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Sunday, January 25, 2015

Roundtable: The Future of Spot Broadcast from Some Old Pros

The one question that I often get from readers is where I believe the conventional broadcast markets will be several (7-10) years from now. Naturally, that is an almost impossible question given the rapid rate of change in the media world today. While I knew that no one person is going to get it right, especially your correspondent, I decided to ask several people whom I valued as sharp observers of the media scene and clever practitioners of the art of negotiation. All have been in the business for at least 30 years. I never worked with any of them under the same roof and I did compete against two of them from time to time. Each is still in the business but, even the youngest, will likely be retired in 7-10 years. To protect them and their remarkable candor, that is all I will say about them.

While we did not really sit together around a table, I will report in a format that assumes that we were:

Don--How do you think negotiation will change in the years to come?

Buyer #1--“Whenever you read about rules of negotiation or take a seminar concerning it, two things usually stand out--
1) Try to create a win-win situation where the station or interconnect is pleased and you and your client is as well.”
2) “Always be willing to walk away. This second point is key. For decades, we could always walk away from a radio station and we could usually buy around a TV station in any market. Sometimes, if a TV station were really dominant, we would be forced to buy a lighter schedule than normal but we had to give them something. Soon, and I cannot tell you when, we may simply not buy the medium period in a market. Recently, a longstanding client and I made a market trip to a DMA ranked somewhere between 80-110. We had not done it in at least 7-8 years. People were surprised and pretty happy to see us as we have continued spending in this small market when many national accounts have dried up. At one station, which is still a leader but with diminished numbers as all broadcast and cable players are experiencing, a sales manager would not budge on rates or meet any of our requests for promotions or other special features. My client simply said, “Fine, we just will not use TV here this year”. The sales guy said you can’t do that. It will kill your business. I mentioned what we do in network TV and told him that digital could make up the slack nicely. We left and the general manager of the station came running out coatless on a frigid day waving frantically. He apologized and said his young hot shot did not understand how the world was changing. We thanked him and my client held firm.  The digital team did a few things locally but we bought no TV. We were down 2.5% nationally but flat in this Podunk town."

    “Years from now, this may be the norm. We will do media mix much heavier on a market by market basis. If we cannot get the conventional people to make realistic concessions, we will not buy them at all.”

Buyer #2--You sound like Don beating the drum for market by market planning as he has for the last 30 years. It is not going to happen. Maybe a few small but hardworking shops will try to do it or the occasional mid-sized will, but no buying service on earth is going to waste time on that type of labor intensive approach. Once TV is approved they will execute. Also, you need client buy in to let you change a plan in mid-stream.  Few are going to give you carte blanche authority to change the plan on the fly. The idea is sound and fits the new world we may see in a few years, but it is just not practical.  The future is already set in stone. We will have fewer people and more work to do. A broadcast exchange could be the answer but not this.”

Don-- “Any other ideas on the future marketplace?”

Buyer #3--“We have heard about this for years but TV will become a much stronger Direct Response medium. A network sitcom may have a couch or a car in it. You click on the couch and order it and go back to the show. Or, click on a car and you can set up a test drive at a dealer near you. Some of this may be available to local advertisers as well. This could provide much needed revenue to the station. If things do not change they are in real trouble. Many that I deal with already have an appointment with the dustbins of history.”

Buyer #4--“The stations need to face reality. They talk to me as if it were 20 years ago. I too went on a rare market trip in 2014. My last call was at a station who had me watch their evening news and then the sales and general managers took me to dinner. The sales guy kept saying how great the station was and I was getting annoyed. I should not  have had that third glass of wine but when he asked me again how great the station was I said, “Yes, you are the best looking horse at the glue factory.” The GM roared but the sales guy was insulted. I know you need to talk up your product but, face it, local news is often horrible in the mid-sized and smaller markets. The GM drove me back to the hotel and we had a good laugh. He “gets it” but his staff does not.”

Buyer#2--“At some point, the network affiliates will just fade away. Look at the demographics of local news. It is old and increasingly downscale in so many DMA’s. An on demand model will probably emerge from the ashes. Also, it will continue to erode gradually although Neflix, Hulu and Amazon are certainly speeding the process up.”

Buyer #1--“What about Google and Apple? Google has lots of potential with You Tube and both companies have billions lying around. Maybe one will buy Viacom or Disney."

Buyer #2--“Why would anyone want to buy Viacom?”

Buyer#1--“For content and programming expertise.”

Don--any trends that you watch closely?

Buyer #2--“I am all over what upscale millennials are doing. They will be the leaders of tomorrow. The young women are particularly interesting as some do not even have TV’s. How do you reach them? Well, you cannot with traditional media. They are the group that will kill radio and put the last nail in the newspaper coffin. Yet, they have big buying power.

Buyer#1--“I agree but do not follow them all that much or as much as I should. They are several years ahead of the pack so if they have abandoned TV others will see how they are getting video and follow suit.”

Buyer #4--I still look at shrinking ratings. Sales suffer these days if we put too much on TV. And with all the other devices in play while the set is on, even our best creative does not break through as it used to.”

Buyer #3--“The economy. The millennials are largely broke. Lots of low paying jobs and big college debt. I do not see an easy road ahead for these kids.”

Don--are stations preparing for their demise or new role in the media world?

Buyer #2--“Nope. I ask even the old goats whom I have known forever. The network owned and operated stations get it but they say little to me at least. The smaller group operators are often in denial. For them, there is no mid-course course correction option in the cards.” (editors note--quite a statement!)

Buyer #1--“You get vague comments from a few but 90% have not come to terms with what is going on and, more importantly, what is going to happen.”

Buyer #3--“The poor bastards are dealing with debt service. They have to send the money every month to headquarters regardless of the media landscape. In radio, it is the worst. No, they are not reflective. They have to hit their tabs or come close each quarter. It has to be a nightmare. The smart ones know that TV and radio do not work as well as they used to even a few years ago.”

Buyer #4--“Those over 50 say just let me get to retirement with my job and pay intact. It is hard to oversee a dying enterprise.”

Don--how about each of you? How are you treated within your own companies?

Buyer #4--“Hey, I know I am a dinosaur but the CEO and I are joined at the hip. The young digitals in media and creative think I am a jerk but they are afraid of me. I try to reach out to them and I do learn from them. My days are numbered and I know it. I am not rich but I will be comfortable. The business has been good to me.”

Buyer #1--“We, as a company, are way behind the times. I am the progressive one if you can believe it. A few years from now, I will be there to shut off the lights. It has been one hell of a ride.”

Buyer #3--“Absolutely no comment.”

Buyer #2--“My influence is declining and I understand why. A couple of the young digital creatives have told me that I am more respectful than veterans they worked with at previous shops. I will play it out until the ax falls. It still is fun but, obviously, not like the “80’s.”

Don--this was great fun. Any parting shots?

Buyer #2--“Let’s do this again in 10 years if Don is still lucid.”

Don--Very nice!

Buyer #1--”We need a drink.”

Buyer #3--”Too early for me in my time zone.”

Buyer #4--“You never were much fun.”

Please note that the language was cleaned up a bit and fractured syntax was corrected up to a point. Also, a good amount of material was edited and may be used in the future in very targeted posts.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or place a comment on the blog.

Monday, January 19, 2015

The Skyboxification of America

This past week a reader sent me an e-mail thanking me for several past posts discussing the rising economic inequality in the United States. He then asked, “Why don’t you write a post on the Skyboxification of America?”  I fired back, “What a great term. Did you coin it?” He said that he did not but could not remember where he first heard it.

Intrigued, I dutifully Googled it and was soon heading to a local library. As best as I can tell, the term came from Michael J. Sandel, a government professor at Harvard. He outlines the concept in a thought provoking book entitled, WHAT MONEY CAN’T BUY, The Moral Limits of Markets (Center Point Publishing, 2012).

I grew up going to more sporting events than most as my father worked in the field. My brothers and I went to many games and frequently sat on the bench with a team. Some of my favorite memories were when I was 8-10 years old and we would go to afternoon games at Fenway Park. Tickets started at 75 cents for a bleacher seat and may have gone up to a high of $4.50. For $3.25 you could get a seat beside third base (maybe 7-12 rows back). That is where we always sat. You felt almost as if you were on the field as Fenway had and still has the smallest area of foul territory in the game. I remember one game vividly on a hot August day. The Red Sox played the Cleveland Indians. Behind us, a surgeon and his daughter were in a lively discussion with my Dad about a player’s physical rehab program (my father was a former coach and an athletic therapist). Next to me was a man who worked at the Necco Wafer candy company in Cambridge, Massachusetts. Everyone was an enthusiastic fan and the discussion all around us was lively and fun. It was twi-night doubleheader and the man from Necco had to leave in the 2nd inning of game two to work the night shift at the Cambridge plant. He shook everyone’s hand and made a graceful exit. I told my Dad what a great job he had. Imagine working at a candy factory! My father smiled and said it might be fun for a summer job but, Don, you would not like it for a life’s work.

When I saw the term “Skyboxification” in print, that memory came flooding back to me. Going to a professional sporting event back then was almost a civic experience. All types of people went and interacted. They were all fans. Hope sprung eternal as we all rooted for the home team.

Over the years, times changed. Working in the media, I was privy to some incredible perks. Long line to enter Augusta National? Not for me. I had a VIP pass and even bought my swag in the member’s pro shop on occasion. Park blocks from a stadium? Nope. A special pass for a close in lot came with the complimentary tickets. It was amazing how quickly people got used to such perks. I took a young associate a few times to games and we sat in the Skybox courtesy of a regional sports channel. The next opening day I invited my whole team to a game. When I passed out the tickets, he said, “Boss, we sit in the stands?” Yes, we sat in the stands a few rows behind home plate. Somehow, he managed.

The Skybox first appeared, as far as I can determine, in the Houston Astrodome, in 1965. Then, America’s Team, The Dallas Cowboys, put some in Texas Stadium in 1970. Executives and key clients loved it and when many new stadia came on board in the 1990’s, Skyboxes were a key part of the design. When the new Yankee Stadium was built it was said that some 3,000 “normal” seats were eliminated to make room for the ultra-expensive Skyboxes. If one owned a team, you can hardly blame them. Skybox rental is very high and prices for food and drink within them are paralyzing. They have to be very lucrative for any franchise.

Sports, which was something that all kinds of Americans would gravitate to, are now demographically segregated perhaps more than any other form of entertainment. A Texas newspaper columnist some years back had the chutzpah to call Skyboxes “the sporting equivalent of gated communities.”

Each year we grow further and further apart from one another. A guy working at a candy plant can longer afford to go to major league sporting events let alone take his children with him. As inequality continues to soar in the United States regardless of the party in power, we find that the affluent live in different areas, their children go to different schools, and we work and shop in starkly different environments. Interaction with the shrinking middle class gets less and less and the affluent get more out of touch with the American mainstream.

Do read Professor Sandel’s book. I do not agree with all of that he says especially the limits that he would like to put on advertising. He did, however, make me think hard about certain issues in a unique way.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a comment on the blog.

Sunday, January 11, 2015

2015 Media Forecast

Forecasting is always a tricky business but is especially so this year with an uncertain economy coupled with the rapid changes in media going on especially in the United States. A number of people asked me to do a forecast and with help from my panel as well as TV and radio broadcasters, cable salespeople, agency media chiefs, broadcast negotiators, and a few agency CEO’s, I have put the following report together. Many spoke very candidly and I promised not to name any names.

Here goes:

The United States

A big issue regarding the media environment for 2015 in America is the price of oil. In the summer of 2014, a barrel of oil cost over $108. As we publish, it is now just under $50. Some say the oil decline will be V-shaped and snap back quickly as rigs shut down in the U.S. and when Saudi Arabia cuts back on production some time in the next few months. I have no idea and I doubt if any else has a clear handle on what will happen. When oil was over $100 a few Cassandras worried about the price dropping to $80 but I did not hear anyone say it would fall below $50. This is a market that I have followed somewhat closely for over 40 years and all I really know is that the industry is cyclical. When oil prices are low (as they are now) companies cut back on capital expenditures so exploration and production takes a back seat. As production slows and global demand continues upward, prices rise. When prices rise the companies earn big profits and there is a return to large capital expenditures as a result of big profits. Banks also lend more to smaller firms. So, the cycle repeats as high prices retard consumption. Too simplistic? You bet. Yet some variation of that cycle repeats each decade. This means that here in the U.S. the consumer has been handed the equivalent of a nifty temporary tax cut. Forecasters are saying that since July the average American family has $125 more to spend each month as a result of lower gasoline prices.

Both broadcast and cable sales people have said that automotive advertising is holding up very well. And,why not? Cheap gasoline is propelling vehicle sales coupled with an aging North American auto fleet. This could be a big year for General Motors, Ford, Chrysler and Toyota. Profits for SUV’s and full size pickups are big for the manufacturers relative to compacts. Some estimates are that 17 million vehicles will be sold in the U.S. in 2015 if gasoline prices stay low. That is good for Detroit manufacturers but great for all forms of TV and video advertising as well. Early signs are that Ford’s all new aluminum-bodied F-150 pickup will be a real success. Perhaps General Motors can overtake Toyota and reclaim its spot as the #1 car manufacturer in the world!

Medium by medium, we find:

Spot TV--a mixed bag. Right now, automotive as mentioned above, is propping some markets up significantly. With no political spending in most DMA’s and no Olympics this year, things are not great in some markets. Also, media people are shifting increasing amounts of their budgets in to digital in 2015. Local cable people are packaging up deals with an online component and more than one admitted to me that it is really helping them stay competitive. An experienced broadcast negotiator wrote, “I always had a great record for post buy analysis for 20 years. Now, nobody can post anymore. The Nielsen numbers are evaporating book to book. We may lose a key client who is all over each post and daypart delivery within each buy. Nielsen is just plain obsolete but they will not listen.” This sentiment was echoed by three salespeople 1,000 miles from each other.

Two salespeople said that there is clear shrinkage in sales across the board. One said his boss or bosses’ boss, claims victory at headquarters for being flat.

One area that is going to suffer is the oil patch. Over the last few years, Texas, Oklahoma, Wyoming and the Dakotas have had vibrant broadcast sales which bucked the trend. As rigs shut down, the markets will soften. Texas will do better than the others due to their more diversified economy but the glory days are over for a while. A cranky old coot in Houston wrote, “Son, just watch the rig count. Until that rises, places like Odessa-Midland and North Dakota will be weak.” I doubt if many media planners reading this will monitor the rig count, but he makes a good point.

So, on balance, automotive will help the spot marketplace but the shift is in place away from broadcast and that trend will continue. Expect -5% in the weak places and up to +5% in portions of the Southeast.

Local Cable

As was true last year, they will do better than broadcast as they have varied inventory, great promotional offerings, zoned sales, and several digital options that broadcast cannot usually match. So, a modest increase overall with lower declines and higher gains by market than their broadcast brethren.


Death by a thousand cuts continues. The rate of decline may be halted but they will still lose ground in 2015. National papers, The Wall Street Journal and USA Today, are exceptions, but the game is close to over for many papers. Some try offline and online packages but mid-sized markets are in real trouble and the product gets weaker and weaker as wire service copy predominates.


Similar to newspaper although, given the selectivity of interest, some titles are thriving. The online product is getting more play but they may be several years too late.

Out of Home

Pretty good prospects! The last mass medium has lots of appeal for established brands with a reminder message. Also, electronic billboards of all sorts should do well.


This was interesting to look at given the reactions my questions provoked. To my surprise several agency people say that it still worked well for smaller, local retail clients.
Those spending money for major clients either ignored it or have cut back drastically. Talking to broadcasters was striking. Most said that sales would be down a bit although a few markets, particularly in the Southeast, were modestly bullish. The surprise came from those who were successful. All said they made money last year via non-traditional means and that was generally through their websites. Couponing was particularly successful. The only format which seems to be thriving is sports talk and that tends to be in markets where there is no or weak competition.


The trade press, in my view, sometimes does this emerging medium a bit of a disservice. Admittedly, some people made somewhat breathless forecasts about how well mobile would advance in 2014. And, they did have a nice percentage gain in sales. They did not become a major player yet and some say it was a disappointment. My attitude is that they are doing just fine and will advance again in 2015. Maybe this year will be their breakthrough year; maybe not. Ignore this category at your peril.


An old hand tells me that other than the Super Bowl and ESPN, most sports sales are soft. There does appear to be some excessive saturation out there. Also, people are increasingly wondering if the premium for sports is worth it if “two fisted viewers” have a few screens going during commercial breaks.  Sling Media’s inclusion of ESPN in their stripped down TV product is interesting and it will see if ESPN can lure millennials who have never bought cable into paying for some form of TV.

On Line--continued growth here at double digit levels. The big growth spurt comes from on line video which takes many forms and is an especially good way to reach young adults. Increasingly, advertisers are wisely hedging their bets here.

Media Research Issue--Is Nielsen still viable? Our currency for TV measurement appears to be asked to do much in the world of 2015. Can they keep up with the lightning fast changes going on these days. It seems unlikely. Also, when is an impression an impression? Is a TV impression equal to an online video impression?

Conclusion for U.S.--modest growth (3-4%) overall IF the economy continues to crawl higher and oil prices do not spike back upward. Conventional media will struggle or lose ground while online and mobile grow nicely.

Global Growth

There are some 200 countries on earth (depending on how one is counting). Here is a top-line forecast for some in the news:

Briefly, Europe should not see much growth with real weakness in Spain and Italy. Russia is getting crushed with low oil prices so their overall economy will struggle mightily for a while. The Ukraine is obviously a marketing wasteland at the moment.

India, Turkey and Japan will be much helped by lower oil prices so Turkey and India may see advertising perk up for a while.

Southeast Asia will grow at 7%+ in ad revenue which is very good in today’s shaky global economy.

China--always a wild card. The consensus is that Chinese GDP will grow by 7-7.2% in 2015. Also, 25-30 million Chinese will vault in to the middle class. That, to me, translates to a good year for advertising. The press keeps harping on how China is no longer growing at 12%. So, clearly they are growing at a decreasing rate relative to recent years. Yet America is presumed to be growing at a consensus forecast of 3.1%. Wouldn’t we kill for a 7.1% growth rate? Is China cooking the books? Who knows? Advertising should fare quite well there in 2015--up 8%.

In Latin America, Venezuela is a basket case. They may be the most oil dependent country on earth and need a cost of $130-160 per barrel to balance their budget. So, do not look for much activity there. Brazil will be helped by lower oil prices.

That is how I see it.  Good luck to all of us in 2015.

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

Sunday, January 4, 2015

The Biggest Challenges That Marketers Face?

Happy 2015!

On Christmas Eve in the afternoon I received an e-mail from a reader. Like much of the messages that I receive it was from someone who corresponds fairly regularly with me but I have never met in person. He asked me simply, “What is the biggest challenge that marketers face going forward?”  Admittedly, I was pressed for time. I was about to leave for a church service where I sing Christmas songs with my enthusiastic but shaky tenor. So I wrote back simply, “To grow your brand and protect the business that you have at the same time.” I was out the door.

A few days passed. Even I do not check e-mail on Christmas Day. When I went to check  messages, there was a strongly worded reply from my reader. This being a family blog, I will not repeat his exact words but a sanitized version goes something like this: “Don, you idiot! How could you give such a knee jerk response to my serious question? Here is my answer: The biggest problem faced by both ad agencies and their clients going forward is how do you build a mass oriented brand in a media environment that has become personalized? As a media person, you should understand this. Narrow targeting opportunities are almost endless but how do you balance things? How much conventional media do you use and how much pin-point targeting goes on? Can you still afford to do it given the number of venues that you will need to hit? Will it be possible to calculate ROI on all of these platforms or are we back to 1875 with John Wanamaker’s theory that I know half of my advertising is waste, the problem is I do not know which half.”

My e-mail friend certainly had a point. I tossed out the question to several agency folks in my panel and they had two basic answers:

1) People--getting the best that we can afford and holding on to them
2) Keeping up with the rapid changes in the industry

If my reader is right and I think that he may be as he makes a strong case for his POV.  I believe that, once again, the gods of marketing will be on the side of the big battalions. Strongly entrenched brands with deep pockets and great research and access to Big Data will have an increasingly strong advantage over start-ups with high hopes and perhaps excellent products. Without hefty resources, social media can only take you so far. Also, media fragmentation is moving so fast that all models of performance of delivery (i.e., reach & frequency) are totally lacking.

What do you think? Care to weigh in? You may reach me at doncolemedia@gmail.com or add a comment on the blog.