Dinosaurs Still Exist!

 

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

 

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

 

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

 

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

 

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

 

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

 

 

The SAG-AFTRA Strike and Viewing

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

 

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

 

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

 

Here are some slightly edited responses:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

The Greatest Measure

 

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

 

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

 

For example:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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

 

Demographics, the Media and the Fed

 

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

 

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

 

Here goes:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

Reach & Frequency--2023

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

 

 

 

The Open-Minded Myth

 

One lesson that I have finally learned in my long life is to question whether an opinion that I have is mistaken and, equally importantly, have facts surrounding the issue changed? Another way to look at it is to keep what is known as an open mind.

 

As I look back, I realize that very few people whom I knew, worked with or for or sold to were truly open-minded. Those who began a meeting with “I have an open mind about what you are proposing” were almost always really saying, “don’t confuse me with facts, my mind is made up.”

 

If the topic is a minor one or in an area with no big downside or emotional wallop, many of us can be quite open-minded. In other, more substantive areas, closed minds reign way too much.

 

In the media world, things have changed remarkably over the last 40 years. Getting people to test cable TV as it broke out as an advertising medium was an uphill slog. That was nothing compared to selling people on very modest digital tests over the last 20 years. The “facts” or media landscape had changed but people clung to their beliefs even though their business franchise seemed to be eroding.

 

On a personal note, looking clearly at facts has shifted some of my political beliefs somewhat toward the center. As a young man, I identified very clearly as a libertarian. I had a live and let live approach toward others but felt that when government got involved in many issues things got pretty screwed up. That is still largely true but, as a marketer, I was always observing demographic shifts. As the US and the western world has gotten older, I see the need for maintaining a strong social safety net. Each month some 71 million people in the US will receive Social Security or disability checks. By 2033, projections are that the Social Security “trust fund” will run dry and benefits under the existing structure will need to be cut by 24%. Most of you reading this post could deal with that, but a strong majority of the 71 million receiving checks could not. It would be a body blow to them and reduce some to horrible poverty. So, while I still believe in personal responsibility and for lawmakers to stop spending so much, something needs to be done (and soon) to protect the elderly. Facts changed my opinion once I saw how my simplistic prior view was mistaken.

 

The great economist John Maynard Keynes was a great example of someone who kept an open mind. In charge of King’s College investments after World War I, he began investing based on business cycle forecasts. He was nearly personally wiped out in the British calamities of the early 1920’s. The great man regrouped, dodged some of the 1929 crash and took a new approach. A man recognized by many as the greatest expert on macroeconomics at the time, abandoned that sophisticated thinking and invested in large, strong companies with good management. He said it was good to not try to be too clever.**  When then Lord Keynes died a multi-millionaire in 1946 (a million went pretty far then), his King’s College fund had also grown exponentially as well. He once said, “When my information changes, I alter my conclusions. What do you do, sir?***

 

My path to being open-minded is still a work in progress. May I ask that you join me?

 

 

**Notice how similar this is to the practices of Berkshire Hathaway’s wildly successful Warren Buffett and Charlie Munger. Charlie has said that he never considers macroeconomic variables in making an investment.

***For a different spin on Keynes, read Media Realism, 2/11/2011—“Would Keynes Still Be a Keynesian?”

 

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

My Favorite Governmental Department

 

From the time that I was about 19 years old, I have been a rather enthusiastic believer in the free market system. So, it might surprise long time readers of this blog to see me entitle a post, “My Favorite Governmental Department.” I generally like a light cloak of regulation in many areas.

 

What I am I writing about? The Congressional Budget Office. Sound as exciting as watching paint dry? Bear with me a few moments and read on. It has a very interesting history.

 

In the later days of the Nixon presidency Congress was concerned about the White House overreaching a bit into things on Capitol Hill. So, they wanted a new agency that would provide objective advice based on data about the impact on the federal budget on various policy proposals. With Nixon gone in August, 1974, The Congressional Budget Office (CBO) was established. Its first head was a dedicated and straight arrow pro named Alice Rivlin. Her resume later included being a deputy at the Federal Reserve, president of the American Economics Association, and Director of the Office of Management and Budget.

 

Under her leadership and that of her successors, the CBO became perhaps the most respected and influential institution in the DC swamp. Independent statistical agencies such as the CBO are important and need to be protected. They realize that much of their job is providing simple arithmetic which most politicians of both major stripes do not always want to accept.

 

Things went okay under Jerry Ford but Jimmy Carter did not approve when Rivlin & Co. did not accept the president’s plan for improving energy efficiency. Speaker Tip O”Neill, Speaker of the House, said the CBO ”was not helping.” My fellow Boston College alum did not get it. The goal and value of the CBO was to be impartial and Rivlin made sure that it was.

 

The genial Ronald Reagan who succeeded Carter also had issues with the CBO. In 1981, Reagan’s first year, the CBO projected that the budget deficits over the next several years would be far higher than the White House projected (sound familiar?). Reagan dubbed the CBO numbers as “phony.”

 

Is the CBO perfect? Of course not. What I respect is that they do not appear to make politically expedient errors in their calculations. Most of the time they focus on the gap between spending and tax revenue going out a few years. To my cynical eye on governmental projections, they strike me as unbiased.

 

There are other groups in DC that provide statistics. At the top of the list is the Census Bureau, the Federal Reserve, the Bureau of Economic Analysis, and the Department of Agriculture. All have some fine people on board.

 

Politicians do not like these purveyors of official statistics. When running for president in 2016, Donald Trump talked about how weak the US economy was. Officially the unemployment rate was pegged at about 5%. Trump said in speeches that it was 35%. I found that laugh out loud funny as in the Great Depression of the 1930’s unemployment peaked in 1933 at around 25%.

 

The absurdity gets better. When Trump took office in 2017, the official unemployment rate continued to ratchet down. His then spokesmen, Sean Spicer, said without winking, “I talked to the president prior to this, and he said to quote him very clearly. They may have been phony in the past, but they are very real now.”**  Clearly, he was manipulating data for his own purposes.

 

We need some grownups such as the statisticians at the CBO and other departments to give the politicians and the public a dose of reality. The media does not address this as clearly as they should.

 

As the fight over the debt ceiling goes on as I write, I wonder how many in congress have truly wrapped their heads around what $31 Trillion means and what the debt will be a decade from now.

 

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

 

 

**Source, The Atlantic, March 2017