From day one in courses in Marketing, Branding, New Product Development, Advertising, or Consumer Behavior students are always taught that a marketer must separate their product from the competition. Before launching a brand at a company, the old pros instruct the rookies that above all you must be able to differentiate yourself from other entries in your category. A new book, “Different”, subtitled “Escaping the Competitive Herd” (Crown Business, 2010) puts a whole new and important spin on that old marketing saw. The author, Professor Youngme Moon, teaches at the Harvard Business School.
Professor Moon’s thesis is that if you only make direct comparisons on features you may have the “perverse effect of making you just like everyone else”. It reminded me of John Hartford’s lyric from the late ‘60’s—“What’s the difference being different when it’s different now that looks alike”. Professor Moon suggests that we hop off the competitive treadmill and do something that is MEANINGFULLY different. Lots of people promise that with every campaign but the author gives a good roadmap for doing it.
The book cruises along pleasantly with simple logic and some nice examples. Then the reader encounters a chapter simply entitled “Hostility” which hit me like a freight train. Her argument is that some brands differentiate themselves meaningfully by admitting that they are not for everyone but rather for a small minority. Their advertising deliberately tries to polarize people as do their products. Some people love them but an equal or larger group hates them. She states that they do not lay out the welcome mat. “Hostile brands don’t market in the classic sense of the term; they anti-market.” She gives several great examples with my favorites being Marmite, Red Bull, and Mini Cooper.
Marmite is a sticky brown food paste that has been around the United Kingdom for a while. You either hate it or are a true aficionado. I vividly remember staying at a British B&B some years back and watched people in the dining room slathering it on their “bits of toast.” I had to try it although it reminded of me of oil that had been sitting in the crankcase way too long. The stuff was dreadful or as the Brits would say “bloody awful.” But others in the breakfast nook scarfed it up with abandon. Their theme line is “Love it or hate it” and a TV spot of recent vintage has a blob of Marmite terrorizing a British town. As a boy in New England, there was a soft drink called Moxie which triggered similar polarized reactions. The great Ted Williams endorsed it so whenever we went to Fenway Park to see the Red Sox, I always ordered one and could never finish it as it struck me as having an awful medicinal taste. Finally, at the ripe age of ten, my father stepped in and stopped me from getting one saying “how about coffee milk (a great Southern New England tradition) or a Pepsi, Don? You know you won’t finish the Moxie.” Later that day, Ted Williams hit one of his last home runs which was thrilling and, to my father’s joy, he did not have to finish my Moxie for me. Moxie would have been a perfect candidate for a hostile brand. Instead, they took the high road and used New England’s greatest hero as spokesman.
Red Bull is well known to all of us. But the story behind the story may not be. Austrian entrepreneur Dietrich Mateschitz did his due diligence prior to launch and tested Red Bull extensively. Research results stated that the products coloring, sticky mouth feel, and taste were “disgusting.” One researcher wrote that “no other product has failed this convincingly.” Mateschitz’s response was a simple “great.”
He was not one to pander and as Dr. Moon put it refused to “even consider the possibility of modifying the product to sand away the rough edges.” Somehow the product caught on in clubs and select bars and was nicknamed “liquid cocaine”, “speed in a can” and “liquid viagra.” This spawned a consumer boycott by some worried about its health effects. Red Bull did no counter advertising. Their tone was “if Red Bull makes you nervous, don’t drink it”. The product has succeeded and has a hard core of devotees. To date, they have never flinched.
The final example is kind of a soft ball relative to the previous two UNLESS you saw their initial advertising. The Mini Cooper is a cult favorite which appeal to a certain class of driver. Early on they were strident. Initial ads were “The SUV backlash starts here”. To people who were worried about the small dimensions of the car, they simply stressed it especially on billboards. They were blunt and brazen with a very direct message.
What excites me about this discussion of hostile brands is that there is a world of media options available these days to allow a hostile brand to obtain awareness even if your budget is modest by traditional launch standards. Imagine a rollout into a few test markets. You could put together a package of cable channels with your local interconnect that would be a nice fit to the in your face or irreverent message that you were using. On line, the possibilities are endless. There are thousands of sites with an audience who might be turned on to your product and would not be offended by a “take it or leave it” positioning. New video options abound and would be inexpensive but nicely targeted. It almost makes me want to be a 28 year old media planner again.
Some brands are obviously too vanilla to be hostile brands. But, there are many like the Moxie of my youth that would be excellent candidates. Dr. Moon has done us all a great favor. Going forward her message of meaningful differentiation is sound but her defining the hostile brand and its applications is inspired.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Sunday, August 29, 2010
Friday, August 20, 2010
A New Twist on Good To Great
In 2001, Jim Collins wrote a great business best seller entitled “Good to Great: Why Some Companies Make the Leap…and Others Don’t.” In general he defines “great” largely on financial performance several times better than the market norm over a fairly long period of time. Some of the companies that he singled out who made the transition from good to great were: Abbott Labs, Kimberly –Clark, Nucor (steel and industrial conglomerate), Gillette (now a division of Procter & Gamble), Walgreen’s, and Wells Fargo.
He described several characteristics of these winning firms:
1) Humble leaders who do what is best for the long term.
2) First thing is to get the right people on your bus and then decide where to go.
3) Always confront the brutal facts regarding your industry but do not give up.
4) Be disciplined in all things at all times.
5) Remember that small initiatives are additive; they act on each other like the wonder of compound interest.
The book made a lot of us think. I remember vividly at the time if I had the right people on my bus. Last week, I was speaking at length with a general manager of a TV station in a mid-sized market. He told me that things were much better than last year but lamented—“this used to be a great business.” It certainly was. Many years his predecessor in the job had profit margins of 40-50%. The station changed ownership several times in the 70’s and 80’s as financiers felt that TV station ownership was a sure thing. Buy it and flip it several years later for a nice profit was the mantra.
Well, times have changed. In many markets, it is no longer a great business. But, as I stressed to my friend, it is still a VERY good business. And, with a manager such as he who trains his staff well and is fair with them, has close ties to the local community and hustles like hell, it should stay that way for some time to come.
All conventional media are going through this but the stage of downward evolution varies significantly medium to medium. Newspaper was a great business thirty years ago and a good one 15 years ago. Now, with few exceptions, it is a tough battle for survival unless some new technology can bail them out and bring in younger users. Magazines are a really mixed bag with a blend of successes and failures each year with new titles and they all struggle to monetize their online product. Radio could become very good or even great again in some cases if the corporate bean counters go away and local ownership comes back strongly. Outdoor, the last true mass media type, may have a big resurgence as TV continues to fragment and digital options for video multiply over the next several years.
But TV can still do well in the right hands. My friend is a very decent fellow and a hard headed realist. He laughs about his station site which gets into many advertising packages although he cheerfully admits that he feels many of the site visitors are nervous 60 year olds worried about traffic or snow for their evening drive home. Still, he soldiers on, makes a nice living, and does his best to provide value for those to whom he and his staff sell advertising. The days of dropping huge sacks of gold back at headquarters are over. But his station remains solidly profitable for his company which has owned the property for more than 20 years.
The great to good concept is sneaking into other traditionally solid businesses. Someone who fancies himself a securities analyst told me that Coca-Cola and Pepsico have gone from great to good in recent years. My attitude is that there is some truth in his thesis if he is referring to their US business for cola which is quite mature and where the margins are paper thin. But overseas they are just getting started. Indonesia, which some pundits say will be the next BRIC country (Brazil, Russia, India, China) of dynamic economic growth, has a per capita Coke consumption similar to the US in 1910. So, growth overseas for these beverage companies and McDonald’s, among others, should be quite robust as a middle class emerges in what were third world nations only yesterday. The US is only about 5% of the world and we need to keep that in mind.
Finally, I stressed to my broadcaster friend that there is nothing wrong with running and optimizing a good business. The easy money days are over for a lot of us but there is no need to be depressed. If TV truly is doomed a decade or more from now, I bet my plucky friend and his station will be one of the last to fall.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
He described several characteristics of these winning firms:
1) Humble leaders who do what is best for the long term.
2) First thing is to get the right people on your bus and then decide where to go.
3) Always confront the brutal facts regarding your industry but do not give up.
4) Be disciplined in all things at all times.
5) Remember that small initiatives are additive; they act on each other like the wonder of compound interest.
The book made a lot of us think. I remember vividly at the time if I had the right people on my bus. Last week, I was speaking at length with a general manager of a TV station in a mid-sized market. He told me that things were much better than last year but lamented—“this used to be a great business.” It certainly was. Many years his predecessor in the job had profit margins of 40-50%. The station changed ownership several times in the 70’s and 80’s as financiers felt that TV station ownership was a sure thing. Buy it and flip it several years later for a nice profit was the mantra.
Well, times have changed. In many markets, it is no longer a great business. But, as I stressed to my friend, it is still a VERY good business. And, with a manager such as he who trains his staff well and is fair with them, has close ties to the local community and hustles like hell, it should stay that way for some time to come.
All conventional media are going through this but the stage of downward evolution varies significantly medium to medium. Newspaper was a great business thirty years ago and a good one 15 years ago. Now, with few exceptions, it is a tough battle for survival unless some new technology can bail them out and bring in younger users. Magazines are a really mixed bag with a blend of successes and failures each year with new titles and they all struggle to monetize their online product. Radio could become very good or even great again in some cases if the corporate bean counters go away and local ownership comes back strongly. Outdoor, the last true mass media type, may have a big resurgence as TV continues to fragment and digital options for video multiply over the next several years.
But TV can still do well in the right hands. My friend is a very decent fellow and a hard headed realist. He laughs about his station site which gets into many advertising packages although he cheerfully admits that he feels many of the site visitors are nervous 60 year olds worried about traffic or snow for their evening drive home. Still, he soldiers on, makes a nice living, and does his best to provide value for those to whom he and his staff sell advertising. The days of dropping huge sacks of gold back at headquarters are over. But his station remains solidly profitable for his company which has owned the property for more than 20 years.
The great to good concept is sneaking into other traditionally solid businesses. Someone who fancies himself a securities analyst told me that Coca-Cola and Pepsico have gone from great to good in recent years. My attitude is that there is some truth in his thesis if he is referring to their US business for cola which is quite mature and where the margins are paper thin. But overseas they are just getting started. Indonesia, which some pundits say will be the next BRIC country (Brazil, Russia, India, China) of dynamic economic growth, has a per capita Coke consumption similar to the US in 1910. So, growth overseas for these beverage companies and McDonald’s, among others, should be quite robust as a middle class emerges in what were third world nations only yesterday. The US is only about 5% of the world and we need to keep that in mind.
Finally, I stressed to my broadcaster friend that there is nothing wrong with running and optimizing a good business. The easy money days are over for a lot of us but there is no need to be depressed. If TV truly is doomed a decade or more from now, I bet my plucky friend and his station will be one of the last to fall.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Saturday, August 14, 2010
The Scary New Scenario of the Paradox of Thrift
On June 15, 2009, I posted an article entitled “The Paradox of Thrift.” In brief, I talked about the economic concept developed by Lord Keynes in the 1930’s. The idea is that in a downturn when people get worried about the future, they tend to consume less and save more. So, recovery can be slow as consumer demand lags due to largely to consumer fear. In the world of 2010, it is even more serious with a U.S economy that is now 70% consumer driven as compared to the 1930’s when the industrial base was a larger share of the economy that that of consumer activity.
When I posted the report on the Paradox of Thrift some 14 months ago, the U.S. savings rate was at 4.7% (it had been zero a year earlier!) and the official unemployment rate was 8.9%. Last Tuesday, new figures were released and the savings rate was at 6.4% which is the highest level in decades. People who have jobs are still uneasy and are saving aggressively. Back to school sales to date are 17% below last year’s levels! And, government unemployment levels have crept up to 9.5% from 14 months ago.
Now, over the years I have learned to respect the difficulty of working with a mass of information. And, looking at only two data points—the savings rate and the unemployment rate do not make a definitive economic analysis.
But my innate optimism was shaken and shaken hard in recent days when I considered two more facts. Our growth rate appears to be dipping back to zero. I will let the professional economists and pundits waste time on whether we are heading into a “double dip” recession or not. The other datum is chilling and not many people want to talk about it. Most economists agree that due to demographics and new graduates entering the work force we will need 3.3% growth rate in Gross National Product (GNP) to lower current unemployment levels. When the economy is sailing along as in the past at 4% growth and a zero savings rate in our 70% consumer driven economy, job creation was almost automatic. But now, with anemic growth at best and a very high savings rate, vibrant job growth is going to be a long time in coming.
So, if you are a broadcaster, cable executive or advertising manager, be realistic when the boss or headquarters asks for double digit revenue increases for 2011. There are some pockets of prosperity in a country with a few hundred media markets but aggregate consumer demand across the US will likely be tame for a while. Your sales teams may go at it tooth and nail but the increased advertising dollars will be hard to find in many markets.
Who is to blame? Many people point the finger at George W. Bush who lowered taxes for the affluent, Wall Street’s greed or President Obama whom they label as a socialist. All three have not helped much but the American consumer is largely responsible for what has happened. We had it too good for too long. For two generations, we saved less and less and borrowed more and more. If it took 60 years to get us into this mess, we are not going to be out of the woods in another six months. Recovery is going to be slow in my opinion and, for many, painful.
Am I afraid? No way. Concerned? You bet. And you should be too.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
When I posted the report on the Paradox of Thrift some 14 months ago, the U.S. savings rate was at 4.7% (it had been zero a year earlier!) and the official unemployment rate was 8.9%. Last Tuesday, new figures were released and the savings rate was at 6.4% which is the highest level in decades. People who have jobs are still uneasy and are saving aggressively. Back to school sales to date are 17% below last year’s levels! And, government unemployment levels have crept up to 9.5% from 14 months ago.
Now, over the years I have learned to respect the difficulty of working with a mass of information. And, looking at only two data points—the savings rate and the unemployment rate do not make a definitive economic analysis.
But my innate optimism was shaken and shaken hard in recent days when I considered two more facts. Our growth rate appears to be dipping back to zero. I will let the professional economists and pundits waste time on whether we are heading into a “double dip” recession or not. The other datum is chilling and not many people want to talk about it. Most economists agree that due to demographics and new graduates entering the work force we will need 3.3% growth rate in Gross National Product (GNP) to lower current unemployment levels. When the economy is sailing along as in the past at 4% growth and a zero savings rate in our 70% consumer driven economy, job creation was almost automatic. But now, with anemic growth at best and a very high savings rate, vibrant job growth is going to be a long time in coming.
So, if you are a broadcaster, cable executive or advertising manager, be realistic when the boss or headquarters asks for double digit revenue increases for 2011. There are some pockets of prosperity in a country with a few hundred media markets but aggregate consumer demand across the US will likely be tame for a while. Your sales teams may go at it tooth and nail but the increased advertising dollars will be hard to find in many markets.
Who is to blame? Many people point the finger at George W. Bush who lowered taxes for the affluent, Wall Street’s greed or President Obama whom they label as a socialist. All three have not helped much but the American consumer is largely responsible for what has happened. We had it too good for too long. For two generations, we saved less and less and borrowed more and more. If it took 60 years to get us into this mess, we are not going to be out of the woods in another six months. Recovery is going to be slow in my opinion and, for many, painful.
Am I afraid? No way. Concerned? You bet. And you should be too.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Sunday, August 8, 2010
The Old Metric Lives
Since the early 1960’s (before my time) many people used a very simple calculation and still do to determine whether a retailer should advertise on spot television. Fast food is where it has received the most acceptance but I have seen it work against several categories over the years.
The metric is very simple. Divide the number of retail locations (points of distribution) that an advertiser has in a Nielsen DMA in to the total number of TV households in the DMA (Designated Market Area). If the number is under 30,000 Spot TV has an excellent chance of paying out. If it is in the 30-50k range per point of distribution it is an iffy proposition. Over 50k per retail location and TV is very hard pressed to pay out other than with a destination venue such as a luxury car dealer or huge big box retailer. Keeping this metric in mind saved me a lot of pain over the years and won me the love of some radio stations who thought I was simply helping them. The reality is that TV is wasteful for some retailers and a bonanza for many others.
In the last few weeks, I spent a lot of time in New England. I was not in Boston or Hartford but spent most of my time split across the other DMA’s in the region. Something amazing was going on. I sampled the 6pm local news in each mostly to get the weather report for the next day. In a few markets, there were small retailers buying the local news. I do not know what they paid but was stunned simply to see them there. Once restaurant with two locations advertised across a DMA with 619,610 TV households. So, TV households per unit were not in the vicinity of 30 thousand but were nearly 310 thousand per location! How could that possibly pay out for the advertiser? Another advertiser, a marine supply company with one location advertised in the news in the same DMA. As I moved across much of the six state area, I saw other questionable placements but none quite as bad as the two mentioned above.
Don’t get me wrong. I applaud local stations for the chutzpah to bring new advertisers on the air in a difficult environment. Yet, realistically, the odds of some of these people succeeding seem very remote. These advertisers belong on local cable not on over the air TV. Period!
How does it happen? Many young planners and buyers do not do their homework. There is no analysis. They have never heard of the 30,000 TV households per store rule because no one taught them such simple rules which cover a multitude of sins. Perhaps their clients were eager to get on TV and pushed them to it. An experienced media person would tell the client what a long shot such a buy has of ever paying out.
As I have said before here, we need a back-to–basics approach with media planning. In my home region of New England, they clearly need it more than most. The old 30k metric remains a decent yardstick. It should be the first screen a planner makes before considering local television.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
The metric is very simple. Divide the number of retail locations (points of distribution) that an advertiser has in a Nielsen DMA in to the total number of TV households in the DMA (Designated Market Area). If the number is under 30,000 Spot TV has an excellent chance of paying out. If it is in the 30-50k range per point of distribution it is an iffy proposition. Over 50k per retail location and TV is very hard pressed to pay out other than with a destination venue such as a luxury car dealer or huge big box retailer. Keeping this metric in mind saved me a lot of pain over the years and won me the love of some radio stations who thought I was simply helping them. The reality is that TV is wasteful for some retailers and a bonanza for many others.
In the last few weeks, I spent a lot of time in New England. I was not in Boston or Hartford but spent most of my time split across the other DMA’s in the region. Something amazing was going on. I sampled the 6pm local news in each mostly to get the weather report for the next day. In a few markets, there were small retailers buying the local news. I do not know what they paid but was stunned simply to see them there. Once restaurant with two locations advertised across a DMA with 619,610 TV households. So, TV households per unit were not in the vicinity of 30 thousand but were nearly 310 thousand per location! How could that possibly pay out for the advertiser? Another advertiser, a marine supply company with one location advertised in the news in the same DMA. As I moved across much of the six state area, I saw other questionable placements but none quite as bad as the two mentioned above.
Don’t get me wrong. I applaud local stations for the chutzpah to bring new advertisers on the air in a difficult environment. Yet, realistically, the odds of some of these people succeeding seem very remote. These advertisers belong on local cable not on over the air TV. Period!
How does it happen? Many young planners and buyers do not do their homework. There is no analysis. They have never heard of the 30,000 TV households per store rule because no one taught them such simple rules which cover a multitude of sins. Perhaps their clients were eager to get on TV and pushed them to it. An experienced media person would tell the client what a long shot such a buy has of ever paying out.
As I have said before here, we need a back-to–basics approach with media planning. In my home region of New England, they clearly need it more than most. The old 30k metric remains a decent yardstick. It should be the first screen a planner makes before considering local television.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Thursday, July 15, 2010
Does Cable TV Have A Future?
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
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
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
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