Lessons From Jeff Bezos

 I have long been fascinated by Jeff Bezos and the growth of Amazon. There is no question that his firm has changed the way we shop and set a standard for service for retailers. Here are a few things that I have digested by tracking his actions over the past few decades:

1) Bezos’ mantra is: “We have a whole process that starts with the consumer and works backwards.” As a result, many business analysts would say that Amazon is the most consumer-centric company in the world. Many have imitated their approach.

When I mentioned this to people in various industries, I have often received the reply that “just about everybody does that.” Not in my experience. Not even close. I worked with people who promised outstanding service when pitching business, yet when it came in their primary focus was on earning a 20%+ profit margin on the new acquisition. I was frequently accused of over-servicing an account. The customer was paid lip service but the firm’s bottom line mattered far more than the long term health of the people ultimately paying us.

A similar scam goes on in financial services where a “customized plan” is put together for new clients. The reality is that it is almost always a pre-packaged mix of assets that is driven solely by the age of the client(s) and their existing net worth. The exception was the late Jack Bogle of Vanguard who popularized the index fund. His tactic, fully above board, was to buy the entire market and charge a very, very low service fee. Overtime, the natural growth of markets would make your holdings rise and you were not eaten up by high fees from investment "professionals.” Bogle was truly customer-centric.

2) Bezos is a great communicator. Study his work and it is cloning Winston Churchill. Years ago, I told a colleague that he should read Warren Buffett’s annual letters to shareholders of Berkshire Hathaway (I still highly recommend them). My friend said you should read the Amazon letter to shareholders that Jeff Bezos puts out each year. The guy writes like Churchill, he said.

I am a huge Churchill fan and was always impressed since my teenage years with the clarity of both his writing and speeches. The great man once said regarding writing or speechmaking: “Short words are best, and old words when short are best of all.” Read Bezos or watch some of his presentations on You Tube. The man is a great communicator. Many words have one syllable, sentences are short and memorable. To me, it is a 21st century American version of Sir Winston. Executives in all industries should imitate this approach.

3) “Missionaries love their product and love their customers.”—Jeff Bezos

Do you REALLY love your customers? If not, maybe you are in the wrong game.

4) “Humans aren’t good at understanding exponential growth.”—Jeff Bezos

When Jeff launched Amazon, a deciding factor was that the internet was growing at 2,400% per year. Mind boggling but most of us missed it. I never bought Amazon shares as, a quasi-securities analyst, they had no consistent earnings for years. Yes, sales kept exploding but I was wedded to a low P/E (price to earnings ratio) strategy and the company’s shares left the station without me. This comment still hits home and smarts a bit.

5) Avoid big departments. Bezos once said that if your team cannot be fed with two pizzas, it is too big. So, he divides teams into smaller groups and fresh ideas seem to pop up.

6) He banned power-points at meetings. At Amazon, memos are used and very tightly written. For some meetings, no one reads the recommendation memo until decision-makers are all in the room. The memo is passed out and everyone reads it at the same time. Also, for each staff meeting, there is an empty chair at the table. The point is that the chair represents the consumer and you always need to be aware of them and their needs and wants.

7) One last gem from Bezos—“You don’t choose your passions. You passions choose you.” 

Many people have tried to copy some of this. Some Amazon alumni are developing consumer-centric companies. I wish them well. One very successful player is Bom Kim who has created a company called Coupang (ticker symbol CPNG) which is referred to as the Amazon of South Korea. I am not touting the company and do not own any at present but I do follow their journey closely.

There are many books out about Amazon. My two favorites are: The Bezos Blueprint by Carmine Gallo and bezanomics by Brian Dumaine.

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

Game Over For Spot TV?

Last week, I was visiting a relative in a market that is no longer a top 50 Nielsen DMA. For a change, I watched a bit of local network affiliate TV checking some local news and a few other programs. I was more than a bit surprised by what I saw.

The issue was not at all the quality of the actual programming. It was the size and quality of the advertisers. I expected local multi-unit retailers and some car dealers. Instead, the airwaves were flooded with individual craftsmen such as plumbers, roofers, and glorified handymen hawking their business. 

All may be solid business people and pillars of their communities. The gnawing question was how can they afford to advertise on DMA wide TV? The answer clearly was that the network affiliates were taking what they can get. Actually, I applaud the sales teams who do not look down their noses at tiny players. What hit me was that the relentless decline in spot tv revenue was clearly coming to an end soon.

Also, how could the commercials pay out? A rule of thumb for decades is that you needed a certain number of points of distribution if you were advertising across an entire DMA for advertising to work for a retail advertiser. These one shot players must have been paying almost nothing for the time or would only be on one brief flight and swear off over the air TV as it failed to move the sales needle profitably for them. Local cable, however, could certainly work in some cases for single unit advertisers.

Linear, or over the air TV, was the greatest mass medium ever. Both network and their affiliate stations were able to reach an overwhelming majority of the country or their individual market respectively almost weekly. Profit margins for strong affiliates were a virtual cash machine. Not so any longer!

In media, as in life, it has always been true that the only constant is change. Still, I felt a bit of sadness getting hit so directly with visible evidence of the medium’s decline.

It also brought back another issue that I have mentioned several times over the years in Media Realism (MR). How does one launch a new product aimed at a mass audience? Fragmentation continues to get worse. My answer is that a few upstarts will break through as their message and products go viral. Most success will likely come from the existing giants in many categories who can do line extensions and are a proven quantity to most prospects.

You may reach Don Cole at doncolemedia@gmail.com or leave a message on the blog.

Will Artificial Intelligence Kill Search?

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

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

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

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

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

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

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

The Case For Disney

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

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

 

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

 

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

 

 

Dinosaurs Still Exist!

 

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

 

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

 

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

 

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

 

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

 

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

 

 

The SAG-AFTRA Strike and Viewing

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

 

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

 

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

 

Here are some slightly edited responses:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

The Greatest Measure

 

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

 

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

 

For example:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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