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Monday, January 27, 2014

The Elephant in All Our Offices Revisited

Over five years ago, when I began this blog, the 2nd post was entitled, “The Elephant in All Our Offices” (January 6, 2009).  At the time, the elephant, of course, was DVR penetration specifically, and TV commercial avoidance in general.

Today, it appears that just under 50% of US TV households have a DVR or time shifting device. If you earn over $100,000, DVR penetration is closer to 60%. Over the last 18 months the rate of growth of DVR penetration has declined. Some ad agencies and a few broadcasters are saying that because DVR penetration is slowing, TV is not threatened all that much by commercial avoidance.

Admittedly, I am surprised that more programs are not time shifted these days. Half of the action appears on broadcast with much lower taping done on cable. Variety and drama are the most time shifted shows and they tend to be the top rated programs.

However, just because the RATE of DVR household penetration has slowed down does not mean there is not a growing problem as household penetration inches up. Also, five years ago, we did not have the four screen problem that we have today.

You can look at a variety of studies that illustrate that with every passing month more Americans use more devices than just the TV when they view. Watching a 21 year old view can be a dizzying experience as he or she swiftly shifts from device to device while the youngster is supposedly watching TV. I find myself, a fairly serious old movie buff, carrying my laptop with me, when watching a film. Invariably, I will Google “IMDB” (Internet Movie Database), several times during the viewing of the film. This Sunday, while the Super Bowl is on, I will be riveted to the commercials, but am sure to check statistics about the teams or background on the advertisers and their new campaigns while the action is taking place.

If mature, okay old men, such as I are using multiple screens, imagine what younger viewers are doing. When do they tweet or text or e-mail? Often it is during commercial breaks. Young men text during games and chat in g-mail or simply call friends on their Smartphones. During awards shows, young women are famous for tweeting. All of this has to have an impact on commercial effectiveness. Millions may be sitting dutifully in front of their sets when your expensive spot comes on any given evening, but how many are truly watching it when multi-media options abound?

So the elephant still exists. He has never left the viewing area. Actually, he has just gotten bigger but we do not see him clearly if all we do is concentrate on the decline in the rate of DVR growth.

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

Thursday, January 16, 2014

Changes in Political Advertising

Last week I spoke with and e-mailed back and forth with a broadcaster about prospects for 2014 advertising. He was, at best, guardedly optimistic but did say that he had a hot U.S. Senate race in his state that should bail him out if the economy did not continue to crawl upwards. Then, he said that political spending on his TV station would probably allow him to meet sales quotas for 2014 but definitely not for the rest of his career. We talked at length about the way political advertising is changing and I then spoke or e-mailed with a dozen other people who NEED political spending, some very badly.

To a person, everyone agreed that the game was changing and fast. One graybeard asked me if I remembered when candidate or PAC (Political Action Committee) spending was considered to be a pain in the derriere? Often a junior salesperson had to handle it and, due to rules that required candidates to get the lowest rates on the station, it was not considered a very lucrative part of the station’s income. You would have to “bump” conventional advertisers to make way for the political spenders and sometimes the politicians paid significantly less than your local account.  As the economy has softened and political money continues to break records with each election, all that has changed. Political spending can make a TV station’s year in competitive states.

Additionally, the cable people can sell zoned messages which allows a candidate to run unique campaign messages in vastly different demographic areas within a congressional district by sending separate messages by county or a cluster of zip codes. There is far less waste than running on over the air TV where you often reach thousands living in an adjacent state.

The big changes lie ahead in two areas:

A Four Screen Campaign

1) Microtargeting is not really new--it is new in that it is not that well known outside of direct marketing. Simplistically, it is a cluster analysis which is datamining techniques that involve predictive market segmentation. Some say Microtargeting in politics was first used as early as 1992 but it was initially employed on a national basis by the famous Karl Rove in more than 15 states in George W. Bush’s 2004 reelection effort. The research identified likely Bush voters and the campaign was able to reach more than 90% of them.

    Both national parties have very large and sophisticated databases that track voter habits not unlike what American Express or Mastercard do for consumer spending habits. The databases know a great deal about you--do you have a party affiliation, do you always vote, do you ever contribute to campaigns and how much, and whether or not you have ever volunteered in an election campaign. Armed with these data, volunteers can visit likely prospects and help get the vote out. Direct mail and e-mails are customized to these prospects and often the tailored message is aiming at a small, sometimes very small, segment of the voting public. This can be very positive for ad agencies as they may get to produce a large number of commercials, or mailings on a wide variety of topics.

2) Four Screen Campaign--this is already underway but we should see a lot more of it in  2014. The four screens of TV, PC, Tablet, and Smartphone will be used by many more candidates this year than ever before. Most people see the Smartphone as being the biggest gainer on a percentage basis. It may be a way for politicians to reach the elusive and light voting young adults. One campaign manager whom I met online through a friend is going to use Vine, the six-second video alternative from Twitter. He said, “My candidate is a good guy who does not make verbal gaffes. But, he is not a high energy candidate. So we are going to tape dozens of six-second videos and put them on Vine. As we near the end of the campaign, if our segmentation is good, we will have dozens of customized messages out there. He can make a few campaign appearances a day but Vine will make us look as if there is always a flurry of activity. We can also pick off some young voters than we need, really need.”

Forward thinking cable players are getting things in place to insert on all four screens. By 2016, this could be the norm in major races. Separately, Hulu and YouTube should see nice increases as well.

So, is TV and Cable political advertising dead? Not by a long shot. Both parties are now deep into 21st century technology (the Democrats outflanked the GOP in 2012) so spending may be up this year but TV and Cable’s share of the huge political pie is likely to decline. In 2012, friends in battleground states such as Wisconsin and Ohio said they were afraid to turn on their TV sets given the barrage of TV messages. One said he went to Turner Classic Movies and Public Television far more than usual just to escape the politicians. Several years from now, you may hesitate before you fire up your tablet or Smartphone.

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

Tuesday, January 7, 2014

The Ad Agency Positioning Paradox

One of the greatest cliches in the advertising business is that,“New business is the lifeblood of any advertising agency.” It is obvious as you only grow an agency by getting new assignments from an existing account or by “stealing” a new account from someone else. Tied in to that reality is what is often referred to as the “leaky barrel” effect. No matter what, you are going to lose some business quite regularly due to conflicts over compensation, chemistry, buyouts, new marketing directors and, of course, the state of the economy.

So new business is vital especially to a small or mid-sized agency’s survival in our new digital world. Interestingly, I have never come across an advertising agency that does not stress a key benefit that they can bring to any client is how to position the company’s brand(s). Yet, at the same time, it is a rare agency that seems to know how to position ITSELF when pitching new clients.

If you have attended a number of new business shootouts, or talked with people who have, you find that agencies tend to talk of the same capabilities. They may put different names on what they claim to be proprietary tools, but virtually all seem to have the same approach. Even the jargon is the same. How many times have you heard people say, “We are media agnostic?” (see Media Realism, March 21, 2013).

So, very few agencies stake out a differentiated position for themselves even though that is what they preach to all clients and prospects as a necessity. Without the agency positioned clearly, the new business road gets bumpier for several reasons:

1) Without a clearcut positioning you have no target audience that would find the agency’s services very appealing
2) If you are a prospect, agencies often look interchangeable. So, with clear positioning you will be different and stand out. Not to everybody, but you only need a few wins each year or so.
3) Unless you look different, you are probably chained to your own backyard. Will someone fly cross country to see you if you look and sound like everyone else?
4) True expertise in something can set you apart. Do you have it in some discipline?

Besides positioning, there are other mistakes that agencies continue to make decade after decade in new business presentations. I sent a draft of this out to many of my panel members who forwarded it to some agencies that I do not know and to a number of clients as well. Here is a sampling of the responses that I received:

1)“The CEO needs to be a master of ceremonies but should not dominate the proceedings in terms of time spent talking. Too many agency chiefs answer all questions and talk over department heads as well. It makes the shop look like a Potemkin village.”
2) Listen to the clients! A marketer wrote the following to me--“We stressed to the four agencies that we were down to that we could not afford national TV. What we needed was some combination of social media plus online and maybe a bit of targeted magazine. We were open to their media mix ideas.” The agency chief said, “Wait until you see our reel.” My boss said sharply, “We do not want to see your damn reel.” “Yes, you do”, replied the agency CEO who promptly shut off the lights and began the  video. “It was a theatre type of setting in their conference room and the room was extremely dark. When the lights came up, my boss was gone. I was not given a ride to the airport, both my boss and I had a good laugh over a drink before my flight left. Clearly, the chemistry would have been awful.”
3) Be careful who is in the meeting and coach them on taboo subjects. Two people told me very similar stories but here is the more colorful--”My creative director insisted on having a young writer in the room even though there was no role for him and the guy has no verbal filter. A prospect looked at a good spot and asked how much the production cost was for it. The young guy beamed and blurted out, $375,000. Our prospect shook his head and said that he could never afford that. For the next half hour, he kept bringing it up despite our promise that we can do low cost and effective TV production. The young account guy who drove the prospect to the airport said that he brought it up three more times in the half hour ride. We lost a good shot at a fine piece of business because our creative head refused to coach a talented young guy on what to say and what not to say".
4) Seven different people weighed in on this final one--do your agency credentials quickly and then have a laser focus on their business. You have already sent them reels and successful case studies. Talk about them--the prospective client. The kiss of death is when a prospect says, “This is fine but when are you going to talk about my needs.” I have seen this for over 30 years, but agencies keep doing it. Ad agencies are famous for people with outsized egos. This is one case where they need to check their egos at the door.

Will the situation improve? Maybe, maybe not. With agencies closing their doors or downsizing in to consultancies, one would think that some would get the message.

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

Wednesday, January 1, 2014

Humility and Leadership

Way back in 1955, I remember my father bringing home a copy of either LOOK or LIFE magazine. I was just a little fellow who could print his own name and was just getting acquainted with the Dick and Jane series of readers. As I thumbed through the magazine, I started laughing. I said to my dad, “Look at this old man with the funny hair.”  My father told me that it was a picture of Albert Einstein who had just passed away. He added that many people thought that Einstein had been the smartest person in the world.

As time went by, I began to read a lot about Einstein. One thing that I noticed was that, despite his reputation as a brilliant physicist, he was a very humble man. During college I stumbled across one of his most famous quotes--"I have no special talent. I am only passionately curious.” Clearly, he had many special talents but his modesty was something that I noted and appreciated.

Thinking of Einstein’s behavior, I have been recollecting all the leaders that I have met and considered what level of humility that they displayed. It has been a very interesting exercise.

Over the years, I have observed three traits that leaders who display humility tend to have:

1) They NEVER underestimate their competition. In advertising and communications, too many people (sadly) show disdain for their competition. The humble leaders take nothing for granted and are always aware that they can lose an account or be outmatched by an adversary. They tend to be better prepared for major presentations than the arrogant ones who feel that business should magically come their way.
2) When talking to people, especially young staffers, they are secure enough to talk about their own weaknesses and past failures. It disarms people, makes them approachable, and reminds everyone that despite their lofty title, they are human, too.
3) They listen to all ideas. Their humility allows them to admit they do not have all or the best solution to issues. Sometimes, they appear to give too much time to someone who seems to be really “out there.” Invariably, a far less zany version of the eccentric person’s idea may be used and the leader gives them credit for it.

Recently, a few sincere young people told me that they wish they could know all the things that I do. When that happens, I laugh and say that I am 40 years older than they, so I have a lot behind me. Also, and I think importantly, I remind them that we are both passionately curious (to steal a phrase!). The only difference between me and them is that I know what I do not know. And, that is a lot!

Take a look at people who lead. Are they truly humble? If they are, you may be looking at a real winner.

Happy New Year!

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