There are currently approximately seven billion people on earth. The wealthiest 9.5 million (less than .2%) control about 26% of the assets given recent prices on global bourses. Many people will rail about moral issues for allowing so much of the wealth being controlled by so few. Today, given some recent mail that I received, I would like to address it regarding real estate prices.
When you travel at all, you find that marvelously attractive places to live have become very expensive. London and Paris apartments or homes are sky high in price. Foreigners often swoop in and buy apartments as a hedge against political unrest at home. It is one thing to freeze a bank account but quite another to take back foreign real estate. This scenario is playing out in North America in New York and in Vancouver.
Have you ever read the polls on great cities to live and work? Often, they highlight Geneva or Zurich, Switzerland, Sydney, Australia and Singapore. Check out the cost of a house or a decent apartment in those cities. Those places have become havens of the rich or lucky locals who have been there forever.
A number of Media Realism readers have mentioned to me in e-mails in recent months how they are struggling to find an attractive place to live with job possibilities and lifestyle appeal that is also affordable. With their permission here are a few highlights:
From New York a mid-30’s creative writes: “I am tired of living like a graduate student. My bandbox of an apartment is costing me a fortune. New York is great culturally but there are many things that I cannot afford. I want to get out and work in a city where I can buy a decent home. My career will not progress as well but I have been marking time financially for a dozen years. I also love the outdoors. It takes too long to get away here.”
A young German ad man wrote to me recently saying that he was weary of living in his small apartment and paying high rent for it. He was seeing if he could relocate to an agency in either Berlin or Vienna where he could live better and finally accumulate some capital. I had heard that Vienna was a relative bargain for apartment rentals but Berlin came as a surprise. The truth is that Berlin has been aging for years, has a stumbling infrastructure and a low cost of living by European standards even including food. Other Europeans say that northern Portugal is the best value in western Europe but there are not good agency or marketing jobs there.
A just retired midwesterner says: “For years I bounced around Chicago, Milwaukee, and Minneapolis. I am looking for some place warmer. Property taxes are killing me as are fuel bills. I want to sell my place here and live in a milder climate. Florida has little appeal to me and neither does rural Arkansas or Louisiana. I just would not fit in there. What I am willing to do is live in a place with fewer amenities if I can find a handful of like minded people for friends. Maybe a Texas town would work. I just do not understand why kids pay so much for a roof over their heads.”
A Bay Area ad guy writes, “About 10 years ago a buddy asked me to join an agency in Seattle. I believed all the nonsense about rain and stayed here. Now I can barely cover my studio apartment. The city is great but I will never own a house here. And, today, I missed the boat on Seattle real estate as well. I would like a bit of “elbow room” and I doubt if I can ever get it. Marrying a rich woman is my only hope. :)
“I now commute 45 miles in horrendous Atlanta traffic,” a sales pro writes. It is exhausting. The work is fine and I really like my boss but my quality of life is miserable. By Friday night I am totally wiped out. I need to move to a smaller city where I can afford a nice house close to work. Are you listening Cleveland companies?”
As income inequality grows, this issue has to loom larger. There is considerable cheap housing in America but how many marketing professionals would be comfortable living in rural areas of West Virginia, Mississippi, or Nebraska? True, in the digital age, some people can work from afar but not everyone can. One young writer tells me he has been trying to work out a deal where he can live in upstate New York and buzz in to Manhattan every few weeks for a day. That sounds great for him but he must have a proven track record for his company to even be able to consider such an approach.
Retirees seem to be in the same boat. Besides my midwestern friend above, several have written to me saying they want to cash in on their home equity and move someplace far less expensive. They all appear to have one thing in common--they do not care about great healthcare (surprising) or schools (their kids are grown) or even much in the way of cultural activities. They simply want a bit more money in their pockets each month. With cable or a satellite dish and a few friends, they seem to think that they can manage.
This is a trend that is worth watching. We all read or hear stories about the joys of moving to Mexico or Costa Rica. When you dig a bit, it is a mixed bag. Many Californians who live within 100 miles of the US border in Mexico have found that life in demonstrably cheaper there. Other worry about crime and some say it is how you behave with the locals that is what makes a difference.
Where will these people young and old go who want a bit more living space and will cheerfully give up some amenities? It is a big country and there are bargains out there relative to New York, Boston, Los Angeles, San Francisco and Washington, DC. It will be curious if tele-commuting will accelerate a trend away from our expensive cities over the next few years.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Wednesday, April 29, 2015
Monday, April 27, 2015
I Am Not Pro-Business
Several years ago, during the worst weeks of our economic crisis, I was discussing the difficult financial situation that America was in with a business man. At one point, he said, “You have to agree with me on this. We are both pro-business.” I smiled and said, “Maybe you are, but I am not. What I am is pro-free market.” My acquaintance said, “They are the same thing.” A lively exchange followed and he just shook his head at me.
What was going on? Some of this may seem like semantics but I sincerely believe that it is a big part of the problem these days. A free market or pro-market person such as myself wants a society that fosters free and open competition and free entry and exit in all industries.
Pro-business, to me, in recent years, has sometimes taken on a connotation that is incompatible with free markets. The great Nobel Laureate Milton Friedman put it succinctly when he wrote, “Business corporations are generally not defenders of free enterprise.” Friedman went on to say that many corporations have become addicted to some form of corporate welfare.
Large established corporations have significant lobbying presence in Washington, DC. Lobbying is considered as being pro-business but I would argue that it is not often pro-market. Most of the time it is arguing in support of existing well entrenched businesses and asking for special favors. Sadly, often the support they desire from government is to throw up barriers to competition, both domestic and foreign.
In a free market, if you continue to lose money, you go out of business. You either get better or a lot better at what you are doing or some other entity comes along and takes your place. Free marketers are often called hard hearted when they talk of the “cleansing effect” of recessions. What they are saying is that inefficient producers or service providers are weeded out in a weaker economy. The fact is that most new businesses fail and it has always been that way. A free market if truly free does not protect a company from losses, competition or even bankruptcy.
Former Federal Reserve Chairman Paul Volker (a man whom I admire greatly) said of financial institutions after the 2008-2009 debacle, “If you are too big to fail, you are too big.” Will America learn? Or, will the next time we hit crunch time the established players with their well oiled machines lobby hard for support under the guise of being “pro-business”?
Capitalism or the free market is not failing. What is not successful is capitalism as we now know it which is a pro-business agenda that props up the large and often inefficient players.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
What was going on? Some of this may seem like semantics but I sincerely believe that it is a big part of the problem these days. A free market or pro-market person such as myself wants a society that fosters free and open competition and free entry and exit in all industries.
Pro-business, to me, in recent years, has sometimes taken on a connotation that is incompatible with free markets. The great Nobel Laureate Milton Friedman put it succinctly when he wrote, “Business corporations are generally not defenders of free enterprise.” Friedman went on to say that many corporations have become addicted to some form of corporate welfare.
Large established corporations have significant lobbying presence in Washington, DC. Lobbying is considered as being pro-business but I would argue that it is not often pro-market. Most of the time it is arguing in support of existing well entrenched businesses and asking for special favors. Sadly, often the support they desire from government is to throw up barriers to competition, both domestic and foreign.
In a free market, if you continue to lose money, you go out of business. You either get better or a lot better at what you are doing or some other entity comes along and takes your place. Free marketers are often called hard hearted when they talk of the “cleansing effect” of recessions. What they are saying is that inefficient producers or service providers are weeded out in a weaker economy. The fact is that most new businesses fail and it has always been that way. A free market if truly free does not protect a company from losses, competition or even bankruptcy.
Former Federal Reserve Chairman Paul Volker (a man whom I admire greatly) said of financial institutions after the 2008-2009 debacle, “If you are too big to fail, you are too big.” Will America learn? Or, will the next time we hit crunch time the established players with their well oiled machines lobby hard for support under the guise of being “pro-business”?
Capitalism or the free market is not failing. What is not successful is capitalism as we now know it which is a pro-business agenda that props up the large and often inefficient players.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Tuesday, April 21, 2015
Musings on Online Education
Online education has been getting attention lately and many people ask me about it. So, today, I will give my take on it (on the college level) which may vary a bit from what you have generally read or heard.
There is no question that online learning is going to grow. It is very inexpensive for colleges and universities to get in to it especially compared to the current standard classroom courses. Imagine the operating leverage that a school gets! One could add 100 students to a course who are paying full tuition and all that the school might have to do is add a graduate teaching assistant to help grade papers. No use of tight classroom space, no heat, no electricity in that scenario either. The sales pitch is that many people live too far from a university to attend class in person or are consumed by their jobs during the week. So you may still obtain a degree in the discipline that you desire and you can work where and when you want often at your own pace. The appeal is clearly very strong for cash strapped institutions to get involved in a big way by providing a wider net for their universities. Here are a few of my views on online education that I have not heard much about from others:
1) Online education is a godsend to VERY motivated students but not to indifferent ones. Imagine this scenario. A young man from North Dakota gets an economics degree from school in Wisconsin. While there he takes an elective in History of Economic Thought and loves it. He badgers his advisor who arranges for him to take an independent study that allows him to dig deeply in to the work of Adam Smith, Thomas Malthus and David Ricardo (all early Classical Economists with Smith being the giant). The next semester he graduates, returns home, and helps Mom and Dad run their ranch in rural North Dakota. He would like to pursue study of History of Economic Thought but there are only six or seven schools left who confer graduate degrees in the discipline and several are outside the U.S. He continues to read omnivorously about the topic and spends a vacation in London sitting in on a symposium on the work of Carl Menger, considered the father of the Austrian School of Economics. His mother thinks that he is nuts but his father encourages him and the young man’s work at the ranch, which, he will one day inherit, is exemplary. To his great delight, one of the schools that he would like to attend suddenly offers an online graduate program in History of Economic Thought. He is accepted and loves it. The professors are amused by his constant questions and e-mails and more than floored by how much background reading that he has done on his own and continues to do for their courses. For this lad, online education has been great and he is the perfect candidate. He can continue to be an emerging wealthy rancher while he simultaneously becomes an economics scholar. Without his online education, he would be self taught but there would likely be gaps in his learning unless he put forth an absolutely Herculean effort.
2) Recently, while walking the halls of a university classroom building, I overheard two students talking. One asked the other how the semester was going. “Great”, the young man replied. “I am taking three courses online, am not doing a damn thing, and so far I have all B’s.” Clearly, he is not as motivated as my mythical North Dakotan and few are. He sees his online courses as a great way to be a slacker. If one does not sit down at the screen and stay a while regularly, the online experience will not be worthwhile.
3) Some people tell me that the existing faculty at most schools will put up roadblocks to growth in online courses as they fear for their job. True, if online really catches on in education, fewer professors will be needed. This may especially true in foreign languages where introductory courses lend themselves to video and audio presentations that resemble programmed learning. Yet, on balance, I feel that these attacks on faculty are largely mean spirited and made by people who have never taught a college level course. There will be adjustments, however. Professors who lecture with notecards yellow with age will have to adjust to a new way of teaching. A bigger and trickier roadblock with be with accrediting bodies. Will credits be transferable to other institutions are among the issues that need to be sorted out and carefully.
4) Professors, and many will hate this analogy, will have to become “coaches” or Chief Motivating Officers in students lives as online education gets more traction. The caliber of online materials is constantly improving but the students still need direction and guidance even from people whom they may never meet in person. Ideally, professors should be major motivators now.
5) How will elite institutions react to online education as it grows? Some were involved in early experiments but will they embrace online learning significantly? Consider Ivy League giants Yale and Harvard. Or, how about our best liberal arts elite colleges such as Amherst and Williams? There is tremendous cache to going to these four schools largely due to the exclusivity of each. Graduates tend not be simply big donors--they are often huge donors. Contacts made at these schools help people for their entire lives. Will the alumni who write the six and seven figure checks continue to donate if THEIR schools become democratic and have thousands of enrollees from developing countries or a handful who never leave their holler in West Virginia? Look at what Starbucks is doing with Arizona State University. Thousands of baristas who stick to it with true dedication will get degrees largely financed by their generous employer. And, some will never have to leave Dayton! It is those type of schools, not in the top tier, that may use online most for the immediate future.
That’s how I see it. I would love to hear your take on it.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a comment on the blog
There is no question that online learning is going to grow. It is very inexpensive for colleges and universities to get in to it especially compared to the current standard classroom courses. Imagine the operating leverage that a school gets! One could add 100 students to a course who are paying full tuition and all that the school might have to do is add a graduate teaching assistant to help grade papers. No use of tight classroom space, no heat, no electricity in that scenario either. The sales pitch is that many people live too far from a university to attend class in person or are consumed by their jobs during the week. So you may still obtain a degree in the discipline that you desire and you can work where and when you want often at your own pace. The appeal is clearly very strong for cash strapped institutions to get involved in a big way by providing a wider net for their universities. Here are a few of my views on online education that I have not heard much about from others:
1) Online education is a godsend to VERY motivated students but not to indifferent ones. Imagine this scenario. A young man from North Dakota gets an economics degree from school in Wisconsin. While there he takes an elective in History of Economic Thought and loves it. He badgers his advisor who arranges for him to take an independent study that allows him to dig deeply in to the work of Adam Smith, Thomas Malthus and David Ricardo (all early Classical Economists with Smith being the giant). The next semester he graduates, returns home, and helps Mom and Dad run their ranch in rural North Dakota. He would like to pursue study of History of Economic Thought but there are only six or seven schools left who confer graduate degrees in the discipline and several are outside the U.S. He continues to read omnivorously about the topic and spends a vacation in London sitting in on a symposium on the work of Carl Menger, considered the father of the Austrian School of Economics. His mother thinks that he is nuts but his father encourages him and the young man’s work at the ranch, which, he will one day inherit, is exemplary. To his great delight, one of the schools that he would like to attend suddenly offers an online graduate program in History of Economic Thought. He is accepted and loves it. The professors are amused by his constant questions and e-mails and more than floored by how much background reading that he has done on his own and continues to do for their courses. For this lad, online education has been great and he is the perfect candidate. He can continue to be an emerging wealthy rancher while he simultaneously becomes an economics scholar. Without his online education, he would be self taught but there would likely be gaps in his learning unless he put forth an absolutely Herculean effort.
2) Recently, while walking the halls of a university classroom building, I overheard two students talking. One asked the other how the semester was going. “Great”, the young man replied. “I am taking three courses online, am not doing a damn thing, and so far I have all B’s.” Clearly, he is not as motivated as my mythical North Dakotan and few are. He sees his online courses as a great way to be a slacker. If one does not sit down at the screen and stay a while regularly, the online experience will not be worthwhile.
3) Some people tell me that the existing faculty at most schools will put up roadblocks to growth in online courses as they fear for their job. True, if online really catches on in education, fewer professors will be needed. This may especially true in foreign languages where introductory courses lend themselves to video and audio presentations that resemble programmed learning. Yet, on balance, I feel that these attacks on faculty are largely mean spirited and made by people who have never taught a college level course. There will be adjustments, however. Professors who lecture with notecards yellow with age will have to adjust to a new way of teaching. A bigger and trickier roadblock with be with accrediting bodies. Will credits be transferable to other institutions are among the issues that need to be sorted out and carefully.
4) Professors, and many will hate this analogy, will have to become “coaches” or Chief Motivating Officers in students lives as online education gets more traction. The caliber of online materials is constantly improving but the students still need direction and guidance even from people whom they may never meet in person. Ideally, professors should be major motivators now.
5) How will elite institutions react to online education as it grows? Some were involved in early experiments but will they embrace online learning significantly? Consider Ivy League giants Yale and Harvard. Or, how about our best liberal arts elite colleges such as Amherst and Williams? There is tremendous cache to going to these four schools largely due to the exclusivity of each. Graduates tend not be simply big donors--they are often huge donors. Contacts made at these schools help people for their entire lives. Will the alumni who write the six and seven figure checks continue to donate if THEIR schools become democratic and have thousands of enrollees from developing countries or a handful who never leave their holler in West Virginia? Look at what Starbucks is doing with Arizona State University. Thousands of baristas who stick to it with true dedication will get degrees largely financed by their generous employer. And, some will never have to leave Dayton! It is those type of schools, not in the top tier, that may use online most for the immediate future.
That’s how I see it. I would love to hear your take on it.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a comment on the blog
Sunday, April 12, 2015
Things I Have Learned and Observed
A few weeks ago, a young adult approached me after a lecture and asked me a provocative question. He said, “Could you tell me the most important things that you have learned over the years?” I tried to put him off by saying something to the effect that the older I get, the more I realize how little I know. He was persistent and I told him that I would get back to him. So, over recent days, I have mulled over the question very carefully. I will avoid the cliches such as “honesty is the best policy,” “to thine own self be true,” and “work hard, it pays off.” The cliches are all true but here is a list that you may not have thought about:
1) Markets always go to extremes--as l look back it does not matter if one is talking about the real estate, stock, commodity, oil, or broadcast marketplaces, they always seem to go from one extreme to another. I vividly remember 1974-1975 recession when we suffered through inflation, interest rates and possible impeachment. TV prices plummeted but in 1975 roared back with 50+% gains in some spot TV markets. Jump to 1999; radio broadcasters were stamping availabilities saying that their rates were valid for only five days and strange new tech companies were appearing on billboards in top 10 markets. I remember remarking in a client meeting that, “the media market was a balloon in search of a pin” (not original with me, of course) and was met with a roomful of people all shaking their head no. Several weeks later in early 2000 I had relocated to Atlanta and The Super Bowl advertising that year had many new entries among national advertisers that had recently completed Initial Public Offerings (IPO’s). Some of the commercials were so obtuse that you had no idea what the company did. That was the last straw for me. Soon after, the dotcom bubble burst. It was years before you could bring the internet up with smaller clients as many had lost personal funds in the debacle. So, the moral is regardless of market, to get skeptical when people say it can only go higher or, when it has fallen sharply in value, some will say that it can never bounce back. Asset values will fluctuate--always.
2) Demographics drive the bus in most cases--To me, this is the most powerful trend in existence. It is, to me, a tidal wave that cannot be held back. Many people tell me that Europe will bounce back from their current malaise. I agree that rallies can occur but many countries have severely aging populations who will put a damper on growth and strain finances with enormous increases in entitlement expenses. Declining populations have consequences! China faces the same problem with their one child policy in many provinces and Japan is also getting very old. Governments can try to stimulate business, tax less, tax more, even encourage having more children. Yet, the die is cast for many countries. As nations get older there will be fewer entrepreneurs and fewer opportunities for vibrant growth. So watch Asia ex Japan and selected countries in Latin America and perhaps parts of Eastern Europe. That is where the action is going to be. It seems inevitable.
3) Strategists--everybody and his brother seem to be positioning themselves as strategists. In the last 40 years, I have only met a handful of people who deserved that title and they were worth their weight in gold. Many dubbed as strategists do not know the difference among a strategy, objective or a tactic yet they are called marketing or advertising strategists. Truly, titles do not make the man or woman!
4) Geniuses--people often ask me what it must have been like to be surrounded by geniuses having worked in advertising and marketing for so many years. The truth is that I worked with smart people, clever people, many quick with a line or an ad-lib but I never worked with a genius. There was never anyone that I was in awe of despite my long years at the game. The atmosphere was invigorating and fun many times but genius? I just did not see it. Sad but true.
5) Read and read some more--I tell this to all young people who will listen. There is truly great material out there and, if you are willing to put the time in, you can learn and understand a great deal. It still stuns me how little people in business read about their industry even though they are committed to spending decades in it. If you have no interest, get out and do something you enjoy. Charlie Munger, Vice Chairman of Berkshire Hathaway, was once asked what people might find surprising about his business partner, Warren Buffett. Munger said, “You would be amazed at how much Warren reads.” I also tell young people that if you keep on top of your industry, you will likely have great success as most people will not read much. You do not have to be overtly competitive in most businesses. Being better informed gives you a huge edge. To people who tell me that they have no time to read, I always suggest that they unplug the TV.
6) Superficiality--it is rare for marketers or ad agency people to do a really deep dive on a topic. And, the few who do are often stifled because their management may say, “Just give me the bottom-line.” If you boss is older, put your ideas in a report or lengthy e-mail. They will likely read it. I learned the hard way to give 30 second answers to a tough question and then followed up with a detailed response in writing. Some issues and problems are just plain complicated. The one minute manager approach is not always the best.
I have a fistful of other issues on this topic that I may include in a future post.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
1) Markets always go to extremes--as l look back it does not matter if one is talking about the real estate, stock, commodity, oil, or broadcast marketplaces, they always seem to go from one extreme to another. I vividly remember 1974-1975 recession when we suffered through inflation, interest rates and possible impeachment. TV prices plummeted but in 1975 roared back with 50+% gains in some spot TV markets. Jump to 1999; radio broadcasters were stamping availabilities saying that their rates were valid for only five days and strange new tech companies were appearing on billboards in top 10 markets. I remember remarking in a client meeting that, “the media market was a balloon in search of a pin” (not original with me, of course) and was met with a roomful of people all shaking their head no. Several weeks later in early 2000 I had relocated to Atlanta and The Super Bowl advertising that year had many new entries among national advertisers that had recently completed Initial Public Offerings (IPO’s). Some of the commercials were so obtuse that you had no idea what the company did. That was the last straw for me. Soon after, the dotcom bubble burst. It was years before you could bring the internet up with smaller clients as many had lost personal funds in the debacle. So, the moral is regardless of market, to get skeptical when people say it can only go higher or, when it has fallen sharply in value, some will say that it can never bounce back. Asset values will fluctuate--always.
2) Demographics drive the bus in most cases--To me, this is the most powerful trend in existence. It is, to me, a tidal wave that cannot be held back. Many people tell me that Europe will bounce back from their current malaise. I agree that rallies can occur but many countries have severely aging populations who will put a damper on growth and strain finances with enormous increases in entitlement expenses. Declining populations have consequences! China faces the same problem with their one child policy in many provinces and Japan is also getting very old. Governments can try to stimulate business, tax less, tax more, even encourage having more children. Yet, the die is cast for many countries. As nations get older there will be fewer entrepreneurs and fewer opportunities for vibrant growth. So watch Asia ex Japan and selected countries in Latin America and perhaps parts of Eastern Europe. That is where the action is going to be. It seems inevitable.
3) Strategists--everybody and his brother seem to be positioning themselves as strategists. In the last 40 years, I have only met a handful of people who deserved that title and they were worth their weight in gold. Many dubbed as strategists do not know the difference among a strategy, objective or a tactic yet they are called marketing or advertising strategists. Truly, titles do not make the man or woman!
4) Geniuses--people often ask me what it must have been like to be surrounded by geniuses having worked in advertising and marketing for so many years. The truth is that I worked with smart people, clever people, many quick with a line or an ad-lib but I never worked with a genius. There was never anyone that I was in awe of despite my long years at the game. The atmosphere was invigorating and fun many times but genius? I just did not see it. Sad but true.
5) Read and read some more--I tell this to all young people who will listen. There is truly great material out there and, if you are willing to put the time in, you can learn and understand a great deal. It still stuns me how little people in business read about their industry even though they are committed to spending decades in it. If you have no interest, get out and do something you enjoy. Charlie Munger, Vice Chairman of Berkshire Hathaway, was once asked what people might find surprising about his business partner, Warren Buffett. Munger said, “You would be amazed at how much Warren reads.” I also tell young people that if you keep on top of your industry, you will likely have great success as most people will not read much. You do not have to be overtly competitive in most businesses. Being better informed gives you a huge edge. To people who tell me that they have no time to read, I always suggest that they unplug the TV.
6) Superficiality--it is rare for marketers or ad agency people to do a really deep dive on a topic. And, the few who do are often stifled because their management may say, “Just give me the bottom-line.” If you boss is older, put your ideas in a report or lengthy e-mail. They will likely read it. I learned the hard way to give 30 second answers to a tough question and then followed up with a detailed response in writing. Some issues and problems are just plain complicated. The one minute manager approach is not always the best.
I have a fistful of other issues on this topic that I may include in a future post.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Thursday, March 26, 2015
American Optimism
About five years ago, I was driving on an interstate after a long conversation with a friend who is far more liberal than I (not hard). He went on a long harangue about drought, possible global famine, income inequality, inevitable economic decline and global warming. We agreed on climate change except that I said he needed more faith in technology. Solar and wind energy were renewable and virtually pollution free and were becoming more efficient each year and the energy companies were using high tech to find fossil fuels. He shook his head and essentially said that America was doomed along with most of the planet.
Driving along, I noticed a bumper sticker on a car in front of me. It said, “Annoy a liberal. Work hard and be happy.” I laughed out loud but it made me think. People left of center tend to be more negative than those who are apolitical or center-right. Most Americans do not sit around moaning. They get up each day, do their work, take care of their families and are not bitter.
What is it about Americans? I dug up a fascinating study that was undertaken in the dark days of the Great Recession (2008-2009). The Harris Poll in a joint venture with the prestigious Financial Times of London (the salmon colored newspaper you may notice at upscale newsstands) found in December, 2008 that the French (63%), Italians (62%), Spanish (59%), Britains (58%) and Germans (52%) were pessimistic about their economic situation. What about Americans? At the time, unemployment was 11.8% which was just below one depression benchmark of 12.0%. Some 54% of Americans were OPTIMISITIC about their economic situation even though we were in the biggest economic crunch since the 1933 bottom of the Great Depression.
Recently, I ran in to a financial planner and asked him why baby boomers had not saved much for retirement. Was it because they were spendthrifts or immature? He smiled and shook his head. “Americans do not save for a rainy day because many just don’t believe in rainy days. That is why people loved Ronald Reagan so much. He ran up our debt but his sunny optimism made you feel good about the country and, more importantly, about ourselves. He was America’s cheerleader.”
Separately, I saw an interview a few years back with Richard Gervais, a British comic and sometime writer who created the popular show, The Office. The program originated in Britain and then came to the U.S. in a different format. He said when he came to America, the show had to be adjusted fairly significantly. Essentially, he said it was because Americans were different from the Brits. “Americans are smarter, have better teeth, are more ambitious, somewhat heavier, and the big difference is that you are more optimistic than us.”
Why? Well, we are nation of immigrants and I believe that helps. Someone, maybe far in to the past, came here seeking a better life and many found it. Historically, Americans firmly believe that each new generation will live better than the prior one did.
Now all that has shifted in the last 18-24 months. I see it talking to young people. In front of a large group of 21 year olds recently, nearly 90% felt that they would never receive social security. I tried to explain that to save the system at some point both social security and medicare would face means testing and the rich and very affluent would have social security taxed away and medicare benefits cut severely. Some shook their heads but many ignored me. Several have approached me and said they will never own a home as their student loans will pin them down for the next three decades. The American dream for them is disappearing.
What they fail to see is that good old Yankee ingenuity will triumph. Take three blue chip companies, for example, that some analysts perceive as stodgy. Every year Johnson & Johnson grows their income and increases their dividend via new product development and selling to new markets. 3M is a huge company that consistently comes up with new products that the public wants and their footprint in Asia is unusually large. Or, how about Schlumberger, an oil services giant, that seems to come with one oil field innovation after another and increases the yield from every well their new technologies touch?
Clearly, things are not great right now. Yet, it saddens me to see American youth so discouraged when they have their whole lives ahead of them. And, the media feeds in to it constantly with story after story about how the current crop of college graduates will often not live nearly as well as their parents did. We need to reinstate our 200+ year trend of American optimism. Positive thinking coupled with positive action really works!
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Thursday, March 12, 2015
Media Director 2025
Over the past week, I have had some lively exchanges with some media pros regarding what qualities a media director will need to have 10 years from now. Several of us are retired or semi-retired (as I am) and a few were under 35. Candidly, anyone 45-55 is not objective as they are apt to mutter something to the effect that they want nothing to change or little will change until they retire. That is a child’s dream--all of us decided to leave that to the children.
Looking 10 years ahead is not easy. You need to focus on the dramatic change of the past decade and recognize that the next 10 years will likely be far more significant in terms of upheaval than the last ten. Platforms that we cannot even conceive of now will be standard in 2025. So, who do you need to lead your media team in the future?
Clearly, the odds are overwhelming that the person will no longer be called a media director. No matter. The function will be largely the same but all of us who discussed it said it would far more important to agency performance that it has been in the past.
Someone asked me a year ago, what skills a 2014 media director needed. I mentioned that the ideal person had to be part economist, trend watcher, negotiator, media researcher, business analyst, futurist, and student of marketing. Sounds like a high bar, doesn’t it? I have never met anyone who hit on all those cylinders simultaneously.
For the future, some mix of the above attributes will still need to be there. I would say the key function even if we go to significant automation in on line and broadcast buying will be proper allocation across the various media platforms. That has always been a blend of art and science but art will make a huge comeback in the mix as new types of media emerge at an ever rapid pace.
I threw out an idea to my vest pocket panel of contributors. Perhaps the media director of the future, or whatever he or she is called, might come from account planning. Your basic training had been to be the eyes and ears of the consumer and to relentless in asking everyone, in every department, “WHY.” That might be the ideal candidate to manage the media world of 2025.
An interesting sidelight came out of the discussion. All of us no longer involved full time in the business did not feel that we would be right for the job in 2025. Perhaps humility comes with maturity. :):):)
I would love to hear your opinions on this topic.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Thursday, March 5, 2015
Ad Agency Mergers and Buyouts--A Long Look
Over the last year, a few people asked me to develop a post regarding the failure of advertising agency mergers. I sent out some feelers and was astounded when people forwarded my questions to friends and friends of friends who had been involved with either a merger or agency buyout. Some of the mergers went back a couple of decades and one lively octogenarian not only asked to be included but made some timeless comments. Also, what came out of the inquiries was that not all mergers and buyouts were failures. Some of the more successful ones quietly went about their work despite a rocky start and still survive today.
Setting the Stage
I do not think that it is an unwarranted assumption to say that people who start advertising agencies that lasted are different from many business people. They took a huge risk in opening a shop no matter how small it was. There was zero security. Many opened up as they were angry--they worked at an agency where someone else was taking the credit for their work or where management could not grow the agency fast enough to keep them. After being your own boss for a decade or two, it is virtually impossible to merge with someone and have equal partners after you or a few close cronies have called ALL the shots. If you were bought out, it is a painful transition of a different kind where you are reporting to others and have lost much of your decision making clout. For agency chiefs who had a strong self sufficient ego, this can be painful at best but usually impossible.
Also, every ad agency in my experience has a unique culture. They are not interchangeable as many banks or insurance companies are.
The Failures
Here are a mixed bag of comments from some battle scarred veterans of the merger/buyout game:
--“For years, I pretty much did as I pleased. One week in to the buyout, this dweeb from the accounting department came in to my office and reviewed by expense account line by line. It was humiliating. He told me that I could not have two scotches on a cross country plane ride. The jerk was overreaching but our new owners were insensitive fools. A lighter touch with us, and especially with me, would have helped a lot. Things fell apart fast. We lasted a couple of years but it was a disaster.”
--“I foolishly ran my little agency as an extended family. It worked well when you had less than 20 staffers who had worked together with almost no turnover. When we were bought out by a firm several times our size, we were unprepared. We could no longer cover for people with personal problems or weaknesses in certain areas. Our accounting and billing had been sloppy while our new leaders were buttoned up and they taught me a lot in that department. Their cash management was top notch. Had I known what they knew, we might have stayed independent!”
--“When we sold out, we positioned it to our team as the chance to work on a bigger stage. It was a flop. They were condescending to me and my associates and, after a year, tried to keep us away from our long term clients. A few of our junior people thrived as they loved the resources that our new owners had. Their healthcare and 401k plans were a big step up but I got tired of being treated like dirt.”
--“Merger! What a farce! We both knew that we needed added strength in several areas and thought that 1+1=3. Well, my new partner or Co-CEO wanted to push me out after a couple of months. I was 15 years older than he so I let everyone know at the merger that he would one day be czar. At best, I wanted five years. He had no patience. Many of my team left within a year. I hung on although he kept me out of the loop as much as possible. It was humiliating.”
--“I had to do a merger. I was getting old and no one or no group of my employees could buy me out. No bank would give them a loan. And Omnicom et al had no interest in buying my little operation. So, I merged to feather my own financial nest. The other shop’s CEO was decent to me and a few of my senior people are still with him. Was I selfish? I wonder about it. But, most days I feel that I did what I had to do. The culture shock was tough for us to swallow. Until you live it, you never know what it really is like.”
The Successes
--“We sold out to a much larger shop (six times our size). The CEO got me in to the mix and even had me meet with key clients and gave me one big one to oversee. After I met with the large client, a junior A.E. and I took him to dinner at a well known steak house. I ordered a bottle of single malt scotch and the client loved it. When he slipped in to the men’s room, they young A.E. told me that I could not order something so expensive. I held my temper but was furious. When I got home, I was still really hot. My wife, god bless her, sat me down and told me that we both knew there would be some adjustments. It was not my bat and ball anymore. So, I swallowed my pride and stayed for years. I now have a great retirement as I earned more at the larger firm than I ever did at my own. It was bumpy at times, of course, but many of my team is still there.”
--“I was an arrogant know it all. When we were bought out, I thought that I would take the new agency by storm. After a month, I was humbled. Big time. They had people with much broader experience than I did and their young people were on top of changes in the industry. I was stunned at how infantile our production estimates had been relative to theirs. They ran a tight ship. I checked my ego every day. I was in my 50’s but still learning. It was great.
-- “When we were bought out, we were relieved but nervous. The new owners behaved impeccably. They left us alone on our long standing accounts but had media and research services that were much better than what we had. Also, they put junior account people and creatives on our key business so the client became used to them over time. When I was ready to retire, people were in place whom my clients, now ours, trusted. They did it right and treated me with respect.
--“We were totally unprepared for the digital revolution. Was anybody really ready? Our new owners helped us and trained a few young people who have made the transition from traditional media to on-line and mobile. We would have closed our doors a few years ago if we had not sold out.
--Finally, my octogenarian friend added some interesting words of wisdom. “Mergers and acquisitions generally do not work. In my long life, they seem to work best in natural resources. A small oil company or natural gas producer is up against the wall with either too much debt or low energy prices. Along comes a giant who scoops them up in a downturn. The staff may report to the same foreman but the benefit and pay package is often better. They have state of the art tech that the wildcatter did not. Some leave but, for those who are disciplined, it often works out pretty well. Ad agencies are different. Many CEO’s are pompous--I certainly was. If you go in to a deal with the right attitude and recognize that you might learn something and also survive long enough to use it, then you can benefit.”
This is only the tip of the iceberg of the comments that I received. Many were so angry and obscene that I chose not to repeat them. Also, no one in my sample was in New York or was purchased by a publicly traded mega-shop. Times will change and several years from now there will be many new advertising platforms. Human nature, however, will not change so there be likely similar stories to these told above 20 years from now.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a comment on the blog.
Setting the Stage
I do not think that it is an unwarranted assumption to say that people who start advertising agencies that lasted are different from many business people. They took a huge risk in opening a shop no matter how small it was. There was zero security. Many opened up as they were angry--they worked at an agency where someone else was taking the credit for their work or where management could not grow the agency fast enough to keep them. After being your own boss for a decade or two, it is virtually impossible to merge with someone and have equal partners after you or a few close cronies have called ALL the shots. If you were bought out, it is a painful transition of a different kind where you are reporting to others and have lost much of your decision making clout. For agency chiefs who had a strong self sufficient ego, this can be painful at best but usually impossible.
Also, every ad agency in my experience has a unique culture. They are not interchangeable as many banks or insurance companies are.
The Failures
Here are a mixed bag of comments from some battle scarred veterans of the merger/buyout game:
--“For years, I pretty much did as I pleased. One week in to the buyout, this dweeb from the accounting department came in to my office and reviewed by expense account line by line. It was humiliating. He told me that I could not have two scotches on a cross country plane ride. The jerk was overreaching but our new owners were insensitive fools. A lighter touch with us, and especially with me, would have helped a lot. Things fell apart fast. We lasted a couple of years but it was a disaster.”
--“I foolishly ran my little agency as an extended family. It worked well when you had less than 20 staffers who had worked together with almost no turnover. When we were bought out by a firm several times our size, we were unprepared. We could no longer cover for people with personal problems or weaknesses in certain areas. Our accounting and billing had been sloppy while our new leaders were buttoned up and they taught me a lot in that department. Their cash management was top notch. Had I known what they knew, we might have stayed independent!”
--“When we sold out, we positioned it to our team as the chance to work on a bigger stage. It was a flop. They were condescending to me and my associates and, after a year, tried to keep us away from our long term clients. A few of our junior people thrived as they loved the resources that our new owners had. Their healthcare and 401k plans were a big step up but I got tired of being treated like dirt.”
--“Merger! What a farce! We both knew that we needed added strength in several areas and thought that 1+1=3. Well, my new partner or Co-CEO wanted to push me out after a couple of months. I was 15 years older than he so I let everyone know at the merger that he would one day be czar. At best, I wanted five years. He had no patience. Many of my team left within a year. I hung on although he kept me out of the loop as much as possible. It was humiliating.”
--“I had to do a merger. I was getting old and no one or no group of my employees could buy me out. No bank would give them a loan. And Omnicom et al had no interest in buying my little operation. So, I merged to feather my own financial nest. The other shop’s CEO was decent to me and a few of my senior people are still with him. Was I selfish? I wonder about it. But, most days I feel that I did what I had to do. The culture shock was tough for us to swallow. Until you live it, you never know what it really is like.”
The Successes
--“We sold out to a much larger shop (six times our size). The CEO got me in to the mix and even had me meet with key clients and gave me one big one to oversee. After I met with the large client, a junior A.E. and I took him to dinner at a well known steak house. I ordered a bottle of single malt scotch and the client loved it. When he slipped in to the men’s room, they young A.E. told me that I could not order something so expensive. I held my temper but was furious. When I got home, I was still really hot. My wife, god bless her, sat me down and told me that we both knew there would be some adjustments. It was not my bat and ball anymore. So, I swallowed my pride and stayed for years. I now have a great retirement as I earned more at the larger firm than I ever did at my own. It was bumpy at times, of course, but many of my team is still there.”
--“I was an arrogant know it all. When we were bought out, I thought that I would take the new agency by storm. After a month, I was humbled. Big time. They had people with much broader experience than I did and their young people were on top of changes in the industry. I was stunned at how infantile our production estimates had been relative to theirs. They ran a tight ship. I checked my ego every day. I was in my 50’s but still learning. It was great.
-- “When we were bought out, we were relieved but nervous. The new owners behaved impeccably. They left us alone on our long standing accounts but had media and research services that were much better than what we had. Also, they put junior account people and creatives on our key business so the client became used to them over time. When I was ready to retire, people were in place whom my clients, now ours, trusted. They did it right and treated me with respect.
--“We were totally unprepared for the digital revolution. Was anybody really ready? Our new owners helped us and trained a few young people who have made the transition from traditional media to on-line and mobile. We would have closed our doors a few years ago if we had not sold out.
--Finally, my octogenarian friend added some interesting words of wisdom. “Mergers and acquisitions generally do not work. In my long life, they seem to work best in natural resources. A small oil company or natural gas producer is up against the wall with either too much debt or low energy prices. Along comes a giant who scoops them up in a downturn. The staff may report to the same foreman but the benefit and pay package is often better. They have state of the art tech that the wildcatter did not. Some leave but, for those who are disciplined, it often works out pretty well. Ad agencies are different. Many CEO’s are pompous--I certainly was. If you go in to a deal with the right attitude and recognize that you might learn something and also survive long enough to use it, then you can benefit.”
This is only the tip of the iceberg of the comments that I received. Many were so angry and obscene that I chose not to repeat them. Also, no one in my sample was in New York or was purchased by a publicly traded mega-shop. Times will change and several years from now there will be many new advertising platforms. Human nature, however, will not change so there be likely similar stories to these told above 20 years from now.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a comment on the blog.
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