Will Artificial Intelligence Kill Search?

 Artificial Intelligence (AI) is the rage these days. Futurists, stock market analysts, gloom & doomers, sociologists, and mega-cap companies are all weighing in. They are all right about one thing—it is coming on fast and soon and it will likely be as transformational as the Internet revolution of a few decades ago.

I read many of the AI forecasts with great interest and some with amusement. One that tickles me quite a bit is that AI will be a sudden killer of online search. Another was that Tim Cook of Apple had no AI strategy.

We need to step back from the somewhat breathless forecasts for AI’s future and keep our feet on the ground. As, is true of many events in business evolution, I have seen this movie before. Remember, when Microsoft brought out Bing? Many were saying that Google (now Alphabet) was toast. Well, today Bing has a lusty 3% of search in the U.S. today while Alphabet has 88%+. Or when Google invaded social media and Facebook (now Meta) was finished? It did not happen.

Look at what the cash rich mega-caps in tech are doing. Apple, Microsoft, Alphabet, Meta and Oracle are investing billions in AI R&D. Yes, Nvidia may have the current lead according to some reports but there are dozens of smaller companies working in the AI space. If they make big inroads into AI you can be sure one or two of the deep pocketed giants will scoop them up. Does Tim Cook have an AI strategy? You can bet he does and some great minds are working on it along with AI swat teams at the other tech giants.

So will AI kill search as we know it? Yes, but not overnight. Consumers lag technology and the population in the West is rapidly growing older so adapting to a new approach may take a bit of time. Also, the long awaited recession in the U.S. will likely slow things down as well.

To sum up, I am convinced AI will rock our world. And, yes, search will suffer OVER TIME. Just do not be naive enough to think that today’s big players will get hurt as much as some are forecasting.

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

The Case For Disney

 

Yesterday, shares of the Walt Disney Company hit a nine year low on the New York Stock Exchange. From $190 just two years ago, they are hovering (as I write) at about $83 and change. This, plus a host of reports in the media have many analysts, pundits and consumers talking about the iconic company.

 

Disney has had a rough road the last few years.  The Covid virus killed their cruise ship business and was a body blow to their popular theme parks. Their ownership of ABC TV network plus several local network affiliate channels is a future albatross as linear TV continues to lose viewership and advertiser credibility. And, ESPN, once a corporate cash cow, faces some tough sledding as sports rights fee advance and ESPN is not as dominant with the heavy sports viewers as they were several years ago. Finally, Disney +, their streaming service, continues to lose big money.

 

Short term, the actors’ and writers’ strike, is an annoyance that they do not need right now.

 

So, is Disney down for the count? We do not think so. There are a host of things that they appear to be exploring and they include:

 

1)    Breaking the company up. Is the entertainment conglomerate just too big to be managed easily? A few people told me that Apple should buy the entire company. Others wrote to me that Apple could not afford it. Nonsense. If they stopped buying back their shares at such a frenetic pace, they could easily swallow Disney whole and bankers would not blink to make any loan needed. To me, Apple is not a good fit for ALL of Disney. Do they really want to run a cruise line or a slew of theme parks. Buy ESPN? Now that is any idea that has some traction with me. Apple wants to expand their presence in sports, and they can afford rights fees. Putting ESPN as a streaming service on Apple TV provides some synergies.

 

 

2)    As we put this together, Disney appears to be talking with Amazon about an ESPN partnership that could include the sports channel appearing on Amazon Video and Amazon perhaps taking an ownership position in ESPN.

 

3)    There are rumors that Disney might spin off the owned and operated ABC stations to shareholders. Or maybe ABC. Without being snarky, who would want them given the rocky road ahead unless the price was dirt cheap?

 

4)    The Disney movie studios have not produced the normal blockbusters of late. That may turn around quickly with a couple of winners.

 

     There is a lot to unpack in the Disney dilemma. Clearly, there will be changes in their structure and a new alliance or two is most likely. Just do not count them out yet as a dominant media player.

CEO Bob Iger had to come out of retirement to help right the ship. He is a very capable executive who is clearly exploring many options for the company. To me, his biggest task may well be helping to choose the right successor.

 

Disney has great assets. No one can accurately forecast their share price but I think that they will bounce back as a major player in entertainment.

 

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

 

 

Dinosaurs Still Exist!

 

About 20 years ago, I would often hear from old media hands that they hated what was going on in the advertising world. The lament usually went something such as this: “Just give me three, maybe four stations to buy, add a couple of cable channels and I am happy. All this online activity is ridiculous. I want to go back to 1980.” At the time, I patiently would say that times are changing and, to stay at this game, you need to shift gears and embrace new platforms in both media and marketing. It did not play well.

 

A week ago, I got a bit of a surprise. I was approached by phone by someone who used to correspond with me decades ago. She never worked with me or was a client, but she had been one of the dinosaurs in denial of the internet and digital revolution. To my amazement, she still operates in media buying broadcast for a few clients in the upper Midwest. Her lament was remarkably like my manufactured quote above.

 

The conversation was not simply sad. It got me thinking. How many other digital deniers are still out there? They obviously are not dealing with Fortune 500 companies, nor do they likely have lush budgets from the clients they still maintain. What gnawed at me was how the clients must be getting shortchanged. Fifteen years ago, we looked at those who limited efforts only to conventional media as primitives. Now, it is unconscionable.

 

So, please keep learning. Stay on top of changes and continue to test new platforms or venues. Some will work, some will not but you will be doing your duty as a steward of clients’ funds.

 

Change is not easy for any of us. Shifting gears with communications strategy and tactics is essential.

 

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

 

 

The SAG-AFTRA Strike and Viewing

In recent weeks, many of us have been following the strike that has been taking place in Hollywood. SAG-AFTRA (Screen Actors Guild and American Federation of Television and Radio Artists) allied with WGA (Writers Guild of America) have been on strike against the AMPTP (Alliance of Motion Picture and Television Producers).

 

I have followed the action closely and see the arguments for both sides but do lean toward one position. What few seem to be discussing but is right in my wheelhouse is how the strike, if prolonged, will impact over the air and cable tv viewing levels.

 

To get a better handle on the viewing issues, for the first time in six months, I polled members of the dormant Media Realism panel to get the members take on this issue.

 

Here are some slightly edited responses:

 

Local TV station sales manager—“Don, this is the last thing that we needed. Ratings continue to erode and now the fall looks worse given the reruns that will dominate. The local economy is holding up, but I doubt if we will hit the revenue targets that our corporate office has set for us.”

 

Mid-Sized Agency Media Director—“We will cut back investment in local broadcast significantly for the rest of the year. Now, we would have lowered our commitment anyway but now digital will pick up more for the fall.

 

Independent Movie Theater Owner—“Covid really hurt us and now this. I hope that I make it through 2024.”

 

Local Cable Sales Manager—“We have some premium priced sports that will give us a bit of protection. Our packages to advertisers will be full of bonus units. Also, we will ramp up and enhance promotions to our valued clients.”

 

Where do I weigh in? I would say that streaming services should benefit for sure. While production of some popular series will be delayed, there is a great deal of content available across the menu of streaming services. There is a time-honored concept in broadcasting called Least Objectionable Programming (LOP). Basically, it states that when bored by a lineup in broadcast, people will watch what they find least objectionable, but THEY WILL WATCH! The idea got a lot of traction the 1960’s when there were few viewing options. With few exceptions, I do not think that millions of Americans will suddenly rediscover the joys of a good book during the length and immediate aftermath of the actors’ and writers’ strike. It is possible that most streaming services will see a modest increase in subscriptions but a measurable increase in viewing levels. Even You Tube should see a rise. People will watch something a la LOP and backfill some of the series that friends or critics have been recommending that they have yet to sample. Also, there likely will be a “stickiness” to streaming. Once some people ramp up their viewing of streaming programming, they may well stick to it long after the strike has been settled.

 

I feel a bit sorry for the SAG members in particular. The press is full of headlines how major stars get an eight figure fee for a role in a blockbuster film or a nice share of the box office while almost all card carrying members labor in low paying jobs while waiting for their break.

 

Your opinions would be most welcome. You may email me at doncolemedia@gmail.com or leave a message on the blog.

 

The Greatest Measure

 

As I get older, I suppose I am getting a bit wistful. Every now and then, someone asks me how I feel about my life. The answer may surprise you. If I had to sum it up in one word, it would be GRATITUDE.

 

Most of us have so much to be thankful for yet seem to focus on some negative issues. And millions compare themselves to others or talk about the dreams or possessions of others instead of their own. Whenever I get a bit down, I take an inventory which always leaves me feeling grateful.

 

For example:

 

I live in a century where medicine is many times greater than at any time in history. If I were born even 20 years earlier there is no way I would have made it to my present age.

 

I grew up in the 2^nd half of the 20^th century in the United States. I had supportive parents, was non-ethnic and I had a graduate degree from a good school. The runway was long and very clear compared to 98% of the people in the world. I was lucky.

 

Even though we were very different people, my father always gave me constant encouragement. Never once did he tell me I was a hopeless dreamer. His support sustained me through many rough patches. I was only 27 when he died; I still miss his kind words.

 

I live in a country which is still full of opportunity. Also, I can say and largely do what I want. Most of the seven billion people on earth are not so lucky.

 

My wife and children are the joy of my existence. I do not deserve them and my gratitude to them is boundless.

 

It amazes me how people measure their success vs. the material success of others. The measure should be yours –no one else. Each of us is unique and has unique experiences. We may have had to overcome obstacles that others did not. If you have gratitude, you may be the real winner for appreciating your life.

 

Young adults come under a lot of criticism. One area that I admire many of them for is their focus on experiential purchases. Many 20-somethings hop across the globe and examine other cultures. Some sample exotic foods and wines. They spend money on doing rather than on things (material things). I would bet that they will have far fewer regrets later in life than those who merely chased material things. The interaction with others, the understanding of those of different backgrounds, and the challenges they faced will leave them content.

So, to me, the greatest game of all is gratitude.

 

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

 

Demographics, the Media and the Fed

 

Clearly, this may be the most unusual MR post that you will ever read. It concerns some, to me, strange actions by the Federal Reserve in the U.S. that appear to have been ignored by the major media for years.

 

A quick word of warning. This is a bit wonky. It is very unlikely that any of you discussed this over a drink with cronies or with your fellow professionals regardless of your discipline.

 

Here goes:

 

In late 2008, we had a financial crisis that ushered in what is now known as The Great Recession. There was panic in the financial markets across the globe. To help stem the fears, the US central bank, better known as the Federal Reserve, stepped in with boatloads of cash to quiet the markets somewhat. They also cut interest rates very quickly to the point where they approached zero. This new policy, often referred to as ZIRP (Zero Interest Rate Policy) helped to calm things down by acting as something of an economic stimulant.

 

Some weird things began to happen that really got my attention. I began getting solicitations to borrow $1-2 million at absurdly low interest rates of about 1.5%. For someone who considers himself to be modestly affluent, this was a bit shocking. I worked some math and saw that if I purchased a few stocks with high yields, I could easily cover the interest payments (and deduct them) as well as pay off much of the principal with dividends alone. If the securities raised their dividends each year, I could knock my loan down even faster.

 

I then began to see TV commercials on CNBC and Bloomberg for these types of loans. There was still much fear in the air, and I did not try to take out such a loan. I did, however, buy a car a few years later with ZIRP still rolling along. The interest rate and monthly was absurdly low. Being a child of rural New England, I have always hated debt and made extra payments for several months and paid off the vehicle quickly.

 

Okay, why did this concern me? As a media professional, demographics have been my beat for entire career. And being trained in economics academically, I realized that a ZIRP policy would have some winners and losers. Around 50% of American credit card holders carry a balance each month and pay annualized interest rates of 12-21% per year depending on their card selected and credit worthiness. With ZIRP, credit card balances were not slashed. They stayed largely intact.

 

To those with a substantial asset base, ZIRP was a windfall. To those struggling, it was business as usual except for mortgage rates which fell dramatically. Companies benefited mightily by borrowing money to buy back their stock at very low interest rates and thus pumping up their share prices as earnings rose due to a smaller float (share base).

 

By keeping ZIRP in place, there was an “Allocative effect” where certain parts of the economy benefited. It shifted money to wealthy people and larger corporations. I thought about this a great deal but could find nothing to confirm my suspicions. Finally, after some digging, I found an interview in the Wall Street Journal in May 2010 with Thomas Hoenig, a Federal Reserve regional president who articulated the “Allocation effect.” Hoenig was often the lone dissenter on policy matters during the Ben Bernanke era at the Federal Reserve. He was a “hawk” who did not think rates needed to drop as quickly as the Fed chairman did.

 

Finally, last year, Christopher Leonard, a financial writer wrote a book entitled The Lords of Easy Money (Simon & Schuster, 2022). He interviewed Hoenig extensively and covered the Fed’s handling of ZIRP in great detail.

 

My question is simple: How did I spot this back in 2009-10 and the media did not give it much attention? I am business news junkie but the Allocation effect did not surface clearly to me except from Leonard’s book.

 

I am not trashing the Fed. They are smart folks but also human. We did have a crisis in 2009 and things had to move fast. My personal feeling is that rates came down too fast and were kept too low for too long. We needed see how the initial rate cuts worked before going to zero. Younger people complain to me about high interest rates today.  For much of my life, 5% on a passbook savings account was the norm. The 3.5% mortgages that many received in recent years struck me as artificially low. I vividly remember telling people close to me that bankers would have to be crazy to give a fixed 30-year mortgage at 3.5%. Who knows what things will be like in 10 years, let along 30? The response was the usual, “Don, you just do not understand.”

 

At least we did not go the European route of negative interest rates. When I first read about them, I felt they were insane. How can you have a market economy with negative interest rates? The idea appears to have been to get people to spend so they made sitting on cash in savings accounts unattractive. A few Danish banks even wrote mortgages for a time with a negative rate handle. Don’t believe me? Read--https://www.theguardian.com/money/2019/aug/13/danish-bank-launches-worlds-first-negative-interest-rate-mortgage

 

I love the financial press and devour their offerings daily. Why was the “Allocation effect” not covered adequately? It gives left wingers more ammo to claim that the rich always get richer. Actions have consequences and many had to see this coming.

 

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

 

 

Reach & Frequency--2023

 

I started in the ad agency business some 49 years ago as a Media Research Analyst. One of my jobs was to provide Reach & Frequency Analyses for TV campaigns, radio schedules and magazine buys. Media Planners and senior staffers would look at the results and decide where to put the funds. The most cerebral efforts tended to be with magazine selection as editorial content of a publication was as important as the number of people being reached by the message.

 

Reach simply meant the number of people who were exposed to the advertising message. Frequency was of those reached, how many times they were they exposed to it.

 

I dutifully did the analyses and learned a lot about daypart mix in TV, radio station formats and print pluses and minuses. One thing always gnawed at me. All the models provided EXPOSURE OPPORTUNITIES not actual delivery of the message. So, the numbers that we told the client that as many as 90% of the target will see the message an average of a dozen times had to be way too high and never correlated with recall scores or product awareness levels. Frustrated, I went to my boss’s boss who struck me as being more pensive than others in top management. He listened carefully, smiled, and said: “Don, you are correct. You need to realize that we need to have some means of comparison and clients need something to hold onto regarding performance of their large advertising investment. In a few years you will be speaking at client sales meetings (he was right) and these numbers play a small role in firing up a sales team at a convention”.

 

Another problem I asked at the same session was about trying to provide delivery across media. All media are used and perceived differently and very importantly are measured differently. Different methodology yields different results so how can we mix TV, radio, magazine, newspaper and outdoor together and provide a clear estimate? He agreed that intermedia estimates were shaky and too high and only used them when clients requested them.

 

Okay, a lot has happened in the past 49 years. When I think of how many hours I spent with people looking at the pattern of frequency distributions, it makes me laugh. We tried to reach people from somewhere to 3-12 times during a purchase cycle for a brand. You did not want to reach the same people again and again so we did quintile distributions. Invariably, the heaviest 20% of TV viewers would get 40-50% of the potential ad impressions. So, we tried very hard at times to structure buys that reached light users of media who may have been good prospects for our brand or service. We even looked at research studies on attentiveness and weighted TV dayparts by effectiveness. Primetime (8-11 pm, EST) and Prime Access (7-8 pm) scored higher than late night when many were asleep in front of Carson or Letterman (but the Nielsen meter kept rolling) or early morning (7-9 am) when people were in a rush to get the kids fed, lunches packed and also get themselves dressed and out the door.

 

Nowadays, the game is starkly different. Nielsen reports that in the season just finished over the air TV viewing declined 9% and many primetime shows delivered a 1 rating or less. Streaming services continue to gobble up more viewing, much of which is commercial free. Local TV weather is picked by going to the station’s website at any time of day. And, in a digital age, advertisers know how many people are buying their products, what they are willing to pay and how often they visit their companies’ sites. Big Brother truly is watching as they are smoking out your pain or opportunity thresholds for price of a unit and they know what styles you like.

 

These types of data are not exposure opportunities—they are empirical, i.e., real.

 

So, clearly we are seeing a trend away from a huge reliance on conventional media (TV, Radio, Magazine, and Newspaper) as their delivery keeps shrinking. A small market TV broadcaster told me off the record—“we sell to local players. Our audience is downscale and old. Some of the advertisers get it but others are slow to use 21^st century options. This cannot go on much longer.”

 

When I polled some agency people about R&F’s, a few got defensive but others were realistic about it. A few samples of edited quotes:

 

--we cut back conventional media each year. Digital will keep growing.

 

--clients love the accountability of digital and social media.

 

--our smartest client is always introducing new products that are not line extensions. She uses conventional media to introduce new products but does not go overboard.

 

--we do R&F’s if the clients ask for them. It is not a dealbreaker for most of them. Perhaps it is a security blanket as the world keeps changing.

 

--I would not say that that they are meaningless statistics but how do you aggregate the 100 things that we do across so many platforms into a solid unduplicated number? Sales are strong so people are happy at present.

 

 

So, is Reach & Frequency dead? Not yet, but when blended with actual performance estimates in digital, their role in media strategy and analysis is much diminished.

 

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