The Two-Speed Economy and 2017 US Media

Economists generally define a “two speed economy” as one in which different sectors are performing significantly differently at the same time. Generally, I have observed the two speed occurrence in markets where there has been significant natural resource activity. Venezuela, Nigeria, even Canada during oil or metal booms were great examples and Australian in 2012 was a recent entry when it seemed that their entire commodity, coal and base metal output was shipped to China. Those involved with the boom sector(s) were doing great while some miles away boarded up storefronts and unemployed citizens were the norm.

Today, we see the two-speed economy really hitting its stride in the United States consumer arena.  Online shopping continues to boom and brick and mortar retailing is to put it charitably, challenged. Look at our holiday season sales if you need verification.

Why bring this up in MR? Well, a number of people have asked me to provide a 2017 media forecast. I have politely responded to each with the comment that I have never in my life been more uncertain about the US or global economy or what our new political leadership will do next year. So, a forecast with any specificity seems impossible at this point.

What I am certain of is that a “two-speed media economy” will likely get even more pronounced relative to 2016. Conventional or legacy media will continue to garner a smaller share of the advertising pie with absolute declines likely in Local TV, newspaper and national magazines. Digital and social media should see solid gains with mobile being a big winner regardless of overall economic performance.

I wish all of you a happy, healthy and very prosperous 2017. This year I heard from readers in over 100 countries and appeared to have been read by professionals in 152 countries. I love to hear from you and thank you for your constant encouragement.

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

Mr. Market and The Media World

Sometimes people refer to markets as if they were actually people. If you watch CNBC and Bloomberg as I often do, a commentator or Wall Street type may something akin to “the market thinks that stocks are overextended” or that “the world is awash in oil.” Where did this come from? As best as I can tell, it came from Benjamin Graham’s 1949 book, THE INTELLIGENT INVESTOR. He was more famous for his early book SECURITY ANALYSIS and for being Warren Buffett’s teacher in the Columbia M.B.A. program and his first real employer (I reread the Intelligent Investor annually with emphasis on his discussion of Mr. Market and also “the Margin of Safety”).

Graham essentially says that Mr. Market is bi-polar. He toggles back and forth between crazy optimism and downright despair. Graham says that there are times when Mr. Market offers you ridiculously high prices for your shares (no matter how small a piece of a business) and others when his offer is obscenely low. The trick, according to Graham, is to give your shares to Mr. Market when they are high, and buy more when he offers you little for them provided the underlying business is sound.

Some years back, I tried to use this approach with advertisers. In the 1970’s and in to the early “80’s, media pricing in broadcast moved pretty much in lockstep. In good times, all 200+ markets were able to mark their prices up and in recessions, prices fell across the board in a fairly predictable pattern. Since then, prices have been less uniform. Boom towns experienced booms and rust belt and rural areas tended to have little pricing power.

So, when recession or booms times hit, I would sit with clients and sometimes tell them to avoid certain Nielsen Designated Market Areas (DMA’s) as they remained pricey on a per person basis but go stronger in to other areas where things were so soft that we could find no bottom in pricing or receive great RELATIVE value.

This did not go over well within my shop. Management reps would tell me that I was walking away from easy billing. My response was that we were tossing money down the toilet as the prices were way too high and there were many markets out there where we could do well with recession resistant products and sell more cases given how much more bang we received for our advertising buck.

I would also suggest that we shift to radio as sales often skewed toward metro areas rather than an entire TV market. My internal critics saw me as a troublemaker. I wanted to do more labor intensive market by market work and sometimes cut budgets back until there was a return to normalcy in media pricing in certain localities.  When attacked, I always said that I was thinking of the long term interests of the client(s). It generally did not play well.

In the early days of digital, a similar pattern occurred when players did not know how to price their on line properties. We witnessed some temporary spectacular bargains as well as ripoffs. Today, with more knowledge of delivery and huge players buying on exchanges, wild inequities are not so prevalent.

With conventional media, the Mr. Market approach still has some validity. A smart client may see you as a hero if you save them a seven figure sum and still increase case sales for their product. Just do not expect a warm welcome inside your shop unless management has a true long term horizon.

May I wish MR readers around the world, a very Merry Christmas.

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

Something Will Turn Up

A long time ago I went to a Christian Brothers Academy in Rhode Island. I did not like the brothers and they did not like me. Yet, the school had one redeeming feature. In each of my high school years several lay teachers exposed me to some good literature. I recall having to read three Charles Dickens novels--Great Expectations, A Tale of Two Cities, and David Copperfield.

My favorite Dickensian character was Wilkins Micawber who was in David Copperfield, published in 1850. He was always in financial straits and was said to be loosely based on the author's father, John Dickens, who once served time in debtor's prison.

A famous Micawber quote from Copperfield is "Annual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pound nought and six, result misery."

Micawber could never live within his means. Yet, he was a buoyant optimist. I vividly remember the Cliff notes describing him as "living in hopeful expectation."

The struggling character, Micawber, when up against the financial wall, would often say--"Something will turn up."  This phrase or attitude strikes me as how companies and governments are reacting to the tech revolution both in terms of long term employment and effective marketing.

Let’s face it. We are in a period of creative destruction. (See Media Realism, “Schumpeter Lives in 2009 Media, 1/30/09). The problem is that the technology or digital boom is different from previous business cycles. What people do not seem to grasp is that tech does not move smoothly or predictably. Technology is not there to create jobs; it is growing as it allows innovators to cut costs and steal market share from old tech forms (i.e., conventional media or brick and mortar retail). The benefit of tech is that it allows you to do more with less, especially people. Government solutions are often more spending in existing systems that would not alleviate the problem.

So, many jobs lost as technology grows (robots in factories or in fast food joints, self drive cars and trucks, and in mining) will never be replaced. Can anyone turn this around? Some World War II style mobilization to move us from reliance on fossil fuels to  alternative energy would be a possibility but no clear program has seen the light of day and political resistance from pressure groups would be huge. A massive infrastructure build-out would create many blue collar jobs for a few years but, again, is it politically viable as it is sure to be a budget buster?

In the media world, I continue to talk with people who remain in denial about the last 15 years. Local broadcasters say that when the economy bounces back more strongly, so will they in a big way. Have they forgotten about commercial avoidance? Do Netflix, Hulu, Amazon Prime and DVR’s have any significance? How about viewing with another device in play as well?  Even the most slow witted broadcasters have to see this but the denial continues.

Clearly, old models no longer apply. The psychological foundation for a conventional media revival no longer exists. Our world has changed for good.

So, will something turn up for either displaced workers or conventional media? Sorry, Mr. Micawber. I just do not see it.

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

The Public Relations Renaissance?

Let me be candid upfront. Historically, advertising people did not always have the highest regard for those who practiced Public Relations (PR). The take was that the advertising and marketing people felt that they did the heavy lifting when it came to getting a brand recognition and acceptance while the PR people would get a blurb in a local newspaper and be strutting while sitting down about what they had accomplished. Some found them to be such lightweights that behind their backs they referred to PR staffers as “the flak.”

Well. Having said that, I am convinced that things will change somewhat over the next several years. Of the seven pillars of Integrated Marketing Communications (Advertising, Direct Marketing, Internet Marketing, Promotion, Public Relations, Publicity, and Personal Selling), Advertising is clearly on the decline. Commercial avoidance continues to get stronger with each measurement period as more of use our DVR, watch Netflix or Amazon Prime or simply have another device going when advertising appears. So, conventional advertising simply is not and cannot work as well as it once did even a decade ago. Something has to pick up the slack among the remaining Integrated Marketing Communications (IMC) pillars. While each brand or service will have a different mix of IMC components, I would bet that a surprise gainer in the emerging new reality will be PR.

Why PR? Studies in recent years have clearly illustrated that adults are increasingly getting cynical about advertising. This is especially true of millennials who rely heavily on social media, Amazon reviews, and the opinions of friends before making purchases. PR, executed properly, can help a company. Remember, PR is not a 30 second spot or a print ad. It is a PROCESS by which a company can assess where they stand with any number of their publics--consumers, employees, shareholders, government, the media and their local communities and then take action to repair perceptions. Essentially, it is a long game. A company in the 21st century needs to refine and rebuild its reputation continually. Running and hiding from the press only raises more issues than it solves. Meet with your opponents be they political, press or community groups. Today, we live in a 24/7 world of communication. If you let outside groups know who you are and what explicitly that you stand for, you will likely come out way ahead of what advertising (as we know it) could ever do for you.

Finally, a few words about “spin.” The late presidential speechwriter and wordsmith William Safire defined spin as a “deliberate shading of news perception; attempted control of political reaction.” PR people are often referred to as “spin-doctors” who can put a positive face on anything. Sometimes, they get away with it but it appears to be less so today. True PR pros put the best foot forward of their client but they should never spin. Remember when as a child you were told something to the effect that if you tell a lie you will eventually have to tell 10 more to cover it up? Well, in the business world that is oh so true when it comes to spin. As PR guru Fraser Seitel put it, “The crisis will hurt you, but the cover-up will kill you.” If you always tell the truth, even the painful truth, you never have to keep track of what you have said in the past. Spin is manipulation and people today, especially millennials, do not want to feel as if they are being toyed with or lied to in any way.

So, keep an eye on PR. Perhaps upgrade your PR staff or service provider. It may prove to be inexpensive and effective over the next decade.

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

The Importance of Encouragement

Managers and executives often talk about the benefits of encouragement. In interviews, they often say how encouragement is an important part of their management mantra and many trot out the old saw about “catch someone doing something right.” In the real world, I must say that I have seen far too little of it. A few people fresh from a seminar or sensitivity training session would start praising staffers for insignificant things but that would wear off soon and it was back to business as usual.

Yet managers who do encourage staffers generally do get good results. Sometimes, even great ones.

I am going to tell a story from my childhood that up to now I have never revealed to anyone. It makes my point better than anything I have ever experienced. Here goes:

In the summer of 1957, I celebrated my seventh birthday. Relatives dropped off a few dollars, my aunt in Houston sent me three dollars, and I received a couple of gifts from my parents. It was a really nice day. The next morning, I asked my father if he would drive me to the bank in the village so I could deposit my birthday cash haul. He smiled and a few minutes later we were approaching a teller’s window at the bank. I was so tiny that she could not see me. My dad boosted me up and I handed her my passbook and the $9 I wanted to deposit. She took the deposit but did not seem happy. A minute later she returned with my bankbook having the new entry. She said to both of us, “A small deposit like that. It does not seem worth the effort.” My father got very still. He gave her a withering glance that was far more frightening than any he ever gave me. After a few seconds, he said evenly, “The little boy has good instincts. You should encourage him to bank here.” Visibly flustered, the mean old biddy said, “Of course. Is there anything else I can do for you, Mr. Cole?” Fishing a dollar bill out of his pocket, my father said, “Yes, do you have any silver dollars lying around?” A minute later she returned and handed him a 1924 Peace dollar and he gave her a one dollar bill for it (sic).

In the car, my dad said, “You seem to understand saving better than other seven year olds.” He handed me the silver dollar. “Donny, keep this.” My eyes must have gotten huge. I remember asking him if it were real money. He said yes and told me how as a junior in college he had a summer job working a cement mixer at a construction site. The first week he worked some overtime in the hot Iowa sun and received a pay envelope on Saturday afternoon. It contained two $10 gold pieces, a $5 gold piece and three Peace dollars which he said everyone called cartwheels. A few minutes later I was surely the only seven year old in Rhode Island who knew the difference between fiat money and specie (As an aside, the following spring, my father won the NCAA wrestling championship in his weight class. He had paid his room, board and tuition with his earnings from the cement mixer job. It boggles my mind to think what a soon to be NCAA champion would be given on a campus today!).

When we arrived at home, I did not show my siblings or my Mom my new cartwheel. I made a beeline to the toy safe that my parents had given me for my birthday. It did not look like much but it was made of steel and had a real lock and only I knew the combination (still do). I took the passbook and the Peace dollar and placed them in the safe next to my other prized possessions--my Mickey Mantle, Ted Williams, and Yogi Berra baseball cards and my Bob Cousy and Bill Russell basketball cards.

A few years ago I sold the cards at an auction for a staggering profit. The silver dollar? I still have it. Every 12-18 months, when visiting a safe deposit box, I hold it in my hand for a few moments. More than once, I am not ashamed to admit, my eyes have filled up with tears when I stare at it. I am convinced that my father’s standing up for me to the dismissive teller and his encouraging me to save, changed my life. He set me on a path toward being a private investor that I never veered from for an instant.

So my friends, there has to be someone you know, work with or for, or love who needs some encouragement. Give it freely. It costs you nothing and it just may change someone’s life or career.

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

Can Doing Nothing Be A Strategy?

Last week, a bright young person asked me the precise question of today’s post. In a slightly indirect way, this leads us in to a brief discussion of the concepts of cost benefit analysis and opportunity cost.

Many times in life and in business we face a tricky situation.  We then generally draw up  a list of factors and calculate what something costs and how it might benefit us. It might be a new job, evaluating a media property, buying a house or a business or moving to a new city. Interestingly, few people seem to attempt to calculate the cost of NOT making the choice. In essence, what happens if we go on as we are?

In answer to the young person’s question, I had a few examples to draw on from my career. Late in 2001, I was asked to provide an analysis of buying some kind of special package or media effort in Salt Lake City for a multi-unit retail client during the 2002 Winter Olympic Games. A team member and I hopped out to Salt Lake City and literally gave them a “baker’s dozen” of options of customized media efforts for the Games. People all listened politely but I could see some unease on their faces with the pricing that each package had. Many had an enormous premium over normal rates for similar efforts in a non-hyped environment. When I came to the recommendation page, someone whispered, “Here it comes.”

The recommendation was DO NOTHING. Our thesis was that with the metro area teeming with tourists, business would pick up on its own and they should pocket the money for later in the year when they might need it to fight a competitive fire. My clients were shocked and thrilled. Sales jumped low double digits during the Games and they were even more delighted and my team had great credibility going forward.

A few years earlier, I was having lunch with a friend in Dallas. He told me about a hot company that he had purchased shares in and strongly advised me to back up a truck and buy as many shares as he had. I went back and researched the company and did not quite understand what they were doing. So, I stuck with my cash and waited for another opportunity. The company was Enron!  In essence, I gained by doing nothing rather than buying shares in the soon to be bankrupt company. I profited by not doing what my friend suggested.

At other times in my life, I did not buy Microsoft, Apple, Facebook at their IPO’s so I had an “opportunity loss” by not getting in to them at the earliest possible moment. Hindsight, of course, is always 20/20.

To conclude, the point to take away is that sometimes doing nothing is the right thing. I looked at thousands of media opportunities over the years and, in reflection, only recommended a small fraction of them and bought even fewer as I could not pull the trigger without client approval.

My young friend’s question was slightly off kilter. Doing nothing is not literally a strategy but it is more often than you might think a wise decision.

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

Tiresome Terms

Over the years, certain turns of phrase have crept in to the American business lexicon. Some are wildly overused; others can be code for something else. We have all heard them and perhaps we still use them even though they are annoying. Here are my pet peeves:

“Think Outside the Box”--why can’t we simply say, “think creatively” or “think differently”

“Give 110%”--total nonsense. You cannot never give more than 100%. Also, most psychologists and others involved in study of humans posit that most of us only use 25-30% of our brainpower.

“Hit the Ground Running”--a worn out cliche if there every was one. Why not say, “get started immediately.”

Synergy--this one perhaps irks me the most and will be the focal point of this brief post.

Back in the 1970’s, media people and advertising folks often talked about a synergistic effect in media plans. The chosen media types in a plan would produce a result where the sum of the individual components would be less than the actual effects on consumer awareness. Certain media types were said to work unusually well together and by receiving messages from different media and, in different ways, the total effect of the campaign was magnified in the eyes and ears of the consumer.

Okay, I can accept synergy in a media mix analysis. Over the last 15 years or so, synergy has been used in a different context--generally it surfaces with mergers or corporate buyouts. These days when I hear the word synergy it means that two companies are getting together. Should they have similar products, services, warehouse or delivery operations, it usually is code for many people losing their jobs.

I have a long standing acquaintance who has been “synergized” three times. He was at an ad agency for many years and was part of the team that departed after the buyout of his shop by a much larger firm. At the time, he told me he was going for a media job as he wanted something more stable. Since then, he has been let go twice due to one corporate buyout and the second a merger. He is getting bitter and was terrified when he heard of the AT&T/Time Warner proposed marriage. Well in to his fifties, he said the following-- “If I get whacked again, I will be virtually unemployable. No one is going to take a chance on me at my age and salary level. My CEO was asked at a staff meeting about the AT&T/Time Warner deal and he said that there were interesting synergies in the merger of the two giants. My young colleagues all nodded. I had to be stone faced.”

The truth is that most mergers end up costing money despite the much discussed “synergies” that will emerge. In the real world, financial and equity analysts usually evaluate a deal by looking at how big a reduction in force will occur and and how much can be saved as a result. Generally speaking, the higher the number, the better. Have you ever noticed when a company does a layoff of 5000-10,000 employees? Invariably, the stock price jumps the next day. That is what synergy is and does. In a free market society, it is inevitable. The victims tend to be those who believed the boss(es) when she spoke about the new, stronger company. Why is it impossible for leaders to speak in plain, American English?

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

Freedom To Fail

Recently, I was speaking with a young woman who grew up in a small, western European country. She told me that she loved being in the United States and was hoping that she could spend the rest of her life here. When I asked her why, her answer was illuminating.

She said, “In my country if you fail at a business, you have a target on your back for the rest of your life. When I was a child, a man in my village started a restaurant. He tried hard but it failed. Now, nearly 20 years later, people still whisper behind his back that he is a failure. In your country, many successful people have failed at several things before they break through and make it as entrepreneurs. If you fail in Baltimore-Washington, you can go to Chicago. If you fail again there, you can move to Seattle. Or, you can stay put and keep trying. America gives business people 2nd, 3rd, and 4th chances. I think that this is key for a society to move forward.”

I was floored by the prescience of this young woman. She realizes that almost all successful entrepreneurs have a willingness to fail. In essence, they fail their way to success until they get it right.

A few weeks after speaking with the young lady, I talked to a mature man who is a serial entrepreneur. When I asked him how he thrived where so many others did not, he laughed and said, “Don, I am different from most people. I am not afraid to fail. All my life, I have failed and I continue to do so. I got it right a few times but that is all I have needed. To me, failure is part of success IF YOU LEARN FROM IT.”

Entrepreneurial guru and best selling author Randy Gage (author of Risky Is The New Safe) put it beautifully--“The opposite of success is not failure but mediocrity.”

So, while America has its share of problems, we are still free to fail. And that, along with an innate entrepreneurial spirit among many of us plus passionate immigrants, bodes well for our future.

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

The Best Practices Trap

About 20 years ago, the term “best practices” began to creep in to the American business lexicon.  I first experienced it when working at an agency that handled a large brand with a super agency as a lead player handling creative and network TV and a dozen or so smaller ones existing media for this multi-unit retailer. We were all summoned to headquarters where each of us was asked to present “best practices.” Essentially, they were asking for the tactics that worked best on a local market basis in our selected Designated Market Areas (DMA’s).

When I got to the big session, I greeted a number of acquaintances and a few old friends. Also present were a few media representatives from the mega-shop that handled the national business. When it was my turn to present, I pulled out all the stops and got a rousing ovation from the crowd and a nice compliment from the lead client. In the back of the room, I was surprised to see an angry looking man--the senior media officer of the mega-shop.

The two young media supervisors who worked for Mr. Big approached me. One said, “We need a copy of your presentation.” With a big smile, I said, “That is the intellectual property (a relatively new term then) of my agency and perhaps the client as well. You will have to ask the client for it.” Both had the proverbial deer in the headlights look. “You don’t understand, Don. Our boss said he wants it.” Oozing charm, I said that I was powerless and I could not release it without client permission.

I am not trashing the mega-shop. They handled billions in billing over the years, and their media and creative product was first rate. Being so big, however, they could not or would not put in the labor intensity required to work out customized promotions in smaller local markets. They could buy inexpensively but they never made market trips or spent much time at all looking for promotions and extensions.

That day I learned a lesson which has stayed with me. Whenever I am asked about “best practices” I always try to make a good account of myself and the organization that I am representing. At the same time, I always am silent about the absolute best tactics that delivered the gangbuster results. The client knows about them but why share them with people unable or unwilling to do the due diligence to come up with similar tactics/promotions? Also, if you best ideas are going to be stolen, why do they need you for long term?

In preparing this post, I floated the idea of best practices out to a few of the Media Realism panel members. One responded that she had read that, “best practices should really be NEXT practices” as the media work was changing so rapidly. She could not remember where it came from but I think I found it. Mike Myatt in the 8/15/12 issue of FORBES appears to be the person who first used the term “next practices”.

I realize that this post flies in the face of the approach taken by tech leaders such as Chris Andersen, former editor of WIRED magazine. In his 2009 book, FREE: THE FUTURE OF A RADICAL PRICE, he suggested that initially products and services should often be given to customers free. Okay, I understand that. I do not think that you should give things to your defacto COMPETITORS for free.

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

Conventional Wisdom Impedes Progress

Every industry in the world has sacred cows or what we usually describe as conventional beliefs. We often cling to them even though the world has changed and they often are no longer valid. One futurist whom I respect says many were never valid in the first place.

When we look at things we tend to carry baggage with us. Sometimes a great deal of baggage. The disruptors in many categories tend to be people from another industry who are not weighed down with conventional wisdom and perhaps see things more clearly.

For example, I love bookstores of all kinds. A relaxing hour to me is to browse through a bookshop in any large city. Sometimes used bookshops are even better as I find out of print gems that I have wanted for years. 

Jeff Bezos worked on Wall Street. He did not toil at Borders or Barnes & Noble. So, he thought that selling books and music online was worth a shot. He bet the ranch on it and it morphed in to a phenomenon that has changed the way most of us shop. People in the book industry did not take Amazon seriously until it was too late.

There is a young media strategist who writes to me frequently. Sometimes he has an idea and bounces it off me. Other times, he sends me the draft of a proposal that he is working on for a client. And, once in a while, he writes to inform me that he thinks that my latest blog post is way off base.

Last year, he sent me an early draft of a media plan that had his boss had rejected out of hand. Essentially, he wanted to pull out of a college football package that his client had purchased for many years. To sum up, he said that attentiveness levels had dropped and presented some information that showed channel hopping was rampant during commercial breaks on Saturday afternoons when several games were on simultaneously. He suggested that the package not be renewed and that the money be redeployed in a fistful of digital options.

His boss regaled him with the time honored commentary that there was a magic to an advertiser being in a sports property and that while the premium for such involvement was often steep, it was ALWAYS worth it. The young gentlemen stuck to his guns and was a pariah within his shop for a few weeks.

Then, the client, citing business difficulties, did not renew the football deal. My young friend was given half the money he usually had for football and reinvested it in some digital alternatives. Business perked up and he was soon back in the good graces of his management team.

Now, there are many factors that might have caused the client rebound. My point is that the conventional wisdom that the pricey sports package was essential to good allocation of the client’s funds was an accepted practice but it may no longer have been relevant in 2015.

So, examples like this strike me as wake-up call for media people and management at ad agencies. Keep in mind the thing that all disruption tends to have--it is pro-consumer. Decades ago, Wal-Mart offered everyday low pricing and one stop shopping, Amazon took it to your door, mobile apps seem to be changing everything.

Market destruction is a tough game. It will not recede. Remember, with creative destruction comes creativity. Strive to be part of it no matter what business you are in.

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

Pricing Power

In 2011, the great Warren Buffett was testifying before the Federal Crisis Inquiry Commission. Asked about studying a business, he responded:
"The single most important decision in evaluating a business is pricing power. If you've got the power to raise prices without losing business to a competitor, you've got a very good business. And if you have to have a prayer session before raising the price by 10%, then you've got a terrible business." Buffett went on to say that pricing power was more important than good management.

If you look at the successes that Buffett and his vice chairman Charlie Munger have had, it was often when they bought in to franchises such as Coca-Cola, Gillette (now part of P&G), The Washington Post (decades ago), and even Wells Fargo (recent bad publicity notwithstanding).

There are many wonderful businesses with pricing power. Apple comes to mind. Would you buy another brand of laptop if Apple raised the price by $75. In most cases, I would think not. Single malt scotches, high end wines, Titleist golf balls, and Starbucks are there as well.

But what of our world, media? Does pricing power still exist? With legacy media, I would say not really. Throughout the 70's to the 90's, the major TV networks moved prices up in line with the business cycle but they always seemed to get a bit more than the rate of inflation or GDP growth. When the dot.com bust hit in early 2000, they still did fine as people became gun shy about online options and loaded more money in to network TV. After a while, people admitted they put money there because they did not know where else to allocate it. So, some networks had declining ratings and actual audience delivery but saw prices per unit rise.

Today, the game has changed. Social media is changing the media landscape so increases for traditional media are far more muted than in prior years. Many digital options are working and they can prove it.

A radio broadcaster from the Midwest told me recently that his rates are lower than they were 25 years ago. I gently reminded him that his ratings are lower now and he came back by telling me that "90% of our  local advertisers cannot read a rating book. They now have moved to digital options."  Some clever radio operators in larger cities are seeing their digital business ellipse their  traditional commercial billing significantly.

Legacy media will survive if the players evolve. Even if the property looks the same, the revenue is likely to come from what a few years back, we would be calling unconventional sources.

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

Someone To Call You On Your Nonsense

This morning I was doing some work at my desk and the phone rang. The caller was someone with whom I had not spoken in a few years. We talked for a while about a wide range of things--the upcoming elections, the federal deficit, the American League Pennant race, media fragmentation and some personal issues. Finally, he said, “I have to ask you something.”

It appears that he had an idea for his media property that he had raised in a staff meeting with his team. To a person, everyone was very enthusiastic. After listening to his pitch and following up with a few questions, I started to laugh. “You don’t like it, do you", my friend asked. “No, I don’t.” And I ticked off a number of reasons why I thought the idea was a non-starter. He then started laughing. “Don, my wife told me to call you. There are not many people around who call me on my b.s. these days.”

My friend now runs a substantial media organization. It appears that his team members are afraid to speak honestly to him. All of us need colleagues or “go to people” who really want what is best for us. It has to be someone whom we trust. Some will trash your ideas unfairly out of jealousy or they are very limited people and fail to understand many ideas. Often, however, our ideas are just plain weak. The higher we go up the corporate leader, the greater the need for a trusted friend to blow the whistle when needed.

In one of his famous letters to shareholders, Berkshire Hathaway Chairman Warren Buffett put it this way: “If a CEO is enthused about a particularly foolish acquisition, both his internal staff and his outside advisors will come up with whatever projections are needed to justify his stance. Only in fairy tales are emperors told that they are naked.”

It also helps to have people call you out in your personal life. A long time ago, I gave my first speech at a conference. It was very well received and I barely made it to the airport to catch my plane home as many in the audience stopped me to talk. I was thrilled. When I arrived at home, my young children were all running around and eager to see what I had brought them from my trip. I told my wife of the success I had and she was pleased and supportive but also reminded me that I need to take out the trash as they were coming to get it at six the next morning. I then helped to get the younger children down when the phone rang. A person at the conference was on the line and praised my address and asked if I could speak at an upcoming meeting he had scheduled in a few months. I was overjoyed and full of myself. When I got off the phone my oldest was still up and we did our normal ritual of a couple of songs and a goodnight prayer. She was very sleepy but looked up with drooping eyelids and said, “Hey, Dad, did you take out the garbage cans?”

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

Forecasting Foibles

Back in graduate school, my classmates and I were often told how companies used sophisticated quantitative methods to forecast sales. When I started out in the world, I asked a few colleagues about it and never received a clear answer. So, I waited for an appropriate moment and began to ask key players who had to be responsible for it.

The first time occurred just before my first major client meeting at a New York advertising agency. I remember dressing with unusual care and arrived at the office a half hour earlier than normal. After pacing around a bit, I made my way to the conference room. I opened the door and froze. Sitting at the conference table was a man in his fifties. I could not turn around and leave so I walked in and introduced myself. He turned out to be the president of the client company (it is a well known company that you all have heard of and may own one of their products but it was not a Fortune 500 company at the time). He was very pleasant and put me at ease.

After a few minutes of small talk, I said, “May I ask you a question?” He replied, “Sure thing, Don. Anything.” I asked what quantitative forecasting methods that he used to predict next year’s sales. Was it helped by a regression analysis or some blending of economic forecasting? He started laughing and said, “Oh, god, did you just get your MBA?” I suppose I hung my head and said yes. “I don’t use any of that highfalutin stuff. What I do is ask my sales managers.” The meeting came off okay and after I did my two minute presentation he was far more complimentary to me than his marketing team was. As the group departed, he slapped me on the back and wished me well with my regression analyses.

Since that day, more than four decades have passed. And, I rarely missed an opportunity, when I could get a key player alone, to ask how he or she did their forecasting. To a person, they did qualitative rather than quantitative based forecasts and often at surprisingly big companies.

Here are some of the qualitative approaches taken:

Estimates of Sales Force--there is no question this group is closest to the customer and the street. I never worked much in tech but sales force input has to be vital in that arena. Looking at it objectively and seeing things close at hand as well, they can be great but perhaps biased. After a while, the sales team gets smart and learns that their estimates are often the key component on building sales quotas so they sandbag numbers so they over-deliver and obtain a lusty bonus. I have seen more than one management rep do that at ad agencies as well. One fellow placed a low number in after I had placed a four million dollar network TV order. That buy alone blew out his estimates for the whole year and this was second quarter. When I confronted him about it, he told me that they might cancel!

Outside Experts--on paper, this should bring some truly meaningful help to the forecasting table. Time and time again, I saw industry experts who “rubber stamped” the intuitive feel that the man or woman who hired them had “forecast” going in.

CEO Judgement--this is a mixed bag. A hands on CEO who is a straight shooter can do this well. He or she may have deep experience in the category and be far more analytical than the sales team. If they are too far removed from day to day, their projections could be way out of whack.

Once I asked a serious player in multi-unit retail about his forecasting. He looked me in the eye, laughed, and said 8%. It was literal--he set that as a target across the board. He cut me off as I was midway through my 210 markets with different economies speech. “I know that you are right. But, I set a high goal even for those in dying markets. For instance, I put a sharp young kid in to XXXXXXXXXXX a few years ago. We had declining sales for years and the economy keeps sputtering there. He has had gains of 1 and 2% the last two years. The guy is amazing! He still apologizes for not making my quota. I am going to move him in to a senior position here at headquarters in a few years. You need to motivate people so throw down a big challenge. Scientific? Hell no.”

Group Discussions--This one aims for a consensus. The whole team must come to a common projection and agree. It can work unless a bully is present (usually a senior manager) who dictates the final estimate. Others firms “pool” estimates and average the results of the sales team members and managers. It may have worked decades ago but  today with e-mail, texting, Skype and cheap long distance people will talk and cook something up.

So, my bottom line after decades of careful observation, is that surprisingly large firms are sloppy with sales forecasts. Also, honesty may be lacking in many cases. Once again, American businesses may prosper in spite of themselves.

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

Revisit Your Inner Five Year Old

My late father was born way back in 1908. I was the last of his children and am several years

younger than my nearest sibling. Dad told me a very interesting story that appeared to have happened in 1913.

His mother took him, his two older sisters and his twin brother from their home in Ames to the big city of Des Moines, Iowa. They visited a large department store on the day that the retailer was unveiling the first escalator in the city. A fairly large crowd was assembled as the owner turned on the juice of the modern marvel (with its wooden steps!). 

Everyone in the store was invited to join some of the sales staff as they rode up the escalator for the first time. No one moved. They were apparently afraid to try the new contraption. Well, the twin Cole brothers had no such fear. They hopped on the escalator and gleefully rode it up and down much to my grandmother’s embarrassment. When they raced down the up escalator my grandmother, assisted by her older daughter, was able to grab them. The owner came over, shook each of the boy’s hands and thanked them. When others saw the little fellows safely enjoying the new technology, they took a free ride as well. The owner took the whole family to the company dining room and the kids were given as much peach ice cream as they wanted.

Why tell this story? Well, over the last few decades I have read numerous psychological studies that repeatedly say that a person’s imagination tends to peak at age five. After that, we are all programmed to conform and the world loses some of its wonder for us. You go to school, you have to pay attention, do not speak out of turn, sit up straight, and get permission to go to the bathroom. Over time, the regimentation tends to knock the stuffing out of most people. Young people in the workplace often have great ideas but after years of being shouted down or ignored, they tend to go along to get along and never live up to their potential.

Not long ago, I had a student who was every professor’s dream. He asked questions constantly, led class discussions, and was so prepared for lectures that he often asked if there were additional articles or background data that he could read BEFORE I covered a chapter in the classroom.  One day, I threw a hypothetical problem at the class about what could a small coffee shop owner do to survive if both McDonald’s and Starbucks were moving in to their trading area and his monopoly loyalty would be threatened. The young guy’s hand shot up first, as I expected, and he said that they should go to friends on the town council and block the two chains from entering the village. I laughed and said no we needed a marketing solution. Actually, I was upset.

He seemed to sense it and after class asked if he had offended me. I said no but I was surprised at his answer. He said, “Isn’t that the way the world works. You get an edge by who you know.”

Somewhere along the line his imagination had been thwarted. He was way too young to be so cynical. Have you ever noticed how people who succeed in the arts or are great entrepreneurs often were troubled youths in some people’s eyes? They did not do well in school because they would not conform. Yet, as adults, they were successful, as they appeared to be wired differently than the rest of us. They have never lost the wonder they had as a five year old.

So, within reason, tap in to that five year old within you. When thinking about issues or how to come up with an imaginative solution to a problem, do not worry about current practices, political correctness, local zoning or even what is legal. Be a five year old and go directly to a solution. Ever watch a youngster open a Christmas present? Does he or she carefully unwrap the paper? Hell no! They get to the gift that is inside as quickly as possible. That spirit is what our society needs to move forward. Five year olds are not boxed in by limits or linear thinking and neither are entrepreneurs with break-through ideas.

Walk or run down that up escalator.  Do something silly once in a while. You may start to reclaim what you lost decades ago.

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

How Much REAL Strategic Planning Is Done?

Ideally, companies, institutions, and even people should engage in strategic planning. Put simply, it is concerned with identifying and then achieving long term objectives of your organization. This should not be confused with organizational planning which may be for the next 90 days (the quarterly report to Wall Street) or for the next year. Strategic planning is a long term forecast going out five years or more. In fact, a few companies, such as Exxon Mobil, AT&T, Microsoft, and Verizon likely look out 50 years in terms of planning.

Is 50 years absurd? Not really, in many cases. Take Exxon Mobil, for example. Fifty years from now they will likely be a significant player in energy production, transmission and sales. Several years back they made a multi-billion dollar acquisition of a large natural gas player. It has not paid off big time yet but the world appears to be moving to using more natural gas as it burns cleaner than oil or coal. Should alternative energy sources such as wind, solar, or hydrogen get more competitive with fossil fuels, you can bet that they will be there and they will have prepared for it decades before. Newer tech players in the business world such as Apple, Google and Facebook have surely begun to embrace long term planning. One key is that with the world changing so rapidly it is unlikely that your company as you know it will exist in 20 years or more. So, you have to hedge your bets and plan for the future. Such change is not a new thing. William Wrigley was selling baking powder well over a hundred years ago. To induce buyers, he ran a special where the purchaser received two free packs of chewing gum with each purchase of baking powder. The response was huge, he had the Eureka moment where he realized that he was in the wrong business, and created an empire with gum that was worth billions and recently went private.

I did find one long term plan some years back that was clearly in la-la land. Japan’s Matsushita Corporation (now Panasonic since 2008) said they had strategic plans going out 250 years in to the future. Initially, I thought it was a typo and they were saying 25 years. Nope. I had to laugh out loud. The changes that will occur over the next 250 will defy even a science fiction writer. Did their plan include selling space heaters on Jupiter? Give me a break!

Strategic plans incorporate objectives, strategies and tactics. All companies have objectives. They may include increasing sales, growing market share, or finding a niche where they can protect themselves from competition.

How do you achieve these objectives? That is through a strategy or grand plan. A surprising number of companies fall down here. They “fly by the seat of their pants” and react to competition but fail to lay out a coherent strategy. Part of the problem is that often their have unrealistic objectives.

Expressing your grand plan or strategy locally or on a micro level is the province of tactics. Here way too many people use terms strategies and tactics interchangeably. Also, I have sat in way too many painful meetings where managers spent hours mulling over whether a part of the plan was a strategy or a tactic. If they had a real plan, they would know.

If you spend time with small business operators or entrepreneurs, you rarely see  even a semiformal strategic plan. Many will point to their temple and say something like “it is all up here.” Not a good idea. Think about it. If someone dies suddenly, there is no plan for heirs to carry on. If you get a plan down on paper, even a simplistic one, you are forced to think about it. Show it to associates or a business savvy friend and you will get some healthy push-back and you will be forced to refine your plan. Also, a plan also implies commitment. I heard from a reader this week who wrote the following: “This may sound weird, but my plan is a contract with myself. I read it over once a week and force my CFO to review it monthly. Am I meeting my objectives? Do I have to shift gears? The written plan forces me to have discipline.”


With strategic planning, you need to follow-up. A “set it and forget it” mentality is deadly especially in a competitive environment. So, the best strategic plan needs to be followed up with strategic management, if you will.

There are key questions to ask when putting together a plan and they include:

--What is our share of the market and how strong is the market?

--Do our competitors pose a big threat and have we really identified all of them?

--Do our customers really like us? Where are we strong and where are we weak? Research can help a lot here and many CEO’s and top management are almost delusional about their image. A brutally honest consultant can help as well.

--What do we need to change to adapt to the future? Can we do it?

--What might happen if we continue with the status quo?

So, in answer to our title of this post, “How much real strategic planning is done?” My opinion is not nearly enough for companies of all sizes.

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

Schedule Time For Self Development

In our time pressured society, many if not most people seem harried. When I ask if they have read a specific new book or pass on an article, the response I often get is “thanks, but I am too busy and do not have time for that.” Oddly, the most successful people that I have ever met always seem to find the time for learning new things in their field and will respond in detail to anything that I send them.

My theory about these clear winners is that they seem to schedule time for self development almost instinctively. For years, self help gurus have encouraged people to take a sabbatical a few times in their careers. Well, that is fabulous if you are an academic where sabbaticals are common and often provide full pay or close to it during your time off or work for that rare company that provides them (For years, Time, Inc. gave staffers sabbaticals. It was not simply for writers. Sales executives would get them and come back refreshed and with a fresh eye on things). Others claim that several months of unemployment are a great time to reassess things. Maybe. Most people understandably use that time to be laser focused on becoming employed again. Some say being out of work told them that they needed to switch careers but that is usually only for a minority.

Sabbaticals are not practical in most areas especially small business where most of the job growth comes from these days. And, there are times in the middle of a work siege where all of us find the task directly front and center to be an all consuming passion. Yet, now during these exciting but turbulent times in marketing, you have to stay current and be able to embrace new ideas. Conventions, seminars, even TED talks can be valuable.  The value to me has always been that I never feel alone after such a session. Topics are brought up that were a non-starter at my place of employment or other issues were covered that no one else with whom I worked saw as important. Some valuable contacts could also be made.

Sometimes it is not easy. I have seen senior managers refuse to send people to conventions saying that they are a waste of money and Bob or Mary simply wants a few days off from work. True, in some cases. At the same time, I have witnessed a few highly motivated types pay the entry fee themselves and, in one case, even take vacation time to attend. None of these people stayed with their employer much longer but they were not going to pass up a chance to “go back to school.”

Also, I have met people who do it quietly. A sales rep that I have known for years would lunch with me three times a year. We did some business early on but then my accounts changed. He still met with me and asked a barrage of questions about various futuristic media and marketing topics and took copious notes. After a while, I had a book and a few articles ready for him. Today, I send him e-mails regularly and he never fails to respond despite his lofty title these days. Recently, I found out that he has been doing this with five other people for the last 20 years!
Entrepreneurs seem to know instinctively that they must reach out and ask for help and read a great deal about their field. They are often running scared which is a great way to stay on top of your game.

Finally, I have seen people from 58-65 year old do a complete makeover. Some retired, some were forced out, some worked for dying enterprises. When their unplanned sabbatical hit them they did not engage in self-pity. They used their first free time in decades to reinvent themselves. Their genius was not going to go untapped!

So whatever you age or situation, may I suggest you make the time for self-development. You will become more interesting and perhaps happier.

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

Western World Demographic Outlook

Several years ago, I was about to put up a post entitled “Demographics are Destiny.” When I could not get most of my panel members to weigh in, I knew that the title must have been deadly. So, I renamed it “Jennifer Aniston is 40!” (Media Realism, April 23, 2009) and soon my e-mail box was loaded with comments and there were many hits on the actual post from across the world.

Well, a lot has happened in the last six years but, as you might expect, politicians around the world have “kicked the can down the road” instead of addressing a demographic iceberg that will hurt all and clobber many western democracies in the next two decades.

In terms of demographics, things have gone from rotten to worse over the last few years. There is not a single country in the European Economic Union (EEU) which boasts a fertility rate that guarantees an increase in population over the next three decades. In some countries, the population will decline drastically such as Italy and Spain. Others have serious issues for unknown or unresolved issues. Take Russia, for example. The World Health Organization (WHO) posits that the average Russian male has a life expectancy of under 60! They attribute this to big increases in heart disease, strokes, smoking and alcoholism. This gives them a life expectancy lower than males in Nigeria, Tanzania and Pakistan.

Japan is setting records for a peacetime decline in population. By 2050, 40% of the population will be over 65. Supporting the elderly will bankrupt them.

So, how will these countries survive or maintain an infrastructure? There is only one way--big increases in immigration.

In the United States, Treasury department estimates project that we will need 10 million immigrants per year to maintain our ratio of workers to retired citizens. Read this carefully. They are not calling for 10 million new immigrants. What they are saying that to keep the CURRENT RATIO intact, we will need that many new people. So, if we do not reform Social Security with some mix of higher S.S.taxes, older age for eligibility,  and net worth means tests, the system along with Medicare will collapse without a huge injection of immigrants to prop up the entitlements. And, many of us old folks will keep working longer as well.

Many rural places in America and throughout the western world are suffering acute labor shortages. Immigrants can help turn these areas around or provide vital services. Someone told me that young Brits, Germans, or Frenchmen would not wish to work in a small town Finnish old age home. I agree--wiping oatmeal off the faces of octogenarians does not have much appeal to them nor would it to most American youth.   Yet, if you were from Syria or a frontier market in Africa or Asia you would welcome the chance to live and work in a western nation with healthcare, free education, and a social safety net. People forget that unskilled immigrants often do the jobs that people in wealthier nations do not wish to do. I vividly remember being in Zurich, Switzerland in late 1973. Hundreds of then Yugoslavs hung out in the train station on Sunday afternoons. They had nine month or two year work permits. It had to be lonely but it was a step up from their life at home. British writer Randy Charles Epping put it well when he wrote, “a job, even a relatively low-paying one by Western standards, is the best hope for a worker to start building a better life.”

So, the impact on marketing will be profound. The old people have much of the money (sorry, kids). Many will live very long lives and will need caregivers who may well be immigrants. Marketers still have not adjusted to this emerging reality as many messages are still aimed a the under 35 group who are often struggling economically across the western world.

Politicians in Europe, and Japan need to do something and quickly. In the U.S., we need to act but not as drastically. Will any have the political will to take the necessary measures to right the demographic shifts? History tends to damper my normal optimism about the future in this regard.

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

Luck vs. Hard Work?

About 35 years ago, the business press began publishing articles centered around the theme of “work smarter, not harder.” Some of them I found to be marginally useful and most seemed to be discussing time management techniques. The advice sounded great when you first read it but did not always work in the real world. For example, many said return all phone calls and e-mails at a set time each day usually after you get your personal “to-do” list done. Logical, right? Well, in a service oriented business such as advertising you do not keep a client waiting for six hours.

Also, I always took moderate offense at those whose claimed that all great managers and executives left promptly at five o’clock. Sometimes you had to work hard and simply put the time in on many projects. As a media executive, I knew that virtually no one was eager to hear what I had to say in most presentations. So, I worked hard to differentiate both me and my team in meetings. It might only be a factoid or two that was new to them or telling them about their company or spending that they did not know. It took time--sometimes a great deal of it. Yet, it almost always paid off handsomely.

So, I was and remain a fan of hard work or doing due diligence.

At the same time, you often hear how luck is just as important as working hard. To me, when people refer to someone as lucky it is often due to jealousy. How many times have you heard, “He gets all the breaks” or “She is just lucky.” Often, the complainers are the ones leaving at 5 pm and do not see how hard the “lucky” ones are putting in the long hours. Luck does play a factor in the broad sense. I remember my father telling how lucky I was “to be born in America and growing up in the 2nd half of the 20th century.” Malcolm Gladwell brought up the same point decades later in OUTLIERS. Just by being born here and then within a supporting family environment one had a leg up on 95+% of the rest of the world. Yet, there is also the old cliche of “shirtsleeves to shirtsleeves in three generations.”  As a youngster there were people who did seem to have a lot handed to them. They would inherit a modest retail operation, law practice, insurance office, or travel agency from their parents. Well, the internet and online marketing has devastated many of those operations and those who have survived were not simply members of what Warren Buffett dubbed the “lucky sperm club” but people who worked hard and have adapted to the changing landscape.

I asked some panel members and a few others about luck vs. hard work. Here are few of the better responses:

--Experienced and ageless marketer--“Don, I think luck plays a  part in getting to the right place at the right time.  After that I don’t think luck wins consistently. It’s all about preparation, persistence, and a reasonable dose of intelligence and common sense doesn’t hurt.”

--Self made mega-rich entrepreneur--“Luck is wildly overrated as a big factor. There are no shortcuts to success. It takes passion, dedication, and focus. People who talk about luck all the time are usually lazy bastards who never really tried.”

--Long time ad agency principal--Hah! Define Luck.
I love the axiom “The harder I work the luckier I become.” (originally from Thomas Jefferson although many including I used to attribute it to golfer Gary Player--editor)

Right place. Right time?  It happens but I prefer to think the odds are improved when you are working your butt off.

Obama did NOT get to be POTUS by luck.

If you work hard you might get lucky--or not. But, if you work hard and are smart you will be successful.”

To me, I find you can make your own luck. My entire life I have always been an omnivorous reader. Each week, I devoured each issue of AD AGE, BUSINESS WEEK, FORBES, FORTUNE and the Wall Street Journal and New York Times daily. Over time, I would be able to answer questions in meetings or presentations that surprised people. Dozens of times, colleagues would say, “I loved the way you pulled that answer out of your behind.” Well, I did not. I had and still have fairly good recall and I was able to answer questions based on my extensive reading. So, the more I read, the luckier I got! To this day, I still read economic theory (Smith, Keynes, Mises, Hayek, Friedman) for an hour a day to stay sharp. So, with rare exceptions, hard work takes heavy precedence over luck.

With every rule comes striking exceptions. In the late 1970’s, I was walking up a flight of stairs. A young lady was walking down. I smiled and said hello. She stopped, introduced herself and we talked for a minute. As we parted, she said, “I hope that I see you again.” In a few days, we will be married for 37 years. I was and am very, very lucky.

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

Is Your Ad Agency Ambidextrous?

Most of us hope to lead a long and productive life. How about your company? The odds are that it is far less likely to live to a ripe old age. Less than .1% of U.S. companies make it to age 40. Even large companies, seemingly well established, may disappear or be sold within the next 10 years. General Electric is the last survivor of the original Dow Jones Industrial Average. And, it has reinvented itself several times in the last 130 years. To survive, authors Charles O’Reilly III and Michael Tushman say that a company has to be ambidextrous. They outline their thesis in a marvelous new book entitled, LEAD AND DISRUPT (Stanford University Press, 2016).

The authors state that company failure is “often due to the incumbent’s inability to play two distinctly different games at once.” Put simply, you need to use your current cash cow business to fund exploration in areas that are growing quickly or may significantly make your current business obsolete. Their advice to all is “innovate beyond your core.”

The book is full of statements that struck me as absolute gems. A favorite was “management is about preserving and improving the status quo. It is about avoiding the many “bad” ideas that surface in an organization. But leadership done well is about seeing around corners and running experiments that help destabilize the status quo.”

Another was “faced with changes in technology, competition, and regulations, incumbents need to compete in a mature business where the exploitation of existing capabilities is key and to simultaneously use existing assets to compete in more exploratory businesses.”

All of this, of course, is easier said than done. The book provides a fairly detailed case study of Havas in 2013, then the sixth largest ad agency holding company in the world. The CEO David Jones had the idea of transforming his assortment of agencies from a creative and media star to one that coupled crowd sourcing technologies in to the mix in a big way as well. Sadly, operators around the globe appeared to worry only about their “sandbox” and continued to sharpen their creative and traditional media strengths. So, the individual country managers did not try to implement the new focus and in some cases ignored the directive from the HQ. This kind of transformative goal could not be delegated. Senior management and the CEO needed to be more active and engaged in the process of change. After a year of frustration the talented Mr. Jones move on to, I hope, better things.

One thing I noticed reading the book was that it was easy or relatively easy for a major company to be ambidextrous--working equally well from either hand. Google, Apple, Microsoft and now Facebook and old stalwart Exxon Mobil are all loaded with cash. They can be ambidextrous as a failure in a new venture or even a disappointment will not hurt them much.

The harsh discipline of the market, however, is not so kind to smaller firms. Think of all the mid-sized and small ad shops that are struggling these days. As things change and sometimes very quickly, they will have to “bet the ranch” on a single experiment with a new speciality. A WPP, Omnicom, Interpublic or Publicis or even a large second tier player such as Havas can fail at a new venture and get bruised but not mortally wounded. And, if they do fail, the deep pocketed mega-shops can simply buy a leading player in an emerging discipline. So, like it or not, the big will likely only get bigger.

The book is provocative. Can you as a leader look around corners? Can you maintain the status quo but embrace change and a new way of doing business? If you can, then you are ambidextrous, too.

Also, do not be put off by O’Reilly being a professor at Stanford and Tushman at Harvard. They did not write a dense, scholarly tome. This book is easy to read and it has great clarity.

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

Personnel Policy--Netflix Style

On Sunday, June 19, 2016, THE NEW YORK TIMES MAGAZINE had a cover story entitled, “Netflix Destroyed The Way We Watch TV.” Like many of us, I devoured the very well written piece by journalist Joe Nocera.

When people asked my opinion I generally referred them to my blog post of 1/28/16, Media Realism--”Netflix Concerns.” The post outlined some of the issues that critics, particularly securities analysts, said about Netflix in Nocera’s story.

What fascinated me about the Times piece was something else. It was with the remarkable candor that Netflix employees talked about their personnel policies. Nocera interviewed Patty McCord who served as something of a personnel director for Netflix for many years. Her advice to Reed Hastings, Netflix founder and CEO was “that he should ask himself a few times a year whether he would hire the same person in the same job if it opened that day.” If the answer were no, Hastings often wrote a large severance check. The article stressed how the company worked hard on letting people go humanely.

Eventually, Hastings approached Patty McCord and let her go as well after working with him for nearly 20 years including his pre-Netflix days. The article goes to a describe a slide show presented to all employees. A key line is, “We’re a team, not a family.” And “Netflix leaders hire, develop and cut smartly so we have stars in every position.” A number of companies talk about this kind of approach but few do it in practice. Apparently, Netflix does.

I approached some panel members who are active CEO’s, referred them to the Times article, and asked for comments. Here are a few of them:

--“This type of Darwinian approach might work well in tech where the average age of staffers is under 30 and no one expects to have a career with you. In more mainstream businesses, it does not work.”

--“I have a core group with me that has become an extended family. Some stayed with me through hard times and we all pulled together. Now, a few do not contribute much new. Some have retired but a few hang on. Should I cut them loose? Yes, but it is not simple.”

--“Years ago, someone told me to run my shop like a ball club. When they no longer were star performers, let them go. I have not always done it and it has come back to bite me. It makes the whole company weaker and the younger talent resent it and move on.”

--Someone whom I admire very much asked me, “Don, how does this approach build loyalty? Does each employee see themselves as a hired gun who will work anywhere?”

--“As staffers are less effective, I adjust compensation. We have a conventional media director and a digital media leader. Each year, the conventional person gets less to spend. I pay the person the same but cut the bonus. When I get push-back, I tell him the truth. You are not far from retirement so your salary will stay flat. You still have to perform. This does not play well but deep down, he knows the score.”


--“There are certain team members that I consider family. If we were about to go under, I would let them go. The odds are, though, that they will be here to help me turn off the lights. Am I too weak as a leader? Maybe. But this is not all about money.”

For years, virtually any company that I have known well has always said something to the effect that, when someone leaves or is terminated, you replace them with a better employee and the whole firm gets stronger. Yet, few have addressed the issue of employees who are not growing, or more frequently, not growing fast enough.

I once worked at a firm with a great deal of apparent deadwood in senior management. They were to me, the FOMOT group--Fat Old Men on Tenure. It seemed that they did not work hard, were not on top of industry changes, yet they pulled down serious money and even owned part of the firm. Later I learned that some had contacts that helped with new business and were joined at the hip with certain key clients.

Many people, however, were just there and simply hanging on.

How do you handle it? Could you honestly embrace the Netflix pure “grow or go” philosophy? I would love to hear from you.

If you would like to contact Don Cole directly, you may e-mail him at doncolemedia@gmail.com or post a message on the blog.

Chronicles of Wasted Time

Malcolm Muggeridge, the British journalist and wit among other talents, entitled his autobiography, CHRONICLES OF WASTED TIME. I read it at publication decades ago (he lived 1903-1990) and found it slow going with great writing and interesting insight. The title always amused me.

Recently, I sent the title out to a number of people on my panel who were retired or who announced they were about to be in the near future. I did not ask anyone to read Muggeridge only to react to the title of his autobiography. Here are some of the more interesting comments that I have received back:

--“Don, what a perfect way to describe my career! I spent more time in meetings both internal and with clients than I did actually working. The work itself was a joy; the meetings deadly.”

--“A few years back, I became a consultant. I am so much more productive than I ever was at an agency. No being bored by the long harangue of my CEO, no pompous creatives to ruin my day with their holier than though attitude. At the same time, if I have not spent 30 years at several shops and five client side, I could never do what I do now. So, the “wasted time” was the greens fee that I had to pay for the free and lucrative life that I have today. Sometimes, I miss the camaraderie, but most days I am very content.”

--“I have always been impatient. Meetings sapped my time and my emotional strength. I bet that I spent 20 years of my career in meetings. Now, I do a few conference calls and lots of e-mails and am very productive. Clients know that I charge by the day so they do not waste my time. They have expectations of me and have all their ducks in a row when I visit them. I have never worked more efficiently.”

-- “Meetings are just part of the process. The time was not really wasted. If you listened carefully and stayed attentive, you learned a lot about the players involved. The mavericks, the yes men, the lazy, the nut jobs, the ultra-talented all showed themselves eventually.”

--“Don’t get me started. There were times in my late 50’s when I felt that I had wasted my life by staying in this business. My husband helped me stay on an even keel. Yes, my career was a chronicle of wasted time. Wasn’t yours?”

--“Firemen, combat soldiers, political assassins, and day traders all have down time but on the job itself they do not waste time. The rest of us do regardless of profession. It is called life.”

Personally, I could deal with it fairly well except when it became repetitive. I had a client whom I visited twice a year for nine years. At each session, he asked precisely the same questions. After four or five times, I sent him a lengthy report thanking him for his interest and hoped to put the issues to bed. Nope. The next meeting he opened with the same inquiries. I never could figure him out nor could anyone around me. He was never rude and not unintelligent. Yet, he was a time waster on steroids.

How about you? Has your career been a Chronicle of Wasted Time?

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

The 80:20 Rule

Unless you are a newcomer to the business world, you have experienced, thought about, or been part of the 80:20 principle.

It first surfaced way back in 1896 when Vilfredo Pareto, an Italian economist, published a paper at the University of Lausanne. Pareto’s research illustrated that 80% of Italy’s land was owned by 20% of the population (and you thought income inequality was a new issue! Nope, remember Karl Marx). Pareto kept digging and found that across countries similar patterns existed. As late as 1989, looking at global GDP by quintile, the top 20% (quintile) produced 82.1% of the economic handle.

After World War II, a few others led by philologist George K. Aipf, picked up the Pareto mantle and the 80:20 principle was found to be widespread and some soon called it the “principle of least effort.”

The following items were often observed across the world:

--20% of employees were responsible for 80% of corporate output.

--80% of sales came from 20% of clients

--80% of profits came from 20% of customers

--In bookstores, 80% of sales came from 20% of titles

As more people examined it, the 80:20 principle started to creep in to management science or quasi-science. Some entrepreneurs failed as they did not leave tasks to others that they did not do well. They should have focused on the 20% at which they excelled.  The mantra was to work harder on elements that work harder for you and ultimately focus energy on what you enjoy.

Big companies often shed brands or divisions that were not profitable. Conglomerates often did not work out well so chieftains sold off the least profitable or most difficult areas and became stronger organizations.

Asking a few ad agency chiefs about 80:20 was interesting. Here are the two best comments:

--“No one wants to resign business unless the clients are complete bastards. Over the last few years, I saw 80:20 clearly in our P&L’s. So we have asked for big increases in compensation from a few clients. If they refused, we resigned them. We are a bit smaller but more profitable during a challenging time for shops our size. I wish that I had done this 10 years earlier but it takes guts.”

--“When you contacted me, I was afraid to answer but my partners urged me to tell the truth. Candidly, if we could start over tomorrow, we might only keep the 20% of our staff that is still growing and contributing a great deal. I think that if I were totally honest, I just might fire myself. It stuns me how 80:20 applies in so many areas.”

Recently, I had an experience with 80:20 that shook me to the core. I looked at my stock trading since 1973. Even a persnickety statistician would consider that to be a longitudinal study. And, my findings? You guessed it. Some 79.4% of my gains came from 20% of my holdings. Eerie, but true.

The 80:20 principle is alive and well!

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

Is Your Firm A Learning Organization?

In the last 15 years all of us have clearly learned one thing--the world is speeding up and, as even frontier markets get wired, people are getting more demanding or spoiled. They want precisely what THEY want and they want it now, not in the future. As the pace of change continues to accelerate, all companies, but especially those in communication, have to adapt and change or perish. A firm has to continually improve across all departments and you need to rethink your goals. Yet, what is a company? It is essentially its people and people only change when they are learning new things and shifting behaviors. As one person wrote to me, “Learning is the capital of the future” (More about that later).

About 25 years ago, Peter Senge of MIT wrote a book called THE FIFTH DISCIPLINE: THE ART AND PRACTICE OF THE LEARNING ORGANIZATION. His thesis was that it was not merely individuals but the organization itself which has to learn and keep learning to stay current. He described learning organizations as “organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together.” Sounds fabulous, huh?

Does anyone truly do it? Well, as is often the case, theorists such as Senge were more than a bit ahead of their time. Today, in 2016, I would argue that being a learning organization is crucial for the growth and even survival of many media entities and small to medium sized advertising agencies.

Did you ever ask anyone or observe what it is to be part of a great business team? Maybe even a well run department within a larger firm? To me, it always seem to hinge around an open environment for ideas and that people feel that they are doing something meaningful.

Senge identified things with a bit more precision that that. Disciplines needed in a learning organization include:

1) Systems Thinking--this is simply saying that what you do is interrelated and what you do can effect others and have long term effects. All too often I observed people 100% concerned with their own job, job security or department. No one looked at the big picture--people focused on their own “silo” or “sandbox.” Long term it hurt growth and the overall environment of the company.

2) Personal Mastery--here Senge says one lives life from a creative rather than reactive standpoint. These people are still learning and hungry for it. There are no “fat old men on tenure” who are coasting. Curiosity reigns. This is much easier said than done especially in a service organization.

3) Building A Shared Vision--teams learn to think insightfully and there is an “operational trust” among executives. There is dialog that is far more open than most organizations.

4) Leadership--autocrats need not apply. These men and women need to be teachers but not owners of the corporate vision.


About 10 years ago, I began to see the term learning organization pop up in the chairman’s letter in annual reports and corporate mission statements. I sometimes laughed out loud if I knew the group was run by a narrow minded tyrant. To me, Senge’s idea is one whose time has come. If not, many organizations we know will be swept away or much weaker over the next decade.

Finally, I mentioned that someone had written to me when I canvassed some panel members about this topic that “learning is the capital of the future.” Impressed, I asked if it were his original phrase. He said no and challenged me to find it. After some Inspector  Clouseau style research, I believe it was coined by British business writer Edward Russell-Walling. His articles on Senge are well worth your time if you do not want to plow through the original “Learning Organization” text.

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

Tell Them What They Want To Hear?

It has often been said in the American business world that the way to survive is to tell management “what it wants to hear.” The late Chris Argyris (1923-2013) questioned that view often in his long career. Of all his books on organizational science, my favorite was ORGANIZATION AND INNOVATION.

In brief, Argyris said that there were two types of companies which he labeled Model I and Model II.  He stated that in Model I firms people only said things aloud in meetings that were felt to be appropriate to company culture. Confrontation was avoided at all costs. If an employee felt that he or she would be penalized in some way for candor, or might embarrass someone or announce bad news in a session, they usually would keep quiet, soft-pedal the issue or even lie. By doing so, top management gets knowledge that he categorized as invalid and many errors could not be corrected. Argyris felt strongly that if an organization was to learn, then finding and correcting errors was what it was all about.

Everywhere that I have worked in my career, superiors always said, “Tell me anything. My door is always open.” Think about it yourself and I am certain that most of you have heard the same thing. Did you act on it literally?

It is very hard to find an executive in almost any industry who is not at least minimally defensive about criticisms from an employee. After a period of years goes by and a relationship develops, most of us have learned where they can go and where they avoid comment. I made it a point never to call someone out in a meeting in front of peers. Stronger comments were always better one on one and even then, it was difficult at times. This week I just finished THE MURDER OF LEHMAN BROTHERS (Brick Tower Press, 2009) in which Joseph Tibman (a pen name for a former investor banker at Lehman) talked about how Lehman Brothers CEO Dick Fuld was always insulated from bad news right until the end of the company’s existence. Clearly, they were a Model I firm.


Model II companies, according to Argyris, have somehow found a way to express issues. People are not afraid to raise conflicting views and their is actual encouragement of challenging publicly even what the CEO has to say. Problems can be dealt with even when you are pretty far down the road on a project. Argyris says there are only a handful of Model II companies out there. He wrote that in 1965 and I bet it is still largely true today.

Where do Model II companies exist? Startups, particularly in tech, would likely head the list. I have seen and heard of it in small professional practices in law, medicine and financial planning and analysis. Everyone is experienced and fairly secure. Family businesses sometimes operate on Model II. As one person said to me, “Yes, we argue, disagree and fight. But, at the end of the day we still love each other and we are all owners.”

Does it work in the media world? A sales staff may have it if it is not too large. Everyone is under pressure to perform so the sales chief is not the villain--the bean counters at headquarters are. So, people are often apt to speak up about sales tactics or who to pursue for new business. Ad agencies? Maybe a few start-up digital shops are Model II but generally candor is found in private conversations at long standing agencies among senior management who are financially secure.

The late Andy Grove of Intel once famously said, “Only the paranoid survive.” It always gets a laugh when it is brought up but today in many firms, particularly advertising agencies there is a crying need to move toward a Model II culture.

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

The Uncertain Future of New Brands

For the last few decades, brands have been a very important facet of our U.S. economy.  There was a time when it appeared that generics and store brands would dominate things but brands bounced back in many categories and grew even stronger.

At first the message was that brands must be warm and friendly and then it morphed in to an era that posited that one must have a relationship with their favorite brands. All that appears to be going away according to the futurists out there. It is difficult to argue with them as we appear to be going in to a “personal data economy.”

In previous postings in MR, I have discussed how the Internet of Things, Big Data and on line shopping lead by Amazon.com are turning the media, advertising and marketing worlds upside down. Truly, we are in a transformational era that may well speed up a new economic system and perhaps even social system.

The advent of accelerating technology has changed the way we shop and how we are persuaded what to buy. Many cling to the concept of emotional storytelling remaining the key to consumer communication but I am growing increasingly skeptical of that idea. As online shopping grows, smart data, if you will, should take center stage in many purchasing decisions. Some are forecasting a huge decline in the importance of grocery stores especially in high income, densely populated areas (i.e., Manhattan) in the years to come as many will order their food and other sundries on line or with the help of their “Smart Fridge” that signals when certain items are running low in the household.

Generally, I have found that seismic change takes longer than futurists forecast as consumers, or many of them, tend to lag technology. Millennials, however, are so tech savvy that they are likely to embrace technological advances far more quickly than any previous generation has to date.


So, what does this mean? I return to a theme that I have tried to articulate in several MR posts over the last few years. Established and firmly entrenched brands have to have a tremendous advantage over new products. In an era where commercial avoidance will continue to grow especially among the well educated and affluent, many automatic orders of groceries and personal care products will likely take place with the overwhelming preference going to established brands. Other than in fashion, where trends often seem bubble up quickly without much traditional marketing support, established players will have a huge advantage over newcomers who may not be as well funded as the deep pocketed giants.

Yes, there will be new players who will break through and somehow upset all precedent and succeed. Not to sound cynical but I would bet that they will be bought out by major players in their category if they grow fast and build market share quickly. A billion dollars remains a sizable amount of money and few entrepreneurs will be able to resist a generous buyout.

So, as the retail world unravels or shifts look for the big producers to get larger and even more powerful. Social media is great but it likely cannot level the playing field enough for newcomers to break through and grab big shares from the global giants.

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

The Dangers of Advertising Agency Diversification

Today, in the financial world, you often hear the clarion call for proper diversification. That is why index funds, which buy the entire market, are so popular. Many fees are tiny and risk is reduced by buying an entire market rather than trying to ferret out individual winners. The proverb to back it up is “Don’t put all of your eggs in one basket.” On the other side of the coin, steel magnate Andrew Carnegie once said, “Put all of your eggs in one basket, but watch that basket.”

Interestingly, if you look at billionaires, Gates, Zuckerberg, Murdoch and a few others, they tended to find success by focusing on one product or category. A notable exception to this is Warren Buffett and Charlie Munger of Berkshire Hathaway who run a conglomerate but do not see themselves as managers so much as allocators of capital.

Way back in the 1960’s when I first began to study businesses, conglomerates were the coming thing. Harold Geneen’s ITT put together a collection of companies as disparate as Avis, Continental Baking, The Hartford (insurance) and Sheraton Hotels. TIME magazine ran a cover story on “Jim Ling, The Merger King” who had cobbled together a motley assortment of companies under one roof. It ended badly for him.

Sometime in the 1980’s, these diversified companies began disposing of unprofitable businesses. The focus was more on concentration. The argument that if you owned companies in non-related industries protected you from the ups and downs of an industry was true but Wall Street and shareholders were not enchanted and corporate headquarters became top heavy with too many employees. Today, when companies speak of diversification it is often line extensions of their winning brands or adding new products to their existing markets.

The concept of diversification is a topic that I am getting a great deal of mail about from owners of small and medium sized ad agencies. With all the new platforms emerging in the media world, these shops of modest size are feeling some heat. How can they compete going forward? Many became involved with digital after the train left the station. Others still tout their online or mobile “whiz” employee at new business sessions. For clients who are new to advertising or of a very modest size, it may work. Yet, move up in size and there is an extreme disadvantage.

The major mega-agencies, WPP, Omnicom, Interpublic, and Publicas are deeply embedded in diversification. When a new platform or medium emerges, they have the deep pockets to buy either the leader outright or raid key talent and soon have a viable presence in that space. And, you can bet that is what they will be doing for years to come.

What can the smaller guys do? Tom Malone, management guru at MIT, said a decade ago, “All good diversification builds on competitive advantages in core businesses.” Okay, but what does a mid-sized or small shop have to offer other than personalized service? Their online rates are totally outclassed by the exchanges and their online or mobile whizkid cannot possibly work a full day on agency business and still monitor changes in the field effectively.

Those who say that they have a group of small “companies” with one or two staffers in Public Relations, Mobile, Online, or Emerging Media may look and sound good but they are often not just fooling prospects but are also fooling themselves. Some sort of affiliate relationship with a speciality shop of an advertising behemoth, seems to be a workable solution to their obvious gaps in specialization.

If they abandon the absurd fiction of being truly diversified and stick to their circle of competence, they may evolve in to a survivor as many of their size are swept away in the years to come.

Should you wish to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

The Competitive Environment for Advertising Agencies

Back in 1980, Michael Porter wrote a book now famous in certain circles called COMPETITIVE STRATEGY: TECHNIQUES FOR ANALYZING INDUSTRIES AND COMPETITORS. I devoured it, gave it to my boss who said he was dying to read it, and it sat on his desk for three years unopened. One day I found it in his wastebasket but said nothing. Porter’s thesis is more timely than ever, so after 36 years, it might be a good moment to share my thoughts with you.

The basic point was that what we think of as competition--direct competition, is only one part of the total landscape. He identified five forces and only one, internal rivalry in the industry, was always evident, but the remaining four came from the outside.

The five forces were:

1) Competitive rivalry among existing players--this is where most advertising agencies put 90% of their focus and nearly 100% of their frustration.

2) The bargaining power of suppliers.

3) The bargaining power of customers--why is Integrated Marketing Communications taking hold and advertising a declining segment of the marketing mix? It can be explained in two words--Wal-Mart and Target. Power shifted over last quarter century from manufacturers to retailers. Wal-Mart wanted you to lower their price rather than accept massive advertising support. And now, on-line retailers, led obviously by Amazon.com, are reshaping the retail landscape and perhaps destroying conventional retail. So a few large buyers are dominating things.

4) Threat of new entrants--in a free market, any profitable market will attract new players making the overall industry less profitable. Warren Buffett and Charlie Munger of Berkshire Hathaway have looked for companies with “moats” around them. They buy companies with high investment or fixed costs, or utility franchises or those with very high switching costs for customers. How many manufacturers can take on Boeing in aircraft manufacture when the cost of entry is in the billions? Ad agencies are different. A few disgruntled employees can quit, rent some office space or use a kitchen table and start a shop. The threat of new entrants is always there.

5) Threat of substitutes--if brand loyalty or switching costs are high, a manufacturer is protected somewhat. Otherwise, look out!

As we look at today’s advertising agency environment, it is not an exaggeration to say that this may be the most difficult period ever to grow your agency business.

I talked and had lively e-mail exchanges with a number of agency principals largely in the U.S. Here are some of their comments (obscenities deleted):

--Mid-Sized agency partner--we have a great deal of pride about our ability to keep up with changes. Two years ago, we hired a young art director. He impressed all of us but in each interview around the shop he kept pressing all of us on our digital capability. He signed on and was a big hit internally and especially so with clients. After seven months, he came to me and resigned. When I asked him why he said (paraphrase), “You guys lied to me. It is crazy to tell people you are up to speed on digital. You may fool most of your current clients, but not me. I am out of here.” We all wrote him off as an angry young man and kept our heads down and continued to march. A year later a bright young intern joined us. The kid was on fire with ideas and seemed to read everything about the industry in his free time. He peppered us with articles, blog posts, and a few new marketing books. After 90 days, my partner and I offered him a job. He laughed and said, “No way. I have learned nothing here. You are nice people but you are at least five years behind most agencies your size. I am heading for NYC.” A month later, a young copywriter of ours told us that the young intern had landed a job at a mega-shop in New York and seems to be doing great. The two young people were a wake-up call for us. If we simply talk to each other and unsophisticated clients, we do not know how far out of the loop that we really are. We are trying to recruit staffers from larger shops and are sending key people to industry conferences. Can we ever catch up?

--Small agency owner (12-15 staffers)--"when we pitch new business now, we are stunned to find much larger shops chasing the nickels and dimes some of these small advertisers are offering. A beach community tourist board had 12 finalists. We could only offer serious attention from me and the whole staff. Competitors had departments twice as large as my whole shop.”

--Mid-Sized CFO--"we tried incentive based compensation some years back . We got clobbered as the Great Recession made it hard to sell anything. Also, one client, privately held, appeared to lie to us. His staff said we were great but he said sales were flat and our bonus was tiny so we resigned it.”

--Mid-Sized Creative Chief--"our competition lies all the time. Our media director and I keep fighting for more staff. How can we possibly do due diligence on all the platforms that we need to cover for a campaign? When we ask for an increase in fees, existing clients usually say no despite agreeing that we have more work to do than years ago. In competitive shootouts, someone always lowballs us (and others) and say that they can do it all for a few hundred thousand less. It always ends badly for the client and they switch shops. Meanwhile, we lose some good opportunities.”

--Anonymous Ad Agency Owner--"we try to upgrade staff and facilities but we are outclassed right and left. Fifteen years ago, we could pitch a big piece of business and our TV executions could compete with the big boys and girls. They might let us buy media in some spot markets and a mega-shop’s buying service would do the network TV negotiation. Now, we are light years behind in digital and I cannot afford to pay young talent what they deserve. So, our client roster is getting less and less sophisticated. The young kids hate it. One told me as he left that working here was like working at an assembly line at GM. The people were pleasant but the work was the same with nothing new coming on board. I did not dispute what he said.”

So, the atmosphere is tough out there and may get worse. It is difficult to analyze your competition when you do not have their tools or they are unethical.

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