Make Your Career Robot Proof!

Sometime back in the late 1970’s, I was on a plane traveling from Detroit to Baltimore. A fellow roughly my age was assigned the seat next to me, sat down, and we talked a bit. He told that he worked in a General Motors (GM) plant in Michigan as a welder. When he asked what I did, I told him that I worked in advertising. He said that was a bad choice as someday I could get fired, maybe more than once. He, on the other hand, did a vital job at GM and had job security forever. At the time, I did not think much of what he said until perhaps 10 years later, I began to read about how automation was slowly taking hold at auto plants all over the world. So, it is a good bet that my seat mate never made it to retirement as industrial robots can always outperform a human, no matter how skilled, when doing a REPETITIVE task.

I bring this up as I firmly believe that there is a serious misconception going on among many regarding the future of robotics and employment. In recent months, I have read dozens of articles and viewed countless interviews about the automation revolution. All too often, the “expert” talks about how thousands of cashiers at supermarkets and Wal*Mart will disappear. Some project that six-nine million blue collar jobs will evaporate in a decade. Others discuss how driverless cars and trucks will smash the job security of taxi drivers and truckers and things will be delivered safely and on time as insurance rates for companies plummet. And Amazon Go stores scheduled to sweep across America will eliminate all but a small staff at thousands of locations. I do not have a serious issue with any of these forecasts.

What I do find disturbing, and a tremendous oversight, is that several million “white collar” jobs will evaporate as well as Artificial Intelligence and Robotics take hold. If I had to find the most vulnerable area a decade or so from now, I would bet that it would be “middle management.” Yes, the role of a middle manager can be complicated at times, but, be honest, much of it is routine and repetitive. Software has steadily improved over the last 20 years that is making these roles obsolete at worst and far less important at best. Remember, companies are always looking for ways to cut expenses. Imagine the profit windfall to organizations if a substantial number of their staffers earning low six figures could be eliminated with no decline in product quality or service. Enterprise software is getting databases together than can look at precedent and historical data and cut the number of people needed for a firm to function smoothly.

Changes have been going on for years but, as they do not happen overnight, many are blind to them. Remember travel agents? How about your friendly stockbroker? Millions now trade online and young upscales are piling billions into low cost index mutual funds and by-passing brokers forever. The cost savings over 40 years often will total well over six figures in most cases. We are over lawyered in the US and people are brushing and flossing more aggressively these days and a dental practice is no longer a sure thing. New sensors can spot macular degeneration and cataracts and the tests are run by a technician. Yes, ophthalmology will still exist but we will need far fewer eye surgeons going forward as a variety of programs can handle routine exams and spot trouble. This will be true across all medical areas.

What to do? Some people suggest that everyone should be prepared to become entrepreneurs. Sounds great but remember that most entrepreneurs make it on the third or fourth try and most fail. And, roughly one in seven people ever go out on their own. Some are simply not psychologically equipped or physically able to handle the pressures and challenges of being a one person band. Mathematically, everyone cannot be a chief.

So wither does one flee? Sometimes staying where you are may be a viable option but with a twist. For years, I have read very carefully everything that Berkshire Hathaway mavens Warren Buffett and Charlie Munger say and write. Both have said when you buy shares in a company, view yourself as a part owner of the enterprise (even if you merely have a few hundred shares). Well, the same thing can help you at your place of work. If you think like an owner, you mindset changes. You eschew politics and look at efficiency and take a long term perspective. Also, you may start to come up with creative solutions to many problems (some very small) at your place of work. Higher ups who are not asleep at the switch will likely take notice and, over time, you may become indispensable to the enterprise in top management’s eyes. You are an entrepreneur with the confines of your company.

We are at a transformational stage in our economy. I know, people have said this since the steam engine arrived two hundred years ago. Now, the difference is that no new industry appears to be emerging to sop up the lost jobs due to robotics and artificial intelligence growing at a rapid pace. Interestingly, if you look at economic history, unconventional characters always seem to be the ones who survive and prosper during times of industrial or market upheaval.

Anyone who has survived in the business world for decades has always needed to shift gears and reinvent themselves decade to decade. Now, with robotics et al on the march for real, the change will likely need to be more dramatic. We are not all visionaries. Yet, we can all be more organized, better communicators, and courageous. Robots lack courage and imagination and human kindness. It takes courage to deal with changing conditions and that is what you will likely need.

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

Rule #1

In recent years, people increasingly ask me what the most important habit or attribute is for success in the business world. I have given it a great deal of thought and have dismissed the platitudes such as hard work, doing something you love, and following the golden rule. All of these are vital and necessary. To me, however, there is something else. It is what I call Rule #1.

What is it? It is simply this—If you say that you are going to do something, do it. No exceptions. Early on in my life and career, I would not always follow through sometimes and would try and rationalize a missed deadline or a minor promise broken by saying that I was ungodly busy or too tired. It did not hurt me much but I hated it. So, about 30 years ago, I shifted gears forever. If I made someone a promise, I kept it. Sometimes it meant working until 9 pm or coming in for several hours on a Sunday, even though I knew a long nap would have done me a world of good.

Today, I am cautious about what I promise but, when I do, you can make book on it. Several years ago, I was talking with a client about the magazine world. He was waxing poetic over the quality of writing in SPORTS ILLUSTRATED.  I agreed and told him that in the publication’s early days, they hired Ernest Hemingway to write a series on bullfighting. He was intrigued and I told him the Hemingway pieces were in a book that featured his work and that of other memorable articles from the magazine. I then said I would mail him a copy of the book.

The next day, I hurried to the post office at lunch and shipped the book to the client. As I returned to the office, I ran in to the account executive who attended the client meeting with me. I told her that the SPORTS ILLUSTRATED collection was winging its way to the client. She said, “You actually sent it? I thought you were just making conversation.” I must have been visibly annoyed as she said, “Did I say something wrong?” “Yes, you did” was my icy reply.

Interestingly, it continues to surprise me how people are surprised when you follow through on commitments, large or small. Over time, you begin to be viewed as a serious person. You are dependable which is a very soothing attribute in today’s world.

So, when young people ask me my #1 Rule, my answer is always the same. If you say that you will do something, do it!


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

Nomadland

Very recently, I read NOMADLAND, Surviving America in the Twenty-First Century by Jessica Bruder (W.W. Norton and Company, 2017). It tells the story of increasingly large groups of people who have left or abandoned their homes and taken to living in their cars or RV’s. They are often getting on in years, are financially challenged and tend to move several times per year.

Now, these people are not whom you might think of at first blush. They are not the many thousands of people in their 60’s who buy Recreational Vehicles (RV’s) that they have paid six figures for and they take off across the continent to see North America close-up. Those folks often pay $100+ per night for a campsite, and in some rural areas, would save money staying at a hotel. The new Nomads have come to a difficult, painful and sad decision—the cost of maintaining a permanent residence is so onerous that they find that their only option is to find a used RV, refurbish it a bit and hit the road to look for seasonal work and a place where they can park or hide their vehicle for free.

The Nomads may serve as guides in the summer at national parks with the added perquisite of being able to park their RV within the facility safely and free of charge. Others gathered sugar beets in North Dakota which is physically exhausting work that pays a little above minimum wage. Finally, despite other jobs mentioned, a big employer is Amazon distribution centers where the Nomads, usually senior citizens work seasonally at an exhausting pace.

Rural areas are a magnet for these struggling seniors as they are far from highly concentrated population centers. Desert areas in Arizona, Texas and a few other locations are popular choices for these passing strangers. Hundreds, perhaps thousands, gather at Quartzsite, Arizona each winter and are welcomed by the locals. Needles, California also sees a lot of these individuals as well. Given their age and their “camping” far from cities and towns, the police tend not to hassle the Nomads. If they stay too long at a location, the police simply tend to “suggest” that they move on out of their jurisdiction.

Ms. Bruder is a very engaging writer and she spent parts of three years studying and, at times, living with the Nomads. The story is heart wrenching at times and beautifully written. There is the occasional gaping hole in the plot. Most of these people are not destitute. They collect transfer payments such as Social Security in many cases and, many work from time to time as mentioned. I listened with great interest when Ms. Bruder was interviewed on National Public Radio (NPR). When asked how many people were living this lifestyle, she replied thousand and thousands. Okay, but how many thousand? With some 327 million people living in America today, is this really a groundswell or a tiny group who are dealing with hard times in a unique way relevant to 2018? Many have Wi-Fi, write blogs and stay in touch with a wide range of acquaintances.

To me, this is simply a sign of the times. Unemployment is low and markets are stuttering a bit but remain at all time highs. Yet, as mentioned before in this space, nearly half of Americans have been left totally behind in the current strong economy. This small subset who may have worked and worked hard for 40+ years is reduced to living in aging vehicles and struggling to survive. Let us hope when the next inevitable downturn comes their numbers do not swell.

I recommend that you read NOMADLAND.  Candidly, I wonder if these people truly exhausted all options before hitting the road. Some may be estranged from family members and others may want a last bit of true freedom. One last point. Ms. Bruder mentioned that at one time she returned home to Brooklyn and saw a few vehicles parked in an industrial area one night. She wondered if they were NOMADS. Last week, I drove by a Wal*Mart and saw two RVs parked in a corner of the lot. An elderly man stepped out of the vehicle looking down on his luck. Two days later, I drove by and they were both gone. Coincidence?

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

Income Inequality

A few weeks ago I put up a post entitled “Is It Really Social (In)Security?  It, to my great surprise, generated more mail than any of the other 400 posts that I have published since starting Media Realism. Some called me a socialist and others an alarmist. I do not believe that I am either. Several, however, asked me to double back on the theme hinted at in the post and address the issue of Income Inequality in the United States.

I must confess to being a bit hesitant to write about this topic. It is very hard to thread the needle and not veer off into partisan politics or give social engineering suggestions when one covers such a hot button topic. I will do my best to limit the discussion to demographics and some financial data but at times will editorialize a bit.

Emanuel Saez, an economist at University of California, Berkeley monitors income and wealth disparity perhaps better than any academic in America. A couple of years back he calculated that income inequality was at a level not seen since 1928. Back then, the top 1% garnered 23.9% of the income and the bottom 90% some 50.7%. With the stock market run-up in the last few years, the number for the top 1% has to be higher than that now. How come? Easy. Only about half of all Americans have any stake in the equity markets. So, with every all time high we hit in the Dow or S&P 500, those on top by default have to be garnering a larger share of US wealth.

Internal Revenue Service data is not current as it takes a while to gather it all, paints the picture for 2015:


AGI*                % of Returns        % of all Taxes Paid   Average Effective 
                                                                                               Tax Rate**                          

$2 million +         0.1                          20.4%                        27.5%

$500k-2 million     .8                           17.9                           26.8

$200-500k         3.6                       20.6                            19.4

$100-200k        12.3                          21.7                             12.7

$50-100k.            21.8.                         14.1                              9.2

$30-50k.               17.6                          4.0                            7.2

Under $30k          43.8.                           1.4                             4.9    


* Adjusted Gross Income. It is Taxable Income after deductions

**Pew Research Center projections based on Internal Revenue Service Data


I would bet that you have probably never seen anything quite like the above table. The first question might be if the top tax bracket were 39% in 2015, how come those making over $2 million  only averaged 27.5% as an effective tax rate? Well, much of their income in a given year can be from capital gains (sale of long term stocks or real estate) and a handful benefited from carried interest which treats short term gains as long term. The rich can and do hire clever lawyers and accountants to arrange their affairs in a way to minimize tax exposure. There is nothing illegal about it; they simply have the means to do it.

I have avoided all terms such as upper class and upper middle class on purpose. Someone living in Youngstown, Ohio or rural Arkansas with an income of $100-200k would be doing great and a family in Manhattan, San Francisco, or the DC suburbs would be middle class at best with twice that income. So where you live is a great driver of lifestyle and purchasing power.

Make no mistake. If you have a free society, there will ALWAYS be some level of income inequality. Some people are smarter, work harder or simply are luckier than others. Others were in the right place at the right time and benefited from their industry taking off like a rocket. So, the Marxian dreams of a truly egalitarian society are just that—a dream.

Yet, today, things seem to be getting increasingly polarized. As noted in the Social Security post, the Federal Reserve reports that some 40+% of Americans do not have the liquidity to cover a $400 repair bill or an emergency room visit. Telling someone who lives paycheck to paycheck and sometimes payday loan to payday loan to maximize their 401k contribution is an absurd fiction. Horatio Alger’s young heroes may have pulled themselves up with energy and ingenuity in early 20th century America but they did not have to cope with the 21st century millstone—student loan debt.  Also, artificial intelligence, robotics and advanced software will cut the need for labor substantially over the next few decades. The top 10% will benefit as they own the means of production. Job training can help alleviate some of the problems but will you truly need as many workers as we have today?

Solutions? Soak the rich, some say. Well, a re-writing of the tax code to require those making over $2 million  annually to pay 35%+ regardless of loopholes would make people feel good but you can see in the table above that there are not all that many of them. So, making a dent in the budget deficit simply would not happen.  Expand transfer payments and entitlements? Would help smooth things out a bit but our deficits are huge already. Tax people earning more than $100k somewhat more? That would help but might not be politically viable as virtually all of those citizens vote.

Over the  long haul, I have some concerns about the inequality trend. Will it cause social instability if it continues to accelerate? Separately, what about personal responsibility? When does a person have to take full responsibility for where they are in life? 21, 35, never?

Things seem to be eroding. Since 1790,when rough data was first gathered here in the USA, each succeeding generation made more money than their parents. Now, Deutsche Bank projects that only 50% of children will earn more that their parents. Amazingly, it is also true of low income people. The American Dream seems to be evaporating.

The late comedian, satirist and social critic George Carlin put it this way—“The reason they call it The American Dream is that you have to be asleep to believe it.”

I will have more about this topic and related issues in future posts.

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


                                         

Is It Really Social (In) Security?

In my endless updating of demographic data, I stumbled across some social security figures this past week.

According to government data, the average recipient receives $1,404 per month. Okay, what is the big deal? Well, other data they published, admittedly a few years old, really got my attention. Consider the following:

—Some 19.7% of recipients obtain 100% of their annual income from Social Security (S.S.)

—33.4% derive 90%+ of their income from S.S.

—61.1% receive 50%+ of their income from S.S.

I knew that Social Security was a lifeline for many seniors but I found these numbers pretty jarring.

At the same time, most of you have heard or read that the Government Accounting Office (GAO) has projected that Social Security will go in to serious deficit mode in 2034. No, the Cassandras are wrong when they say the system will be totally broke. What they do say, however, is that benefits will have to be cut 24-25% unless significant changes are made in the funding meaning some combination of higher eligibility age, means testing for the affluent, or higher Social Security taxes for those with generous incomes.

Sadly, we have known about this for years but politicians do nothing. Certainly, they will act at some point but the measures may have to be really draconian if they wait until the deficit is right on top of us.

Amazingly, some people say do nothing. I read an article a few years ago by a mean spirited columnist who suggested that if we did nothing people would learn to save on their own. At the time I dismissed it as the work of a crackpot, but on a plane in August, I fell in to conversation with a fellow who said the same thing. When I asked about the pain that it would cause millions, he shrugged and said, “that is their problem.” I countered that not many 85 year olds can find steady work, but he would not budge. So, I gently (I thought) brought up the much quoted stats that over 40% of Americans cannot afford a $400 car repair bill or an emergency room visit.* So, how can millions fund a comfortable retirement when they lead a hand to mouth existence now? He got red in the face and called me a “pathetic bleeding heart liberal.” That was a first for me! :)

I would project that 90% of you reading this are in great shape for retirement. Yet if something is not done, the three stunning statistics at the top of this page will get even worse. And, video services will thrive as millions more than today will not be able to afford any other entertainment but “TV” in their retirement years.

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

*Source--Federal Reserve Board--Economic Well Being of U.S. Households, 2018

The Rise of In House Advertising Agencies

On August 27th, The Wall Street Journal published an article entitled, “In house agencies on rise as advertisers seek services closer to home”. I found it interesting and mildly surprising. Three MR readers coincidentally e-mailed me the link and asked that I cover the topic. Hence this post.

Over the years, In house advertising agencies did not have the greatest reputations. Generally, they were formed as a means for the parent company (the advertiser) to save money. Agency people were often their worst enemy. Clients came to believe that agency staffers were arrogant and charged too much for their services. They also flaunted their high incomes. Many is the time that I arrived with a creative or management rep at a client meeting in one of their Mercedes or Jaquars. The client would sometimes say something to me afterwards. They felt that the agency team was rubbing their affluence in their faces.  Agency people also often talked of their fabulous vacations to marketing people client side who were struggling financially. It did not play well and, years later, when I ran in to former clients, it has often been a topic of conversation. So, many felt that a move inside would save a boatload of money and the work would be almost as good.

On the negative side, there was a stigma for many regarding working at an in house shop. The conventional wisdom was that there was little turnover and a true ad pro would want the fast pace of traditional agency life and enjoy pursing new business plus working on a variety of type of businesses. Many of my peers said in house was great for collateral material or grinding out coupons or Free Standing Inserts but fresh thinking had to come from the sharpies at ad agencies. If you worked on only one piece of business or category, you would get stale.

Things appear to be changing and in more ways that the splendid Wall Street Journal piece discussed.

I hunted up some people who I knew casually who worked at in house shops. A few former colleagues put me on to some others. Here are some comments from people currently working in house:

—“We went in house several years ago. It was a good decision. We move quickly (no waiting for our big shop to get a work starter wending its way through the creative department), save money, and our people know the brand. Our company is the brand. Amazingly, some agencies do not get this.”

—“Friends made fun of me when I went to a large in house shop. Well, the staff is professional and the hours are great. Sure, I work late every now and then but I only went in on two weekends last year. No new business to pitch so we focus on our assignments and are really good at time management.”

—“I am a single Mom and the benefits at my huge company dwarf that of any agency that I worked at. The health care package and 401k is so much better than my agency experience. Also, twice I was let go when my shop lost a big account. I was told that I did nothing wrong but they had to cut expenses. I do not have to worry here about what you often refer to as ‘the leaky barrel’ of agency/client relationships. It is not totally secure but better than I have ever known.”

—“The stigma of working in house is lifting. I like the better hours and benefits plus the salary is comparable to ad agency levels. We are nimble here and there are far fewer levels of review. Also, we do not suffer under an egotistical creative chief who hates ideas that were not his.”

—“Ad agencies do not get it. As a total percentage of marketing spending, advertising continues to decline here. Also, we deal directly with Google, Facebook, and lately, Amazon for our on line advertising needs. The reps are young, smart, state of the art, and, AND THEY LISTEN!  I see us using a free lancer or two in a few years for theme lines or a new set of eyes but we will not need an outside agency much longer.”

—“As we move to digital, we deal with the FANGs sans Netflix. What pros!”

Agencies are not going to disappear. Yet, in an era when accountability continues to become more prominent and measurement metrics improve, the trend of a movement toward in house shops seems likely to continue.

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

The Allure of New TV

Last week, many of us in the media world were surprised but pleased by the launch of a unique venture—New TV. It is the brainchild of two powerful executives—Meg Whitman, the outgoing chair of Hewlett-Packard and Jeff Katzenberg, a founder of Dreamworks and the former head of Disney’s movie studios. They raised over a billion dollars for the launch and did it very quickly with an amazing array of businesses providing seed money including Disney, NBC Universal, Alibaba, Facebook, Viacom and in the financial world, JP Morgan Chase and Goldman Sachs.

Right now, Ms. Whitman and Mr. Katzenberg are projecting a Christmas, 2019 launch. The service will provide “on the go mobile viewing” with much newly created content being about 12 minutes per episode for New TV series. You may ask why would people want to watch on their phones. Well, currently, the average person spends four hours per day on their mobile device and approximately one hour per day is with video content.

In terms of technology, they are are projecting an improvement in quality and also will be ready when the move to 5G occurs in a couple of years. When I bounced this idea off a number of people in recent days, there was a very sharp demographic divide. My contemporaries seemed to be skeptical of people watching series video on their phones although two mentioned that the new Apple phones will have larger screens. Those whom I canvassed in their 20’s were much more enthusiastic and some liked the idea of briefer episodes.

So, once again, conventional media is threatened. These two executives have a wonderful track record and are unusually well connected in both creative and financial circles. I am VERY curious to learn what they plan to charge for the service. How much will people be willing to fork out for “New TV”? Remember, many of us doubted people who be willing to pay for music but that has been proven to be totally wrong.

What do you think? I would love to hear from you.

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

The Silver Bullet For Start-Ups?

Over the years, I have always watched the trajectory of start-up businesses very closely. As you all realize, most new products and most new businesses fail with businesses generally closing up shop within about three years. So, I have done some digging and asked countless people what they thought was the reason that some businesses succeeded while most did not.

The answers centered almost exclusively around five variables:

1) The Leadership or Management Team

2) The Big Idea for the business

3) The Business Model

4) How well financed the business was

5) The Timing of the Launch


Consistently, I have found that most businesses fail due to inadequate financing. Most brands of large companies fail due to poor marketing or tough competition. Finding why businesses succeeded was a great deal harder to smoke out than dissecting failures. When it came to tech, my highly limited sample came in hard on the attribute of timing. For service companies, most said the team of principals and how careful their subsequent hires made all the difference. Surprisingly, few said the basic idea for the business was a major factor. Almost to a person, they said that often a company evolved and the original idea either went away or became transformed in to something else as the business rolled out. Re the Business Model, one observer said “When a company succeeds, the analysts tout the business model. That is certainly part of the mix but I see it as secondary to the team and timing.” Others made similar comments.

What about funding? We have all heard Fred Alger's famous comment that “there is no such thing as an over-funded company.” So true. A few mentioned funding as vital if you had a somewhat rocky start but none saw it as the touchstone for brand success.

So what was the winner? To my surprise, Timing was the clear winner. More than one mentioned the Great Recession of 2008-2009. Their attitude was that no matter how good your product or service was, we were in the worst downturn since 1933 and people were afraid to spend or try something new. Unemployment soared by 250% and if you could keep you head down and also your job, you felt good. Branching out in to something new was not on the agenda during that very troubled period.

I was skeptical and then thought about it a bit. Then, watching TED talks, I found that my contacts had a strong ally. Bill Gross, the start-up maven, not the bond king, gave a brief talk entitled, “The Single Biggest Reason Startups Make It” and he came down heavily on the side of Timing as a major indicator (the You Tube link is  https://www.ted.com/talks/bill_gross_the_single_biggest_reason_why_startups_succeed).

Clearly, I do not agree with all that Gross says. In the six and one half minute video, he discusses the 200+ firms that he has helped launch and discusses which attributes worked. Also, he makes a leap of faith and discusses other that he did not have a hands on relationship with personally. He may be implying a mathematical precision that really is not there as how can you really smoke out the contribution of Idea vs. Team vs. Business Model vs. Funding vs. Timing. He does make some cogent arguments, however and it is well worth a brief view. The example of Air BnB struggling at first as people did not want strangers in their homes dissipated in the Great Recession as people needed money very badly was dead on.

If one relies too much on timing, then you are saying that luck may place an outsized role in the success of a venture. Yet between the comments that I received plus the Bill Gross video, I am rethinking this question. Any opinions?

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

Do You Want Me to Fail?

If you have been in business a while or simply lived a long time ( I have done both), you realize that most things be they new products, new companies, new restaurants, new ideas do not succeed. If you study the habits of entrepreneurs you find that successful ones make it on the 3rd or 4th try. They appear to be wired differently than most people and do not see failures as conclusive but merely a learning experience and they move on to the next adventure.

One thing that I have observed and experienced, and often hear a lot from MR readers is that it appears that most people do not want you to succeed.  It has always struck me as odd especially in certain circumstances. Over the years, I was involved in hundreds of new business presentations. People would always grill me afterwards and asked how I thought it went and whether or not the firm that I was associated with would get the business. I would always say how I thought the presentation went but, after I left my 20’s, I never said whether we would get the business or not. People would gloat if you were wrong and it was always hard to forecast. Once I was a lead player in a pitch and really nailed it. When I returned to the office, people asked me what I thought and, very uncharacteristically, said “we have it. I am sure.” The most eager person with the questions seemed deflated and said “Cole, you are awfully sure of yourself.” Forty eight hours later they called and assigned us the account. My colleague walked around morosely for a few days. I was confused. Why should he be jealous? He, too, was a partner in the firm and would benefit from the increased billing.

Months later, a third colleague really burned the midnight oils and, against stiff odds, landed a nice account. When I saw him, I thanked him and gave him a big hug. My colleague who was displeased with my win months earlier, chimed in, “Yeah, congratulations.” Later that day, he called me aside and asked “Why did you hug that bastard?” I responded that the firm would be better off with the new business and our associate had worked very hard to bring it in to the shop.

When I asked some panelists about this issue, I expected mild responses.  Nope. Here are some verbatim (expletives deleted plus some modest editing) comments:


—“The only one who was ever happy with any success I have had is my spouse. Even people that I made a lot of money for did not seem grateful. I was no threat to them especially when young but they seemed ill at ease when I succeeded.”

—“I am a serial entrepreneur. My losses are far more frequent than my gains. People still dredge up my failures at dinner or cocktail parties and out on the golf course. I am rich now and they are really jealous. None of them ever took a real chance. I try to avoid them but I live in a small city and they pop up at any large gathering. “

—“I can’t stand the armchair dreamers who sit around and tell me what I did wrong. They were not still at the office at 9pm and you never saw them on weekends. When I was young, a few would come to me after a loss and want to do a post mortem telling me what I did wrong. They were high on criticism but never got off their asses and tried to broaden their horizons. You never strike out if you never get in the game!”

—"I have been a salesman for 35 years. When I landed an account that others had tried to crack for years, New York (headquarters) was happy. My boss and fellow foot soldiers rarely had any sincere praise. They were jealous, I suppose. One boss told me that the only reason I was able to get billing was that he had softened them up for years. Maybe so, but it was a rotten thing to say after my first big win.”

We live in an age of envy. If you win when others lose or merely sit on the sidelines, there will be inevitable resentment. May I suggest that you wrap yourself up in entrepreneurial mode and go out and change the world?

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

Should You Fear The Robots?

It is hard to believe but Stanley Kubrick’s “2001: The Space Odyssey” was released in 1968, some 50 years ago.  I was a freshman in college and was eager to see it as it was directed by Stanley Kubrick who a decade earlier had led “Paths of Glory”, my favorite film of all time (if you have not seen it, do so. It is remarkable and remains my favorite film). I did not quite understand the film but vividly remember people talking about HAL, the robot who at one point in the film tried to kill all the humans. Today, when I discuss either robots or Artificial Intelligence (AI) with people, HAL often comes up especially since “2001” has been re-released.

Here is my take on Artificial Intelligence(AI). The robot issue is a ruse—the real issue is the AI WITHIN the device.  Ask anyone running a business of any size and ask what is most important and they will tell you that containing or cutting costs is issue #1. The great Warren Buffett was once quoted as saying: “There are two rules in business. #1 is cut costs. #2 is don’t forget rule #1.”

Over the years, I have read and heard many comments about using robots or logarithms or algorithms to do many things but most importantly THEY CUT COSTS!. Taking a mix of comments send to me over the years, business owners have told me that robots “never get sick, never require social security or health insurance or 401k contributions, never go on coffee breaks, and are absolutely never clubhouse lawyers.” So, when people tell me that the robot revolution will never happen, I just smile. If you are running a business today, it is not easy. Something that can save you a boatload of money and reduce headaches is an approach that one is going to embrace.

The U.S. Department of Commerce has projected that today some 3.8 million Americans drive taxis, Ubers, trucks, buses and other vehicles. Within 20 years, most of these jobs can be replaced by self drive vehicles. When you tell this to people, an amazing number (over 50%) shake their heads and say that it can never happen. Believe me, it will. I hear arguments including “I like to drive and be in control. I will never give that up.” Well, if your insurance rates drop and you get place to place safely, you will likely embrace it. And, businesses will as they see costs fall and productivity and safety rates rise. I have joked with family members that when I turn 90, I will take my self drive car to the Grand Canyon by myself and perhaps a bottle of scotch (I had a scotch once in 1973, hated it, and have not had one since but I may make an exception in 2040!).

Big mining firms such as Rio Tinto and BHP Billiton are experimenting with self drive trucks in underground mines. Even the struggling and comparatively small Hecla Mining of Idaho has found that self drive trucks are more reliable than staff drivers. Imagine if every traffic cop in the world were relieved of traffic control and freed up to fight crime? Things might get safer and municipalities could save money.

Been to a casual restaurant lately in a major city? Increasingly, ordering is automated from a touch screen eliminating the need for many on the wait staff. We grey-beards my not like it but millennials do.  How about health car? Algorithms can spot patterns that your physician may not and diagnoses are getting sharper but there will be less need for specialists as the “robot” may do the screening.

So, here is the issue. I have averaged several studies from a wide variety of sources. Projections are that in the U.S. some 19 million jobs could be eliminated over the next 20-25 years due to all forms of AI. At the same time, the glass is half full crowd say that 21 million new jobs will be created. They talk of “cobots” that are collaborative robots that will work side by side with humans. Great! I just do not see how more jobs can be created out of this AI growth. If you are not well educated or motivated, you may a very uncertain future. To survive, many businesses will have to hop aboard the AI train as it is leaving the station or be noncompetitive moving forward.

Don’t get me wrong. As doors have closed on me due to changes, several more have always opened. I do not see this happening for people across the board in the future. We do not need to fear HAL literally killing us. But young people need to stay flexible and on top of things. The world will change faster than many realize.

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

The US Consumer Debt Bomb

Those of you who know me are aware that I am something of a data junkie. I love to crunch numbers and look for trends. For years, I have worried about growing debt levels. Currently, the US government debt stands at approximately $21 trillion dollars. Few want to discuss that and I realize it is not exactly comparable to personal consumer debt. After all, the US dollar is the world’s reserve currency so, at times, we can print money to cover expenses and get away with it for a surprisingly long period of time.

Recently, the Federal Reserve released updated figures on household debt in the United States. The headline was that total household debt in the United States was projected to be $13.15 trillion. That certainly got my attention!

As any media strategist should be, I am something of a part-time demographer. So, I wanted to see how the debt was arrayed against different age groups in America. Results were a bit surprising and as follows:



Demographic           Average Household Debt

Under 35                      $67,400

35-44                            133,100

45-54.                           134,600

55-64                            108,300

65-74.                             66,000

75+.                                34,500


Source: Federal Reserve Bank of New York, 2018


A few issues popped out. The under 35 group was burdened by college loans. The average person owed $19,000 but often both husband and wife owe so the household college debt can be much higher. This debt is preventing many millennials from buying their first home nearly as early as their parents did. The 35-64 demos were about what I anticipated. People have mortgages and college bills plus notes on cars at that time of their lives. The surprise was 65-74 year olds and the 75+ demo. I assumed that it was for car loans. Nope. Many still had mortgage payments. Banks cheerfully write long term mortgages for people of any age if they qualify.  Admittedly, some upscale 65-74 have mortgage debt on second homes.


Why bother to bring this up? Well, the Great Recession or financial crisis began to take hold in earnest a decade ago. Once we struggled through 2009, many people said something like this to me—“People have learned their lesson. Look ahead 10 years. Millions will have cleaned up their personal balance sheets and will never get themselves in such a bad situation again.” Looking at the above data, I see that my friends were wrong. Household debt continues to grow. A rebounding real estate market did get many out of upside down mortgages (mortgage balance higher than current value of residence) but the overall debt levels continue to churn ahead.

Credit card debt continues to be annoyingly high. Again, the surprises came among those 65+. Here is the average revolving credit card balance by age group:

Under 35          $5,808

34-44                 8,235

45-54                 9,096

55-64                 8,158

65-69                 6,876

70-74                 6,468

75+                    5,638

I was quite taken by surprise that the average 75+ household with credit card debt owed $5,638!

So, despite our recent very solid growth of GDP of 4.1% for the last quarter, things are not so rosy for many people when you dig a bit. Are people borrowing more to purchase things and keep our 70+% consumer driven economy chugging along? It would appear so. An acquaintance dropped me an e-mail recently and said that he stole this line but uses it in meetings—“If you think the retail apocalypse is exaggerated, wait until the next recession comes along. People will not be able to meet their debt payments and storefronts will close all over America.”

So, what does this mean for the world of media? Even if my gloomy friend quoted is not entirely correct, it would appear that debt service will dig even deeper into discretionary income. So, people will likely watch more video as a result. You may cut the cord on cable but keep your Netflix subscription. Will you do without Amazon Prime? Probably not. So, Amazon Prime Video will take up more and more of your video viewing. HBO could grow stronger depending on what new owner AT&T does with it. And free You Tube will be cost effective for very inexpensive entertainment.

The world is not coming to an end. But when over 40 percent of Americans cannot handle a $400 car repair bill or trip to the emergency room, something has to give at some point.


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

The Coming Two Americas?

On July 12th, THE WASHINGTON POST published an article by Phillip Bump in their political section that, in many ways, was right in my wheelhouse. It discussed demographics 20 years from now. The point was that by 2040, eight states will have nearly half (49.5%) of the U.S. population. Add the next eight most populous states and that will be home to nearly 70% of Americans. So what, you may say. Well, clearly, young people want to go where the jobs are and where the action is. Living in rural areas has little appeal especially in those areas that are getting grayer and actually losing population. The author then talks about how this seismic shift, which strikes me as a demographic tidal wave, will put us in an odd situation. His thesis is that the U.S. House of Representatives will likely get far more progressive in nature as today’s millennials pile in to the 16 most populous states. Conversely, the U.S. Senate may get far more conservative as, even states that are losing members of the House and may join the handful now that only have one at-large House member will still have two U.S. Senators. His projection, and I have seen others that are similar, is that 30% of the population will control some 68% of the U.S. Senate seats. (A link to the article is https://www.washingtonpost.com/news/politics/wp/2018/07/12/in-about-20-years-half-the-population-will-live-in-eight-states/?utm_term=.c24c1ad51732).

Growing up in Rhode Island, I had a sense of this type of issue by studying Little Rhody’s history. When the Constitution was being drafted, people in smaller states felt that the larger ones (New York, Virginia and Massachusetts) would dominate things.So, the idea of an upper chamber, the U.S. Senate, was put forward. The two smallest states, Rhode Island and Delaware, might not have many members of the House but each would get two Senators just as the big states would. Delaware seemed to like the compromise and became the first state to ratify the Constitution. Stubborn Rhode Islanders held out but finally gave in and became state #13.

When I first read the article, I wondered if the author was going to call for an end to the electoral college. Many progressives are still smarting over George W. Bush losing the popular vote in 2000 by gaining the White House. There is an even larger discussion of the issue with Donald J Trump’s electoral college victory in 2016. Yet, no, the author does not go there. He does, say, however, with some merit, that the House and Senate may well represent two different Americas.

Right now, the divide between urban and rural in America, to me, is largely cultural. It seems if these population shifts come to fruition (they do seem likely), things will get even more polarized than they are now. By the way, this is not true only in America. On May 22, 2012, I put up an MR post entitled “Urbanization, Globalization and Media” that discussed how DAILY across the globe some 180,000 were leaving rural areas to move to a city. Soon we will be facing issues that aging nations in Europe deal with daily. Hospitals in some Scandinavian countries are being closed due to declining populations. Countries with a deeply entrenched provider state are trying to see how they can maintain services in areas will declining economic prospects and aging populations. We are seeing cracks now in places such as Northern Maine, Western Kansas and Nebraska. Local schools have become regional and rescue squads are manned by folks in their seventies.

I thought about these data and forecasts and ran them by my hero—a no-nonsense, feet on the ground type who shares with me a tendency to look ahead. She immediately grasped the details and said “One caveat. Climate change.” If things do heat up, people will move back to certain places. Minnesota and Wisconsin will grow and Buffalo, Syracuse and Rochester will have a comeback. These places have lakes and upscale people like to live near the water. If the winters moderate somewhat, some will relocate to formerly forbiddingly cold areas that have good medical care and universities. Far fetched? Maybe. Yet, I have learned to take her forecasts seriously.

So the Post raised some interesting political questions. Will the Senate be dominated in two decades by people, who, if a mirror image of their small state constituencies, be out of touch with the population as a whole? I hope to live to see the outcome!

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

Streaming Scenarios

The business news is full of reports about deals going on in the media business. Will Comcast be able to best Disney’s latest offer to Fox’s film and broadcast assets? If Disney gets it will Comcast be satisfied to enlarge their global footprint by purchasing Sky in the United Kingdom? Will Comcast leverage up and try and purchase both Fox and Sky? If shut out of the Fox assets will Comcast make a run at Discovery as a consolation prize and, at the same time, enhance their global reach as Discovery has some fine overseas assets? I admit that I watch the financial soap opera daily and find it amusing. To me, however, it is not the really big issue out there although it is a part of it.

The real issue, to me, is the coming war for consumers in the streaming video space. As you know, Netflix, Amazon Prime, and Disney are active in this space. Two other tech giants, Apple and Facebook have talked about entering the fray. And, of course, there is Alphabet (Google), an absolute behemoth which has owned YouTube since 2006 but has yet to fully monetize its possibilities as an video and advertising platform.

Sumner Redstone, decades ago as CEO of CBS, popularized the term “Content is King.” The statement has proven to be true as distribution is now taking a backseat to content and the streaming bidding wars are beginning in earnest.

I have generally hesitated to make definitive forecasts but in this case I make an exception. We, in and of the media world, are going to see fireworks in mergers, acquisitions and new services in the next few years that will dwarf anything that we have experienced to date. Why? From my viewpoint, it is very simple. The companies involved are the greatest companies (by many yardsticks) in measured economic history. They have the deepest pockets of any publicly held companies since (adjusted for inflation) John D. Rockefeller’s Standard Oil was broken up by the federal government early in the 20th century.

Consider the players:

1) Apple—this company has nearly 200 billion dollars in cash. They are generating an additional several billion a month in free cash flow. Now, they want to get in to streaming content. They can lose several billion a year for a while and can play the long game. A year ago, I, along with other media observers, thought that Apple would be wise to purchase Netflix. Perhaps they are sorry that they did not. Since the beginning of 2018, Netflix shares have increased by 115% so the acquisition now would be far more costly and more risky.

2) Alphabet—for nearly 12 years, they have done little with their amazing YouTube platform. If they decide to go all in with streaming by creating content, they will be a formidable competitor very quickly.

3) Amazon—Jeff Bezos has a lot of irons in the fire but his 100 million plus Amazon Prime members gives Amazon a nice start in streaming. And, if you watch it, you will see that Amazon Prime video original content is getting better. Bezos is patient. Remember that Amazon was not consistently profitable for many years. As was true of Apple, Amazon can play the long game in streaming content if they choose to do so.

4) Facebook—The social media titan is losing a bit of luster with millennials but they have a huge global base and deep pockets to boot.

5) Disney—the “Mouse House” has a great deal of their own content and may indeed snare the Fox Studio and film library from Comcast’s clutches. They are planning their own streaming service and have great franchises such as Lucas Films (Star Wars), Marvel Entertainment and classic children’s fare. Perhaps they can shoehorn ESPN in to the package as well. Disney is a leader in global entertainment and has made few missteps over the years. If they price their streaming service well and package it up properly, they will be a force for sure.

6) Netflix—let me begin by saying that I love the service. I use it several times a week for their Netflix originals and, given my affection for classic films, I also re-watch a number of my favorites. One issue that I have with Netflix is that they are not spinning off much cash. Yes, they have tremendous loyalty and have become one of the world’s most valuable brands. But, they are spending a fortune on content. I have seen estimates of $8 billion dollars for calendar 2018 alone. When asked about it, talking heads on CNBC and Bloomberg have rationalized it by saying that they can easily issue more shares if they need more money. Okay, that is fine when a bull market is in progress but this one is getting long in the tooth. When will they get profitable and start delivering a boatload of free cash flow? Right now, their logarithm seems to have found a sweet spot for consumer likes and their original programming has surprised many of us with success after success. And, their global footprint is expanding much faster than the traditional media companies. Still, I think they are vulnerable and a sale last year to Apple might have been their ticket to immortality.

So, where does all this leave us? In the 40 plus years that I have been analyzing media properties, I have found that it has generally been a bad move to bet against Disney. Yet they do not have the borrowing power of an Apple, Alphabet, Amazon, or Facebook or the recent success of Netflix. Were this a simple fight with Netflix pitted against Disney, I would bet that once Disney made a complete commitment to streaming they would eventually win a very hard fought victory. But with all the FAANG’s involved, it is a whole new ballgame.

One good thing. As competition heats up, it will be great to be a consumer. We will get some really nice pricing on streaming venues over the next few years.

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

Is Legacy Media Really Tuscany in Disquise?

On September 8, 2001, I was reading the New York Times. Columnist Anthony Lewis wrote a wonderfully descriptive piece on his love of Italy’s Tuscany and Umbria regions. It reads in part—“The silvery olive groves, the fields of sunflowers, the vineyards, the stone houses and barns……….Italy is evidence that there is more to life—a civilized life—than the unregulated competition of the market. There are values of humanity, culture, beauty, community that may require deviations from the cold logic of market theory.” He went on to lament the growth of corporate farms and waxed poetic over the small agricultural units he saw in the those two beautiful Italian provinces. I got his point—there is more to life than turning a buck and sometimes we need a reminder about what is important and quality of life should generally outweigh scheming for income.

I remember actually clipping the article out (no convenient online folders for me then) and vowing to visit Italy soon. Three days later, the 9/11 tragedy struck and the article and its message was submerged by glaring headlines. Some years later, I found the hard copy of the article as I was preparing to move. A few years later, my wife and I and other family members visited both Tuscany and Umbria and loved them. Also, friends put us on to the beautiful  walled city of Lucca where we spent some wonderful days. A return visit is definitely on our bucket list. One thing that I notice as a demographer was how old the areas were getting. Young people have gravitated to the bigger cities for job opportunities and those remaining tend to be quite old in many instances. So, the memorable lifestyle afforded in many of the villages that we visited was threatened as the low Italian birthrate was well below zero population growth (children needed to maintain a level population).

I bring this story up not to defend the free market system although I am normally happy to do it.  Rather, as conventional media is dying in the U.S. and other Western nations, a part of our lifestyle is fading as well. I am especially referring to metropolitan newspapers and selected magazines. Today, some 40+% of Americans get their news from Facebook. Call me old fashioned but I like the New York Times, Wall Street Journal, and The Washington Post which require two or more sources on their fact-finding. Investigative journalism is still important in a free society but as legacy media withers it is largely disappearing unless the story is huge. I also like to ponder a TIME magazine essay now and then even though the news in the publication (now sadly very thin) is not a few hours old.

The immediacy that the internet and contemporary news sources provide has its place and will only get stronger. I, for one, still savor, however, the nuance and distance that the printed reports in some old line media still provide.

To all of my American readers who make up nearly 45% of the Media Realism audience, may I wish you a happy Independence Day!

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

Stranded Assets in Media?

Very recently, I had a conversation with a small market broadcaster. In a moment, you will see why I will not identify him nor his markets or whether he operates in TV or Radio.

He called me and said that his media company was struggling. He said essentially that his net worth was suffering from a case of STRANDED ASSETS. “Don, you probably do not know what that means”, he told me. “No, I know exactly what it means.” That was not good enough for him. He said that I needed to define it. I was not thrilled but rattled off a definition that any MBA would be proud to call his/her own. For you non-wonks, a stranded asset is “an asset that is worth less on the market than it is on a balance sheet due to the fact that it has effectively become obsolete in advance of complete depreciation."

In other words, my acquaintance has broadcast assets with a listed value but he knows they may never see the light of day in the real world if he wants to sell. And he does. He is getting older as we all are and thought that selling his properties would provide him with a platinum parachute in his golden years. This is somewhat analogous to several million people in 2008-2010 who were “underwater” on their mortgages. They owed more on their mortgages than they could sell their homes for. Some walked away, others went bankrupt, but many simply stayed put and dug themselves out of a huge hole over several years. The broadcaster appreciated the analogy but was clear that his small market properties would never bounce back as the real estate market has done to a certain degree.

We then went in to a lengthy and at times amusing conversation about how his bailout position may be a “greater fool”. The Greater Fool Theory is a an equity market term that is, in essence, a crazy idea. It is the opposite of the Graham/Dodd/Buffett/Munger approach of investing in the fundamentals of a company. When the greater fool theory is in evidence be if for a stock, a house or a business, the buyer knows that the price one is paying is unjustifiably high but the buyer does not care as he/she is convinced that the price of the asset is going up and fast. The speculator, I cannot stomach calling him an investor, sells when the asset pops up to another bozo whom we shall dub the greater fool. There have been greater fool purchases throughout my life and even in recent history particularly in the tech bubble and highly leveraged real estate.

The broadcaster talked at length and his candor was refreshing. He doubted he could rustle up a “greater fool” to buy his properties. I countered that just as everyone and his brother think that they can run a restaurant and most fail miserably, there has to be a small but passionate group who think that they could run a TV or Radio station profitably even in today’s environment. He thanked me for my time. Really,  I think that all he wanted was someone to listen.

My caller is a survivor. I am confident that he will work his way through things somehow. Yet, what gnaws at me is how many others are out there in a similar boat in the media and advertising worlds? Are stranded assets a silent burden that many are carrying?

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

Silicon Valley Wisdom

I was doing a bit of digging recently and found that the term Silicon Valley is a good but older than I imagined. While there is a lively dispute going on regarding who coined the term, it appears that Don Hoefler was the first person to use the term “Silicon Valley” in the printed word. That was way back in 1971 which surprised me. Prior to that, many people appeared to refer to the tech area as “Silicon Gulch.”

As the years have passed books have been written about the nuggets of wisdom coming from Silicon Valley. They may be attributed to Steve Jobs, Steve Wozniak, Mark Zuckerberg, a number of venture capitalists and many other tech players. Someone asked me this past week which comment had the most staying power with me. I am embarrassed to say that I do not know the man or woman who first said it but it goes as follows:  “We overestimate what can be done in three years, and underestimate what can be done in 10.”

Think about that line for a few moments. To me, it so dead on that it is almost eerie.

To the graybeards reading this—Remember when cable first began as an advertising medium? Some suggested that the major over the air networks were going to dry up and blow away. Clearly, it did not happen in three years but a decade later, the networks had lost substantial audience share and ad dollars began a shift as well.

The same thing happened with early online activity in late 1999 and early 2000. When the dot.com crashed occurred, online suffered a setback but came roaring back a few years later and, by 2010, only neanderthal advertisers did not have some digital in the mix. How about 2009-2010? If someone wanted to look intelligent in a meeting, the magic word, sometimes whispered, was Facebook. I am convinced that they picked up much too much advertising revenue early on in their development. Did it work? Few knew and sadly, some did not care. They wanted to appear cutting edge.

Look back, if you will, ten years. Think of the things that you do now as a matter of course that you would not have thought of years ago. Netflix streaming? Watching video on your phone? Texting like crazy at age 70? Making bank deposits via your device? These lifestyle changes have been remarkable and we would all regret losing them.

My point is that we, in the media world, need a long term perspective. We need to be flexible and always remember that we will be surprised at both what will happen and what will not.

The great Danish theologian, Soren Kierkegaard, wrote in “Either/Or”—“he who becomes wedded to the spirit of the times soon becomes a widower.” So, embrace change, but do not do a complete 180 degree turn on media mix. Over a decade, absolutely. But constantly shifting gears as we move in to new platforms seems to be a winning approach.

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

A Dead Cat Bounce in Legacy Media?

There are many sayings in Wall Street lore that I love and have used to make a point over the years. One of my favorites is the “Dead Cat Bounce.” What this means is a temporary recovery of the share price of a company that has taken a real shellacking of late. For example, a stock was at 100 and dropped to 30. It then jumps back for a brief time to 35 as short-sellers cover and then continues its downward slide. Wall Street analysts will sometimes say “Even a dead cat will bounce if it is dropped from high enough.” At the risk of offending the cat lovers among my readership (I am an enthusiastic dog guy), I think an argument can be made that a dead cat bounce might be in evidence in the conventional media world these days.

Several years ago, newspapers were essentially left for dead. Many are still struggling. The two leaders, THE NEW YORK TIMES and THE WASHINGTON POST, are currently enjoying something of a revival. The TIMES now has over 2.5 million digital subscribers and revenue is up from subscriptions although advertising is still struggling. The Wall Street Journal has nearly 1.3 million subscribers while the POST has recently crossed the 1.0 million mark after a spirited marketing effort. Some say the POST has been energized by Jeff Bezos who has added a large number of reporters and a financial cushion. One reader told me (and I disagree) that the paper has been much helped by the release of Steven Spielberg’s film, THE POST.

How about MSNBC? Its ratings have soared over the last year and do not forget the late night talk shows. Jimmy Kimmel, Trevor Noah, and Seth Myers all seem to have a new lease on life and they appear to be having the time of their lives each night.

Why? Well, it seems that we have a controversial person in the White House. The papers have lots of material to work with and are turning investigative reporters loose as our the cable channels. The comics are doing some wonderful political satire and some of their material is hilarious. Saturday Night Live seems more vibrant that it has been in decades and big name talent appear to be lining up to do cameos. Two on air talents, Bill Maher and Samantha Bee, to me, have crossed the line of propriety with their comments.

So the question I have for you is the apparent chaos in the White House and Congress the real reason for the renewed vigor of these media properties? If someone else is president on January 20, 2021 will these legacy media properties and formats continue their relentless slide of recent years? Is their current buoyancy real or is it a media version of a “dead cat bounce.” Will newcomers stick with them for the long haul?

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

A New Lost Generation?

The group of people who came of age during World War I (1914-1918) were sometimes referred to as “The Lost Generation”.  The term was popularized by the great author Ernest Hemingway and was front and center in his 1920’s novel, THE SUN ALSO RISES.
Some sociologists characterized this group as being disoriented, wandering and directionless. A bit harsh, I would say. Yet, looking at some recent demographic data, I wonder if a 21st century Lost Generation is emerging 100 years later.

What am I referring to is the millions of young Americans who are hamstrung or perhaps handcuffed by student loans and are struggling to repay them. The average student loan now rests at $34,000 and many young adults with unusually high balances are on 20 year payment plans to retire them.  Some unscrupulous lenders came in at almost predatory interest rates and added fuel to the fire although they are not as prominent today. According to recent data and projections provided by the Brookings Institution, many who owe are in default. There is a unique and scary divide on defaults. A stunning 47% of people with loans to fund education at a for-profit institution are in default. Conversely, 13% (still too high) are in default if the loan was for schooling at a non-profit center of higher learning. Also, the Brookings data showed that many people default after many years of dutiful payments. Some people pay for a dozen years and then fall off the ability to pay. Brookings projects that as many as 40% overall could be in default by 2023. How is that possible? Here is my theory: our economy has been in recovery after a terrible downturn in 2008 aka The Great Recession. At some point, a downturn is inevitable. When it hits, a few million young people who have been struggling to make their monthly payments may default as many will be hit with either short term or perhaps long term unemployment.

Just how big is the total of Student Loan debt? The figure bandied about these days is $1.4 trillion. Here are some data compiled by the New York Federal Reserve Bank for January, 2018 which pegs student loans as the 2nd largest category of loans in the U.S. Details are:

Home Mortgages    $8.7 Trillion

Student Loans.          1.34 Trillion

Auto Loans.               1.19 Trillion

Credit Card Debt        784 Billion

Home Equity Loan     412 Billion


Some crazy things are going on in an effort to prevent defaults. Some 22 states will pull licenses for nursing, medical technicians, doctors, and even teachers certifications if you have missed a certain number of payments. Three states—Montana, Iowa, and Oklahoma have suspended drivers licenses to those in default. Really? In rural areas, how do you get to work where there is no public transportation? Does a friend give you a ride every day? C’mon. The states are sensitive about the drivers license issue and say that it is rarely enforced. How does a nurse pay back her debt when she can no longer work as a nurse? It is a classic Catch-22. Remember, even if you declare bankruptcy your student loans are not forgiven so people cannot “game the system” that way.

Some people say that student loans are harmful to the economy. On a short term basis, that strikes me as sheer idiocy. The money does not sit there. It goes to schools for tuition, room and board and greedy book publishers pick up some funds. That money goes to pay salaries and maintenance at the institutions.  Long term, I do believe the approximately $1.4 trillion and growing will be a drag on the economy. Some four out of 10 recent graduates stay living with their parents for a few years to allow them to buy a vehicle and pay down some of the debt until a raise or two or a better job arrives.  Some 78% of millennials with student debt state that they cannot save for a downpayment on a home. A full two thirds say that they do not feel secure. I could not find figures on this but I am curious as to how many with student debt bypass 401k’s at their place of work until the balance is worked down. Your 20’s and early 30’s are key capital formation years and if you miss the first 12-15 years, you will never catch up with your debt free colleagues.

Solutions? Some have suggested that you pay back as a fixed percentage of earnings. So, a young investment banker with six figure debt can pay it back faster by kicking in a fixed percentage of income each year while a lower paid worker can stretch out payments for a longer period . Others suggest retiring a portion of the debt if you work in public service areas such as teaching, government or nursing. My mild suggestion is that people need to know what they are signing. A lot of people who seem to get in to the most trouble are first generation college students. They have been told that a university degree is a ticket to prosperity. I have met a few canny students who have thumbed their noses at loans and take six-seven years to get their undergraduate degrees. They work either full time and take night classes or sometimes skip a semester and work 50 hours a week to pay the next semester or year in full. They do miss out on the “college experience” to a certain degree but they have no financial millstone around their necks. Also, they tend to attend state schools and with in-state tuition are provided with good value.


I feel for these fine young people. They cannot work a nice summer job and even begin to cover or largely cover expenses as they did in my day. Many will (sadly) become angry and bitter if things do not go their way.

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

Where Have All The Babies Gone?

In the past 10 days three different reports were released which strike me as having a profound effect on the future of our country and, to a certain degree, marketing and media issues going forward. The first was from mainland China. Years ago, Chinese leader, Mao Zedong, instituted a one child policy. The fear was that the country could not feed itself so the population needed to decline over time. As, in recent years, the country experimented with a unique form of the free market, things improved for hundreds of millions and the leaders realized that, with a rapidly aging population, they needed more young people. So, approximately two years ago, they lifted the ban in many provinces that had only allowed a couple to have a single child. Surprise! Since the ban has been lifted there has been no statistically significant move upward in the Chinese birth rate.

In the U.S. the government released figures that stated that U.S birthrates are at a thirty year low. Let us set the stage for a moment. In order to keep a population level, the average women needs to have 2.1 children. This is known as Zero Population Growth (ZPG). The latest data from the U.S federal government puts the birthrate at 1.7545 which is well below ZPG. For years, we often felt that we could hover above ZPG as immigrants would provide the lift above the threshold as they tended to have more kids than citizens born in the states. For whatever reason, that no longer holds true in the last couple of years. While we are now below ZPG, we are nowhere near the low levels seen in countries such as Spain, Greece, Japan and Italy where the statistic can be as low as 1.1. Many forecasters said that once the Great Recession passed, our birthrates would climb back up. That has clearly not happened as we enter our ninth year of economic recovery.

Why should we care? Well, American is not close to being the provider state that many nations in Western Europe are. There is a somewhat frayed safety net here in the states but it is nothing like the cradle to grave security that many other countries provide which will be unsustainable going forward. Young people would pay into social security and medicare and take care of us baby boomers. If there are fewer young people in the workforce, safety net promises will be harder to keep.

The third shoe dropped on May 20, 2018 in the Sunday New York Times. An excellent opinion piece by professors Christina Gibson-Davis and Christine Percheski covered the issue and was entitled, “The Wealth Gap Hits Families Hardest”.

We have all read countless articles about income inequality and, after a while, we have become numb to them, or given their super left wing slant, find them tiresome. This one hit me hard right in the gut. For the first time, I looked at some data regarding families with children. The academics took a  long term look at U.S. Households from 1989-2013 with children under 18 and examined their net worth. Results, to me, were both eye opening and depressing. Here are the highlights:
 
                     Median Net Worth

Top 1%         $5.2 million

Next 9%         $584, 850

Next 40%         $68, 974

Bottom 50%       -$233


These data are totally in line with several reports that some 40+% of Americans cannot afford a minor medical emergency or a big car repair. Also, the authors raise the scary scenario that when some youngsters start college, their parents may still be paying off college loans.

So, what is happening? To me, it is very simple. Sadly, people are not having children or more children as they cannot afford them. It is not due to selfishness on the part of these young adults. Many are literally up against the wall financially.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Advertising Agencies--2028, Conclusions

Here, at long last, are the conclusions to the multi-part series on the future of advertising agencies. The delay in posting was due in part to my being very busy but also the avalanche of mail that I received from readers across the globe.


So, to sum up where my panel members and I have wound up, we find:


1) Virtually everyone whom I spoke or e-mailed with agrees that ad agencies, as we now know them, are not long for the marketing world. The only dissenters were no surprise. They were ad agency functionaries between the ages of 47-57 who were worried about their own hides and claimed that they and their shops were good for another five-ten years. Some will definitely make it. Interestingly, not a single CEO or former agency chief felt that "business as usual" could last much longer.


2) Across the board, a large cross- section of respondents felt that most small to mid-sized agencies will morph into something else. Many used "consultancies" as the likely word although a few cynical types conjured up some exotic names for the new entity. Four were brutally candid and said that on a Friday afternoon an agency will close and then a new smaller LLC will emerge on Monday morning with the same key players but with a new name and same client list.


3) All who mentioned the publicly traded mega-shops hinted or said outright that they would break up over the next several years (Isn't several a great word. It can mean three or 13! A forecaster's dream).


4) Where will the bright young people go? Not to shops, that seems certain. The FAANG's will be where the big ideas are bubbling up in both marketing and media. Facebook, Apple, Amazon, Netflix and Google can buy the best talent and will do so. Graduates of the elite schools will gravitate there.


5) I personally was surprised that only a handful of people mentioned the role of Big Data over the next decade. Those who did said it will cut the need for conventional advertising, agencies, and marketing people at many companies.


6) No one, to my strong surprise, mentioned the impact of The Internet of Things. As things get even more connected, prices will drop and squeeze low margin producers. Again, advertising must suffer in that scenario.

Separately, a small market broadcaster weighed in as did an agency chief also in a sub 180 ranked DMA--"small market TV and radio still work here. The problem is that it delivers the older demographic well. Just as is true of the rest of the country our 15-34 year olds love Netflix, ignore commercials while they use another device and listen to music but not much outside of their cars. So, conventional media will hang on a bit longer in our neck of the woods."

A friend whom I first met some 44 years ago, had some comments for me that I feel it is important to share with you. Were we to field a team of media all-stars for the last 50 years, this fellow’s planning skills would make him center fielder. He was and is that good. Here goes:

“Over the many years I have toiled in the fields of media, I have been shockingly aware of our inability, as a group, to not only forecast important shifts in the marketplace but to react to the changes once they happen.

Back in the 1950s and 60s we were mesmerized by broadcast TV.  Sight, sound and motion.  Surely nothing could beat this amazing new technology.  When cable TV entered the fray we were slow to respond and pretty much ignored the presence of this “narrowcasting” upstart.  Do you remember the 7% solution?  That was where agencies would assign 7% of the media dollars assigned to TV spending to cable networks because cable networks at that time had garnered 7% of the total TV viewing.  Not the most inspired creative thinking.  We were slow to respond to the intrusion of VCRs and DVDs and video games – all of which were cutting into SOA viewing TV.  We were slow to respond to online advertising opportunities.  Surely this was just another flash in the pan media option.  More recently we have been slow to respond to the F.A.A.N.G. group that now controls media usage.  Think back 10 years.  How many of you media people were involved with Facebook or Netflix or Google?

Given that historical trend line I think we in media have no idea what is coming in the next decade.  We haven’t a clue what the next Bill Gates or Steve Jobs or Mark Zuckerberg are cooking up in their dorm rooms or garages.  And that’s OK.  What we in media need to figure out is how we can be more receptive to these new media ideas that are being introduced to us on a weekly basis.  We can’t sit on the side lines and tell these new media options, “we’ve got to wait and see how this is received by the public.”  Instead, try jumping into the freezing water with them.  Don’t always play it safe.  It is the brand new ideas that let you reach the trendsetters, the out-of-the-box thinkers, the thought leaders, the people in this world who make waves and make change.  Over the next ten years find ways to say “YES!” to new concepts and avoid the “not yet” or “prove it” kind of responses.  By always waiting for the safe, tried-and-true idea we will always be following the competition and never being the breakthrough leader in the category.

I do think that over the next 10 years media will be in constant flux.  And the area where I think change is going to come is in a reduced dependence on programmatic buying.  Certainly that will always be a key part of any media buy.  Every major advertiser since the end of WWII has recognized the importance and value of looking hard at the CPM numbers.  But looking at “efficiency” and only efficiency is really a short-sighted idea.  In a programmatic world we would all drive Kias and shop for furniture at IKEA.  There would be no place for a Mercedes Benz car or an Ethan Allen sofa.  There would be no value given to quality of the product, a beautiful design or break-through technology.  Consumers don’t buy in a programmatic way so why should we as business decision-makers buy in a programmatic way?  All websites, all TV programming, all print products are not created equal.  Just like in buying a car, people react in different ways to various options.  And how we as consumers respond to Medium A versus Medium B is just as important as how we respond to Transportation Option A versus Transportation Option B.

As media consultants we need to become smarter and wiser about how to find those media properties that work hardest for the advertiser.  That will require more research, more reading, more observing, more talking to people.  That is what our job is going to require moving forward.  The media agencies that are able to determine these kinds of information that can augment the lowest cost/cheapest price/most efficient kind of media thinking are the media agencies that will prosper.  We have pushed the efficiency needle as far as possible.  Now we need to start moving the “impact” needle, the “awareness” needle, the “how does my advertising help my sales” needle in that direction.”

Some people have written to me that this lengthy series was too downbeat. I do not think so. Things are changing and fast. You need to adapt, keep learning or get out of the way. As I first wrote in a memo way back in 1978, “the future has not been cancelled.”

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

Advertising Agencies 2028--Part IV

This is part four of a series on the future of advertising agencies. What follows are some of the best comments that I received from the few dozen whom I interviewed or ask for their opinions via e-mail:

An unusually thoughtful youngish media chief who has a reputation for striving to stay on top of changes:

“I was recently with a couple of smart people in the industry, and we were talking about two of the primary dynamics that exist (knowing there are many more than that). On one hand, you have consultancies who can charge premium fees for services but often in a more limited term role. On the other end of the spectrum, you have agencies which are still in the value pricing mode and seeking longer-term relationships. Our thought was that agencies should evolve to somewhere in the middle. So how do we take the best parts and then how do we weed out the worst? Of course, that is a very simple thing to say. We talk all the time about “solving problems”, but are we set up to solve problems in the best way? Do we talk about it through the eyes of the client?

Lastly, my dad is not in the industry but loves to talk to me about it. He says that even with the rise of automation, there will always be a need for people to think and people to solve problems. So to me, the agencies of the future will need to get back to their roots and focus on what creates the most value for the clients.  The roles that are also found at clients need to go away, and we need to focus on how we compliment them instead”.


A young digital account executive whom I have known for several years and find amusing. He is on fire for the business and commented as follows in two areas:

Freelancing
Due to other economic factors, businesses are cutting hours and benefits. As a result, there will likely be fewer traditional, full-time employees. Instead, I believe agencies will lean heavily on freelance specialists as needed based on ever-changing client and project requirements. When the project is over, the freelancer is done. That’s not to say the same freelancers couldn’t be used time and time again and repeat partnerships are formed between agencies and talent, but from a human capital perspective, the workforce won’t be the same as it is today.

Global teams
Again, partially tied to other business factors. Office space is expensive and talent is dispersed globally. I can see agencies leveraging teams of designers, writers, and developers from hotbeds around the globe to attain the best talent and offset costs. Screen share and virtual meetings will become ever more present than they are today. Agencies will become increasingly specialized.

Even more so than today, rather than specializing in a marketing service that we provide to a wide variety of clients, agencies will provide their services to a very specific industry and will become increasingly ingrained in the trends and strategies within that market. Higher Education for example; many agencies will specialize in higher education and improve at prospecting and lead generation specific to that industry’s user’s needs.


A long time media executive with her feet on the ground and a great sense of humor:

To think about how agencies evolve, I’d first imagine how the sales structure evolves (seeing as that’s where it starts for me!)

- We’re still in the game of delivering content, building audiences, utilizing data (perhaps our new currency vs. today’s NSI data) and monetizing advertising platforms. 

- Our sales force is different.  Fewer sellers, focus is on digital assets (vs. linear cable ad sales).  Maybe we are not focused on selling one market  but have the ability (and capability) to sell multi-market ad campaigns.  There are no geo-fences in the digital world.

- Delivery of commercial content is IP-based, operations at stations (and in cable) consolidated.

- More programmatic opportunities (interactive & linear) also the reason for a reduced sales force.

So the agency:

-  Creative boutique shops will exist, maybe more than we see currently, focused on creating multi-faceted interactive campaigns – video still reigns.  These are the shops that attract the new talent…grads trained on the new next thing (Internet 2.0)?  Bringing ideas on how clients can market their products/services and accurately measure the effectiveness of their ad campaigns.

- Further consolidation of large behemoth groups.  Verticals within agencies exist.  Interactive (digital) departments lead with traditional media departments a thing of the past.  Just as on sales side, fewer planners/buyers.  The survivors are those who know what a digital/multi-screen campaign is and how to best put it together for successful execution.  Accountability to growing the client’s business is measurable and thus, measured.

- The growth of DSPs or Trading Desks at agencies continues as more campaigns are executed programmatically.  (Also a reason for fewer planners/buyers.)

Next, a true gentlemen and sales executive who keeps growing in the business as it keeps shifting says:

“My outlook on the future is that Ad Agencies will likely undergo a cycle of closures, re-organizations and new partnerships.  Today’s environment of discounts and pitches focusing on “we can do it cheaper” and “we’ll handle your account for free” and “we’ll return the media commissions to you” is de-valuing their work, their ability to hire and retain talent, and the value of the media with which they must partner.

Agencies are implying that their own output is cheap by those statements and practices that I have mentioned.  I believe (like every part of our business) that this is a temporary situation, but please don’t ask me to tell you the duration!
We’ve always had lower-priced agency customers, but also agencies that buy high-profile media to achieve the reach and quality audiences that they need.

Don, the world changed and our agency friends and partners are still behaving as if it is the ‘70’s.  Maybe I am giving them too much credit.I work directly with my customers’ CMO’s and marketing teams.  Their store operators and franchisees.  The only agency interaction I have now is with buyers and their supervisors.  Most of that time is spent telling them what their clients wants and needs.  They are amazed that I know so much about their business.  I then asked one Media Director how often she met with her client’s Media Strategists.  Her answer?  You guessed it!  She had never met them.

Agencies may be blind but the company hiring them has some responsibility to incorporate them into their teams, demand engagement and measure results.I am afraid that the kids behind us can never re-make what we’ve experienced because no one is really trying anymore to create success.  They’re all waiting for someone to hand them answers.

Sorry for my rant, you motivated me!”


From a long time media researcher, a different twist:

“If I had to answer in one word: Blockchain.

Any predictive analysis must account for how Blockchain will change the way agencies run.It can potentially even affect how creatives collaborate. I'm not even sure enough is known about it yet. Nor if blockchain is even the revolution that is claimed.
I certainly don't know enough. But I do know the central banks are worried about it”.

You may find the Blockchain comments “out there” but I have known him for over 20 years and find him to be a genuine original thinker. So, I never play him short.

A small market TV general manager asked to weigh in:

“As you know, Nielsen announced days ago that they will not longer measure the Glendive DMA or the Juneau DMA. Big deal, you might say. Well, to us, it means that we will disappear as a DMA within 24-36 months. It does not really matter and the majority of our sales are directs and the local guys do not know how to read a rating book anyway. I do not see us being a programmatic player either. So, what happens? We slowly go out of business. Streaming is catching on big time even out here in the boondocks and our TV station does not work well for clients anymore in many cases. Small agencies and buying services in outlying areas have to die in this environment.”

A senior media research salesperson: “I have had it. When I go in to agencies, the young planners and buyers seem to resent seeing me. I really could help them but there there is little intellectual curiosity about where our data comes from. If I did not have kids in college, I would quit and become a starter on a golf course or something. The agency teams are beyond superficial.”

Conclusions? That will be Part V coming in several days.

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