Panic seems to have taken hold in our industry. Over the last two weeks, I have received a few dozen e-mails or calls from people whom I know. They ask me point blank--"Are we in a depression rather than a recession."
Before we answer, let's step back a moment and define terms and take a long look at U.S. economic history. In one sense, recession is a fairly new term. In the 19th century and up to the Great Depression of the 1930's, financial downturns were often referred to as Panics or Depressions. The two most famous were the Panic of 1837 which lasted five years and the Long Depression which was a horrendous downturn that spanned from 1873-1896. There were mini-depressions within the Long Depression with the most painful lasting continuously from 1873-1878. The Great Depression of the 1930's was really a downturn from late 1929-1933 and a later downward spike in 1937-1938. Stocks fell 89% from 1929-1933 and were halved again in the 1937-38 crunch. By Christmas, 1933, unemployment was 25%. Some claim only ramped up production in World War II pulled us out of it.
Since then, our downturns have been fewer and milder and are always referred to by the media as "recessions'. No one wants to use the term depression as it conjures up the 1930's which were horrendous. What is a recession? The classic definition is a decline in the Gross National Product that lasts for at least two consecutive quarters. Often, we have been out of recessions by the time we identify conclusively one having taken place. Today, we know for sure that we are in one and it has not bottomed out yet.
For those who think we are headed for another Great Depression or are already there, please keep in mind the following: We now have FDIC insurance on bank deposits and unemployment insurance, two key programs that were not available in the early years of the 1930's. They will put a brake on things. Also, we were on the gold standard in the early 1930's and government by law could not print money at will. Today, governments can, and they have few qualms about doing it to reinflate the economy. This will cause inflation, perhaps serious inflation a few years down the road, but people would likely be working still.
What is a depression? While opinions vary, many economists state it is a continuous decline in economic activity, or Gross National Product (GNP), that lasts for 36 months or more. By that standard, we would still need to be shrinking until January, 2011. Others peg it to an unemployment level of 11.0% or more. We are currently at 7.6% nationally and we did reach 10.8% in the recession of 1981-1982.
How does this relate to our world of media? It is hard to say. If the present trend continues for another 15-18 months, then we would likely be in a media depression. Newspapers may already be there but, as mentioned in a post last month, that medium has structural problems regardless of the state of the economy. Spot TV and radio are in a similar but less precarious position.
So, we all need to ride this out. Both Harry Truman and Ronald Reagan have been attributed the quotation: "A recession is when your neighbor is out of work. A depression is when you are out of work." As the media and agencies downsize in the months to come, it will be hard not to be discouraged or even frightened. And, the backdrop of rapid change in the media landscape itself takes an unsettling situation and makes it worse.
But, what you need to do is keep going. Take a deep breath when you hear the latest economic news or look at your 401k statement. This is a difficult time but definitely not the worst economic challenge that our country or advertising industry has seen.
I assure you, my friends, the future has not been cancelled.
If you would like to conact Don Cole directly, you can reach him at doncolemedia@gmail.com
Monday, February 23, 2009
Tuesday, February 17, 2009
Nothing Can Replace Television and It Almost Has!
Until I returned permanently to Baltimore six weeks ago, I have been traveling 200,000 miles per year annually for decades. I visited with local TV stations, cable interconnects, magazines, clients, client prospects, and all sorts of new media sales teams. Today, I still talk and e-mail with hundreds in the media and visit some face to face.
What I see and hear stuns me. The broadcast media, as a group, are in almost complete denial about what is going on in our world of media. When the relentless march of broadcast fragmentation is brought up, local station people respond with "have you seen our local news. It is extraordinary." I have and it is not.
Ask industry people about how DVR's are changing the effectiveness of TV as an advertising medium and the more mature (in age only) say something to the effect that they hope they will be retired before the effects are truly felt in the marketplace. What kind of answer is that?
We recognize that no one likes change. However, sitting back and pretending that it does not exist is not only a non-solution, it is a danger to the future of our industry.
Today, more than ever, this is a time for truth. From our perspective, here is the reality of where we are:
1) the Internet is not "the" solution. A surprising number of people who should know better feel that on line activity will simply take the place of TV over time. Yes, it will help and continue to grow as an advertising medium, but, there is nothing out there that will ever replace the dynamic mass selling medium that television has been. (we will discuss streaming video in an upcoming post)
2) Today's consumers are now in control and they are not going back to being passive viewers again. Life "on-demand' appeals to people. DVR's, blogs, You tube, Hulu.com, The Slingbox, streaming video, new cable platforms, and many other possibilities have permanently upset the TV landscape. Watch how a young adult uses media--are you positioning your campaigns to reach young people well or at all for that matter?
3) It will be harder and much more expensive to bring out new brands and products. Time tested tactics such as "roadblocks" or vertical strikes in primetime are now virtually impossible. Buy 80 channels deep and you still cannot replicate the reach a conventional TV buy provided not that many years ago. And what of the cost?
4) Because of #3, the entrenched players are in a very good position over the next 10 years. Watch for lots of line extensions
coming from big players in package goods and many other disciplines. Nestle, Coca-Cola, Pepsi, Heinz, and Kellogg along with the major soap companies will be unusually well positioned both domestically and abroad.
5) As mentioned, way too many (but not all) local broadcasters are in denial. To say that they are re-arranging the deck chairs on the Titantic gives them too much credit. Winning the night with a three rating is good in that a win is a win. But it is still a three rating. What are the other 97% of the DMA doing?
There is also a terrible danger with the presence of legacy mentalities out there. People sit in meetings and nod vigorously when I say that TV is losing its luster as a sales medium. But, moments later they say something to the effect that the solution to TV's slow death is simply adding more weight. Add more weight? They will still miss the people that they are missing now! All additional weight will do is add significant frequency to the same folks they reach now who are heavy TV viewers and not always the most desirable prospects.
Another huge problem is that most new media options will not work. In recent years and today, I try to give prospective clients a laundry list of media tests in new business presentations. The audience is more than polite; they are truly attentive. But, invariably, someone in the room will say "Tell us which ones will work and we will do those."
Well. We are recommending tests in these sessions. And, by definition, we do not know which will work. We expect and hope to be surprised and hit a 500 foot home run with some of them or, more realistically, one of them. The truth is that most will fail and fail quickly and badly.
There is a wonderful scene in both the stage and film versions of "1776." The fiery John Adams is watching fellow delegates to the Continental Congress pick apart and try to soften Thomas Jefferson's Declaration of Independence. Finally, in exasperation, he rises and says "Gentlemen, this is a revolution. We have to offend someone."
Many of us with a bit of grey hair have had the privilege of working in an industry that was exciting and fun but somewhat predictable. Those days are over but even those who see it clearly are afraid to acknowledge it publicly. We desperately need a bit of the spirit of John Adams if we are to become founding fathers of the next generation of media professionals.
This is arguably the most exciting time to work in advertising and media since 1953 when TV really hit its stride as an advertising medium. Change is unsettling but no one can hold back the ongoing tidal wave. Embrace the change, challenge, if necessary offend the status quo, or the revolution will soon make you irrelevant.
If you would like to contact Don Cole directly, e-mail him at doncolemedia@gmail.com
What I see and hear stuns me. The broadcast media, as a group, are in almost complete denial about what is going on in our world of media. When the relentless march of broadcast fragmentation is brought up, local station people respond with "have you seen our local news. It is extraordinary." I have and it is not.
Ask industry people about how DVR's are changing the effectiveness of TV as an advertising medium and the more mature (in age only) say something to the effect that they hope they will be retired before the effects are truly felt in the marketplace. What kind of answer is that?
We recognize that no one likes change. However, sitting back and pretending that it does not exist is not only a non-solution, it is a danger to the future of our industry.
Today, more than ever, this is a time for truth. From our perspective, here is the reality of where we are:
1) the Internet is not "the" solution. A surprising number of people who should know better feel that on line activity will simply take the place of TV over time. Yes, it will help and continue to grow as an advertising medium, but, there is nothing out there that will ever replace the dynamic mass selling medium that television has been. (we will discuss streaming video in an upcoming post)
2) Today's consumers are now in control and they are not going back to being passive viewers again. Life "on-demand' appeals to people. DVR's, blogs, You tube, Hulu.com, The Slingbox, streaming video, new cable platforms, and many other possibilities have permanently upset the TV landscape. Watch how a young adult uses media--are you positioning your campaigns to reach young people well or at all for that matter?
3) It will be harder and much more expensive to bring out new brands and products. Time tested tactics such as "roadblocks" or vertical strikes in primetime are now virtually impossible. Buy 80 channels deep and you still cannot replicate the reach a conventional TV buy provided not that many years ago. And what of the cost?
4) Because of #3, the entrenched players are in a very good position over the next 10 years. Watch for lots of line extensions
coming from big players in package goods and many other disciplines. Nestle, Coca-Cola, Pepsi, Heinz, and Kellogg along with the major soap companies will be unusually well positioned both domestically and abroad.
5) As mentioned, way too many (but not all) local broadcasters are in denial. To say that they are re-arranging the deck chairs on the Titantic gives them too much credit. Winning the night with a three rating is good in that a win is a win. But it is still a three rating. What are the other 97% of the DMA doing?
There is also a terrible danger with the presence of legacy mentalities out there. People sit in meetings and nod vigorously when I say that TV is losing its luster as a sales medium. But, moments later they say something to the effect that the solution to TV's slow death is simply adding more weight. Add more weight? They will still miss the people that they are missing now! All additional weight will do is add significant frequency to the same folks they reach now who are heavy TV viewers and not always the most desirable prospects.
Another huge problem is that most new media options will not work. In recent years and today, I try to give prospective clients a laundry list of media tests in new business presentations. The audience is more than polite; they are truly attentive. But, invariably, someone in the room will say "Tell us which ones will work and we will do those."
Well. We are recommending tests in these sessions. And, by definition, we do not know which will work. We expect and hope to be surprised and hit a 500 foot home run with some of them or, more realistically, one of them. The truth is that most will fail and fail quickly and badly.
There is a wonderful scene in both the stage and film versions of "1776." The fiery John Adams is watching fellow delegates to the Continental Congress pick apart and try to soften Thomas Jefferson's Declaration of Independence. Finally, in exasperation, he rises and says "Gentlemen, this is a revolution. We have to offend someone."
Many of us with a bit of grey hair have had the privilege of working in an industry that was exciting and fun but somewhat predictable. Those days are over but even those who see it clearly are afraid to acknowledge it publicly. We desperately need a bit of the spirit of John Adams if we are to become founding fathers of the next generation of media professionals.
This is arguably the most exciting time to work in advertising and media since 1953 when TV really hit its stride as an advertising medium. Change is unsettling but no one can hold back the ongoing tidal wave. Embrace the change, challenge, if necessary offend the status quo, or the revolution will soon make you irrelevant.
If you would like to contact Don Cole directly, e-mail him at doncolemedia@gmail.com
Sunday, February 15, 2009
Outdoor--The Last Mass Medium
Every two years, legendary investor Warren Buffett and his Vice Chairman at Berkshire Hathaway, Charlie Munger, invite a select group of financiers and business executives to a retreat to discuss the economy and value investing. At every meeting over the last couple of decades he also has an exercise that he does with all participants. A recent book on Buffett describes it as follows: "Buffett posed the Desert Island Challenge. If you were stranded on a desert island for ten years, he asked, in which stock would you invest in."
"The trick was to find a company with the strongest franchise, one least subject to the corroding forces of competition and time--Munger's idea of a great business." (Quotes from page 331 of "The Snowball--Warren Buffett and the Business of Life" by Alice Schroeder, Bantam Dell, 2008. Highly recommended!)
Taking a hint from the great Buffett, I went to my panel across the nation and asked the Don Cole version of the Desert Island Challenge. If you were planning a national media campaign for a well heeled advertiser, what medium do you think would be least effected by all the changes going on in the media envirionment in the next 10 years?
( A quick aside about my panel. They are a group of approximately 20 professionals whom I value and trust. Many are sales people across different media, a few at agencies and buying services and a couple of highly seasoned media researchers. There is signficant geographic dispersion to the panel as well. Every month or so, I throw out a question as I am preparing a post. All replies are treated with strict confidence and NO ONE will ever have his/her name mentioned.)
Response to the Desert Island Challenge was excellent. What was particularly gratifying is that the panel members did not gravitate to the medium that they are selling or where they place most of their dollars in the case of agency/buying service players.
There was a brief but intriquing response that listed college sports as a stable player over the next decade. The reasons were not media driven but more sociological in nature as the panelist wrote of its role in many US households.
But the dominant response and the one I also chose was Outdoor. Think about it for a moment. It has been very stable for generations and only now is getting interesting with the emergence of digital boards in many locations. One panelist who is even greener than I environmentally said "I would love to see the outdoor space shared with something useful, like attaching solar panels or wind turbines to the boards." An excellent idea to blunt criticism if localities decide that outdoor is environmentally insensitive.
To me, from a media perspective, Outdoor should change the least for one simple reason--it is the last mass medium. With fragmentation effecting everything else, Outdoor is the classic "old man river" medium in that it just keeps rolling along!
Am I saying that outdoor should become the dominant player in most media plans? Of course not. It will still likely be a support medium in many instances. But it will be able to deliver an audience that is larger and broader based than anything else as the years roll by. If you have a simple message, it should probably play a larger role going forward in many plans than it does today.
About two years ago, a GSM at a large market TV station invited me to give my media forecast presentation that looks five years ahead to his sales staff and other station personnel. He was fearless as my comments about spot TV were very blunt and he was not the least bit defensive. Afterwards, his two best salespeople came up to me, thanked me, and asked if they should look for a job selling outdoor. Half seriously, I said that they might want to consider it. Today, I would say definitely.
If you would like to connect Don Cole directly, e-mail him at doncolemedia@gmail.com
"The trick was to find a company with the strongest franchise, one least subject to the corroding forces of competition and time--Munger's idea of a great business." (Quotes from page 331 of "The Snowball--Warren Buffett and the Business of Life" by Alice Schroeder, Bantam Dell, 2008. Highly recommended!)
Taking a hint from the great Buffett, I went to my panel across the nation and asked the Don Cole version of the Desert Island Challenge. If you were planning a national media campaign for a well heeled advertiser, what medium do you think would be least effected by all the changes going on in the media envirionment in the next 10 years?
( A quick aside about my panel. They are a group of approximately 20 professionals whom I value and trust. Many are sales people across different media, a few at agencies and buying services and a couple of highly seasoned media researchers. There is signficant geographic dispersion to the panel as well. Every month or so, I throw out a question as I am preparing a post. All replies are treated with strict confidence and NO ONE will ever have his/her name mentioned.)
Response to the Desert Island Challenge was excellent. What was particularly gratifying is that the panel members did not gravitate to the medium that they are selling or where they place most of their dollars in the case of agency/buying service players.
There was a brief but intriquing response that listed college sports as a stable player over the next decade. The reasons were not media driven but more sociological in nature as the panelist wrote of its role in many US households.
But the dominant response and the one I also chose was Outdoor. Think about it for a moment. It has been very stable for generations and only now is getting interesting with the emergence of digital boards in many locations. One panelist who is even greener than I environmentally said "I would love to see the outdoor space shared with something useful, like attaching solar panels or wind turbines to the boards." An excellent idea to blunt criticism if localities decide that outdoor is environmentally insensitive.
To me, from a media perspective, Outdoor should change the least for one simple reason--it is the last mass medium. With fragmentation effecting everything else, Outdoor is the classic "old man river" medium in that it just keeps rolling along!
Am I saying that outdoor should become the dominant player in most media plans? Of course not. It will still likely be a support medium in many instances. But it will be able to deliver an audience that is larger and broader based than anything else as the years roll by. If you have a simple message, it should probably play a larger role going forward in many plans than it does today.
About two years ago, a GSM at a large market TV station invited me to give my media forecast presentation that looks five years ahead to his sales staff and other station personnel. He was fearless as my comments about spot TV were very blunt and he was not the least bit defensive. Afterwards, his two best salespeople came up to me, thanked me, and asked if they should look for a job selling outdoor. Half seriously, I said that they might want to consider it. Today, I would say definitely.
If you would like to connect Don Cole directly, e-mail him at doncolemedia@gmail.com
Monday, February 2, 2009
Local TV News--Use Carefully
For my entire career local TV news has been a mainstay of spot TV buys that my team has made. In recent years, I encouraged staffers to cut back in its use in media plans for most products. Its future seems a bit questionable to me as a broad based advertising vehicle and I would like to discuss it in depth in this post.
Local news for decades was a great source of pride for television stations. Competition was fierce and great care was taken to put together anchor teams and sports and weather talent that could appeal to a large cross section of the home DMA. They wanted to appear as good corporate citizens, responsible journalists and fulfill then FCC requirements about public affairs and community involvement. And, it was where much of the station's profits came from as well.
Two major things happened which hurt local news--first cable and then the Internet.
As cable got some traction, young men in particular and sports fans of all stripes realized that ESPN Sportcenter gave them all they wanted and more at 11pm (EST). If there was a big local game they could switch back to a local affiliate at 20 past the hour and catch hometown coverage as well. The Weather Channel did its bit by providing local "at the 8's" which allowed people to get an accurate weather forecast almost at will.
The at-will feature came with Internet growth. Sports, particularly minor sports, were given thorough coverage 24/7. You never had to wait a moment for results. ESPN shined here with all kinds of chat rooms and special features and, of course, streaming video in recent times. Weather was available from several excellent sources online.
Another issue that is hard to quantify is the content of the news. People got sick of the drumbeat of murders, fires, child abuctions, and overall sensationalism of the local product. Also, did you need four stations providing the news often simultaneously? There is only so much going in Podunk and so much beautiful weather in San Diego.
So who is the core of the local news audience? Early news is usually a 50+ vehicle skewing female and, if you do special tabulations via Nielsen, you will find that it is, in many DMA's, downscale, ethnic, and old. After all, if you are watching news at 5 or 5:30 pm the odds are not great that you have a fast track career. You should still be in the office then or perhaps, on Friday night, starting your commute.
Why does early news show up as 15% of some broadcast buys. It appears that many planners and broadcast buyers are lazy. Nielsen says it still may deliver a 2 rating against Adults 18-49 so it helps bring buys in . During a trip to the midwest last year, I sampled early news (5pm) in my hotel room prior to dinner with a station sales manager. I noticed spots for both Jaquar and Mercedes-Benz. My initial response was "what the hell is going on?" Early news cannot be a good vehicle for either brand in virtually any DMA. It appeared a buyer got very lazy or was totally inept and did not think beyond age and gender and bought the news even though 98% of the audience watching at that hour could not possibly afford either advertised vehicle.
It amazes me that local cable sales have not picked up on this issue a lot more. If you are selling detergent, toothpaste (but more denture adhesive!), or certain foods or health products, then early news is fine and often efficient. But cable has a fistful of channels that surely can provide a better demographic for many products and services than you see in early news in almost any market.
Late news was a stalking horse for Prime years ago both in audience size and demography. Not so any longer! And the Local People Meter (LPM) data have driven that point home even more strongly with long time late news goliaths suddenly slain when a new and improved measurement technique came to down. While more appealing than early news, it is simply not what it used to be as a media vehicle.
My point here is that all TV is suffering and is less effective than it once was due to rating distintegration on over the air channels, digital growth, and, of course, DVR growth. But leaving a heavy news component in many buys smacks of the late 1970's not the first decade of the 21st century. When it comes to news, CAVEAT EMPTOR!
To contact Don Cole directly, e-mail him at doncolemedia@gmail.com
Local news for decades was a great source of pride for television stations. Competition was fierce and great care was taken to put together anchor teams and sports and weather talent that could appeal to a large cross section of the home DMA. They wanted to appear as good corporate citizens, responsible journalists and fulfill then FCC requirements about public affairs and community involvement. And, it was where much of the station's profits came from as well.
Two major things happened which hurt local news--first cable and then the Internet.
As cable got some traction, young men in particular and sports fans of all stripes realized that ESPN Sportcenter gave them all they wanted and more at 11pm (EST). If there was a big local game they could switch back to a local affiliate at 20 past the hour and catch hometown coverage as well. The Weather Channel did its bit by providing local "at the 8's" which allowed people to get an accurate weather forecast almost at will.
The at-will feature came with Internet growth. Sports, particularly minor sports, were given thorough coverage 24/7. You never had to wait a moment for results. ESPN shined here with all kinds of chat rooms and special features and, of course, streaming video in recent times. Weather was available from several excellent sources online.
Another issue that is hard to quantify is the content of the news. People got sick of the drumbeat of murders, fires, child abuctions, and overall sensationalism of the local product. Also, did you need four stations providing the news often simultaneously? There is only so much going in Podunk and so much beautiful weather in San Diego.
So who is the core of the local news audience? Early news is usually a 50+ vehicle skewing female and, if you do special tabulations via Nielsen, you will find that it is, in many DMA's, downscale, ethnic, and old. After all, if you are watching news at 5 or 5:30 pm the odds are not great that you have a fast track career. You should still be in the office then or perhaps, on Friday night, starting your commute.
Why does early news show up as 15% of some broadcast buys. It appears that many planners and broadcast buyers are lazy. Nielsen says it still may deliver a 2 rating against Adults 18-49 so it helps bring buys in . During a trip to the midwest last year, I sampled early news (5pm) in my hotel room prior to dinner with a station sales manager. I noticed spots for both Jaquar and Mercedes-Benz. My initial response was "what the hell is going on?" Early news cannot be a good vehicle for either brand in virtually any DMA. It appeared a buyer got very lazy or was totally inept and did not think beyond age and gender and bought the news even though 98% of the audience watching at that hour could not possibly afford either advertised vehicle.
It amazes me that local cable sales have not picked up on this issue a lot more. If you are selling detergent, toothpaste (but more denture adhesive!), or certain foods or health products, then early news is fine and often efficient. But cable has a fistful of channels that surely can provide a better demographic for many products and services than you see in early news in almost any market.
Late news was a stalking horse for Prime years ago both in audience size and demography. Not so any longer! And the Local People Meter (LPM) data have driven that point home even more strongly with long time late news goliaths suddenly slain when a new and improved measurement technique came to down. While more appealing than early news, it is simply not what it used to be as a media vehicle.
My point here is that all TV is suffering and is less effective than it once was due to rating distintegration on over the air channels, digital growth, and, of course, DVR growth. But leaving a heavy news component in many buys smacks of the late 1970's not the first decade of the 21st century. When it comes to news, CAVEAT EMPTOR!
To contact Don Cole directly, e-mail him at doncolemedia@gmail.com
Saturday, January 31, 2009
Do Newspapers Have a Future in the U.S.?
With all the changes swirling about in the world of media, no group has been affected more than major metropolitan newspapers. Until very recently, newspaper billed more than any other media type and shrewd investors like Warren Buffett took big stakes in major market papers or bought them outright. It is doubtful if Buffett, known as "The Oracle of Omaha", would chase a newspaper today.
Some of the problem is the fault of the newspapers and some is simply shifting consumer behavior. They of late have been hit by a double whammy of declining readership in general of the daily press plus a weak economy that has hit local car dealers and retailers very hard. But, newspapers were always a bit arrogant. They knew for a long time that they were "the retailer's bible" so they never worked hard for business. For a few years, some did well as their competitors went under and they became the only newspaper choice in town. Several years later, a lot of the advantage wore off as young people avoided them.
For a while an argument was used in newspaper circles similar to one used by radio people. As a teenager, I loved The Beach Boys and The Beatles. Radio people early in my career told me that by the time I was 60, I would be listening to the Big Band sound of the 1940's. It did not happen. My habits have stayed with me.
When newspaper reading began its slow death 20 years ago, a lot of newspaper people said the young generation would eventually come to them. When they became homeowners and parents, newspapers would become an integral part of their daily lives. Well, I speak a lot as a guest lecturer on college campuses. I always ask for a show of hands to see who reads a daily newspaper. Most of the time it is under 10% and these classes are often full of journalism or communications majors. That bodes very poorly for newspapers long term. Ask a group of marketing people in the work force and you will see that if someone is under 40, the odds of he or she reading a daily paper are also very low. The Wall Street Journal bucks the trend, of course, with rising young professionals, but that is a special case for sure.
The college kids almost always say the same thing when I ask why they are not reading a paper. I get comments such as "you have to wait for a specific time each day to get it and news is always happening" or "I can read the parts that I want for free online" and "where are the hot links?" Another comment said in different ways is "a newspaper does not fit into my life." More damning is "reading a daily paper is something my grandparents do!" Does this sound like a group who will suddenly jump to newspaper some day? Not likely, with all the new options shaping up.
Many fairly major papers are really on the skids. They are largely wire service copy with a few local and syndicated columns thrown in. As I travel around the country and read many of them, a fair assessment is that many have become embarrassments.
How can they be saved? Many analysts say that they need to focus more on local events and simply use the wire service copy for national and international news. But that ignores the demographic tidal wave that is headed right at them. They are skewing older and older and young adults are not going to get turned on to newspapers because they cover school board issues or local fires in great detail. Suburban weeklies already cover that well anyway which hurts the metro dailies.
Others say that they need to bite the bullet if the economy continues to be weak and go 100% digital as a few have done. But, the problem with that is the reality that the core base of many newspapers is older, sometimes much older. If you go exclusively digital you lose thousands of the elderly who do not know how to turn on a computer.
Another portion of the digital argument is that dailies need to come up with a roster of new carriers--RSS, podcasts, Twitter, Facebook, iPhone-- the list goes on and on. Can they brand themselves that way? It is possible, I suppose but not enough publishers think in those terms yet.
One publication that stunned me with their excellent transformation to digital was The Christian Science Monitor. To me, it has always been a thoughtful publication that played politics straight down the middle. The new digital version is compact and wisely does not try to do it all. They have a fairly small staff but have kept several foreign bureaus open. They focus on national news and do it very, very well. I wish them well and rarely miss an issue these days. (Check it out at csmonitor.com)
Realistically, some papers will begin to cut back in 2009. Some will kill the Saturday edition; others may go to a frequency of three times per week. But, if the economy stagnates well into 2010, several will simply close their doors. Some fair sized markets will simply not have a daily paper.
There is a social issue that goes beyond the failure of daily papers. Consider the Washington Post in the early 1970's. Katherine Graham was a courageous publisher who had the money and the guts to take on the Nixon administration over The Pentagon Papers and then Watergate. Two young reporters, Bob Woodward and Carl Bernstein, doggedly pursued the Watergate story with support from editor Ben Bradlee. It took lots of time and money. They unearthed a great deal of criminal activity and helped bring down the Nixon White House.
What about today? There may be publishers with guts but how many mid-size market publishers have the financial resources to do exhaustive investigative reporting about the corruption of their city's mayor or city council? As each week goes by, the odds seem less and less.
America will be poorer in many ways without a free and vibrant daily press in every city of size. Bloggers are great for an open society and for bringing unorthodox viewpoints to the forefront. But, bloggers have limited resources and while they can raise issues and concerns, they can only go so far. Will there ever be another Woodward & Bernstein with a wealthy and gutsy patron to back them up and allow them to keep digging for extended periods of time? Will corruption go unchecked here or there because no one has the resources to blow the whistle or even know there is a problem?
Sadly, most American newspapers are dinosaurs. They need to reinvent themselves quickly or they will surely become extinct.
To contact Don Cole directly, you may e-mail him at doncolemedia@gmail.com
Some of the problem is the fault of the newspapers and some is simply shifting consumer behavior. They of late have been hit by a double whammy of declining readership in general of the daily press plus a weak economy that has hit local car dealers and retailers very hard. But, newspapers were always a bit arrogant. They knew for a long time that they were "the retailer's bible" so they never worked hard for business. For a few years, some did well as their competitors went under and they became the only newspaper choice in town. Several years later, a lot of the advantage wore off as young people avoided them.
For a while an argument was used in newspaper circles similar to one used by radio people. As a teenager, I loved The Beach Boys and The Beatles. Radio people early in my career told me that by the time I was 60, I would be listening to the Big Band sound of the 1940's. It did not happen. My habits have stayed with me.
When newspaper reading began its slow death 20 years ago, a lot of newspaper people said the young generation would eventually come to them. When they became homeowners and parents, newspapers would become an integral part of their daily lives. Well, I speak a lot as a guest lecturer on college campuses. I always ask for a show of hands to see who reads a daily newspaper. Most of the time it is under 10% and these classes are often full of journalism or communications majors. That bodes very poorly for newspapers long term. Ask a group of marketing people in the work force and you will see that if someone is under 40, the odds of he or she reading a daily paper are also very low. The Wall Street Journal bucks the trend, of course, with rising young professionals, but that is a special case for sure.
The college kids almost always say the same thing when I ask why they are not reading a paper. I get comments such as "you have to wait for a specific time each day to get it and news is always happening" or "I can read the parts that I want for free online" and "where are the hot links?" Another comment said in different ways is "a newspaper does not fit into my life." More damning is "reading a daily paper is something my grandparents do!" Does this sound like a group who will suddenly jump to newspaper some day? Not likely, with all the new options shaping up.
Many fairly major papers are really on the skids. They are largely wire service copy with a few local and syndicated columns thrown in. As I travel around the country and read many of them, a fair assessment is that many have become embarrassments.
How can they be saved? Many analysts say that they need to focus more on local events and simply use the wire service copy for national and international news. But that ignores the demographic tidal wave that is headed right at them. They are skewing older and older and young adults are not going to get turned on to newspapers because they cover school board issues or local fires in great detail. Suburban weeklies already cover that well anyway which hurts the metro dailies.
Others say that they need to bite the bullet if the economy continues to be weak and go 100% digital as a few have done. But, the problem with that is the reality that the core base of many newspapers is older, sometimes much older. If you go exclusively digital you lose thousands of the elderly who do not know how to turn on a computer.
Another portion of the digital argument is that dailies need to come up with a roster of new carriers--RSS, podcasts, Twitter, Facebook, iPhone-- the list goes on and on. Can they brand themselves that way? It is possible, I suppose but not enough publishers think in those terms yet.
One publication that stunned me with their excellent transformation to digital was The Christian Science Monitor. To me, it has always been a thoughtful publication that played politics straight down the middle. The new digital version is compact and wisely does not try to do it all. They have a fairly small staff but have kept several foreign bureaus open. They focus on national news and do it very, very well. I wish them well and rarely miss an issue these days. (Check it out at csmonitor.com)
Realistically, some papers will begin to cut back in 2009. Some will kill the Saturday edition; others may go to a frequency of three times per week. But, if the economy stagnates well into 2010, several will simply close their doors. Some fair sized markets will simply not have a daily paper.
There is a social issue that goes beyond the failure of daily papers. Consider the Washington Post in the early 1970's. Katherine Graham was a courageous publisher who had the money and the guts to take on the Nixon administration over The Pentagon Papers and then Watergate. Two young reporters, Bob Woodward and Carl Bernstein, doggedly pursued the Watergate story with support from editor Ben Bradlee. It took lots of time and money. They unearthed a great deal of criminal activity and helped bring down the Nixon White House.
What about today? There may be publishers with guts but how many mid-size market publishers have the financial resources to do exhaustive investigative reporting about the corruption of their city's mayor or city council? As each week goes by, the odds seem less and less.
America will be poorer in many ways without a free and vibrant daily press in every city of size. Bloggers are great for an open society and for bringing unorthodox viewpoints to the forefront. But, bloggers have limited resources and while they can raise issues and concerns, they can only go so far. Will there ever be another Woodward & Bernstein with a wealthy and gutsy patron to back them up and allow them to keep digging for extended periods of time? Will corruption go unchecked here or there because no one has the resources to blow the whistle or even know there is a problem?
Sadly, most American newspapers are dinosaurs. They need to reinvent themselves quickly or they will surely become extinct.
To contact Don Cole directly, you may e-mail him at doncolemedia@gmail.com
Friday, January 30, 2009
Schumpeter Lives in 2009 Media!
A lot of us took some economics in our college years. I actually majored in it. If you were very lucky as I was, a professor here or there might have made a passing mention of Joseph Alois Schumpeter. He was an Austrian who moved to America as the Nazis rolled across Europe. Harvard became his home until his death in 1950.
Schumpeter is getting more attention these days as he popularized though did not invent a concept known as "Creative Destruction." To wildly oversimplify, creative destruction might be summarized as a process by which a new idea enters the marketplace and makes existing capital relatively worthless. The new idea tends to be innovative and radically so.
We have seen creative destruction in mundane ways. Wal-Mart essentially took out Sears and Montgomery Ward and local department stores via tight inventory control management and low cost operations. Radical innovators cost some real hardship to those involved with the existing status quo companies. Layoffs rise in the obsolete companies and many suffer in the short term. Others suffer long term as they are unable or unwilling to be retrained in the new emerging world.
Schumpeter laid out this concept way back in 1942 in a book entitled Capitalism, Socialism, and Democracy. Actually, it is not that radical. It merely articulated that innovation by entrepreneurs is the force that fosters growth in a free market. The innovators eventually destroy the value of established companies who are losing their quasi-monopoly power.
As I mentioned above, it happened in retail and it happened in automotive with foreign competition. But, you can bet someone will be gunning for Wal-Mart and soon if their market share holds up.
Right now, creative destruction is occuring in media as well. The big brands of Disney, GE, Newscorp, Viacom/CBS, and Time Warner are all under siege. Digital and other new media, some of it advertising free, are now doing real damage and the pace of hurt is quickening. With the slowing economy, painful layoffs are occuring across all media and advertising agencies are full of jumpy people looking over their shoulders.
Newspapers (about which we will soon devote a separate post) are fighting for their lives in many areas and have lost forever most young Americans to on line alternatives. Local TV and radio stations are having problems with debt service in some markets and in 2009 some mid-size ad agencies will close their doors or be so downsized as to be unrecognizable but for the name on the door.
The major media both nationally and locally have had a lock on the consumer for more than 55 years. As the digital innovators have gotten some traction, the major media are weakening rapidly. There is nothing sinister going on here; it is merely the same process that has invaded countless other industries.
How do you fight back? Learn new skills. Embrace change with gusto. Read, read, and read some more. And if your management will not look for new clients who accept the reality of today's marketplace, change jobs ASAP (admittedly easier said than done today). If you make a spirited effort and go with the change rather than deny it, you can wind up on the creative side of the term creative destruction.
If you would like to contact Don Cole directly, you can reach him at doncolemedia@gmail.com
Schumpeter is getting more attention these days as he popularized though did not invent a concept known as "Creative Destruction." To wildly oversimplify, creative destruction might be summarized as a process by which a new idea enters the marketplace and makes existing capital relatively worthless. The new idea tends to be innovative and radically so.
We have seen creative destruction in mundane ways. Wal-Mart essentially took out Sears and Montgomery Ward and local department stores via tight inventory control management and low cost operations. Radical innovators cost some real hardship to those involved with the existing status quo companies. Layoffs rise in the obsolete companies and many suffer in the short term. Others suffer long term as they are unable or unwilling to be retrained in the new emerging world.
Schumpeter laid out this concept way back in 1942 in a book entitled Capitalism, Socialism, and Democracy. Actually, it is not that radical. It merely articulated that innovation by entrepreneurs is the force that fosters growth in a free market. The innovators eventually destroy the value of established companies who are losing their quasi-monopoly power.
As I mentioned above, it happened in retail and it happened in automotive with foreign competition. But, you can bet someone will be gunning for Wal-Mart and soon if their market share holds up.
Right now, creative destruction is occuring in media as well. The big brands of Disney, GE, Newscorp, Viacom/CBS, and Time Warner are all under siege. Digital and other new media, some of it advertising free, are now doing real damage and the pace of hurt is quickening. With the slowing economy, painful layoffs are occuring across all media and advertising agencies are full of jumpy people looking over their shoulders.
Newspapers (about which we will soon devote a separate post) are fighting for their lives in many areas and have lost forever most young Americans to on line alternatives. Local TV and radio stations are having problems with debt service in some markets and in 2009 some mid-size ad agencies will close their doors or be so downsized as to be unrecognizable but for the name on the door.
The major media both nationally and locally have had a lock on the consumer for more than 55 years. As the digital innovators have gotten some traction, the major media are weakening rapidly. There is nothing sinister going on here; it is merely the same process that has invaded countless other industries.
How do you fight back? Learn new skills. Embrace change with gusto. Read, read, and read some more. And if your management will not look for new clients who accept the reality of today's marketplace, change jobs ASAP (admittedly easier said than done today). If you make a spirited effort and go with the change rather than deny it, you can wind up on the creative side of the term creative destruction.
If you would like to contact Don Cole directly, you can reach him at doncolemedia@gmail.com
Monday, January 26, 2009
Will It Be Different This Time?
Since I was in college (a long time ago), I have been reading hundreds of books about the stock and commodity markets. One thing always stands out every few years. Some one writes a hot new bestseller about how "this time it is different" and a certain category of stocks will go to the moon.
I saw it with the "Nifty 50" in the late "60's ( advice was buy Polaroid and hold forever), gold in 1980 (it hit $850 an ounce and then fell to $280 and took 28 years to rebound), virtually all stocks in 1986-87 (crashed in October, 1987), the Internet craze of 1999-2000, and the real estate boom of the new century that the entire economy is paying for now. Clearly, a lot of booms and manias are caused by people believing that the good times will last forever. If I have learned one thing the last forty years about the capitalistic economic road it is simply that markets always go to extremes. When people say that this time it is different, it should serve as a warning bell for all to get liquid and wait for some reversion to the mean that corrects pricing back to more modest levels.
What does all of this have to do with the world of media? Well, the more that I think about it maybe it WILL be different this time for media (definitely not for the stock market). Here is where I am coming from: over the last several weeks everyone that I speak and correspond with is talking about how bad things are in both the print and broadcast marketplaces. No argument from anyone seems likely on that point. But broadcasters, eternally optimistic, keep saying that when the economy snaps back and big players, especially domestic auto, returns to the airwaves, all will be well.
I do not feel qualified to comment on the future of the Big Three in Detroit. But, to me, the broadcasters are forgetting something. All through this dramatic ecomomic downturn people continue to abandon broadcast TV and newspaper, and to a lesser extent, radio. The fragmentation continues to march across all major media but outdoor. So, when we do get a return to normalcy whether it is later this year or in 2010 or, sadly even 2011, the playing field will look and feel different.
Some local advertisers will be out of business. Others will have experimented with more digital advertising and will have a healthy component in streaming video and will never go back to an 80% broadcast, 20% local cable mix.
I remember the recession of 1974-75. We suffered from the three I's--inflation, interest rates, and impeachment (Richard Nixon). When the economy came back, the broadcast market roared. Some DMA's saw cost per points jump 40-50%. Today's economy strikes me as worse than those difficult times. But structurally, the media world is undergoing changes over the next one to three years that will cancel out a dramatic surge when the good times roll again. So, for the media world, at least, this time it REALLY is different.
You can contact Don Cole directly at doncolemedia@gmail.com
I saw it with the "Nifty 50" in the late "60's ( advice was buy Polaroid and hold forever), gold in 1980 (it hit $850 an ounce and then fell to $280 and took 28 years to rebound), virtually all stocks in 1986-87 (crashed in October, 1987), the Internet craze of 1999-2000, and the real estate boom of the new century that the entire economy is paying for now. Clearly, a lot of booms and manias are caused by people believing that the good times will last forever. If I have learned one thing the last forty years about the capitalistic economic road it is simply that markets always go to extremes. When people say that this time it is different, it should serve as a warning bell for all to get liquid and wait for some reversion to the mean that corrects pricing back to more modest levels.
What does all of this have to do with the world of media? Well, the more that I think about it maybe it WILL be different this time for media (definitely not for the stock market). Here is where I am coming from: over the last several weeks everyone that I speak and correspond with is talking about how bad things are in both the print and broadcast marketplaces. No argument from anyone seems likely on that point. But broadcasters, eternally optimistic, keep saying that when the economy snaps back and big players, especially domestic auto, returns to the airwaves, all will be well.
I do not feel qualified to comment on the future of the Big Three in Detroit. But, to me, the broadcasters are forgetting something. All through this dramatic ecomomic downturn people continue to abandon broadcast TV and newspaper, and to a lesser extent, radio. The fragmentation continues to march across all major media but outdoor. So, when we do get a return to normalcy whether it is later this year or in 2010 or, sadly even 2011, the playing field will look and feel different.
Some local advertisers will be out of business. Others will have experimented with more digital advertising and will have a healthy component in streaming video and will never go back to an 80% broadcast, 20% local cable mix.
I remember the recession of 1974-75. We suffered from the three I's--inflation, interest rates, and impeachment (Richard Nixon). When the economy came back, the broadcast market roared. Some DMA's saw cost per points jump 40-50%. Today's economy strikes me as worse than those difficult times. But structurally, the media world is undergoing changes over the next one to three years that will cancel out a dramatic surge when the good times roll again. So, for the media world, at least, this time it REALLY is different.
You can contact Don Cole directly at doncolemedia@gmail.com
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