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Friday, August 29, 2014

Beyond TV Commercial Avoidance

For the last few years, every several months I have posted something about the topic of TV commercial avoidance. Essentially, the argument goes like this: TV is not working as effectively as an advertising medium as it did a decade ago.  Reasons appear to be that nearly half of viewers have a time shifting device and tend to skip commercials during replays, a huge group (varies by demographic) is using another device while viewing (laptop, smartphone, or tablet) and misses many or most commercials, and  video options such as Netflix and Hulu or Hulu+ eliminate many TV spots. I still get push back from some creatives at agencies and a few broadcasters who say that if one creates a better commercial people will flock to it. To me, this is a child’s dream in the world of 2014. May I suggest that you leave it to the children?

I think that over the last few years that I have said enough about commercial avoidance. It is here to stay and will only increase given usage patterns and the addiction to mobile devices especially among the young. So, the realists out there at advertisers, agencies and broadcasters need to accept it but not give up on their medium. The new goal of the ad industry should be to get people to PAUSE on TV spots. Yes, the avoidance or ad skipping will always be there. You have to accept that. Focus on using technology to make TV work better for you. Right now, most TV advertisers simply send viewers to a brand website or Facebook page. Many, if not most, are generic and do not really relate to the specific commercial or campaign they just witnessed.

With mobile being the growth medium of the next decade (more on that in upcoming posts), advertisers need to use their TV spots to engage with it. The key is what many have dubbed “mobile activation.” Instead of sending a TV viewer to a sterile brand website, put some creative calls to action in your mobile efforts linked to responses from your TV work. Also, some now have a text at the bottom of the TV screen that offer coupons or special offers that you can activate with your phone. You will find over time that mobile activation can target consumers much better in terms of likelihood to buy and also find those who respond quickly.  Others are putting their long form You Tube videos on mobile which people can see when they respond to the TV spot.

The technology will keep getting stronger and the opportunities are boundless. Clearly, TV is weaker than it has been in past years. So, stop fretting over commercial avoidance or denying it and use TV and mobile as complimentary vehicles.

Much more to come on mobile.

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

Monday, August 18, 2014

Inconsistent Consumer Behavior

In economics, you often see statements such as “assume the consumer acts rationally.” This is the underpinning of many articles and predictive models. If you observe behavior of consumers you will find that they do not often appear rational. Often people seem to be of two minds and say one thing and do another. A growing area of economic study is Behavioral Economics which accepts that people do not always act rationally with consumer decisions. The field is perhaps best described as where psychology and economics meet.

Here are a few examples that I have observed of inconsistent behavior:

1) Way back in 1971, I was finishing college and spent a summer handing out state motor vehicle inspections among other tasks at a service station. We were the largest venue in the county for inspections so some days were busy as I filled out the forms and handled billing. A woman dropped off her car one morning and said, “Do whatever is necessary to pass the inspection. Call me if anything else is wrong.” The mechanic went through the state checklist and the car was in fairly good shape. A turn signal was out plus it needed a PCV valve. When the lady came to pick up the car after work, I showed her the invoice and she exploded. “What is this PCV valve for $4.95? I did not ask for that.” I explained that it was a pollution control device and was required by state law. She slammed her purse on the desk but paid the freight and left in a huff. As she pulled away, I laughed out loud when I saw her bumper sticker which read, “We support a pollution solution.”  Fast forward 40 years. I am finishing a lecture about Public Relations fumbles and I use the BP Oil spill in the Gulf of Mexico as a case study for poor handling of a problem during early days of the crisis. A young fellow raised his hand and gave a long speech about how evil oil companies were. I smiled and said that someone must have liked them as several hundred million people around the world enjoyed using their products. He shook his head and said, “Everyone hates everything about them. They are thieves.”  That seemed like an opportune time to wrap up the class. It was evening and several of the youngsters, including the oil expert, walked with me to the parking garage. When I reached my car, the angry man said, “Prof, what is a man like you driving a tin can like that thing.” I told him that I actually owned two Priuses  and, that after several years, I was still getting 47-50 miles per gallon on each. He shook his head and headed up one floor above to get his car while I continued to chat with a few of his classmates. Two minutes later, my young friend came by in a 4 wheel drive pickup truck. He lowered the window and shouted out, “I get 12 miles to the gallon,” laughed, and drove off into the night.
    For years, I have seen people preach against climate change, pollution, or oil company excess yet live their lives quite differently.

2) Often people tell me that they hate the big box retailers and wish the days of the small local businesses would come back. Some say that they avoid Wal-Mart and Target. I asked one such person whether a certain book might be available at a local bookseller. “Are you crazy, Don? Get it on Amazon. It will be cheaper, you can beat the sales tax, and will be at your door in a few days.” What these people do not seem to understand is that every time they use Amazon, they undermine small local businesses who cannot buy in bulk and compete with Amazon. Additionally, Amazon even hurts Wal-Mart and Target.
 3) “I hate Wal-Mart”--if you travel even occasionally in progressive circles, it is the height of fashion to trash Wal-Mart, the world’s largest retailer. They are all that is evil  in American business in the minds of many people. They do not pay entry level people well, resist unions, and have problematic health care coverage for their associates. How did they get so big? It is pretty simple--they gave people what they wanted at a very attractive price. If people truly do not like Wal-Mart, the way to hurt them is to simply stop shopping there. It amuses me that some towns brag about how they have kept Wal-Mart out of their communities. Wait for the weekend, however, and the roads are clogged to the town a few miles away that has a Wal-Mart. Today, Wal-Mart is struggling as the truly downscale find it expensive and some have moved on to the Dollar Stores. Others are doing more shopping on Amazon and fellow on-line travelers and this is hurting Wal-Mart at the upper end of their demographic appeal. People may want Wal-Mart employees to be paid more and have better insurance but, at the same time, they also want the very low prices that it currently offers. Many do not understand that they cannot have both.

These are just three examples of the inconsistency or hypocrisy of many American consumers. If you are a marketer, be careful. Consumers do not always act rationally so  watch what they do instead of what they might say.

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

Friday, August 8, 2014

Revolution Now!

Several decades ago I was an earnest young undergraduate student majoring in Economics. My favorite courses were History of Economic Thought and Economic History. One branch of economics that fascinated me was Austrian Economics. No, it was not the study of the small middle European country but the school of thought did originate in Vienna. Essentially, the Austrian school favored a pure free market approach with as little governmental intervention as possible. Their 20th century leaders were Ludwig von Mises and nobel laureate F.A. Hayek, both educated in Vienna. In America, a more strident disciple emerged named Murray Rothbard who called himself an Anarcho-Capitalist.

What intrigued me was that they saw economic theory as largely QUALITATIVE. They dismissed mathematical models on the basis that human beings and the general market were too complicated. With several billion people out there, all with different hopes and dreams, likes and dislikes, how can a model of an economy work and allocate resources properly? Also, planned economies such as socialist oriented command economies were doomed to failure. Mises called economics the study of human action and thus modeling was just not viable given behavioral issues.

Well, they were certainly right about socialism as capitalism won the battle by the 1990’s. In my career, I often thought of the Austrians when it came to media and marketing issues. People did scads of research yet most new products failed (and still do). Network programmers go through many levels of review and shoot pilot films yet approximately 70% of shows do not get renewed for a second season even though consumer testing is often extensive prior to the premiere. Each year, and 2014 was no exception, marketers and their agencies placed huge billion dollar bets in the upfront TV marketplace even though virtually all will admit that it is a (slowly) dying medium.

If you watch things carefully as many of you do, it is obvious that much of this failure is going to be lessened and soon due to our emerging era of Big Data. In the last week, several people wrote to me about the speed of change and what it meant. Two standouts were:

1) A senior media executive wrote “I had just been part of an “Addressable to the home” advertising experiment.  A client’s mailing list was matched with an MSO subscriber list resulting in a matched target group. The viewing data from that list was aggregated from actual STB data.  New ratings were created based on the value of those networks viewed and schedules were placed”.
2) A long time agency media maven said “Google and Apple along with Facebook are most likely the largest data gathering companies in the world. And, they are doing so to better target future revenue...with the greatest share from advertising. Google just recently purchased NEST, a programmable thermostat company. They are doing this so they can gather more info about your habits inside the home, as well as when you are reaching out to your home via your mobile device. This data ultimately will help them to sell more advertising”

There is no question that pin-point messaging is upon us. This has to improve marketing performance as clients as desperate for authentic accountability from their agencies and the media. There is definitely an element of “big brother” here and there will be some short term security risks with hackers breaking in to sensitive databases that can literally tell marketers where a prospect is.

Long term, however, there will be no more comments such as the time honored, “I know that half of my advertising is waste--I just do not know which half.”

All of this spells trouble for what is left of mass media. And, attentiveness, even in high priced and high profile sports, is declining. A young media supervisor wrote to me recently saying that no one appeared to watch a single commercial during a party he attended where his alma mater while trying for a bowl bid. “Everyone was on their smartphone looking up better statistics than ESPN could provide. I even noticed this at baseball games this summer where it seemed thousands were on their Smartphones in the stadium. We are wedded to our devices even at live events.”

As usual, change will not happen overnight. The rate of change, however, has clearly sped up. The old guard of 50-65 year olds who think that the status quo will stay in place for several more years are living in a dream world. Big data is coming, faster than we thought even a year ago, and it appears that nothing can derail it.

Finally, if we can forecast Consumer Behavior with Big Data, maybe economic forecasting will get a lot sharper and my beloved Austrian economics will be proven wrong about 21st century modeling.

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

Sunday, August 3, 2014

Are Apple and Google Media Companies?

Last week, I had a very lively e-mail exchange with a very seasoned broadcast executive. At one point, he asked me what organizations would be the leading media companies 10 years from now. My answer will not surprise you. I said that forecasting was always risky but “the two tech giants, Apple and Google, seem to be the prohibitive favorites.” His response floored me. “Don, those are not media companies. Google is an aggregator and a utility and Apple is a high tech device maker.” Trying to be understanding, I gently asked, “Did you mean which companies would be on top among the legacy media companies such as Disney, Comcast or Fox?” “No, I mean overall,” he responded.

Back and forth we went. My argument was that I can understand how you could look at Google as a utility just as some see cable TV as one. Yet, when over 90% of your revenue comes from advertising as it does with Google, it has to be considered as a media company.

To dismiss Apple as a “high tech device maker” was also questionable to me. Yes, they continue to score with their high end i-phone and their refreshed i-pad plus Apple TV is looming out there and appears ready to pounce.  The i-watch may debut in October and i-TV is also likely in 2015. The old boy (14 years younger than I!), was buying none of it. He did, however, permit me to quote him in this post.

Look to the future a bit, my friends. To me, both of these tech behemoths are natural platforms for a post-broadcast world. For the moment, Google organizes and manages content but does not produce much. That could change. They bought YouTube way back in October, 2006 and have yet to fully exploit its global potential. They could use it as a platform for a global TV network and advertising powerhouse if they wished. If they lost a few hundred million on the venture, they would barely notice.

Apple has a great eco-system for the future. A friend, who is a creative chief, told me his goal for 2015-16 is to work on more apps than ads. Rumors abound that Apple TV may soon be running all their apps on it. If mobile is the future of advertising as I believe it well may be, then Apple has the wind at its back.

Also, what about acquisitions? Both of these giants have untold billions of dollars in cash. Apple has used some to buy back shares and pay a dividend. Google is playing it closer to the vest although both companies have billions overseas that they cannot repatriate without strong tax consequences. Even then, either could snap up very large legacy media companies with existing cash. Why don’t they? They probably do not see the value in them as the media and advertising worlds continue to evolve.

So, what do you think? Who will emerge as the leaders a decade from now? Are these giants media companies or not?

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