Happy 2015!
On Christmas Eve in the afternoon I received an e-mail from a reader. Like much of the messages that I receive it was from someone who corresponds fairly regularly with me but I have never met in person. He asked me simply, “What is the biggest challenge that marketers face going forward?” Admittedly, I was pressed for time. I was about to leave for a church service where I sing Christmas songs with my enthusiastic but shaky tenor. So I wrote back simply, “To grow your brand and protect the business that you have at the same time.” I was out the door.
A few days passed. Even I do not check e-mail on Christmas Day. When I went to check messages, there was a strongly worded reply from my reader. This being a family blog, I will not repeat his exact words but a sanitized version goes something like this: “Don, you idiot! How could you give such a knee jerk response to my serious question? Here is my answer: The biggest problem faced by both ad agencies and their clients going forward is how do you build a mass oriented brand in a media environment that has become personalized? As a media person, you should understand this. Narrow targeting opportunities are almost endless but how do you balance things? How much conventional media do you use and how much pin-point targeting goes on? Can you still afford to do it given the number of venues that you will need to hit? Will it be possible to calculate ROI on all of these platforms or are we back to 1875 with John Wanamaker’s theory that I know half of my advertising is waste, the problem is I do not know which half.”
My e-mail friend certainly had a point. I tossed out the question to several agency folks in my panel and they had two basic answers:
1) People--getting the best that we can afford and holding on to them
2) Keeping up with the rapid changes in the industry
If my reader is right and I think that he may be as he makes a strong case for his POV. I believe that, once again, the gods of marketing will be on the side of the big battalions. Strongly entrenched brands with deep pockets and great research and access to Big Data will have an increasingly strong advantage over start-ups with high hopes and perhaps excellent products. Without hefty resources, social media can only take you so far. Also, media fragmentation is moving so fast that all models of performance of delivery (i.e., reach & frequency) are totally lacking.
What do you think? Care to weigh in? You may reach me at doncolemedia@gmail.com or add a comment on the blog.
Sunday, January 4, 2015
Saturday, December 27, 2014
What Is Going On?
Last week, I put up a post entitled “It’s All So Fragile”, a decidedly downbeat commentary from two struggling ad agency principals. I did not expect much in the way of immediate readership or response as several holidays were upon us that are celebrated all over the world. When I went to check my e-mail, I was very surprised to see all kinds of comments from readers in several countries. A few scolded me for a less than optimistic report posted in the heart of their Christmas season. Some said it was true and a few said they knew who my anonymous agency people were (they were wrong). More telling were the comments of a number of readers who essentially said and I paraphrase--Okay, I see the same thing. What is going on?
I am often criticized for many things but one is that I often take a long view on many issues. So, when I look at the changes taking place in both advertising and conventional media, I do not get too upset. To me, what is going on is NORMAL.
Go back to the founding of our republic. When we broke from Britain and adopted our Constitution in 1789, George Washington became our first president. He presided over a nation that was preindustrial in nature--human muscle ably assisted by some animals was about as techie as we got. Some 90% of the people were involved in agriculture.
A few decades later, the Industrial Revolution began to raise its head. Steam engines started to pop up and then came the telegraph and railroads. Electricity and oil motors came on the scene and people had more mobility, warmth, and light. Finally, we emerged in to the third industrial era which I will call the computer age.
Every time the technological innovation came along in a big way, existing economic and social life became quite destabilized. That is simply what we are going through now. The pattern keeps repeating itself. Historically, each took 30-50 years to effect sweeping change. Remember that electricity was available in many American and European homes in the late 19th century but until the Tennessee Valley Authority (TVA) changed things, much of rural southern America did not have power at the flip of a switch.
So, is it different this time as many say? I would only say that it is different in the sense that the RATE OF CHANGE is much faster. Some 15 years ago, much of the world did not have access to a telephone. Today, mobile phones are found even in remote and primitive areas and not only provide calling but also access to video and the world wide web.
Sweeping changes in technology are disruptive. They do cause pain for people of a certain age who want to coast to retirement and to those whose jobs will become obsolete or marginalized in importance. Try to accentuate the positive. Think about the gains in communication and medicine and travel. Branding will not get easier given the enormous fragmentation of media but we will be able to see what works and what does not much more clearly than ever.
Today remains the most exciting time ever to work in advertising, marketing, or the media. You cannot turn back the clock. To a friend who recently described the digital world as the enemy, I can only conjure up the philosophy of the great Don Michael Corleone-- “Keep you friends close, but your enemies closer.”
To all who read the blog (123 countries represented this year) may I wish you all a happy, healthy and prosperous 2015!
If you would like to contact Don Cole directly you may reach him at doncolemedia@gmail.com or add a comment on the blog.
I am often criticized for many things but one is that I often take a long view on many issues. So, when I look at the changes taking place in both advertising and conventional media, I do not get too upset. To me, what is going on is NORMAL.
Go back to the founding of our republic. When we broke from Britain and adopted our Constitution in 1789, George Washington became our first president. He presided over a nation that was preindustrial in nature--human muscle ably assisted by some animals was about as techie as we got. Some 90% of the people were involved in agriculture.
A few decades later, the Industrial Revolution began to raise its head. Steam engines started to pop up and then came the telegraph and railroads. Electricity and oil motors came on the scene and people had more mobility, warmth, and light. Finally, we emerged in to the third industrial era which I will call the computer age.
Every time the technological innovation came along in a big way, existing economic and social life became quite destabilized. That is simply what we are going through now. The pattern keeps repeating itself. Historically, each took 30-50 years to effect sweeping change. Remember that electricity was available in many American and European homes in the late 19th century but until the Tennessee Valley Authority (TVA) changed things, much of rural southern America did not have power at the flip of a switch.
So, is it different this time as many say? I would only say that it is different in the sense that the RATE OF CHANGE is much faster. Some 15 years ago, much of the world did not have access to a telephone. Today, mobile phones are found even in remote and primitive areas and not only provide calling but also access to video and the world wide web.
Sweeping changes in technology are disruptive. They do cause pain for people of a certain age who want to coast to retirement and to those whose jobs will become obsolete or marginalized in importance. Try to accentuate the positive. Think about the gains in communication and medicine and travel. Branding will not get easier given the enormous fragmentation of media but we will be able to see what works and what does not much more clearly than ever.
Today remains the most exciting time ever to work in advertising, marketing, or the media. You cannot turn back the clock. To a friend who recently described the digital world as the enemy, I can only conjure up the philosophy of the great Don Michael Corleone-- “Keep you friends close, but your enemies closer.”
To all who read the blog (123 countries represented this year) may I wish you all a happy, healthy and prosperous 2015!
If you would like to contact Don Cole directly you may reach him at doncolemedia@gmail.com or add a comment on the blog.
Saturday, December 20, 2014
It's All So Fragile
In recent weeks, I have had conversations and exchanged a ton of e-mails with two agency owners. One runs a small shop while the other’s agency straddles the space between small and mid-sized. Both gentlemen have been around for a long time and have thrived through several economic downturns. All I will say to identify them is that they operate businesses far from New York City.
The fellow with the smaller shop is gregarious and openly describes himself as a “shameless self promoter.” He loves to sell and has a wonderful enthusiasm for all that he does. So, I was surprised, when hearing from him after Thanksgiving, how discouraged that he seemed to be. Here are some verbatim comments or quotes from e-mails over the last few weeks:
--When I met you at a 4A’s Media Conference a dozen years ago, you really annoyed me. I told you that my two anchor accounts were local banks that covered all of our rent, utilities and even employee health insurance. You looked at me with an almost Mona Lisa smile and suggested that I diversify more. Then you muttered something about a bank getting swallowed up every day in the United States due to mergers or buyouts. I was annoyed but when I got home I checked it out and you were right. And, of course, we lost both banks to buyouts within a few years. It took me five years of great effort to crawl out of that hole.
--I had a few car dealers that have been great for years. We had a rough time in 2009 as they did but we all survived. Lately, even that is slipping away. The son of our biggest dealer decided to join the family business after a few years in the financial world. I warned our staff to be polite as he would eventually take over the dealership. Each month we placed a fairly strong radio schedule locally for them. One day, our account executive came back and reported that “Junior” had told him they were trying something new and their would be no paid media next month. I got Dad on the line but he backed his son up 100%. What Junior did was simple--he sent an e-mail or direct mail piece if he had no e-mail to every customer who had bought a car from the dealership in the last three to six years. The offer was very,very good--no dealer hype. My account guy told Junior that it could not work without the lift that it would get from conventional media.
It worked great! According to the old man, SUV’s just flew off the lot. Two of my team bought cars from him! Dad was excited and wanted to do it again. Junior said no and suggested doing it two to three times per year at most with a fresh offer each time. Sales were not great when our radio buy went on the next month. They are now doing all kinds of e-mail blasts and even using Twitter successfully. We look like cave men compared to this kid who is simply doing basic 21st century blocking and tackling. Also, Junior has a buddy who designed the mailer for a few hundred bucks. So, we will not get any work there anymore. Even the crumbs are disappearing.
--We are at a point where we cannot pitch business where the key client decision-makers are young. I know that I have to turn over my team over the next 18 months. We are dinosaurs and if we do not reinvent ourselves, we will become extinct!
The second player has a bigger team and is in a larger metro area and has a staff that has embraced digital options fairly well. He was a copywriter in his early days and still sees himself as a creative type rather than an executive. Some of this comments were:
--We work our team hard but we just cannot keep up with the industry changes. Last week, we were at a pitch and asked about mobile advertising. We said we did quite a bit of it and had more on board for 2015. A young prospect started firing questions at our media and creative guys. He used terms that none of us had heard of before. We looked like country bumpkins. I really embarrassed a friend at the prospect company who fought to get us into the consideration list for the business.
--The opposite happened at a session the month before the mobile debacle. Our creative head began to present a storyboard to the prospects. Three of the people around the table started laughing. He stopped dead in his tracks and one of the guys said, “You really think TV makes sense for us. Really?” We crawled out of the meeting.
--The media talks about the mega-shops and how well they are doing with their online trading desks. I just do not see how we fit in to the new world much longer. Radio just does not work anymore and TV pays out very poorly if at all. The only people who say they see our TV work are over 60. We do some local cable and they provide some attractive promotions but that is not enough to carry the day for us. We do not have a clue about the needed media mix between conventional and digital.
--I just do not know how I can keep the game going. Everything is so fragile.
These are good people who have given their lives to the advertising industry. They cannot be alone in their struggles.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
The fellow with the smaller shop is gregarious and openly describes himself as a “shameless self promoter.” He loves to sell and has a wonderful enthusiasm for all that he does. So, I was surprised, when hearing from him after Thanksgiving, how discouraged that he seemed to be. Here are some verbatim comments or quotes from e-mails over the last few weeks:
--When I met you at a 4A’s Media Conference a dozen years ago, you really annoyed me. I told you that my two anchor accounts were local banks that covered all of our rent, utilities and even employee health insurance. You looked at me with an almost Mona Lisa smile and suggested that I diversify more. Then you muttered something about a bank getting swallowed up every day in the United States due to mergers or buyouts. I was annoyed but when I got home I checked it out and you were right. And, of course, we lost both banks to buyouts within a few years. It took me five years of great effort to crawl out of that hole.
--I had a few car dealers that have been great for years. We had a rough time in 2009 as they did but we all survived. Lately, even that is slipping away. The son of our biggest dealer decided to join the family business after a few years in the financial world. I warned our staff to be polite as he would eventually take over the dealership. Each month we placed a fairly strong radio schedule locally for them. One day, our account executive came back and reported that “Junior” had told him they were trying something new and their would be no paid media next month. I got Dad on the line but he backed his son up 100%. What Junior did was simple--he sent an e-mail or direct mail piece if he had no e-mail to every customer who had bought a car from the dealership in the last three to six years. The offer was very,very good--no dealer hype. My account guy told Junior that it could not work without the lift that it would get from conventional media.
It worked great! According to the old man, SUV’s just flew off the lot. Two of my team bought cars from him! Dad was excited and wanted to do it again. Junior said no and suggested doing it two to three times per year at most with a fresh offer each time. Sales were not great when our radio buy went on the next month. They are now doing all kinds of e-mail blasts and even using Twitter successfully. We look like cave men compared to this kid who is simply doing basic 21st century blocking and tackling. Also, Junior has a buddy who designed the mailer for a few hundred bucks. So, we will not get any work there anymore. Even the crumbs are disappearing.
--We are at a point where we cannot pitch business where the key client decision-makers are young. I know that I have to turn over my team over the next 18 months. We are dinosaurs and if we do not reinvent ourselves, we will become extinct!
The second player has a bigger team and is in a larger metro area and has a staff that has embraced digital options fairly well. He was a copywriter in his early days and still sees himself as a creative type rather than an executive. Some of this comments were:
--We work our team hard but we just cannot keep up with the industry changes. Last week, we were at a pitch and asked about mobile advertising. We said we did quite a bit of it and had more on board for 2015. A young prospect started firing questions at our media and creative guys. He used terms that none of us had heard of before. We looked like country bumpkins. I really embarrassed a friend at the prospect company who fought to get us into the consideration list for the business.
--The opposite happened at a session the month before the mobile debacle. Our creative head began to present a storyboard to the prospects. Three of the people around the table started laughing. He stopped dead in his tracks and one of the guys said, “You really think TV makes sense for us. Really?” We crawled out of the meeting.
--The media talks about the mega-shops and how well they are doing with their online trading desks. I just do not see how we fit in to the new world much longer. Radio just does not work anymore and TV pays out very poorly if at all. The only people who say they see our TV work are over 60. We do some local cable and they provide some attractive promotions but that is not enough to carry the day for us. We do not have a clue about the needed media mix between conventional and digital.
--I just do not know how I can keep the game going. Everything is so fragile.
These are good people who have given their lives to the advertising industry. They cannot be alone in their struggles.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Friday, December 12, 2014
Consumer Update
In the wildly exciting life that I live, I do my level best to keep track of demographic and consumer trends. Not quite two weeks ago, the Federal Reserve released new figures on consumer debt levels in the U.S. and I have decided to share them with you plus add a few comments.
Top line results were as follows:
Average Household Credit Card Debt--$15,608
Average Mortgage Debt--$154,847
Average Student Loan Debt--$32,397
Let us take a quick look at each category:
Credit Card Debt--Actually, if you include ALL households in the credit card debt universe, the average balance is about $7,200. Many, such as you and I, pay off their credit card balances each month. So, the $15.6k is for those who are carrying installment debt with credit cards. Some 47% use credit cards almost daily but have no balance and pay zero interest on them. Minimum payments, then, for those who have credit card debt, are over $300 per month.
There is a statistic that is even scarier than those above. When the Great Recession hit in 2008-2009, people saw that average credit card balances were declining. My knee jerk reaction was that scared citizens were cleaning up their personal balance sheets and paying down debt. Undoubtedly, many were. The real truth as we look at it several years later is that the decline in indebtedness was due more to defaults rather than restraints on spending.
Average Mortgage Debt--not a great deal to say here except that those who were underwater (mortgage balance higher than their home’s value) have often worked their way in to the black. The government agencies Fannie Mae and Freddie Mac announced this past week that they are now writing 3% downpayment mortgages again. This time, they say that documentation must be much tighter than in 2006-2008. A shift in policy such as this makes me nervous. Why not stick to the Canadian ironclad rule of 20% down or the mortgage will not be written?
Student Loan Debt--this is the fastest growing area of US debt. The average graduate starting out in the world has $32,400 in debt. Alarmingly, despite repeated media warnings, this total is up 9.6% from the prior year. And, approximately 32% of those who have student loans are late or have defaulted on them. Bankruptcy? Forget about it! If you declare bankruptcy congress has passed laws insuring that you must pay back the loans. Some will be 50 before they pay their loans off. I do not feel that it is the role of government to protect people from themselves yet given the age of people signing long term agreements more explanation and discussion is needed in my opinion.
Also, many of the loans are taken out by youngsters who take out loans to go to a community college. They borrow $16,000 and then fail out or drop out. Next stop is a minimum wage job at a 7-Eleven or fellow traveler. The debt will likely never be paid off and a 20 year old will have a financial millstone around his or her neck for life. Total student debt now stands at over $1.1 trillion.
So, where does this leave us? Some 70% of the US economy is (sadly) consumer driven. Were everyone to pull in their horns all at once, the economy would be headed toward another Great Recession. There is a big buzz lately as the cost of a barrel of oil has dropped from $107 to around $60, as I write. The average American has approximately $100 per month extra to spend as long as oil stays low. Yet, if you look at Detroit sales in the last few months, SUV sales are up smartly. When oil inevitably goes up, they will be in a tighter spot than now. So, will people use this oil windfall to pay down some debt and re-liquify? Too good to be true. Also, historically, a big drop in the price of oil usually indicates a weakening economy. So, is the low cost at the pump merely a prelude of a weakening global economy?
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Top line results were as follows:
Average Household Credit Card Debt--$15,608
Average Mortgage Debt--$154,847
Average Student Loan Debt--$32,397
Let us take a quick look at each category:
Credit Card Debt--Actually, if you include ALL households in the credit card debt universe, the average balance is about $7,200. Many, such as you and I, pay off their credit card balances each month. So, the $15.6k is for those who are carrying installment debt with credit cards. Some 47% use credit cards almost daily but have no balance and pay zero interest on them. Minimum payments, then, for those who have credit card debt, are over $300 per month.
There is a statistic that is even scarier than those above. When the Great Recession hit in 2008-2009, people saw that average credit card balances were declining. My knee jerk reaction was that scared citizens were cleaning up their personal balance sheets and paying down debt. Undoubtedly, many were. The real truth as we look at it several years later is that the decline in indebtedness was due more to defaults rather than restraints on spending.
Average Mortgage Debt--not a great deal to say here except that those who were underwater (mortgage balance higher than their home’s value) have often worked their way in to the black. The government agencies Fannie Mae and Freddie Mac announced this past week that they are now writing 3% downpayment mortgages again. This time, they say that documentation must be much tighter than in 2006-2008. A shift in policy such as this makes me nervous. Why not stick to the Canadian ironclad rule of 20% down or the mortgage will not be written?
Student Loan Debt--this is the fastest growing area of US debt. The average graduate starting out in the world has $32,400 in debt. Alarmingly, despite repeated media warnings, this total is up 9.6% from the prior year. And, approximately 32% of those who have student loans are late or have defaulted on them. Bankruptcy? Forget about it! If you declare bankruptcy congress has passed laws insuring that you must pay back the loans. Some will be 50 before they pay their loans off. I do not feel that it is the role of government to protect people from themselves yet given the age of people signing long term agreements more explanation and discussion is needed in my opinion.
Also, many of the loans are taken out by youngsters who take out loans to go to a community college. They borrow $16,000 and then fail out or drop out. Next stop is a minimum wage job at a 7-Eleven or fellow traveler. The debt will likely never be paid off and a 20 year old will have a financial millstone around his or her neck for life. Total student debt now stands at over $1.1 trillion.
So, where does this leave us? Some 70% of the US economy is (sadly) consumer driven. Were everyone to pull in their horns all at once, the economy would be headed toward another Great Recession. There is a big buzz lately as the cost of a barrel of oil has dropped from $107 to around $60, as I write. The average American has approximately $100 per month extra to spend as long as oil stays low. Yet, if you look at Detroit sales in the last few months, SUV sales are up smartly. When oil inevitably goes up, they will be in a tighter spot than now. So, will people use this oil windfall to pay down some debt and re-liquify? Too good to be true. Also, historically, a big drop in the price of oil usually indicates a weakening economy. So, is the low cost at the pump merely a prelude of a weakening global economy?
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Wednesday, November 26, 2014
Will Streaming Kill the Cable Bundle?
Several weeks ago, HBO announced that it would launch a “stand-alone, over the top HBO service in the United States” during calendar year, 2015. Essentially, you could watch HBO for five dollars a month streaming on to one of your devices without the expense of a cable subscription. The press had a field day with the announcement and I received dozens of e-mails about it and the possible implications for the cable industry. I thought that it was wise to wait a few weeks and think about the issue and also talk and e-mail a number of media analysts about it.
For years, in passing, a few dozen individuals have told me that the only reason that they subscribed to cable was HBO. I always would nod and smile but also observed that sometimes the programs that they discussed were on Showtime or in Mad Men’s case, AMC, not a premium channel. Additionally, they also mentioned some over the air series that they liked and sports would often play a part in the discussion.
So, if a free standing HBO is offered, will cable get hit with a million plus defections in 2015 solely do to the HBO gambit? I am a bit skeptical. Each month, many thousands of people “cut the cord” and abandon cable. They use some mix of Roku, Netflix, Hulu, Apple TV and even You Tube to fulfill their video needs. Some do it as they truly do not watch much TV and others do it out of economic necessity.
In the November 9, 2014, edition of the Sunday New York Times, there was an excellent article entitled “TV Shrinks to Fit.” The article illustrates how many members of the wired generation do not even own TV’s. They lead busy lives and still love TV. Yet, they watch it on a device. The group is very well educated, many earn very good money, but a television or cable subscription does not fit in to their lives. Interestingly, the majority tend to be women. Young men still have TV’s, often with a large screen, so they can watch sporting events.
So my theory, and I do not have a lot of allies in this regard, is that HBO will actually pick up substantial numbers of these internet savvy upscale young women who never had cable in the first place (see Media Realism, “Does Zero TV Signal The Winds of Change for US Television, May 16, 2013).
As many of you know, I also do some lecturing to college students. Many men expressed great enthusiasm about the rumor that ESPN was considering a stand-alone product delivering all of their platforms via a streaming alternative for approximately 30 dollars. “I would dump cable in a New York minute,” a young Brooklynite told me. When I suggested that the NFL would no longer be available to them, a few young men said they would stick with cable and as, one put it, “continue to get ripped off.” One enterprising fellow said he would cut the cord, go the ESPN streaming route and show up at buddies apartments on game day. “If I bring a six pack of good beer, they will welcome me,” the personable young fellow said.
Many said they would spring for the CBS five dollar streaming deal but backed out to a man when I told them that CBS Sunday and Thursday football was excluded.
So, the Cassandras are not thinking this issue through in my opinion. When could stand alone streaming alternatives really hurt cable? To me, it would hit if many channels aped the HBO offering successfully. If ESPN follows suit (for far more than $5) and is joined by other players, consumer behavior may truly shift. Viewers could cobble together their dream team of HBO, ESPN, NFL, Netflix, Hulu and God knows what and save substantial money over their current cable package. As someone told me yesterday, “I pay for 250+ channels and I only watch six. Buying channels a la carte has real appeal to me. I get my news online. Most of cable is a waste to me.”
It will be great fun to see how this unfolds in the next 24-36 months. As I often say--expect to be surprised.
To my American readers, may I wish you a very Happy Thanksgiving.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
For years, in passing, a few dozen individuals have told me that the only reason that they subscribed to cable was HBO. I always would nod and smile but also observed that sometimes the programs that they discussed were on Showtime or in Mad Men’s case, AMC, not a premium channel. Additionally, they also mentioned some over the air series that they liked and sports would often play a part in the discussion.
So, if a free standing HBO is offered, will cable get hit with a million plus defections in 2015 solely do to the HBO gambit? I am a bit skeptical. Each month, many thousands of people “cut the cord” and abandon cable. They use some mix of Roku, Netflix, Hulu, Apple TV and even You Tube to fulfill their video needs. Some do it as they truly do not watch much TV and others do it out of economic necessity.
In the November 9, 2014, edition of the Sunday New York Times, there was an excellent article entitled “TV Shrinks to Fit.” The article illustrates how many members of the wired generation do not even own TV’s. They lead busy lives and still love TV. Yet, they watch it on a device. The group is very well educated, many earn very good money, but a television or cable subscription does not fit in to their lives. Interestingly, the majority tend to be women. Young men still have TV’s, often with a large screen, so they can watch sporting events.
So my theory, and I do not have a lot of allies in this regard, is that HBO will actually pick up substantial numbers of these internet savvy upscale young women who never had cable in the first place (see Media Realism, “Does Zero TV Signal The Winds of Change for US Television, May 16, 2013).
As many of you know, I also do some lecturing to college students. Many men expressed great enthusiasm about the rumor that ESPN was considering a stand-alone product delivering all of their platforms via a streaming alternative for approximately 30 dollars. “I would dump cable in a New York minute,” a young Brooklynite told me. When I suggested that the NFL would no longer be available to them, a few young men said they would stick with cable and as, one put it, “continue to get ripped off.” One enterprising fellow said he would cut the cord, go the ESPN streaming route and show up at buddies apartments on game day. “If I bring a six pack of good beer, they will welcome me,” the personable young fellow said.
Many said they would spring for the CBS five dollar streaming deal but backed out to a man when I told them that CBS Sunday and Thursday football was excluded.
So, the Cassandras are not thinking this issue through in my opinion. When could stand alone streaming alternatives really hurt cable? To me, it would hit if many channels aped the HBO offering successfully. If ESPN follows suit (for far more than $5) and is joined by other players, consumer behavior may truly shift. Viewers could cobble together their dream team of HBO, ESPN, NFL, Netflix, Hulu and God knows what and save substantial money over their current cable package. As someone told me yesterday, “I pay for 250+ channels and I only watch six. Buying channels a la carte has real appeal to me. I get my news online. Most of cable is a waste to me.”
It will be great fun to see how this unfolds in the next 24-36 months. As I often say--expect to be surprised.
To my American readers, may I wish you a very Happy Thanksgiving.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Wednesday, November 12, 2014
A Blue State Basket of Wal-Mart Goods
For the last several years I have taught a course in Consumer Behavior at a local university. It is fascinating for me as the content needs constant updating and it often leads me in to Behavioral Economics which is a special interest of mine and a rapidly growing discipline.
Each semester I do a lecture about Wal-Mart and then have a class discussion about the company’s impact on retail and even on American life. Also, I do a market “basket of goods” comparing buying a list of products at Wal-Mart and then at other chains and grocery stores.
This fall I decided to put a little twist in the basket of goods. It did not contain my normal middle American selections. This time I compared Wal-Mart prices for goods that were not mainstream but were available at the retail giant and all of the competitors in my sample. These goods are considered expensive by those of moderate income yet all are found at Wal-Mart.
My market basket of goods contained items such as Kind cereals, high end toothpaste, expensive soaps and soups, fruit juice, Lindt chocolate, and “healthy” Granola bars. In previous “basket of goods” Wal-Mart always won vs. the best of the competition by 12-15% (sometimes a competitor would have an individual product for less. No sales items were allowed in the analysis). For this upmarket compilation, it was more like 25% savings at Wal-Mart!
The sample was Wal-Mart, Target, two prominent drug chains, a national grocery chain and two local, high end grocery stores. Across the board, Wal-Mart trounced all competitors. Yardley soap was 99 cents per bar while competitors came in at $1.69+. Kind Cereal was $4.78 which was close to one chain but the local grocery stores had it at $7.36. Toothpaste at Wal-Mart was at least a dollar less expensive than anywhere else. They even sold high end Rembrandt at an excellent price (when I was young there was Colgate, Crest, Gleem, Ipana, and Pepsodent. At one drug chain, I counted 54 different varieties of dental creme). Soups were 30 cents lower relative to everyone else. Expensive chocolate is available at Wal-Mart and averages a dollar to a $1.20 less than all competitors. A 60 ounce container of Ocean Spray Cranberry Juice was only $2.98 but as high as $4.56 at a local grocery store.
Why do I bring this up? None of these products are bought in large quantities by struggling Americans. The upscale must be going to Wal-Mart more than they are willing to admit. The prices are clearly excellent. If these items were not selling, Wal-Mart would drop them and fast.
The financial press discuss how Wal-Mart is struggling a bit as they are losing some high end and younger customers to Amazon. At the other extreme, the very low end income customers are moving to Dollar General as Wal-Mart is perceived as too expensive. In fact, a new study has been released which has demonstrated that Dollar General is less expensive than Wal-mart. Next spring, when I do my next Wal-Mart analysis, I will include Dollar General in the mix with a more conventional “basket of goods” than I had this time.
Demographers often say that people who live in “blue” cities and states vote progressive politically and go to Thai restaurants, drive a Volvo or a Prius, patronize green stores and farm to table restaurants, and they tend to look down their noses at the Wal-Mart nation. It seems, given my basket of goods this time around in a deep “blue” state, that many sneak in to Wal-Mart and get some high end products at excellent prices.
If you want to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Each semester I do a lecture about Wal-Mart and then have a class discussion about the company’s impact on retail and even on American life. Also, I do a market “basket of goods” comparing buying a list of products at Wal-Mart and then at other chains and grocery stores.
This fall I decided to put a little twist in the basket of goods. It did not contain my normal middle American selections. This time I compared Wal-Mart prices for goods that were not mainstream but were available at the retail giant and all of the competitors in my sample. These goods are considered expensive by those of moderate income yet all are found at Wal-Mart.
My market basket of goods contained items such as Kind cereals, high end toothpaste, expensive soaps and soups, fruit juice, Lindt chocolate, and “healthy” Granola bars. In previous “basket of goods” Wal-Mart always won vs. the best of the competition by 12-15% (sometimes a competitor would have an individual product for less. No sales items were allowed in the analysis). For this upmarket compilation, it was more like 25% savings at Wal-Mart!
The sample was Wal-Mart, Target, two prominent drug chains, a national grocery chain and two local, high end grocery stores. Across the board, Wal-Mart trounced all competitors. Yardley soap was 99 cents per bar while competitors came in at $1.69+. Kind Cereal was $4.78 which was close to one chain but the local grocery stores had it at $7.36. Toothpaste at Wal-Mart was at least a dollar less expensive than anywhere else. They even sold high end Rembrandt at an excellent price (when I was young there was Colgate, Crest, Gleem, Ipana, and Pepsodent. At one drug chain, I counted 54 different varieties of dental creme). Soups were 30 cents lower relative to everyone else. Expensive chocolate is available at Wal-Mart and averages a dollar to a $1.20 less than all competitors. A 60 ounce container of Ocean Spray Cranberry Juice was only $2.98 but as high as $4.56 at a local grocery store.
Why do I bring this up? None of these products are bought in large quantities by struggling Americans. The upscale must be going to Wal-Mart more than they are willing to admit. The prices are clearly excellent. If these items were not selling, Wal-Mart would drop them and fast.
The financial press discuss how Wal-Mart is struggling a bit as they are losing some high end and younger customers to Amazon. At the other extreme, the very low end income customers are moving to Dollar General as Wal-Mart is perceived as too expensive. In fact, a new study has been released which has demonstrated that Dollar General is less expensive than Wal-mart. Next spring, when I do my next Wal-Mart analysis, I will include Dollar General in the mix with a more conventional “basket of goods” than I had this time.
Demographers often say that people who live in “blue” cities and states vote progressive politically and go to Thai restaurants, drive a Volvo or a Prius, patronize green stores and farm to table restaurants, and they tend to look down their noses at the Wal-Mart nation. It seems, given my basket of goods this time around in a deep “blue” state, that many sneak in to Wal-Mart and get some high end products at excellent prices.
If you want to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Wednesday, November 5, 2014
Some Dismal Demographic Data
With this post, I am going to do something that I have never done before in Media Realism. I am going to revisit and expand on a post that I put up only a few weeks ago. The post was “Median Income Woes” and first appeared on September 24, 2014.
Essentially, I talked about recently published U.S. income data from the Social Security administration. Since then, and with a few encouraging e-mails from readers, I made a deep dive into the report. What I found was surprising and, may I add, deeply disturbing.
After I looked at the numbers, I checked and double-checked them. Searching across the web, I found a few media outlets and bloggers who picked up certain telling statistics from the report. So, all the stats and factoids that you will see may not totally surprise you. I will bet that you will not be familiar with all of them.
The talking heads on CNN and CNBC keep telling us that the economy is on the mend although all admit that we are experiencing the slowest recovery in measured history from the “Great Recession” of 2008-2009. Where are they misleading us? The key appears to be that they are ignoring basic statistics. They talk of average rather than median income which really distorts what is going on in this country.
So, fasten your seat belts. Let us look at what is really going on.
Here goes:
--The “average” yearly wage in the United States for 2013 was $43,041. If you take inflation into the equation, wages declined from the previous year even if you take the often criticized Federal government estimates as your benchmark. In fact, some have calculated that average wage is $500-600 below the 2007 level. Also, an average includes all wage earners and distorts the data. The 17 hedge fund managers who made over a billion dollars last year and the thousands of executives who made millions in 2013 all pull the average wage up somewhat.
--Let us look at median income, which to me is a far more meaningful statistic. To refresh your memory from Statistics 101, an average is a mean which takes ALL incomes and does a straight calculation dividing total income by total workers. The median is far more subtle. It is the 50th percentile. In other words, approximately half of people are above the median and half are below. The influence of high and ultra high earners are taken out of the statistic. According to the Social Security data, median pay for 2013 was $28,031. Have you heard anyone in the media discuss that? How about the 535 members of Congress or the White House spin doctors? Look at the spread between median income ($28,031) and average income ($43,041). The high income earners (top 10%) are pulling up the average income data and they are doing it significantly.
--So, if $28,031 was the median that means 50% of Americans made less than that. Digging a bit deeper, it gets worse.
--Some 39% of US workers took home less than $20,000 in 2013
--A staggering 63% of workers made less than $40,000 last year
--And sadly, 72% of us made less than $50,000 in 2013
Remember, the above data comes from the Social Security Administration report. It is not from some political group manipulating the data for their own purposes.
Most consumer analysts say that it takes $50,000 to provide a middle class lifestyle for the quintessential family of four. So, if 72% make less than that, a single breadwinner no longer cuts it anywhere in the U.S. Median household income is about $53,000 as I write. Adjusted for inflation, that is no higher than it was 30 years ago. Both man and wife work because there is no choice.
So, the recovery is largely a fraud if you look at middle America. The “Great Recession” is still going on for million of Americans.
If this keeps up, the middle class is toast. Implications for advertising are profound. People are running hard to survive. Some 25% of apartment dwellers do not have enough savings to cover two months rent. A stunning 40% are in severe trouble if there car needs serious repairs even though the average car on the road is now 11 years old and some malfunction with the vehicles is inevitable.
Yes, even the struggling have a smartphone. That is used by many to say that people are doing okay. May I suggest that you visit a depressed area as I have very recently? Everyone does not live as we do in advertising, marketing or communications. If you want to be a marketer in 2014-2015 America, take a hard look at the REAL America.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Essentially, I talked about recently published U.S. income data from the Social Security administration. Since then, and with a few encouraging e-mails from readers, I made a deep dive into the report. What I found was surprising and, may I add, deeply disturbing.
After I looked at the numbers, I checked and double-checked them. Searching across the web, I found a few media outlets and bloggers who picked up certain telling statistics from the report. So, all the stats and factoids that you will see may not totally surprise you. I will bet that you will not be familiar with all of them.
The talking heads on CNN and CNBC keep telling us that the economy is on the mend although all admit that we are experiencing the slowest recovery in measured history from the “Great Recession” of 2008-2009. Where are they misleading us? The key appears to be that they are ignoring basic statistics. They talk of average rather than median income which really distorts what is going on in this country.
So, fasten your seat belts. Let us look at what is really going on.
Here goes:
--The “average” yearly wage in the United States for 2013 was $43,041. If you take inflation into the equation, wages declined from the previous year even if you take the often criticized Federal government estimates as your benchmark. In fact, some have calculated that average wage is $500-600 below the 2007 level. Also, an average includes all wage earners and distorts the data. The 17 hedge fund managers who made over a billion dollars last year and the thousands of executives who made millions in 2013 all pull the average wage up somewhat.
--Let us look at median income, which to me is a far more meaningful statistic. To refresh your memory from Statistics 101, an average is a mean which takes ALL incomes and does a straight calculation dividing total income by total workers. The median is far more subtle. It is the 50th percentile. In other words, approximately half of people are above the median and half are below. The influence of high and ultra high earners are taken out of the statistic. According to the Social Security data, median pay for 2013 was $28,031. Have you heard anyone in the media discuss that? How about the 535 members of Congress or the White House spin doctors? Look at the spread between median income ($28,031) and average income ($43,041). The high income earners (top 10%) are pulling up the average income data and they are doing it significantly.
--So, if $28,031 was the median that means 50% of Americans made less than that. Digging a bit deeper, it gets worse.
--Some 39% of US workers took home less than $20,000 in 2013
--A staggering 63% of workers made less than $40,000 last year
--And sadly, 72% of us made less than $50,000 in 2013
Remember, the above data comes from the Social Security Administration report. It is not from some political group manipulating the data for their own purposes.
Most consumer analysts say that it takes $50,000 to provide a middle class lifestyle for the quintessential family of four. So, if 72% make less than that, a single breadwinner no longer cuts it anywhere in the U.S. Median household income is about $53,000 as I write. Adjusted for inflation, that is no higher than it was 30 years ago. Both man and wife work because there is no choice.
So, the recovery is largely a fraud if you look at middle America. The “Great Recession” is still going on for million of Americans.
If this keeps up, the middle class is toast. Implications for advertising are profound. People are running hard to survive. Some 25% of apartment dwellers do not have enough savings to cover two months rent. A stunning 40% are in severe trouble if there car needs serious repairs even though the average car on the road is now 11 years old and some malfunction with the vehicles is inevitable.
Yes, even the struggling have a smartphone. That is used by many to say that people are doing okay. May I suggest that you visit a depressed area as I have very recently? Everyone does not live as we do in advertising, marketing or communications. If you want to be a marketer in 2014-2015 America, take a hard look at the REAL America.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
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