillars to IMC: advertising, promotion, direct marketing, public relations, publicity, interactive, and personal selling. At every touch point, your message and your look are similar and working in tandem with all other pillars.

As IMC grows, advertising is going to decline as part of the overall marketing mix. Right now, advertising may still be 80% of the action for many brands. With each passing year, the number continues to decline a bit. In package goods, promotion has overtaken advertising in a big way. Please keep in mind that just as every company has a different media mix, each will have a different path and different mix of variables as they go down the IMC road.

So, to my mature media strategists out there, learn to shift gears. You need to adapt or die. To the young firebrands, may I suggest that many of your customers do not yet share your media habits? So, keep pushing the envelope on emerging media but remember you still need a foot or at least a few toes in legacy media.

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

Tuesday, March 13, 2012

The Truth About Deficit Spending

You hear a great deal these days about the annual USA budget deficit and the long term US debt. My take is a bit different than that of many so I thought that I would try to articulate it. What does this have to do with Media Realism? Well, I do not think the mainstream media really wants to face to up to it so they paint people as Cassandras if they tell the absolute truth about it. Admittedly, it is a hard topic to face head on and still maintain the sense of optimism that many of us still have for the future.

As I write, the US national debt is about $16 trillion and rising fast. Last month alone, our deficit was a record breaking $220 billion. Most project that we will add $1.3-1.6 trillion to the national debt this year and maybe slightly less next year. The gloom and doomers say that we face disaster within 18 months while others say that we have a decade or more to maneuver. Few deny that there really is a problem.

The issue, as it often is in Media Realism posts, is demographics. We have 90+ million baby boomers (born between 1946 and 1964) retiring over the next dozen years. This will put record-breaking strain on government programs such as Social Security, Medicare, and Medicaid. All of these programs need structural reform or they alone will bankrupt the US as some point in the future.

Most people nod and smile when someone raises the issue but not 1 in a 1000 seems to understand the enormity of the problem. Recently, someone whom I had just met was telling me that if we get rid of President Obama and elect any Republican we could get a balanced budget in several years and pay off the national debt in about 15. I kept a straight face and asked how it would work mathematically. His response was that there was so much waste in government that a good manager could right the ship without changing programs or raising taxes.

Okay, think for a moment. Have you ever considered what a trillion is? Do you know what it is? It is 1,000 billion.

Last year, Rep. Paul Ryan of Wisconsin presented a plan to balance the budget and reform Medicare. It left Social Security alone and did not raise income taxes. Ryan stressed that it was just a starting point for discussion. If you read the Ryan plan (few did) you will see that his plan would balance the Federal budget in the year 2041 some thirty years after he presented it. If by some miracle the Ryan plan was passed, how much more water (i.e., additional debt) would we take on over the next 29 years? Would it go from the current $16 trillion to $30 trillion or maybe $40 trillion?

Now, think about that. Let us say that we did balance the budget in 2041 but now had a national debt of $40 trillion. The first year out we would have a surplus of $100 billion. Excellent! But, if we continued to produce surpluses at that pace, we could pay off the debt in 400 years. Not a typo, my friends. Some 400 years. Do you think the world will stand still that long? Do you think politicians would say that “we owe it to ourselves” or get involved in foreign wars or be tempted to deficit spend again in a weak economy to “prime the pump” of economic activity? Of course they would!

So, with all respect to my new acquaintance, the Federal debt WILL NEVER BE REPAID. Never! That is not the end of the world. All countries, even the very solvent ones, have some national debt. What is a government bond except a loan to a sovereign nation? The problem in the US is that we are borrowing 33-40% of every dollar that we spend in recent years. Sooner or later, despite our global stature, we will hit our national credit card limit with international lenders. When that happens, interest rates on US bonds will rise and maybe soar.

That is an issue few Americans have come to grips with at all. Right now, we have artificially low interest rates. America’s shirt is dirty but many other nations, particularly those in the European Union (EU) are filthy. So the US dollar remains a safe haven and the world’s reserve currency. People are willing to park vast amounts of money in US debt, as many other nations look even weaker. The return is at record lows. But, for the moment, it is deemed safe. The majority of our debt is now short term and at low interest rates. What would happen if interest rates rose smartly due to a lack of confidence in the dollar or the global perception that we are unwilling to face our problems with real solutions? Interest rates would jump and the interest on our national debt would make the current huge deficits look mild by comparison.

You have heard the term ad nauseum lately but politicians keep “kicking the can down the road.” Perhaps after the election this fall, whoever wins will put a bi-partisan team of adults together and really address the issue. The longer we wait, the higher taxes will have to go up.

Many now say simply “soak the rich.” And it is true that many who earn fabulous sums of money each year only pay about 15% in Federal income taxes as a percentage of their total income. But, there are not enough of them. If we put a minimum tax of say 25% for those earning over $1.5 million per year, it would raise some revenue and we would all feel that the system was more just. However, it would not put an appreciable dent in the annual deficit. And, if we took all the wealth of American billionaires, we would still not make a meaningful reduction in the $16 trillion dollar national debt.

So, something has to give. The only rational approach appears to be entitlement reform (meaning cutting some benefits), cutting defense spending not defense, and raising taxes. If we do those things we can move to a balanced budget over a period of years.

Even then, we still remain between a rock and a hard place. A couple of years ago, the Simpson-Bowles Commission made recommendations that would trim $4.5 trillion from the deficit over a 10-year period. It was shelved but it would be an excellent starting point for a SERIOUS approach to reining in government spending.

The demographics are really against the status quo. If we want to maintain the social safety net that Social Security, Medicare, and Medicaid provide we need to reform all three systems and do it soon. Also, unless we cut spending and moved toward a balanced budget, interest on the national debt will drown all other line items in the government expenditure.

Years ago, political humorist P.J. O’Roarke wrote that “giving politicians the power to spend money is like giving whiskey and car keys to teen age boys.” I am for giving Congress all the whiskey that its members want. The car keys, however, are not negotiable.

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

Sunday, March 4, 2012


NPR, formerly National Public Radio, is a national syndicator, which distributes programming to over 900 public radio stations across the U.S. It is a privately and publicly funded non-profit organization, which gets its money from a mix of contributions, grants and indirect government subsidies.

Basically, they distribute news and cultural programming to public radio stations. A huge misperception about NPR is that programming is consistent everywhere. If you spend all your time in a single market listening to a single NPR affiliate, you might have that idea. Actually, the common thread across the stations tends to be that they carry the two highest rated flagship programs “Morning Edition” and “All Things Considered.” After that, programming varies wildly. Some stations run wall-to-wall classical music outside of those two drive-time shows, while others are largely talk. On long road trips it can be amusing or annoying to go from budgets deficits to Beethoven as you shift from one station’s coverage area to another. Also, they distribute programming from other syndicators. My two favorite programs on the stations are “Marketplace” from American Public Media and “This American Life” from Public Radio International.

The audience is a blue chip one financially and extremely well educated. Agree with it or not, the stories do make you think. And, they cover issues that are hard to find anywhere else. A danger that they face in the future is that they are skewing increasingly older. Unless you are a graduate of an elite school, it is unlikely that you listen to NPR if you are under 35.

Those on the right often attack NPR for having a strong liberal bias. After close observation, I would say that is not entirely fair. Some years back, it struck me as being far more pronounced. Now, the interviewers are sometimes more friendly to those left of center, but they work hard to provide contrasting points of view on most issues. The weekly sessions summing up the week in politics with David Brooks of the New York Times (conservative) paired with E.J. Dionne of the Washington Post (liberal) are a good example of such efforts for authentic balance.

Interestingly, when I questioned people across the country about NPR, the knee jerk reaction from several was summed up by one panel member who said “NPR, forget it. They are way too liberal. It is like listening to MSNBC.” Later most admitted that it had been close to a decade since they listened to anything on NPR.

Advertising is sticky issue. They do accept 15-second spots just about everywhere. The problem to us as marketers is that you cannot extol the product or have a clear “call to action” in the spot. That limits creative minds. And, it is not called advertising. It is underwriting. ☺ Yet a long time radio hand that I have known forever says he has had success selling an NPR member to local advertisers. His pitch, and it is intriguing, is that his station can reach people who do not like and who generally avoid advertising. Raising name identification and association with a desirable broadcast property appear to cancel out the ability to have a rousing call to action that is possible on commercial radio.

The big controversy ahead will continue to be the partial funding of NPR by government both federal and state. As any thinking person knows we face a budget crisis. If we are to continue entitlements such as Social Security and Medicare/Medicaid going forward we are going to have to reform the systems and cut spending in many areas as the demographic tidal wave of 92 million baby boomers retiring will bankrupt these programs in their present form. So, some representatives raise the issue of cutting all expenditure to public broadcast through the Corporation for Public Broadcasting, which helps fund PBS on TV and NPR.

Some of the congressmen say it will someday be a financial imperative. Others are more blatant and say why fund something which touts a philosophy different than their own? When I polled people about this, the answers surprised me. A few well educated and politically astute people in their 20’s said in essence, “Don’t worry. If congress pulls the rug out, wealthy individuals and foundations will pass the hat and NPR will be saved.” I checked this out with others who agreed quickly with the young analysts. All felt PBS would have a harder time in the future as money gets tighter.

A West Coast lawyer told me “I think that the NPR on-air people are full of themselves. But I love their stories." I tend to agree. NPR has been and will be an integral part of my life. And no one has ever called me a liberal.

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