In recent months many articles, interviews, and blog posts from a wide variety of sources have seemed to accelerate the drumbeat for the demise of television as a viable advertising medium. It is impossible to argue that new avenues to view all forms of video are springing up and gaining some traction but the speed of some people’s forecasts for TV going down strikes me as way too fast. Some of the most strident comments that I have read or witnessed face to face and via e-mail are aimed at cable TV. People are increasingly dredging up the old cliché that the cable TV business model is broken.
Clearly, after such a set-up, I do not agree. My arguments are detailed and, for me, a bit complicated. Also, I polled my formal Media Realism panel plus some people of interest outside it. Here is what I have found along with what I think:
Many people say that cable is in trouble because of upcoming funding issues. Some argue that cable is sandwiched between ad supported TV and pay per view. As times goes on, it appears that many people will be willing to pay their content creator for certain programming so why is a middleman such as cable or satellite needed? Nielsen adds fuel to this fire each year by saying that roughly 13% of channels are viewed by subscribers in a given week. Economists weigh in by saying that efficiencies always win in the marketplace so packaging should be passé pretty soon.
It is hard to argue as none of us watch all of the few hundred options that we have. Yet, I feel we like having them. Some tests might emerge soon with some type of simple metering—you pay only for what you watch. If that were the case, I would imagine some HBO series, selected sports, and good dramas either cable produced or network produced could get pretty pricey. Also, some people might cut back viewing after getting sticker shock after receiving the first few itemized cable bills. This would hurt advertisers as viewing might really go down in these a la carte households. Fragmentation over the last 30 years has made it harder and harder to reach large portions of your target but an authentic drop in viewing especially among the more sophisticated would really hurt TV as an ad medium.
An a la carte approach would allow you to create your own personal TV network which TiVo does in a sense with its cloning feature now and other specialty services do as well. But the blue collar audience that watches heavily and sometimes indiscriminately will never go for it. They will stick to their flat fee.
As to the argument by economists that efficiencies always win in the long run, all I can say is that the long run is a long time. Have you ever bought a stock whose fundamentals and earning growth tell you it has to go up? You can go broke or die waiting sometimes. Not everyone embraces change as much as a smart 23 year old. Sometimes it takes a generation for the marketplace to reflect a rational price for something.
The same thing is true here because consumers lag technology. The trendy press tell us that many recent college graduates are not buying TV’s. I checked in to it and it is true to a point. The problem is that their sample is skewed. If you check out recent Ivy League and other elite school grads, many lean on Hulu, Netflix, Roku, Slingbox, and You Tube along with Yahoo and Google News for their video needs. They are also quite adept at stealing films and other video online. Speaking on several campuses last year and speaking to many more young adults, I saw a direct correlation between the quality of the school and the ability to scrounge up many sources of video content both legal and not. So, this group with no TV is prominent, articulate, and gets some press but they are not a large group in the total scheme of things. Long term, it hurts as they will become very affluent if not rich and many advertisers will have a hard time reaching them if they continue to avoid TV as we now know it.
There is something else that cable has going for it that few people appear to discuss or consider. I am talking about inertia. Take a look at a fictional couple, Bob and Mary Brown of Youngstown, Ohio. They are both 59 years old. Mary is retired (she never worked full time) and Bob has about two years to go if he can hang on before the axe falls. Their children are gone and they watch a great deal of TV. On fall weekends, Bob curls up in his La-Z-Boy with a six pack and may watch 12 hours of football over 36 hours. TV is not one entertainment option for them; it is their ONLY real entertainment option. They will likely grumble about cable subscription rates in the future but I bet that they will stay with cable for the remaining 25 years of their lives. Some stunning demographic data was released this past week which said that the bottom 40% (or lowest two quintiles) of wage earners in the US now collectively own less than 1% of the nation’s wealth. Currently, there are 39.68 million Americans on food stamps. The Department of Agriculture projects that 43 million will receive them by the end of 2011. There are millions of Bob and Mary’s across the country. Life was never easy but now it seems to be getting a bit tougher. They will not likely embrace the new digital solutions and so will provide a nice stream of income for cable players for a long time to come.
Cable providers have a poor reputation for service. As Verizon moves in to compete in areas with Comcast and Time Warner and smaller companies, there will surely be some jumping from one service to another. But the cable industry will still spin off some serious cash. Cable players seem unwilling to build a moat around their customers’ homes and keep them safely as subscribers. Right now, customer service is poor and millions leap to the alleged improvement of another cable provider or satellite. This excessive customer churn could be fixed but no one seems to be doing enough about it.
Talking to executives and panel members we find a wide range of comments. A cable sales executive says: “our practice of selling spots and dots is here to stay for many years. Many of our ancillary products are not to enhance the subscriber experience but improve the advertiser experience in a more robust fashion. Often they allow us to separate ourselves from conventional broadcasters……… whom we still compete against mightily.”
A deeply experienced media researcher picks up on that and says “Cable has so many revenue streams (and emerging ones) that it is unlikely that they will go away for a couple of decades. Besides subscriptions they have VOD, telephone, internet along with growing ad revenue. ….the fact is that a distribution outlet for TV is losing value in an age of technology. A stand alone TV station seems most vulnerable to new developments in technology. Great reach can still be delivered via network coverage on a cable system across multiple platforms. The guys with the most to lose are those with only one revenue stream (which is most TV stations).”
One cable executive on my panel says do not forget that over the next few years we will have to redefine “what is cable.” He is not totally objective but is genuinely excited about the new products and services that he will be selling in the years to come. Given his strong ethics, I do not feel that he is blowing smoke.
As many of you know, earlier this year, I cancelled cable and had no TV for a few months. With Hulu, Netflix, Netflix Instant, some Google and You Tube help plus free videos from my local library, I was able to satisfy some 85% of my viewing needs. Most 60 year olds are not so ambitious or patient enough to find things even if they are free but if more people did it there would be more leakage away from advertiser supported video.
Cable also has lots of sports led by the amazing ESPN channels. Yes, they are available to varying degrees online but many men will be hard pressed to give them up on cable. And, the big screen is a must for many with major sporting events. I have seen students check sports scores on their cell phones or other device before class, but for the big game they want a large screen. Live sporting events is content that many people will always be willing to buy. There may more money to be squeezed out of that arena with more pay per view opportunities.
So, is cable dying? I do not think so. But, it needs to keep improving its products and finding ways to enhance the advertiser experience. Customer service needs to improve dramatically in many locales as well. No matter what they do more and more people will move away from them as on line options grow. A handful will abandon TV and cable completely. And, when will Google really do something with You Tube? Then things could really get interesting and fast.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Thursday, July 15, 2010
Tuesday, July 13, 2010
Fear
Every few years, purveyors of public opinion publish lists of what Americans fear the most. Invariably, issues such as getting cancer or not being financially secure in old age would be somewhere on the list. The leading fear almost always was having to speak in front of a large group of people. But the most recent study that I have seen has a dominant theme in tune with the last two years—people’s biggest fear is losing their jobs and service oriented companies are afraid of losing existing or prospective business.
Today, we will focus on this fear issue from a business standpoint. Talk to almost anyone in the business world and no one feels secure about their clients anymore. Part of the reason is the weak economy, the nagging high unemployment and timidity about spending that most marketers are living today. Also, the life span of a marketing director at a U.S. company is now amazingly under two years. So, your clients are afraid for themselves and often point fingers at agencies, broadcasters, publishers and cable providers when anything goes wrong.
Management gurus usually suggest the following actions that are all common sense but are not novel:
1) Make yourself indispensable to your clients. Be there for them 24/7. Give them service until they say enough!
2) Do all the dirty work. Smooth things over with senior client management; pour the coffee, show up for weekend sessions. Generally hold their hands. If need be, take blame for things even if the marketing director was the villain of the piece or chief architect of a mishap.
3) Live and breathe the client. The client’s work is honored throughout your organization, and you become totally client focused to the point of being boring and obsessive.
Recently, I ran across a consultant who struck me as totally fearless so I thought I would report his approach which was different but seems to work very well.
My newfound friend entered a meeting and breezed through his credentials (which were extensive and impressive) in about 90 seconds. He provided no power-point, no beautifully embossed folders with a slick sales piece. He did almost no selling but within two minutes had already started consulting. What he did was to begin asking questions about our mutual prospect.
One thing stunned me. We both were given briefing books about 500 pages long. I devoured it over a weekend as is my habit and thought that I had found some core company problems on page 263 and another bombshell buried in a table on page 438. My ally clearly had a nodding acquaintance with it but told me that he had played 45 holes of golf the previous weekend.
What the consultant did was get the people talking. Most marketers love to talk about their business. Within a half hour he was making suggestions as his process of discovery began to flesh out. In my experience, most of us wait to get briefed or hired before we give our product away. He was pleasant and appeared competent but had no arrogance. At times, he asked questions that I thought were obvious as they were clearly answered in the briefing book. No one but I seemed offended. They answered in great detail and he kept throwing up suggestion after suggestion. The mix of dumb questions laced with some seemingly lame suggestions had me embarrassed for him now and then. He forged ahead and the particularly egregious recommendations were dismissed with a smile by the prospects and a “that will never work” but the clients were all on the edge of their seats to hear what else he had up his sleeve.
Finally after five hours, the client asked what the fee structure was. He smiled and said “why don’t we do another session really soon and we can work that out.” A day later he followed up with nice summary and a few more ideas. I called him and said what if they take your suggestions and mine and decide to do nothing or go elsewhere? “You worry too much, Don. The more we learn, the better our suggestions will be. And they have a lot more problems than they realize.”
He got the business, still works with them, and I hope to work with him again on other projects. Here are few comments on his approach:
1) Both he and I are not kids. Grey hair helps in that we can be more fearless than many. If we do not get hired, it will not affect what we eat for breakfast the next day. Our kids are out of college so we do not have to have the heart to heart chat that East Podunk State is your only option, son. Not having strong financial pressure, we never look desperate because we are not. Perhaps we are looser than the competition.
2) He got away with a few reckless questions because he had credibility in many other areas. One complaint that I have about the younger generation is that they often have no filter. Many times someone will blurt out “what’s that” or want a definition of a term that an account supervisor in a particular industry has to know. So, everyone cannot do what he does. But, he likely asks questions that a few others in the room would like to but are afraid to ask.
3) He has a generosity of spirit with prospects. I have been burned a few times by blog readers and others who ask my advice, take it, and then never follow up with a contract or a check. My friend says don’t worry—eventually the great majority of them will come to you with remunerated work even if you have to wait a couple of years.
4) Some 90% of his business comes from referrals. There was no slick leave behind because he does not have one. And, he consults almost from the beginning of the session. Over the years I have seen many agencies waste an hour of a two hour new business presentation telling of their case studies and showing a creative reel or two. People want you to talk about them and they want to talk about themselves and their problems. My friend gets this better than anyone I have ever met.
5) Sales people rarely ask me what my clients needs are. They tell you what they have to sell. Some active listening and a few questions could help them craft infinitely better recommendations than most of us see day to day.
Face it. Fear will be with many of us for a long time to come in our current economy. My friend’s approach may not work for everyone but I am sure that elements of it merit your serious consideration.
If you would like to contact Don Cole directly, you may contact him at doncolemedia@gmail.com
Today, we will focus on this fear issue from a business standpoint. Talk to almost anyone in the business world and no one feels secure about their clients anymore. Part of the reason is the weak economy, the nagging high unemployment and timidity about spending that most marketers are living today. Also, the life span of a marketing director at a U.S. company is now amazingly under two years. So, your clients are afraid for themselves and often point fingers at agencies, broadcasters, publishers and cable providers when anything goes wrong.
Management gurus usually suggest the following actions that are all common sense but are not novel:
1) Make yourself indispensable to your clients. Be there for them 24/7. Give them service until they say enough!
2) Do all the dirty work. Smooth things over with senior client management; pour the coffee, show up for weekend sessions. Generally hold their hands. If need be, take blame for things even if the marketing director was the villain of the piece or chief architect of a mishap.
3) Live and breathe the client. The client’s work is honored throughout your organization, and you become totally client focused to the point of being boring and obsessive.
Recently, I ran across a consultant who struck me as totally fearless so I thought I would report his approach which was different but seems to work very well.
My newfound friend entered a meeting and breezed through his credentials (which were extensive and impressive) in about 90 seconds. He provided no power-point, no beautifully embossed folders with a slick sales piece. He did almost no selling but within two minutes had already started consulting. What he did was to begin asking questions about our mutual prospect.
One thing stunned me. We both were given briefing books about 500 pages long. I devoured it over a weekend as is my habit and thought that I had found some core company problems on page 263 and another bombshell buried in a table on page 438. My ally clearly had a nodding acquaintance with it but told me that he had played 45 holes of golf the previous weekend.
What the consultant did was get the people talking. Most marketers love to talk about their business. Within a half hour he was making suggestions as his process of discovery began to flesh out. In my experience, most of us wait to get briefed or hired before we give our product away. He was pleasant and appeared competent but had no arrogance. At times, he asked questions that I thought were obvious as they were clearly answered in the briefing book. No one but I seemed offended. They answered in great detail and he kept throwing up suggestion after suggestion. The mix of dumb questions laced with some seemingly lame suggestions had me embarrassed for him now and then. He forged ahead and the particularly egregious recommendations were dismissed with a smile by the prospects and a “that will never work” but the clients were all on the edge of their seats to hear what else he had up his sleeve.
Finally after five hours, the client asked what the fee structure was. He smiled and said “why don’t we do another session really soon and we can work that out.” A day later he followed up with nice summary and a few more ideas. I called him and said what if they take your suggestions and mine and decide to do nothing or go elsewhere? “You worry too much, Don. The more we learn, the better our suggestions will be. And they have a lot more problems than they realize.”
He got the business, still works with them, and I hope to work with him again on other projects. Here are few comments on his approach:
1) Both he and I are not kids. Grey hair helps in that we can be more fearless than many. If we do not get hired, it will not affect what we eat for breakfast the next day. Our kids are out of college so we do not have to have the heart to heart chat that East Podunk State is your only option, son. Not having strong financial pressure, we never look desperate because we are not. Perhaps we are looser than the competition.
2) He got away with a few reckless questions because he had credibility in many other areas. One complaint that I have about the younger generation is that they often have no filter. Many times someone will blurt out “what’s that” or want a definition of a term that an account supervisor in a particular industry has to know. So, everyone cannot do what he does. But, he likely asks questions that a few others in the room would like to but are afraid to ask.
3) He has a generosity of spirit with prospects. I have been burned a few times by blog readers and others who ask my advice, take it, and then never follow up with a contract or a check. My friend says don’t worry—eventually the great majority of them will come to you with remunerated work even if you have to wait a couple of years.
4) Some 90% of his business comes from referrals. There was no slick leave behind because he does not have one. And, he consults almost from the beginning of the session. Over the years I have seen many agencies waste an hour of a two hour new business presentation telling of their case studies and showing a creative reel or two. People want you to talk about them and they want to talk about themselves and their problems. My friend gets this better than anyone I have ever met.
5) Sales people rarely ask me what my clients needs are. They tell you what they have to sell. Some active listening and a few questions could help them craft infinitely better recommendations than most of us see day to day.
Face it. Fear will be with many of us for a long time to come in our current economy. My friend’s approach may not work for everyone but I am sure that elements of it merit your serious consideration.
If you would like to contact Don Cole directly, you may contact him at doncolemedia@gmail.com
Friday, July 9, 2010
Bad Samaritans
When I was nineteen years old, I became a confirmed believer in free trade (Yes, I was a wild young man!). The concept, in brief, is that our economy and our newly emerging global marketplace should produce the greatest good to the maximum number of people. If each nation on earth can do what it does most efficiently and sell it without restriction anywhere, then prices are lower and a large number of people benefit. Frederic Bastiat, a 19th century French economist, converted me with his withering attacks on tariffs between nations. He remains the wittiest economist that I have ever read. Admittedly, Bastiat was not in a very competitive race on economic humor. His main talent was firing some acidic ridicule at those putting up trade barriers.
In recent years I have developed the habit of reading extensively in areas that challenge my long held beliefs. It is a marvelous exercise as it makes you re-think all of your assumptions. Most of the time, I stick to my beliefs but such reading often raise some doubts or I find different shades of gray creeping into my thinking. This happened a few weeks ago, when I read “Bad Samaritans, The Myth of Free Trade and the Secret History of Capitalism.” It was authored by Ha-Joon Chang, a long time development economist at Cambridge University and native of Korea.
Chang brings many fascinating anecdotes into his story and, for the first time, provides hard historical data surrounding the success of countries and their position on free trade. As you might expect, the success does not all center around the presence of free trade. One example is Finland which had the distinction of keeping foreign ownership and trade at lower levels than any other western democracy. There was a Finnish “conglomerate” that was struggling with particular weakness in its electronics division. The government propped it up and, over time, the electronics division turned around. That company is now Nokia and most of us, according to Chang, would place it in a globalization Hall of Fame.
A second example requires extensive quoting from the book itself: “The leading car maker of a developing company exported its first passenger cars to the U.S. Up to that day, the company had only made shoddy products—poor copies of quality products made by richer countries. The car was nothing too sophisticated—just a cheap subcompact. But it was a big moment for the country and its exporters felt proud.”
“Unfortunately, the product failed. The car had to be withdrawn from the US market. This disaster led to a major debate among the country’s citizens. …..If the company could not make good cars after 25 years of trying, they should go back to their original business of making simple textile machinery. The government had ensured profits for them by high tariffs and draconian controls on foreign investment in their car industry.”
“Others disagreed…. And argued that no country had got anywhere without developing “serious” industries like automobile production. The year was 1958 and the country was Japan. The company was Toyota.”
Chang’s point is that in developing countries emerging companies are a bit like children. They need to be nurtured, encouraged, and protected before they can stand on their own in a global marketplace. Both Nokia and Toyota would have been shut down early had their governments had a Darwinian “survival of the fittest” mentality along with a pure free trade approach.
He posits that free trade often helps rich countries and brings poor ones along very slowly with low paid and underage workers making products for wealthy (Western) consumption. One could argue that for many factory jobs are a way to survive but, to most of you, child labor is quite odious. Also, only Holland has had pure free trade over the last two hundred years. The United States really was not into it in a big way until the Eisenhower era in the 1950’s and then embracing NAFTA in the mid-1990’s.
Also, Chang raises some fascinating ideas about graft. He cites how two countries in the 1960’s, Indonesia and Zaire (now the Democratic Republic of the Congo) were arguably the most corrupt places on earth. Thirty years later, the Suharto family in Indonesia had stolen between $15-35 billion from the people. Over that time, living standards rose by 300%. In Zaire, strongman Mobuto stole approximately $5 billion. When he was tossed out in 1997, per capita income was one third of what it was when he seized power. So, corruption is not always a fair indicator of holding back economic success.
He gives no credit to linking the work ethic of a people and success which I find troubling. There is no mention of two amazing success stories—Switzerland and Hong Kong. The Swiss have no natural resources to speak of; not even a coal mine. Yet they have one of the highest standards of living on the globe due to a stable government that steers clear of foreign entanglements, hard working people who are very well educated and devoted to free enterprise and who today, have vast technical knowledge in a wide variety of fields.
Hong Kong may be more amazing. A tiny enclave of only 33 square miles, it has over 6 million people and even has to import all of its water. Today, only Japan has a higher per capita income in Asia than Hong Kong. How did they do it? Most observers would agree that it is the entrepreneurial spirit of its citizens and its ability to trade goods and services freely across the entire world.
“Bad Samaritans” will make you think. It is the kind of book that you wrestle with as you work you way through. I do not agree with all of it but it well worth you time.
The moral of all of this is to sometimes step out of your comfort zone. If you challenge long held beliefs, you may become a better marketer and a more understanding professional.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
In recent years I have developed the habit of reading extensively in areas that challenge my long held beliefs. It is a marvelous exercise as it makes you re-think all of your assumptions. Most of the time, I stick to my beliefs but such reading often raise some doubts or I find different shades of gray creeping into my thinking. This happened a few weeks ago, when I read “Bad Samaritans, The Myth of Free Trade and the Secret History of Capitalism.” It was authored by Ha-Joon Chang, a long time development economist at Cambridge University and native of Korea.
Chang brings many fascinating anecdotes into his story and, for the first time, provides hard historical data surrounding the success of countries and their position on free trade. As you might expect, the success does not all center around the presence of free trade. One example is Finland which had the distinction of keeping foreign ownership and trade at lower levels than any other western democracy. There was a Finnish “conglomerate” that was struggling with particular weakness in its electronics division. The government propped it up and, over time, the electronics division turned around. That company is now Nokia and most of us, according to Chang, would place it in a globalization Hall of Fame.
A second example requires extensive quoting from the book itself: “The leading car maker of a developing company exported its first passenger cars to the U.S. Up to that day, the company had only made shoddy products—poor copies of quality products made by richer countries. The car was nothing too sophisticated—just a cheap subcompact. But it was a big moment for the country and its exporters felt proud.”
“Unfortunately, the product failed. The car had to be withdrawn from the US market. This disaster led to a major debate among the country’s citizens. …..If the company could not make good cars after 25 years of trying, they should go back to their original business of making simple textile machinery. The government had ensured profits for them by high tariffs and draconian controls on foreign investment in their car industry.”
“Others disagreed…. And argued that no country had got anywhere without developing “serious” industries like automobile production. The year was 1958 and the country was Japan. The company was Toyota.”
Chang’s point is that in developing countries emerging companies are a bit like children. They need to be nurtured, encouraged, and protected before they can stand on their own in a global marketplace. Both Nokia and Toyota would have been shut down early had their governments had a Darwinian “survival of the fittest” mentality along with a pure free trade approach.
He posits that free trade often helps rich countries and brings poor ones along very slowly with low paid and underage workers making products for wealthy (Western) consumption. One could argue that for many factory jobs are a way to survive but, to most of you, child labor is quite odious. Also, only Holland has had pure free trade over the last two hundred years. The United States really was not into it in a big way until the Eisenhower era in the 1950’s and then embracing NAFTA in the mid-1990’s.
Also, Chang raises some fascinating ideas about graft. He cites how two countries in the 1960’s, Indonesia and Zaire (now the Democratic Republic of the Congo) were arguably the most corrupt places on earth. Thirty years later, the Suharto family in Indonesia had stolen between $15-35 billion from the people. Over that time, living standards rose by 300%. In Zaire, strongman Mobuto stole approximately $5 billion. When he was tossed out in 1997, per capita income was one third of what it was when he seized power. So, corruption is not always a fair indicator of holding back economic success.
He gives no credit to linking the work ethic of a people and success which I find troubling. There is no mention of two amazing success stories—Switzerland and Hong Kong. The Swiss have no natural resources to speak of; not even a coal mine. Yet they have one of the highest standards of living on the globe due to a stable government that steers clear of foreign entanglements, hard working people who are very well educated and devoted to free enterprise and who today, have vast technical knowledge in a wide variety of fields.
Hong Kong may be more amazing. A tiny enclave of only 33 square miles, it has over 6 million people and even has to import all of its water. Today, only Japan has a higher per capita income in Asia than Hong Kong. How did they do it? Most observers would agree that it is the entrepreneurial spirit of its citizens and its ability to trade goods and services freely across the entire world.
“Bad Samaritans” will make you think. It is the kind of book that you wrestle with as you work you way through. I do not agree with all of it but it well worth you time.
The moral of all of this is to sometimes step out of your comfort zone. If you challenge long held beliefs, you may become a better marketer and a more understanding professional.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Tuesday, July 6, 2010
The Need for Detachment
Detachment has been defined as an inner state of calmness and being uninvolved in the emotional aspects of an issue. In recent history, detachment has something of a bad rap. Most of us think of monks or other contemplatives as people who are detached and it is not for those of us in the world of business. Others consider detachment to mean indifference. In my experience that is not the case at all. Many people can be actively involved in an issue and be caring but, due to detachment, can accept calmly whatever happens.
A number of years ago I put together an early power-point on this topic and dubbed it “The Importance of Being Lukewarm.” The presentation fell flat on its face. Today, I want to re-open the issue because I feel a sense of detachment is crucial in today’s environment for good media execution.
Way back in the 1970’s, a concept came into vogue called “Zero Based Media Planning.” The idea was that just because a specific mix of media worked well last year does not mean that a renewal of that plan would be good for the current year. Each year your market situation changes, your competition rarely stays static, and the media is constantly evolving. Sounds logical, right? So, you need to start fresh and look at each media vehicle with a fresh eye and a bit of detachment.
Here we are 35 years later and the need for a zero based approach is more crucial than ever. The media is changing far faster with new opportunities emerging each year. Yet most people serve up plans that may be tweaked a little year to year but most of those are driven by client budgets or media costs rather than a complete review of the prior year’s media mix.
A good example is sports packages. Some advertisers have been sponsors of a team for a generation or more. Rates go up and they keep paying the freight. I love a good TV sports package and in an age where too many viewers have an itchy trigger finger on their remote button, sports offer better attentiveness and viewer interest than many other options. But, a lot has changed. Broadcasters and cable entities can provide campaign extensions, appearances, promotions, contests, special features and a host of other opportunities that were not available even several years ago. Yet some people keep doing the same thing year after year with no real measurement as to what good it does them.
Ask media planners about this and 90% immediately get defensive. Those who do not are very impressive as they track you through their new plan, show the changes and options that they rejected and give a cogent rationale for a plan similar to the prior year. Sadly, most do not and cannot.
Part of detachment is my old idea of being lukewarm. Do not fall in love with a particular vehicle that is all new nor one that you have used for years. Work a bit harder and start off with a blank sheet of paper. Just because we have used a medium or specific vehicle for 15 years does not mean you need to commit the same amount of weight to it in the coming year. We all talk about change but how many of us truly recognize it when drafting a recommendation. Also, we need to be careful not to go too far the other way. I remember in the late 1980’s fighting off a client who wanted to go 100% cable and kill all conventional TV. Well, his business was not ready for that back then and still is not.
We are all human. Over time one can get friendly with sales reps from specific media. It is good to have cordial relationships with everyone but if renewal means your planner or negotiator gets a station trip or too many fancy dinners, something is way out of whack. By needing to defend each medium every year, you can avoid some of the cronyism.
Some people believe that it should all be linear. Cut back TV 5% per year and re-allocate that to new digital opportunities is an approach that I have seen. Well, change does not come in a straight line. When our markets touched bottom in the 1st quarter of 2009, media values were often better than they were in a generation. A zero based approach would have taken these marketplace pricing factors into consideration and shifted dollars to better effect for many advertisers than a rigid formula.
What I am suggesting is not original, nor is it hard but it does take a bit more work. If you are detached from the past and look at the new year as just that, new, and are not wedded to any particular medium or vehicle, you will do a better job for your clients. And, your satisfaction on the job may actually increase.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
A number of years ago I put together an early power-point on this topic and dubbed it “The Importance of Being Lukewarm.” The presentation fell flat on its face. Today, I want to re-open the issue because I feel a sense of detachment is crucial in today’s environment for good media execution.
Way back in the 1970’s, a concept came into vogue called “Zero Based Media Planning.” The idea was that just because a specific mix of media worked well last year does not mean that a renewal of that plan would be good for the current year. Each year your market situation changes, your competition rarely stays static, and the media is constantly evolving. Sounds logical, right? So, you need to start fresh and look at each media vehicle with a fresh eye and a bit of detachment.
Here we are 35 years later and the need for a zero based approach is more crucial than ever. The media is changing far faster with new opportunities emerging each year. Yet most people serve up plans that may be tweaked a little year to year but most of those are driven by client budgets or media costs rather than a complete review of the prior year’s media mix.
A good example is sports packages. Some advertisers have been sponsors of a team for a generation or more. Rates go up and they keep paying the freight. I love a good TV sports package and in an age where too many viewers have an itchy trigger finger on their remote button, sports offer better attentiveness and viewer interest than many other options. But, a lot has changed. Broadcasters and cable entities can provide campaign extensions, appearances, promotions, contests, special features and a host of other opportunities that were not available even several years ago. Yet some people keep doing the same thing year after year with no real measurement as to what good it does them.
Ask media planners about this and 90% immediately get defensive. Those who do not are very impressive as they track you through their new plan, show the changes and options that they rejected and give a cogent rationale for a plan similar to the prior year. Sadly, most do not and cannot.
Part of detachment is my old idea of being lukewarm. Do not fall in love with a particular vehicle that is all new nor one that you have used for years. Work a bit harder and start off with a blank sheet of paper. Just because we have used a medium or specific vehicle for 15 years does not mean you need to commit the same amount of weight to it in the coming year. We all talk about change but how many of us truly recognize it when drafting a recommendation. Also, we need to be careful not to go too far the other way. I remember in the late 1980’s fighting off a client who wanted to go 100% cable and kill all conventional TV. Well, his business was not ready for that back then and still is not.
We are all human. Over time one can get friendly with sales reps from specific media. It is good to have cordial relationships with everyone but if renewal means your planner or negotiator gets a station trip or too many fancy dinners, something is way out of whack. By needing to defend each medium every year, you can avoid some of the cronyism.
Some people believe that it should all be linear. Cut back TV 5% per year and re-allocate that to new digital opportunities is an approach that I have seen. Well, change does not come in a straight line. When our markets touched bottom in the 1st quarter of 2009, media values were often better than they were in a generation. A zero based approach would have taken these marketplace pricing factors into consideration and shifted dollars to better effect for many advertisers than a rigid formula.
What I am suggesting is not original, nor is it hard but it does take a bit more work. If you are detached from the past and look at the new year as just that, new, and are not wedded to any particular medium or vehicle, you will do a better job for your clients. And, your satisfaction on the job may actually increase.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Wednesday, June 30, 2010
The Zombies Among Us
I have never been a fan of horror movies. Some aficionados say that they hit their zenith in my formative years in the 1950’s but I generally avoided them. The real fans often say the best movies were the “Zombie films” and I must say the 1943 classic “I Walked with a Zombie” was memorable and scary. A zombie was a dead creature that was somehow reanimated via voodoo or other intervention.
Over the last 20 years, the term zombie has been used in much business writing. It first surfaced talking about Japanese banks that were overextended. Currently, in the US, it has found some popularity as our financial crisis refuses to go away. Financial writer John Lancaster describes a zombie as “a bank which is dead—insolvent—but has a horrible sort of pseudo-life because it is being allowed to keep trading by an overindulgent government.” As we hear stories of banks not contacting some people a year or more behind on their mortgages we know that there are zombie banks among us. Somebody is clearing hiding something under that scenario.
But what about our industry? Are there zombies in evidence in communications? I would say yes but in a slightly different way. There is no benevolent federal government propping them up to save face or avert a panic, but if you look closely, you can see the lumbering zombies.
A few weeks ago, I traveled north and checked out several small town city newspapers that were dailies. In the past, I never had huge admiration for their editorial product but they did work hard to cover the nation superficially and give solid local coverage. Today, they are mere shells. The national and state news was 100% wire service copy and the local news was scant. The editorial page was vapid and had syndicated columnists to fill in the blank space. One of the papers was only 16 pages. It was sad as it has been around for 140 years but the paper is really a zombie.
There have been zombie radio stations for years and now, with syndicated music, many have but a handful of employees. But the agency world is where there are many zombies in evidence. There are organizations that bill themselves as full service advertising agencies. They have 4-7 full time employees. Creative, conventional media, digital activity and marketing research are all outsourced but in many cases they do not tell their clients. They are in essence consulting firms. There is nothing wrong with being a consultant but when you speak to some of them they all say they will soon claw their way back to full agency status.
Strange charades are played. For new business pitches, the different disciplines are represented by freelancers and comical things often happen when “team” members stumble over each others names or who does what. They also cannot guide their new business prospects to the men’s room! In some cases, the handful of actual agency staffers present all the work, the strategies and the media and the freelancers are never seen.
Please do not misunderstand. There is nothing wrong with consulting firms. Some provide marvelous service and the motley crew of seasoned pros who make up their small roster of players could never work for a conventional agency again. But, many do not sell themselves as such. They would prefer to be zombie agencies rather than tell prospects what they really are. Some candor would help. Yes, they would lose out on some pitches for new business. But, if they told the truth, they could spin their appeal by saying that their small team of battle scarred veterans could pick the best players from each discipline that fit a prospect’s specific needs. Sadly, it rarely happens.
Finally, may I give a nod of admiration to some very small firms that do excellent work for their client base? When a project gets too big or the needs are too specialized they do not hesitate to go outside their walls for help but tell the clients what they are up to from day one. And, I know of two cases where companies with fewer than 10 people still do amazing work across all disciplines. Their real appeal is strong hands on service from agency principals and, no matter their age, they still are eager to learn and respond to change.
So, be careful when screening new agencies. They could be small packages of marvelous dynamite or they could be the zombies among us.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Over the last 20 years, the term zombie has been used in much business writing. It first surfaced talking about Japanese banks that were overextended. Currently, in the US, it has found some popularity as our financial crisis refuses to go away. Financial writer John Lancaster describes a zombie as “a bank which is dead—insolvent—but has a horrible sort of pseudo-life because it is being allowed to keep trading by an overindulgent government.” As we hear stories of banks not contacting some people a year or more behind on their mortgages we know that there are zombie banks among us. Somebody is clearing hiding something under that scenario.
But what about our industry? Are there zombies in evidence in communications? I would say yes but in a slightly different way. There is no benevolent federal government propping them up to save face or avert a panic, but if you look closely, you can see the lumbering zombies.
A few weeks ago, I traveled north and checked out several small town city newspapers that were dailies. In the past, I never had huge admiration for their editorial product but they did work hard to cover the nation superficially and give solid local coverage. Today, they are mere shells. The national and state news was 100% wire service copy and the local news was scant. The editorial page was vapid and had syndicated columnists to fill in the blank space. One of the papers was only 16 pages. It was sad as it has been around for 140 years but the paper is really a zombie.
There have been zombie radio stations for years and now, with syndicated music, many have but a handful of employees. But the agency world is where there are many zombies in evidence. There are organizations that bill themselves as full service advertising agencies. They have 4-7 full time employees. Creative, conventional media, digital activity and marketing research are all outsourced but in many cases they do not tell their clients. They are in essence consulting firms. There is nothing wrong with being a consultant but when you speak to some of them they all say they will soon claw their way back to full agency status.
Strange charades are played. For new business pitches, the different disciplines are represented by freelancers and comical things often happen when “team” members stumble over each others names or who does what. They also cannot guide their new business prospects to the men’s room! In some cases, the handful of actual agency staffers present all the work, the strategies and the media and the freelancers are never seen.
Please do not misunderstand. There is nothing wrong with consulting firms. Some provide marvelous service and the motley crew of seasoned pros who make up their small roster of players could never work for a conventional agency again. But, many do not sell themselves as such. They would prefer to be zombie agencies rather than tell prospects what they really are. Some candor would help. Yes, they would lose out on some pitches for new business. But, if they told the truth, they could spin their appeal by saying that their small team of battle scarred veterans could pick the best players from each discipline that fit a prospect’s specific needs. Sadly, it rarely happens.
Finally, may I give a nod of admiration to some very small firms that do excellent work for their client base? When a project gets too big or the needs are too specialized they do not hesitate to go outside their walls for help but tell the clients what they are up to from day one. And, I know of two cases where companies with fewer than 10 people still do amazing work across all disciplines. Their real appeal is strong hands on service from agency principals and, no matter their age, they still are eager to learn and respond to change.
So, be careful when screening new agencies. They could be small packages of marvelous dynamite or they could be the zombies among us.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Tuesday, June 22, 2010
Things Will Work Themselves Out
Not long ago, I was sharing a very nice lunch with a couple of multi-millionaires. The conversation covered the usual topics—sports, the current state of politics, and the economy. Both of the fellows were slightly older than I, wildly successful, and self made.
After a while, the conversation focused on long term energy alternatives and the U.S. national debt. I remarked about how worried I was about the enormous deficits, both trade and budget, that America was building up. One of the guys swallowed a hunk of salmon, poured another big glass of Sauvignon Blanc and told me not to be concerned. “Things like this will just work themselves out.” I was his guest so I gently responded that we had to pay the $11+ trillion down and start to do it soon. The response could be a slash in spending, higher income taxes or a national sales tax or a combination of all three.
My host said that higher taxes were not politically viable and spending could not really be cut significantly. He repeated that things will simply work themselves out. America had been good to both of my lunch companions and one of them was foreign born. For him, this has truly been the land of opportunity. So, I cut him some slack but do not give myself or most of you the same latitude.
In life, I think that it is true that many, many small issues do indeed “work themselves out.” But macro issues such as an $11 trillion debt that will continue to increase unless we take strong and maybe painful action. The possibility of a looming fiscal crisis cannot simply take care of itself. Some positive steps are needed to turn the situation around.
The same attitude of my affable host is in evidence in the media business. Last week, a reader whom I do not know wrote to me and mentioned that he was a broadcaster in a mid-sized market. He discussed how TV news was soon to make a big rebound in his market. I thought he meant that his station’s share would rise but he wrote back to me insisting that the changes in recent years had been sorted out and now local news was going to come roaring back in the ratings. Reading it, I did not know whether to laugh or cry. We went back and forth via e-mail and I learned that he was deadly serious.
Since late 2008, I have heard several broadcasters say that as soon as the auto advertising comes back to pre-recession levels, everything will be fine for years to come in local TV. People may be buying cars in record levels in a few years but viewing habits will continue to change and fragmentation can only accelerate. So, one cannot depend on auto advertising to bail a station’s sales out for much longer.
In the last few years, I have met dozens of people in the newspaper business and, to a lesser extent magazine industry, who have their own spin but the “things will work themselves out” syndrome is very much in evidence. Their companies are hemorrhaging cash but they smile and say that the future will take care of itself. This is said as layoffs continue, and young people get their news online and, increasingly, so do their parents.
In ad agencies, the line that I hear the most is that “we just need one nice new business win and everything will be back to normal.” I will admit that agencies are a bit like a movie studio and one big hit can bail out a firm for a while. But, the attitude is warped as it ignores the need to shift gears, have your people learn new skills and get your firm positioned for the future that is emerging almost daily.
Clearly, things are changing. The digital world is real and not a flash in the pan. Messages will get shorter in many cases and be accessed across platforms that none of us can imagine at present. And, importantly, the number of places that you will need to be to launch a brand or stay competitive in a noisy category is mind numbing.
So, in a sense, things will work themselves out. In a free economy, inefficient producers eventually get squeezed out and the imaginative and nimble survive and grow stronger. But if you simply sit there, and think that you and your company will be fine, the exciting future that many of us foresee will leave you not only behind but a lot poorer.
May I suggest that you take a hard look at your employer? Many people in conventional media are doing great things and finding new ways to generate revenue and are embracing instead of ignoring the change. If you work for a “things will work themselves out” type, do not run to the exits in this economy but start looking at other options today.
If you would like to write to Don Cole directly, you may contact him at doncolemedia@gmail.com
After a while, the conversation focused on long term energy alternatives and the U.S. national debt. I remarked about how worried I was about the enormous deficits, both trade and budget, that America was building up. One of the guys swallowed a hunk of salmon, poured another big glass of Sauvignon Blanc and told me not to be concerned. “Things like this will just work themselves out.” I was his guest so I gently responded that we had to pay the $11+ trillion down and start to do it soon. The response could be a slash in spending, higher income taxes or a national sales tax or a combination of all three.
My host said that higher taxes were not politically viable and spending could not really be cut significantly. He repeated that things will simply work themselves out. America had been good to both of my lunch companions and one of them was foreign born. For him, this has truly been the land of opportunity. So, I cut him some slack but do not give myself or most of you the same latitude.
In life, I think that it is true that many, many small issues do indeed “work themselves out.” But macro issues such as an $11 trillion debt that will continue to increase unless we take strong and maybe painful action. The possibility of a looming fiscal crisis cannot simply take care of itself. Some positive steps are needed to turn the situation around.
The same attitude of my affable host is in evidence in the media business. Last week, a reader whom I do not know wrote to me and mentioned that he was a broadcaster in a mid-sized market. He discussed how TV news was soon to make a big rebound in his market. I thought he meant that his station’s share would rise but he wrote back to me insisting that the changes in recent years had been sorted out and now local news was going to come roaring back in the ratings. Reading it, I did not know whether to laugh or cry. We went back and forth via e-mail and I learned that he was deadly serious.
Since late 2008, I have heard several broadcasters say that as soon as the auto advertising comes back to pre-recession levels, everything will be fine for years to come in local TV. People may be buying cars in record levels in a few years but viewing habits will continue to change and fragmentation can only accelerate. So, one cannot depend on auto advertising to bail a station’s sales out for much longer.
In the last few years, I have met dozens of people in the newspaper business and, to a lesser extent magazine industry, who have their own spin but the “things will work themselves out” syndrome is very much in evidence. Their companies are hemorrhaging cash but they smile and say that the future will take care of itself. This is said as layoffs continue, and young people get their news online and, increasingly, so do their parents.
In ad agencies, the line that I hear the most is that “we just need one nice new business win and everything will be back to normal.” I will admit that agencies are a bit like a movie studio and one big hit can bail out a firm for a while. But, the attitude is warped as it ignores the need to shift gears, have your people learn new skills and get your firm positioned for the future that is emerging almost daily.
Clearly, things are changing. The digital world is real and not a flash in the pan. Messages will get shorter in many cases and be accessed across platforms that none of us can imagine at present. And, importantly, the number of places that you will need to be to launch a brand or stay competitive in a noisy category is mind numbing.
So, in a sense, things will work themselves out. In a free economy, inefficient producers eventually get squeezed out and the imaginative and nimble survive and grow stronger. But if you simply sit there, and think that you and your company will be fine, the exciting future that many of us foresee will leave you not only behind but a lot poorer.
May I suggest that you take a hard look at your employer? Many people in conventional media are doing great things and finding new ways to generate revenue and are embracing instead of ignoring the change. If you work for a “things will work themselves out” type, do not run to the exits in this economy but start looking at other options today.
If you would like to write to Don Cole directly, you may contact him at doncolemedia@gmail.com
Friday, June 11, 2010
Skippy and Media Prices?
Several years ago some of you may have read about the change in the Skippy peanut butter jar. What they did was put an indentation on the bottom of the plastic jar that, in effect, removed some peanut butter from it. The old jar was 18 ounces; the new one a mere 16.3. Yet the price per jar stayed the same.
In effect, the new jar allowed Skippy to take a de facto 10% price increase and take it very quietly. By 2008, others hopped on the bandwagon. Kellogg's made cereal boxes thinner for several brands and cut the amount of flakes at the same time while maintaining the old price. Zest deodorant bar got into the act by shaving 1/2 ounce from each bar. Again, the old price remained intact. Few people noticed although in focus groups a surprising number said that they ALWAYS looked at unit price data below the product and knew cost per ounce. I doubt it. When I see people buying Skippy or other package goods, it is usually a parent with a couple of children with them, one running around and one in the cart. They are preoccupied to put it mildly. If a price registers with them from past purchases, they probably drop the item in the cart without another thought.
In Consumer Behavior, this practice is referred to as Coherent Arbitrariness. The researchers say that consumers do not really have a handle on what anything should cost. The sensitivity is to relative prices but not absolute prices. If people really knew about the 10% Skippy increase some would have shifted brands or shopped around a bit in the category. So, cynical marketers can take advantage of this. According to the concept of Coherent Arbitrariness, consumers will play along as long as they do not know there is an increase.
The same concept broadly has been in play in TV pricing for some time. For 7-8 years, the trade press has been full of stories about how network advertisers are complaining that every year they pay more to get less. The price of network inventory crept up each year as ratings for the majority of shows declined. Now, with network broadcast, you have a group that is far more sophisticated than the harried Mom or Dad tossing a jar of Skippy into the grocery cart. They are bidding up the price of the inventory even though the audience is less than it was a year earlier.
But the concept is the same. Someone contacted me recently boasting about how he had paid the same price for a local TV property for the past four years. I laughed and said but the rating has gone down. "Not very much", he countered. I had a friend check and the vehicle audience has shrunk 21% in the four year time frame. So, my acquaintance paid the same out of pocket for several years but the cost per eyeball has risen 21% and the advertising impact is likely diminished to the same degree.
If advertisers and their agents are willing to pay more to get less, it is their business. But a day of reckoning is coming as digital becomes more prominent. Soon, some major players will blink and simply refuse to pay more.
Stay tuned.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
In effect, the new jar allowed Skippy to take a de facto 10% price increase and take it very quietly. By 2008, others hopped on the bandwagon. Kellogg's made cereal boxes thinner for several brands and cut the amount of flakes at the same time while maintaining the old price. Zest deodorant bar got into the act by shaving 1/2 ounce from each bar. Again, the old price remained intact. Few people noticed although in focus groups a surprising number said that they ALWAYS looked at unit price data below the product and knew cost per ounce. I doubt it. When I see people buying Skippy or other package goods, it is usually a parent with a couple of children with them, one running around and one in the cart. They are preoccupied to put it mildly. If a price registers with them from past purchases, they probably drop the item in the cart without another thought.
In Consumer Behavior, this practice is referred to as Coherent Arbitrariness. The researchers say that consumers do not really have a handle on what anything should cost. The sensitivity is to relative prices but not absolute prices. If people really knew about the 10% Skippy increase some would have shifted brands or shopped around a bit in the category. So, cynical marketers can take advantage of this. According to the concept of Coherent Arbitrariness, consumers will play along as long as they do not know there is an increase.
The same concept broadly has been in play in TV pricing for some time. For 7-8 years, the trade press has been full of stories about how network advertisers are complaining that every year they pay more to get less. The price of network inventory crept up each year as ratings for the majority of shows declined. Now, with network broadcast, you have a group that is far more sophisticated than the harried Mom or Dad tossing a jar of Skippy into the grocery cart. They are bidding up the price of the inventory even though the audience is less than it was a year earlier.
But the concept is the same. Someone contacted me recently boasting about how he had paid the same price for a local TV property for the past four years. I laughed and said but the rating has gone down. "Not very much", he countered. I had a friend check and the vehicle audience has shrunk 21% in the four year time frame. So, my acquaintance paid the same out of pocket for several years but the cost per eyeball has risen 21% and the advertising impact is likely diminished to the same degree.
If advertisers and their agents are willing to pay more to get less, it is their business. But a day of reckoning is coming as digital becomes more prominent. Soon, some major players will blink and simply refuse to pay more.
Stay tuned.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
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