Charlie Gasparino is a tough guy. He is easily the most pugnacious financial journalist that I have ever seen or read. Yet he is also the most unpretentious, dogged in pursuit of a story and ever loyal to his blue collar roots. As he has risen from the New York Post to Newsweek to the Wall Street Journal to CNBC and now Fox Business Network and the Huffington Post, he never seems to have been sucked in to the lifestyle of the major league success that he is. He has lost none of his outspokenness or sense of fair play.
Mr. Gasparino has a strong new book out entitled, “Bought and Paid For” (Sentinel, 2010). The subtitle is “the unholy alliance between Barrack Obama and Wall Street”. The book turns a lot of conventional wisdom completely upside down. Most people view Wall Street as full of Republicans who lobby hard for lower taxes and deregulation of the financial industry. At the same time, Democrats are the main street little guys who detest the financial leaders and all that they do. Slowly and convincingly, Gasparino builds the case that such assumptions are way off base.
The book starts off simply a listing of financial contributions by Wall Street executives to political campaigns since 2008. Surprise! They gave $20.1 million to Democrats and just under $14 million to Republicans.
The major thesis of the volume is that the Wall Street boys benefit from an increasingly larger government. When Bill Clinton set a goal for 70% home ownership, Wall Street obliged with new mortgage products that made it easier to bundle and re-package mortgages. They made a tidy sum in the process. And now, with the economy still moribund, and the middle class struggling just to hold steady, Wall Street is on a tear again. But, the average taxpayer will pay for Wall Street’s mortgage mistakes for decades. And, as we pile on more debt and still more debt, Wall Street gets a cut of that as well. So, Wall Street is not too adverse to a Democratic president despite the folklore.
There is also a fascinating portrait of Senator John McCain as presidential candidate McCain in 2008. He never was able to muster much support on Wall Street while the leading commercial bankers and investment bankers saw Obama as a moderate who would support them. McCain, a former POW who was tortured by the North Vietnamese “couldn’t stand being in the same room with guys who compared trading bonds for a living with warfare. As a man who had survived the brutality of war in the most literal sense, he found their talk unbearable.” Being from Arizona did not help either. Financial services were not an industry that he had to cater to in his House and Senate races over the years.
Now, Gasparino indicates that the tide may be turning. Wall Streeters are seeing that the president is not really oriented towards business at all. He stops just short of saying what some people suspect and it is this—no matter who gets elected Wall Street really runs things. Jim Carville, Bill Clinton’s enormously entertaining and engaging former aide, said back in the ‘90’s, that “when I grow up, I want to be the bond market” as they can stop anything. It appears that in the battle between Main Street and Wall Street, Wall Street has won and won easily.
I highly recommend “Bought and Paid For”. You may, like I, agree with parts of it. But Charlie Gasparino does not mince words and gives you a refreshing viewpoint that you are unlikely to see anywhere else. And, importantly, he, like most of us, is an ardent believer in free markets. He just wants to see the game played fairly.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Friday, November 26, 2010
Sunday, November 21, 2010
Aging (Media) Brands
It is quite clear that times change, our culture in is in constant flux, and above all consumer interests change. Often I discuss with people how their brand or more often media brand is no longer in tune with the times. Some agree, while others disagree with great vehemence. Here are some of the questions I ask of all players. It may come in handy for you some day.
1) Has you market changed? Do you face new or stronger competition? How well does your experience stand up to the people with whom you are competing?
2) Have new market solutions (like the internet) or customer preferences caused consumers to lose interest in your brand? Does your brand promise still hold water?
3) How is your brand identity? Do your logos or taglines seem out of step with cultural trends or current design looks?
4) What of your brand message? Is it in sync with current consumer tastes?
What I often suggest is that people do a brand audit. If one is unusually honest, this process can be done internally. Nine times out of ten, however, you need an outsider to smoke out the current strengths and weaknesses of your brand.
Is your USP (Unique Selling Proposition) or the distinguishing characteristics of your brand of increasing or lessening interest to the consuming public? Does your brand attract the people you aspire to reach or is it business as usual?
Sometimes entities such as cable channels can erase previously established value and start all over and actually grow stronger. To have such a transformation you need to have energy, total commitment and be very focused. Few do it well.
In a world where we all have to change or be left behind there are several caveats that sadly most still ignore. They would include:
1) Listen to your customers. Most don’t so you will have a tremendous leg up if you do.
2) Change and adapt as your customers need change. This is subtle and hard but pays incredibly rich dividends.
3) Many brands fail due to death by a thousand tiny cuts. By the time they realize that things are bad, they are too weak to change. Small mistakes add up. Protect your brand image jealously. Watch the details relentlessly.
If all this sounds like basic fundamentals, so be it. I was talking to a broadcaster the other day that was very enthusiastic about these ideas. He called 48 hours later to say that he was starting all over. The solution was that he was hiring a new weatherman!
Well. I wish him all the best but he seems to have missed the point. The real issue is whether he should still be doing news, period. His market is not large and he is in fourth place in a daypart that attracts an increasingly old and downscale audience. The addition of a new meteorologist does not strike me as the silver bullet that the station needs to turn things around.
Do you need a brand audit? Will your brand be better off in ten years? Will it still be around? As the Coast Guard’s motto says, you need to be “semper paratus” (always ready).
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
1) Has you market changed? Do you face new or stronger competition? How well does your experience stand up to the people with whom you are competing?
2) Have new market solutions (like the internet) or customer preferences caused consumers to lose interest in your brand? Does your brand promise still hold water?
3) How is your brand identity? Do your logos or taglines seem out of step with cultural trends or current design looks?
4) What of your brand message? Is it in sync with current consumer tastes?
What I often suggest is that people do a brand audit. If one is unusually honest, this process can be done internally. Nine times out of ten, however, you need an outsider to smoke out the current strengths and weaknesses of your brand.
Is your USP (Unique Selling Proposition) or the distinguishing characteristics of your brand of increasing or lessening interest to the consuming public? Does your brand attract the people you aspire to reach or is it business as usual?
Sometimes entities such as cable channels can erase previously established value and start all over and actually grow stronger. To have such a transformation you need to have energy, total commitment and be very focused. Few do it well.
In a world where we all have to change or be left behind there are several caveats that sadly most still ignore. They would include:
1) Listen to your customers. Most don’t so you will have a tremendous leg up if you do.
2) Change and adapt as your customers need change. This is subtle and hard but pays incredibly rich dividends.
3) Many brands fail due to death by a thousand tiny cuts. By the time they realize that things are bad, they are too weak to change. Small mistakes add up. Protect your brand image jealously. Watch the details relentlessly.
If all this sounds like basic fundamentals, so be it. I was talking to a broadcaster the other day that was very enthusiastic about these ideas. He called 48 hours later to say that he was starting all over. The solution was that he was hiring a new weatherman!
Well. I wish him all the best but he seems to have missed the point. The real issue is whether he should still be doing news, period. His market is not large and he is in fourth place in a daypart that attracts an increasingly old and downscale audience. The addition of a new meteorologist does not strike me as the silver bullet that the station needs to turn things around.
Do you need a brand audit? Will your brand be better off in ten years? Will it still be around? As the Coast Guard’s motto says, you need to be “semper paratus” (always ready).
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Sunday, November 14, 2010
Fado, Fatima, and Futbol
Antonio Oliveira Salazar is usually described as Portugal’s dictator from 1932-1968. Often considered to be a clone of his neighbor in Spain, Francisco Franco, Salazar was quite different. He was an economics professor at the ancient University of Coimbra. When asked in 1926 to help the military junta in sorting out the economy, Salazar stayed in Lisbon, the capital, and studied the situation. After a few weeks, he said he would only work for the government if given complete control of revenue and expenditures. The generals said no so Salazar calmly retreated to his economics chair at Coimbra.
By 1928, with the economy facing bankruptcy, the military gave Salazar the power that he wanted. Things turned around fast under his leadership and in 1932 he was named prime minister. During his entire term, the country lived as a military dictatorship with Professor Salazar the civil administrator. He was not your dictator from central casting. A lifelong bachelor, he was a quiet introvert and a serious scholar. The main similarity with Franco was that he shamefully encouraged the police to use informers and he censored the press.
Many observers said that Salazar kept on top with a cynical credo distracting the masses known as the three F’s: “Fado, Fatima, and Futbol”.
1) Fado is the oldest urban folk music in the world. It is often described as the soul music of Portugal. Salazar did not like it but it became a national craze and he went along with it.
2) Fatima is a religious shrine in central Portugal where in 1917 the Virgin Mary is said to have appeared to three peasant children. While widely followed in Portugal, Fatima is what is known in Catholicism as a private revelation. No one is required to believe it or take it seriously. Most popes since Pius XI have been devoted to Fatima but many priests dismiss it and I have never seen a poll among the Catholic populace on how many accept it. Salazar’s “regime” played it to the hilt, however, with some officials claiming that the Virgin Mary kept Portugal out of World War II.
3) Futbol—this is simply soccer. The Portuguese love the game beyond all bounds and the regime encouraged clubs and participation everywhere. The press was said to be encouraged to extend futbol coverage even though they needed little. At the same time, Salazar, a brilliant and serious scholar himself did nothing to improve education. By some measures, literacy rates fell during his era.
Long before 20th century Portugal, regimes had their own distractions. In ancient Rome, the poet Juvenal wrote that the way that emperors retained power and control of the people was to get them involved in self indulgence and trivialities. As the empire tottered toward collapse the people seemed to hope for two things—free bread and circuses. Things reached a low point when there were nearly 100 holidays per year.
Sometimes, lately, as we face a difficult future, I wonder if we in America are getting so involved with the trivial that we lose sight of what is going on. Sports are a great pastime but for many they are now bordering on obsession. It is not unusual for an adult American male to watch 8-12 hours of football (not futbol) on a fall weekend. People have a right to do what they want during their free time but it is almost as if many live vicariously through what others do in a stadium on a weekend afternoon. Their happiness is not with what they have personally accomplished. We in the media have only encouraged this by pouring larger and large amounts of advertising dollars into sports programming.
We had what many feel was an important election on Tuesday, November 2nd. Many Americans did not bother to vote. In many European countries they vote on Sunday so that more people can get to the polls. Can you imagine U.S. turnout if we held elections on November Sundays? I think many lazy boys would curl up on their La-Z-Boys, pop open still another beer, and vote for football.
Actually, the day after the election something happened that struck me as vastly more important than the mid-term voting results. The Federal Reserve introduced QE2 which injected $600 billion more dollars into the economy. QE stands for Quantitative Easing which is employed when all other avenues are exhausted in an economy (QE1 occurred during the financial crisis when over $1 trillion was created to prop up the economy). Usually the Fed lowers overnight interest rates to stimulate economic activity but it cannot do that any longer as the rates are nearly at zero. Financial writer David Dittman put it this way: “It does not involve the printing of money. The central bank (the Fed) will, with the simple stroke of a computer key, increase the credit in its own bank account. This newly formed money will buy whatever the Fed pleases—government bonds, equities, houses or corporate bonds from banks.”
Well, I agree that there is no printing press in the basement of the Federal Reserve building where a few fellows are stamping out $600 billion in new currency. But the effect is the same. And, immediately the dollar tanked giving us a backdoor devaluation of our currency.
I was upset about the QE2 event and spoke and e-mailed with a number of people about it. The next day a friend e-mailed me that, according to Google tabulations, the number of people who Googled QE2 or the Federal Reserve on November 3rd were only a small fraction of those who checked to see the availability of the McRib at their local McDonalds restaurants. Are we maybe getting just a bit wrapped up in the trivial?
Better hurry, folks. The McRib promotion will be gone in most McDonalds by December 5th. QE2? Not to worry. If it does not work as I think it won’t, Fed chairman Ben Bernanke is sure to give us QE3, QE4, and QE5.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
By 1928, with the economy facing bankruptcy, the military gave Salazar the power that he wanted. Things turned around fast under his leadership and in 1932 he was named prime minister. During his entire term, the country lived as a military dictatorship with Professor Salazar the civil administrator. He was not your dictator from central casting. A lifelong bachelor, he was a quiet introvert and a serious scholar. The main similarity with Franco was that he shamefully encouraged the police to use informers and he censored the press.
Many observers said that Salazar kept on top with a cynical credo distracting the masses known as the three F’s: “Fado, Fatima, and Futbol”.
1) Fado is the oldest urban folk music in the world. It is often described as the soul music of Portugal. Salazar did not like it but it became a national craze and he went along with it.
2) Fatima is a religious shrine in central Portugal where in 1917 the Virgin Mary is said to have appeared to three peasant children. While widely followed in Portugal, Fatima is what is known in Catholicism as a private revelation. No one is required to believe it or take it seriously. Most popes since Pius XI have been devoted to Fatima but many priests dismiss it and I have never seen a poll among the Catholic populace on how many accept it. Salazar’s “regime” played it to the hilt, however, with some officials claiming that the Virgin Mary kept Portugal out of World War II.
3) Futbol—this is simply soccer. The Portuguese love the game beyond all bounds and the regime encouraged clubs and participation everywhere. The press was said to be encouraged to extend futbol coverage even though they needed little. At the same time, Salazar, a brilliant and serious scholar himself did nothing to improve education. By some measures, literacy rates fell during his era.
Long before 20th century Portugal, regimes had their own distractions. In ancient Rome, the poet Juvenal wrote that the way that emperors retained power and control of the people was to get them involved in self indulgence and trivialities. As the empire tottered toward collapse the people seemed to hope for two things—free bread and circuses. Things reached a low point when there were nearly 100 holidays per year.
Sometimes, lately, as we face a difficult future, I wonder if we in America are getting so involved with the trivial that we lose sight of what is going on. Sports are a great pastime but for many they are now bordering on obsession. It is not unusual for an adult American male to watch 8-12 hours of football (not futbol) on a fall weekend. People have a right to do what they want during their free time but it is almost as if many live vicariously through what others do in a stadium on a weekend afternoon. Their happiness is not with what they have personally accomplished. We in the media have only encouraged this by pouring larger and large amounts of advertising dollars into sports programming.
We had what many feel was an important election on Tuesday, November 2nd. Many Americans did not bother to vote. In many European countries they vote on Sunday so that more people can get to the polls. Can you imagine U.S. turnout if we held elections on November Sundays? I think many lazy boys would curl up on their La-Z-Boys, pop open still another beer, and vote for football.
Actually, the day after the election something happened that struck me as vastly more important than the mid-term voting results. The Federal Reserve introduced QE2 which injected $600 billion more dollars into the economy. QE stands for Quantitative Easing which is employed when all other avenues are exhausted in an economy (QE1 occurred during the financial crisis when over $1 trillion was created to prop up the economy). Usually the Fed lowers overnight interest rates to stimulate economic activity but it cannot do that any longer as the rates are nearly at zero. Financial writer David Dittman put it this way: “It does not involve the printing of money. The central bank (the Fed) will, with the simple stroke of a computer key, increase the credit in its own bank account. This newly formed money will buy whatever the Fed pleases—government bonds, equities, houses or corporate bonds from banks.”
Well, I agree that there is no printing press in the basement of the Federal Reserve building where a few fellows are stamping out $600 billion in new currency. But the effect is the same. And, immediately the dollar tanked giving us a backdoor devaluation of our currency.
I was upset about the QE2 event and spoke and e-mailed with a number of people about it. The next day a friend e-mailed me that, according to Google tabulations, the number of people who Googled QE2 or the Federal Reserve on November 3rd were only a small fraction of those who checked to see the availability of the McRib at their local McDonalds restaurants. Are we maybe getting just a bit wrapped up in the trivial?
Better hurry, folks. The McRib promotion will be gone in most McDonalds by December 5th. QE2? Not to worry. If it does not work as I think it won’t, Fed chairman Ben Bernanke is sure to give us QE3, QE4, and QE5.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Sunday, November 7, 2010
Women on the Rise
Across the western world, women are getting better educated, having more economic clout, and are far more prominent in top management in business and politics. Over the long term it is increasingly clear that the 21st century economy is a place where women will often be holding the cards.
This does not appear to be a short term trend to me. Demographically, things are in place in the United States for women to increasingly gain more economic power going forward. The first and most telling place to look is in our colleges and universities.
Figures vary slightly but it appears that women are approximately 58% of the enrollment in U.S. colleges and universities. And, women have significantly higher graduation rates than men. Some 60% of students in masters degree programs are women, and law schools and medical schools currently have an even split between the genders. MBA programs are 40% women today. In 2010, we had a first where there were 28,962 newly minted women PhD’s in America and 28,468 males with new doctoral degrees.
Why is this happening? Some sociologists claim that schools are more geared toward women these days and they value the self control and focus along with verbal skills that seem to come earlier to girls rather than boys. Maturity certainly plays a role as well. Virtually all educators agree that women seem better at time management than men of the same age. Culturally, there have been shifts as well. Today’s women are taking advantage of opportunities that earlier generations did not have. They work harder at an earlier age as many still believe that to succeed they have to be more focused and more productive than their male counterparts.
Men, on the other hand, seem kind of stuck. Jobs that used to attract high school educated men here in the states and provide lifetime employment are but a memory. Increasingly, boys are dropping out of high schools and colleges. Forty years ago, 34% of men went into industrial jobs; now it is 11% and dropping. Men are not adjusting to the knowledge based economy while women, on a relative basis, are thriving. Young men seem to be the last casualities of the end of the era of US manufacturing. There are declining male voting rates in the U.S. No one seems to be encouraging, motivating, or preparing men for their now inescapable future. As more boys fall to the wayside, what can be done?
Colleges are very sensitive about gender imbalance. Few administrators or admissions officers want to talk on the record. While the truly great schools will likely have gender parity as they can pick the best of the best, lesser schools have a real issue. If they move toward parity, are they really engaging in “affirmative action” toward men? Off the record, administrators sometimes confirm that they fear academic standards will be lowered if each new class is approximately 50% male.
Now, let us fast forward about 10 years. In 2010, 51% of people in the US with managerial titles are now women. That number has to be higher in 2020 given the emerging education gap between men and women.
On a social basis, the education gap will cause some discomfort as well. Traditionally, most of us date and eventually marry people who have approximately the same level of education or intellectual curiosity. The common statement from young adults generally is “I want to meet someone on my level.” If, in a few years, 10%+ more women will be vastly better educated than men of their age, how will many women find a soul mate? Today, many successful women say that it is often hard for them to find men who are not threatened by their intellect, impressive jobs, or lofty income. What happens when there are millions more of these women and the available men of the same age seem way behind?
Demographically, people are marrying later than they did 40 years ago and fewer are marrying period. It would seem that fewer professional women will marry as time goes on in the U.S. And, those who do may face some unique problems. Can fragile male egos deal with a wife who earns two or three times what they do? Right now, in two earner households, the wife usually stays home when a child gets sick. That will not happen going forward if the wife is the member of the couple with the high powered job. Big earners will have husbands who will work part time or not at all in some cases.
Interestingly, in countries such as Denmark and Norway where the state provides extensive day care as well as maternity and paternity leave, men seem to help out a lot more in the household. And, they are having larger families than countries like Italy where men do little household chores after work. So, something will have to give in lots of households in the U.S. It is very unlikely given our financial stress and center right political tendencies in the U.S. that America will move toward a Northern European style provider state. Men, then, will have to get more involved in the homely aspects of family life if things are to run smoothly.
Have you thought about these changes that are in motion and cannot be turned around for at least a generation? Can young men become academically competitive with women? Importantly, how this will affect the advertising business? Messaging will have to be different. Right now, a great deal of advertising is aimed at housewives even though relatively few still exist. If men start doing the laundry far more often than now, will Tide start advertising on ESPN aggressively and maybe during the day as millions more men may be at home? Financial advertising will shift as they will aim more at women. If she is earning the money, she will want a huge say in where it should be deployed. It is likely that auto advertising will likely change significantly as well.
Demographics are destiny so these changes are set in motion and will occur. Be ready for them and if you have a son, give him a little extra encouragement and preparation.
If you would like to read more about the topic, there are two recent sources that you might find interesting:
1) “The End of Men”, from Atlantic Magazine, July/August, 2010
2) Influence by Maddy Dychtwald, Voice Publishing, 2010
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
This does not appear to be a short term trend to me. Demographically, things are in place in the United States for women to increasingly gain more economic power going forward. The first and most telling place to look is in our colleges and universities.
Figures vary slightly but it appears that women are approximately 58% of the enrollment in U.S. colleges and universities. And, women have significantly higher graduation rates than men. Some 60% of students in masters degree programs are women, and law schools and medical schools currently have an even split between the genders. MBA programs are 40% women today. In 2010, we had a first where there were 28,962 newly minted women PhD’s in America and 28,468 males with new doctoral degrees.
Why is this happening? Some sociologists claim that schools are more geared toward women these days and they value the self control and focus along with verbal skills that seem to come earlier to girls rather than boys. Maturity certainly plays a role as well. Virtually all educators agree that women seem better at time management than men of the same age. Culturally, there have been shifts as well. Today’s women are taking advantage of opportunities that earlier generations did not have. They work harder at an earlier age as many still believe that to succeed they have to be more focused and more productive than their male counterparts.
Men, on the other hand, seem kind of stuck. Jobs that used to attract high school educated men here in the states and provide lifetime employment are but a memory. Increasingly, boys are dropping out of high schools and colleges. Forty years ago, 34% of men went into industrial jobs; now it is 11% and dropping. Men are not adjusting to the knowledge based economy while women, on a relative basis, are thriving. Young men seem to be the last casualities of the end of the era of US manufacturing. There are declining male voting rates in the U.S. No one seems to be encouraging, motivating, or preparing men for their now inescapable future. As more boys fall to the wayside, what can be done?
Colleges are very sensitive about gender imbalance. Few administrators or admissions officers want to talk on the record. While the truly great schools will likely have gender parity as they can pick the best of the best, lesser schools have a real issue. If they move toward parity, are they really engaging in “affirmative action” toward men? Off the record, administrators sometimes confirm that they fear academic standards will be lowered if each new class is approximately 50% male.
Now, let us fast forward about 10 years. In 2010, 51% of people in the US with managerial titles are now women. That number has to be higher in 2020 given the emerging education gap between men and women.
On a social basis, the education gap will cause some discomfort as well. Traditionally, most of us date and eventually marry people who have approximately the same level of education or intellectual curiosity. The common statement from young adults generally is “I want to meet someone on my level.” If, in a few years, 10%+ more women will be vastly better educated than men of their age, how will many women find a soul mate? Today, many successful women say that it is often hard for them to find men who are not threatened by their intellect, impressive jobs, or lofty income. What happens when there are millions more of these women and the available men of the same age seem way behind?
Demographically, people are marrying later than they did 40 years ago and fewer are marrying period. It would seem that fewer professional women will marry as time goes on in the U.S. And, those who do may face some unique problems. Can fragile male egos deal with a wife who earns two or three times what they do? Right now, in two earner households, the wife usually stays home when a child gets sick. That will not happen going forward if the wife is the member of the couple with the high powered job. Big earners will have husbands who will work part time or not at all in some cases.
Interestingly, in countries such as Denmark and Norway where the state provides extensive day care as well as maternity and paternity leave, men seem to help out a lot more in the household. And, they are having larger families than countries like Italy where men do little household chores after work. So, something will have to give in lots of households in the U.S. It is very unlikely given our financial stress and center right political tendencies in the U.S. that America will move toward a Northern European style provider state. Men, then, will have to get more involved in the homely aspects of family life if things are to run smoothly.
Have you thought about these changes that are in motion and cannot be turned around for at least a generation? Can young men become academically competitive with women? Importantly, how this will affect the advertising business? Messaging will have to be different. Right now, a great deal of advertising is aimed at housewives even though relatively few still exist. If men start doing the laundry far more often than now, will Tide start advertising on ESPN aggressively and maybe during the day as millions more men may be at home? Financial advertising will shift as they will aim more at women. If she is earning the money, she will want a huge say in where it should be deployed. It is likely that auto advertising will likely change significantly as well.
Demographics are destiny so these changes are set in motion and will occur. Be ready for them and if you have a son, give him a little extra encouragement and preparation.
If you would like to read more about the topic, there are two recent sources that you might find interesting:
1) “The End of Men”, from Atlantic Magazine, July/August, 2010
2) Influence by Maddy Dychtwald, Voice Publishing, 2010
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Tuesday, October 26, 2010
Mid-Sized Malaise--Part Four
This is the final post in a series about the current issues facing mid-sized Advertising Agencies.
Bucking the Trend
So far, we have focused on the problems that struggling mid-sized Agencies have been facing. In my sample, two executives at mid-sized firms told me that they were doing very well, thank you, but they were sensitive to the challenges that others were facing. I know both of these gentlemen quite well. One I knew as young man. He was extremely well organized, interested in every aspect of the business, and highly ethical. The other is a creative dynamo who works well across all media types and digital platforms. We correspond regularly.
Why are they and their firms doing so well? Both firms have not forgotten that excellent creative has to be the very soul of any advertising agency. High standards are maintained. My creative director friend does not segregate digital from the rest of his creative team. They work in squads with a conventional writer and art director paired with a digital player. This cuts turf issues and they can play off one another in development of the message. Also, he makes an important point to those who speak somewhat breathlessly about Facebook. “Most people do not want to be marketed to, especially in social media. We do Facebook and other digital work as part of a campaign for visibility. Games are developed with pretty good participation but no hard selling. The goal is for creative buzz, not to sell. We make this clear to clients upfront.” The leaky barrel due to marketing director turnover could affect them at some point but in the last year they have picked up significant new business.
My other upbeat contributor says his company was fortunate to have entered the digital arena years ago due to key client acquisition. They developed the necessary skills early on and, in my opinion, probably before some of the mega-shops. Social media is still a challenge as it is for everyone but they are working on it.
I also had wonderful sessions with two old friends who have downsized their companies in recent years and are thriving and happy. Their modesty was refreshing as well.
One ran a fairly good sized shop some years back but now has a very well thought of boutique in a large U.S. city. He says that “our market has been backsliding as an advertising center for years. Right now, we are viewed as a big player in town and we are nothing”. How many chiefs would say that? “Management has shifted frequently at some of our clients but so far we have been able to hang on to the business. Our approach is starkly different than others out there. We have no huge overhead. When we have a project, we gather in senior people that we trust. They only work when we have an assignment. There is “no twelve people to screw in a light bulb” nonsense that you see even at mid-sized shops. Every time you put a layer of people on a job it costs you money. We never do that.”
Another friend downsized before the 2008 crunch and is based in a small Northeast city. Now he works mostly on a project basis. His approach is similar to my old colleague a few thousand miles away. “I have people that I can go to for TV or radio production on a short fuse. We have worked together for years.” Also, he says that the turnover is great with some clients. “Sometimes, I feel as if I am doing a new business pitch for every assignment that we want.”
I told them both that their approach is analogous to what Clint Eastwood has done at Warner Brothers for decades. He has a “boutique” studio within Warners and for film after film he pulls in the same cameramen, lighting specialists, set designers, and often actors among other disciplines. The result is films shot both on time and under budget. It has been described as a family that is very functional. Both loved being compared to the great Eastwood but said the analogy is dead on. One added “I try to explain this concept to prospects. Sometimes I am halfway through it and if I see their eyes glaze, I know that my team is toast and the prospect wants to go the conventional route.” He also is a big believer that larger shops could do well if they approached certain smaller clients with this boutique approach. The issue would be whether the team in the mid-sized or large shop could turn on a dime as he does.
My friend in the Northeast says he never worries about getting assignments. “If you are smart, good and are willing to work very hard, you can always find work even in a tough environment such as this”.
These are two great people who never whine and can teach us all something.
Conclusions
Are mid-sized shops finished or will they come roaring back when the economy someday rebounds smartly? I would say neither. There are always going to be agencies such as the two mid-sized profiled above who keep turning out first class work and keep their teams fresh and motivated. Someone will break out and become the next Crispin Porter, I am certain. But the success stories will be less frequent.
Everyone admits that we are going through a revolution as we move to the digital world. Yet some exhibit remarkable selectivity about how it will affect their firm or their jobs. To me, what is going on at mid-sized shops in simply one more case of Creative Destruction. This is a concept popularized by Joseph Schumpeter of Harvard back in the 1940’s. (For a more detailed explanation see “Schumpeter Lives in 2009 Media, Media Realism, January 30, 2009.)
Creative Destruction in a nutshell states that a new idea enters the marketplace and makes existing capital relatively worthless. The new idea tends to be innovative and radically so. Radical innovators (read digital and media fragmentation) cause some real hardship to those involved with the existing status quo companies. Layoffs rise in the obsolete companies and many suffer in the short term. Others suffer long term as they are unable or unwilling to be retrained in the new emerging world.
The mid-sized players with no niche but promised service are not long for this world. Those who have embraced the change and developed skills consistent with the new reality may outlive us all. I wish them the very best.
Finally, I wish to thank the dozens of people who gave me countless hours of often precious time to put this series together. Your honesty and passion for your business is inspiring.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Bucking the Trend
So far, we have focused on the problems that struggling mid-sized Agencies have been facing. In my sample, two executives at mid-sized firms told me that they were doing very well, thank you, but they were sensitive to the challenges that others were facing. I know both of these gentlemen quite well. One I knew as young man. He was extremely well organized, interested in every aspect of the business, and highly ethical. The other is a creative dynamo who works well across all media types and digital platforms. We correspond regularly.
Why are they and their firms doing so well? Both firms have not forgotten that excellent creative has to be the very soul of any advertising agency. High standards are maintained. My creative director friend does not segregate digital from the rest of his creative team. They work in squads with a conventional writer and art director paired with a digital player. This cuts turf issues and they can play off one another in development of the message. Also, he makes an important point to those who speak somewhat breathlessly about Facebook. “Most people do not want to be marketed to, especially in social media. We do Facebook and other digital work as part of a campaign for visibility. Games are developed with pretty good participation but no hard selling. The goal is for creative buzz, not to sell. We make this clear to clients upfront.” The leaky barrel due to marketing director turnover could affect them at some point but in the last year they have picked up significant new business.
My other upbeat contributor says his company was fortunate to have entered the digital arena years ago due to key client acquisition. They developed the necessary skills early on and, in my opinion, probably before some of the mega-shops. Social media is still a challenge as it is for everyone but they are working on it.
I also had wonderful sessions with two old friends who have downsized their companies in recent years and are thriving and happy. Their modesty was refreshing as well.
One ran a fairly good sized shop some years back but now has a very well thought of boutique in a large U.S. city. He says that “our market has been backsliding as an advertising center for years. Right now, we are viewed as a big player in town and we are nothing”. How many chiefs would say that? “Management has shifted frequently at some of our clients but so far we have been able to hang on to the business. Our approach is starkly different than others out there. We have no huge overhead. When we have a project, we gather in senior people that we trust. They only work when we have an assignment. There is “no twelve people to screw in a light bulb” nonsense that you see even at mid-sized shops. Every time you put a layer of people on a job it costs you money. We never do that.”
Another friend downsized before the 2008 crunch and is based in a small Northeast city. Now he works mostly on a project basis. His approach is similar to my old colleague a few thousand miles away. “I have people that I can go to for TV or radio production on a short fuse. We have worked together for years.” Also, he says that the turnover is great with some clients. “Sometimes, I feel as if I am doing a new business pitch for every assignment that we want.”
I told them both that their approach is analogous to what Clint Eastwood has done at Warner Brothers for decades. He has a “boutique” studio within Warners and for film after film he pulls in the same cameramen, lighting specialists, set designers, and often actors among other disciplines. The result is films shot both on time and under budget. It has been described as a family that is very functional. Both loved being compared to the great Eastwood but said the analogy is dead on. One added “I try to explain this concept to prospects. Sometimes I am halfway through it and if I see their eyes glaze, I know that my team is toast and the prospect wants to go the conventional route.” He also is a big believer that larger shops could do well if they approached certain smaller clients with this boutique approach. The issue would be whether the team in the mid-sized or large shop could turn on a dime as he does.
My friend in the Northeast says he never worries about getting assignments. “If you are smart, good and are willing to work very hard, you can always find work even in a tough environment such as this”.
These are two great people who never whine and can teach us all something.
Conclusions
Are mid-sized shops finished or will they come roaring back when the economy someday rebounds smartly? I would say neither. There are always going to be agencies such as the two mid-sized profiled above who keep turning out first class work and keep their teams fresh and motivated. Someone will break out and become the next Crispin Porter, I am certain. But the success stories will be less frequent.
Everyone admits that we are going through a revolution as we move to the digital world. Yet some exhibit remarkable selectivity about how it will affect their firm or their jobs. To me, what is going on at mid-sized shops in simply one more case of Creative Destruction. This is a concept popularized by Joseph Schumpeter of Harvard back in the 1940’s. (For a more detailed explanation see “Schumpeter Lives in 2009 Media, Media Realism, January 30, 2009.)
Creative Destruction in a nutshell states that a new idea enters the marketplace and makes existing capital relatively worthless. The new idea tends to be innovative and radically so. Radical innovators (read digital and media fragmentation) cause some real hardship to those involved with the existing status quo companies. Layoffs rise in the obsolete companies and many suffer in the short term. Others suffer long term as they are unable or unwilling to be retrained in the new emerging world.
The mid-sized players with no niche but promised service are not long for this world. Those who have embraced the change and developed skills consistent with the new reality may outlive us all. I wish them the very best.
Finally, I wish to thank the dozens of people who gave me countless hours of often precious time to put this series together. Your honesty and passion for your business is inspiring.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Sunday, October 24, 2010
Mid-Sized Malaise--Part Three
This is the third installment of a series that I am writing about the current state of mid-sized advertising agencies.
Marketing Research, Strategic Planning, and Account Planning
I lump these three disciplines together because in both good times and in bad this tends to be the Achilles heel of a mid-sized agency. Most do not have the resources to buy or conduct top quality research. And the people in those positions at mid-sized shops are usually not formally trained. Their knowledge of statistics is sketchy at best in many cases. Some want to look bigger so they take an account supervisor and dub him or her a strategic or account planner. It often ends badly.
Generally, the CEO, Account Service Chief, or the Creative Director drives the bus on strategy. I have met a number who have a very good intuitive feel for what will work or not. Some get to the point where they tell the “researcher” or “planner” to write the research report to back up the creative executions that they want to present. Don’t tell me it doesn’t go on—if you are honest and kept your eyes open, you have seen it too. Maybe you still do.
Often researchers or strategists at a mid-sized shop are strapped for cash. So, they have someone in media do reams of MRI or Simmons cross-tabulations. They built a massive power-point with it, highlighted by way too many bullet points on each page. Some people have a knack for building a logic flow out of it that sounds convincing (I used to be rather good at it myself).
A friend of mine has sold research services for 30 years. He says “agencies today want research that is quick and cheap. If it is very vital new business pitch, they pay just enough to get a few bullet points for the main presentation. A few very large shops do custom work but most of it comes from big companies”. Even the media giants do surprisingly little. The two exceptions are MTV and ESPN. He described ESPN as a gem that knows the profile of everyone using each of their burgeoning platforms and cross-usage of them as well. Perhaps that is why they keep growing and get a huge premium over the competition for all aspects of their sales inventory.
Account Planning is another area that is often an absurd fiction at mid-sized shops. In my long years in the game, I have met two authentic account planners (See Media Realism, 10/13/09 "Is It Really Account Planning" for a detailed discussion of account planning).
Putting people in jobs and dubbing then strategists or planners leads to some funny situations. Not long ago, I was at a meeting where the Sr.VP, Account Planning kept scrunching her face when I spoke of Brand Development Index (BDI) and Category Development Index (CDI). Finally, she blurted out “Don, what is this BDI stuff.” For once in my life I was speechless. The CEO put his palms up in resignation and told me to explain it. The client was not amused and collared me afterwards. It was a very uncomfortable conversation to put it mildly.
So, marketing research and strategic planning are areas where the mid-sized shops fall way short in most cases. They can use smoke and mirrors plus good instincts and common sense with small or mid-level advertisers. They are, however, naked in front of major corporations who have in house teams that would not consider hiring the strategic planner of the agency.
There are a few exceptions to this out there in the mid-sized world. And I mean FEW.
Media
This is where I spent much of my career so you might expect me to obey the 11th commandment and not speak ill of my media brethren. I actually will not attack them but there are some structural issues that put them at a real disadvantage in many cases.
The biggest thing that I notice from media people these days across the U.S. is very simple—fear. Here are some comments from sales executives widely scattered across the country that I have known for years and respect deeply:
“The operative term is scared to death. I can see the fear in their eyes at many mid-sized shops. The smallest are more often morphing into specialty/niche outfits as they are more successful focusing on the best burger in town, instead of banging out an entire menu…..It’s the mid-sizers who are not big enough to truly be all things to all people, and that grew too large, too fast that are indeed suffering. They swallowed hard and down-sized themselves over the last two years (like everyone else) but are now trying to super-serve clients with a skeleton staff. One by one the shingles are disappearing from above the office doors and good people are calling weekly asking “do you know anybody who needs an experienced media planner.””
When I asked a sales director in a major market if people are frightened, the response was “my observation is that many in media in mid-sized agencies are still fearful of the potential SECOND WAVE which could result in yet another downsizing at the agency level. People are guarded, cautious; playing everything close to the vest. Many in media have experienced the unthinkable—the larger than life Media Maven (boss) let go due to downsizing….the slash and burn of some entire media departments which has put many experienced media people on the street. No one wants to go out of his/her way and take chances on anything out of the norm. It is all SO MUCH about the post—now more than ever. I also get the feeling that no one wants to ask the boss to hire on new workers—even if there has been a big pick up with new account work. The attitude out there is that I have got to do more to keep my job.
A charismatic media research salesman whom I often find hilarious in private soberly weighs in: “What I am hearing at mid-sized shops is that larger agencies have cut fees or commissions and it is harder for medium sized shops to hold accounts or even stay in business. So to be competitive for less revenue means less money to pay top quality employees, less perks, less of everything. So the medium sized shops which once had a warmer feel to them and were attractive to the seasoned executive are now becoming places to avoid because the pay and resources are becoming too scarce….I don’t believe that the medium sized shop will evaporate all together but you will see consolidation and unfortunately some will go away. It is just a fact of contracting markets.”
Another media researcher sales maven says that the media teams are nervous but keep plugging along. They are overworked and not paid enough but seem happy to have jobs. He did add grimly that “there are no stars left in media departments. These people do not teach me anything I don’t know.”
A very thoughtful cable executive tells me:" I believe that the media buying community at all levels is scared to death for their jobs. A friend who is a buyer started looking for a job when she did not post on one of 13 markets last quarter. This is symptomatic of being overworked; she needs to understand that she is a much needed commodity….NO ONE IS HAPPY OR OPTIMISTIC RIGHT NOW".
From the world of sports, a seasoned pro says that the overwork is affecting the back office. He told me of a game being cancelled by rain and he had to move 18 advertisers. Immediately his team sent out an e-mail telling people that their schedule had been re-allocated. Two got back to him and one took a credit as the new spots were out of flight. He asked “is anybody checking anything but matching dollars. Twenty years ago, I would have had a dozen calls arguing about the make goods. Admittedly, the ratings are smaller today, but I think good people may be cutting corners”. This man has the ethics of a St. Thomas More but what if he did not?
The big problem facing the mid-level media teams over the next year or two will be the integration of digital and traditional media. Some make them separate mini-departments which can cause a knife fight for budget dollars. It is better for one Solomon to digest both recommendations, allocate the funds, and let each group optimize. Working together as a team is even better! Many, as we have mentioned in an earlier post in this series, fake digital. They buy ad networks and claim to have worked out an integrated on line strategy that optimizes delivery. “The publishers hate ad networks as it diminishes their product”, says a leading media researcher but if you have a digital team of one 27 year old, you play the game.
There are still a few people out there who do as little new media as possible. Most admit that they are having a hard time with social media especially for brands with mature customers. This is okay as all thinking people are struggling with it these days. You know that you need it but in what proportion of total dollars? With each passing year digital will earn a larger place in media plans. To those dinosaurs that resist it, there is no way that they can survive the crunch.
Some media people are not being trained well at all due to overwork of the senior team. Young planners are not learning about marketing like they used to. Some are scrappy negotiators by instinct but do not know the mechanics of where the Nielsen/Arbitron and now digital research comes from. Media planning disciplines don’t come up much as no one has the time to instruct. The proportions of each medium in the overall mix is key issue that gets little attention these days. Youngsters appear to guess at it as they have never learned the benchmarks or quantitative guidelines for it. When the old people go, a lot will be lost.
This should be the most exciting time since 1953 to work in media? Why 1953? That was when over 50% of America had a TV and television became a truly viable national medium. Today, another revolution is going on and smart youngsters should be able to ride the wave into brilliant careers via digital. At mid-sized shops, the financial squeeze will make that difficult.
Finance
Several people harked back to the good old days of the 1980’s when interest rates where high and agencies made a bundle on the “float.” The client paid you and you deposited the money, and paid it out to the media later, pocketing a tidy sum of interest. Well, others disputed that saying that the mega-shops were real sharks with cash management but the mid-sized guys never really made a lot out of it or were that great at it. The question is getting moot today as many advertisers pay networks, stations, cable players and publications directly. Also, the clients are smarter. Why should they give their agency an interest free loan?
To be continued in about 48 hours.
If you would like to contact Don Cole, you may reach him at doncolemedia@gmail.com
Marketing Research, Strategic Planning, and Account Planning
I lump these three disciplines together because in both good times and in bad this tends to be the Achilles heel of a mid-sized agency. Most do not have the resources to buy or conduct top quality research. And the people in those positions at mid-sized shops are usually not formally trained. Their knowledge of statistics is sketchy at best in many cases. Some want to look bigger so they take an account supervisor and dub him or her a strategic or account planner. It often ends badly.
Generally, the CEO, Account Service Chief, or the Creative Director drives the bus on strategy. I have met a number who have a very good intuitive feel for what will work or not. Some get to the point where they tell the “researcher” or “planner” to write the research report to back up the creative executions that they want to present. Don’t tell me it doesn’t go on—if you are honest and kept your eyes open, you have seen it too. Maybe you still do.
Often researchers or strategists at a mid-sized shop are strapped for cash. So, they have someone in media do reams of MRI or Simmons cross-tabulations. They built a massive power-point with it, highlighted by way too many bullet points on each page. Some people have a knack for building a logic flow out of it that sounds convincing (I used to be rather good at it myself).
A friend of mine has sold research services for 30 years. He says “agencies today want research that is quick and cheap. If it is very vital new business pitch, they pay just enough to get a few bullet points for the main presentation. A few very large shops do custom work but most of it comes from big companies”. Even the media giants do surprisingly little. The two exceptions are MTV and ESPN. He described ESPN as a gem that knows the profile of everyone using each of their burgeoning platforms and cross-usage of them as well. Perhaps that is why they keep growing and get a huge premium over the competition for all aspects of their sales inventory.
Account Planning is another area that is often an absurd fiction at mid-sized shops. In my long years in the game, I have met two authentic account planners (See Media Realism, 10/13/09 "Is It Really Account Planning" for a detailed discussion of account planning).
Putting people in jobs and dubbing then strategists or planners leads to some funny situations. Not long ago, I was at a meeting where the Sr.VP, Account Planning kept scrunching her face when I spoke of Brand Development Index (BDI) and Category Development Index (CDI). Finally, she blurted out “Don, what is this BDI stuff.” For once in my life I was speechless. The CEO put his palms up in resignation and told me to explain it. The client was not amused and collared me afterwards. It was a very uncomfortable conversation to put it mildly.
So, marketing research and strategic planning are areas where the mid-sized shops fall way short in most cases. They can use smoke and mirrors plus good instincts and common sense with small or mid-level advertisers. They are, however, naked in front of major corporations who have in house teams that would not consider hiring the strategic planner of the agency.
There are a few exceptions to this out there in the mid-sized world. And I mean FEW.
Media
This is where I spent much of my career so you might expect me to obey the 11th commandment and not speak ill of my media brethren. I actually will not attack them but there are some structural issues that put them at a real disadvantage in many cases.
The biggest thing that I notice from media people these days across the U.S. is very simple—fear. Here are some comments from sales executives widely scattered across the country that I have known for years and respect deeply:
“The operative term is scared to death. I can see the fear in their eyes at many mid-sized shops. The smallest are more often morphing into specialty/niche outfits as they are more successful focusing on the best burger in town, instead of banging out an entire menu…..It’s the mid-sizers who are not big enough to truly be all things to all people, and that grew too large, too fast that are indeed suffering. They swallowed hard and down-sized themselves over the last two years (like everyone else) but are now trying to super-serve clients with a skeleton staff. One by one the shingles are disappearing from above the office doors and good people are calling weekly asking “do you know anybody who needs an experienced media planner.””
When I asked a sales director in a major market if people are frightened, the response was “my observation is that many in media in mid-sized agencies are still fearful of the potential SECOND WAVE which could result in yet another downsizing at the agency level. People are guarded, cautious; playing everything close to the vest. Many in media have experienced the unthinkable—the larger than life Media Maven (boss) let go due to downsizing….the slash and burn of some entire media departments which has put many experienced media people on the street. No one wants to go out of his/her way and take chances on anything out of the norm. It is all SO MUCH about the post—now more than ever. I also get the feeling that no one wants to ask the boss to hire on new workers—even if there has been a big pick up with new account work. The attitude out there is that I have got to do more to keep my job.
A charismatic media research salesman whom I often find hilarious in private soberly weighs in: “What I am hearing at mid-sized shops is that larger agencies have cut fees or commissions and it is harder for medium sized shops to hold accounts or even stay in business. So to be competitive for less revenue means less money to pay top quality employees, less perks, less of everything. So the medium sized shops which once had a warmer feel to them and were attractive to the seasoned executive are now becoming places to avoid because the pay and resources are becoming too scarce….I don’t believe that the medium sized shop will evaporate all together but you will see consolidation and unfortunately some will go away. It is just a fact of contracting markets.”
Another media researcher sales maven says that the media teams are nervous but keep plugging along. They are overworked and not paid enough but seem happy to have jobs. He did add grimly that “there are no stars left in media departments. These people do not teach me anything I don’t know.”
A very thoughtful cable executive tells me:" I believe that the media buying community at all levels is scared to death for their jobs. A friend who is a buyer started looking for a job when she did not post on one of 13 markets last quarter. This is symptomatic of being overworked; she needs to understand that she is a much needed commodity….NO ONE IS HAPPY OR OPTIMISTIC RIGHT NOW".
From the world of sports, a seasoned pro says that the overwork is affecting the back office. He told me of a game being cancelled by rain and he had to move 18 advertisers. Immediately his team sent out an e-mail telling people that their schedule had been re-allocated. Two got back to him and one took a credit as the new spots were out of flight. He asked “is anybody checking anything but matching dollars. Twenty years ago, I would have had a dozen calls arguing about the make goods. Admittedly, the ratings are smaller today, but I think good people may be cutting corners”. This man has the ethics of a St. Thomas More but what if he did not?
The big problem facing the mid-level media teams over the next year or two will be the integration of digital and traditional media. Some make them separate mini-departments which can cause a knife fight for budget dollars. It is better for one Solomon to digest both recommendations, allocate the funds, and let each group optimize. Working together as a team is even better! Many, as we have mentioned in an earlier post in this series, fake digital. They buy ad networks and claim to have worked out an integrated on line strategy that optimizes delivery. “The publishers hate ad networks as it diminishes their product”, says a leading media researcher but if you have a digital team of one 27 year old, you play the game.
There are still a few people out there who do as little new media as possible. Most admit that they are having a hard time with social media especially for brands with mature customers. This is okay as all thinking people are struggling with it these days. You know that you need it but in what proportion of total dollars? With each passing year digital will earn a larger place in media plans. To those dinosaurs that resist it, there is no way that they can survive the crunch.
Some media people are not being trained well at all due to overwork of the senior team. Young planners are not learning about marketing like they used to. Some are scrappy negotiators by instinct but do not know the mechanics of where the Nielsen/Arbitron and now digital research comes from. Media planning disciplines don’t come up much as no one has the time to instruct. The proportions of each medium in the overall mix is key issue that gets little attention these days. Youngsters appear to guess at it as they have never learned the benchmarks or quantitative guidelines for it. When the old people go, a lot will be lost.
This should be the most exciting time since 1953 to work in media? Why 1953? That was when over 50% of America had a TV and television became a truly viable national medium. Today, another revolution is going on and smart youngsters should be able to ride the wave into brilliant careers via digital. At mid-sized shops, the financial squeeze will make that difficult.
Finance
Several people harked back to the good old days of the 1980’s when interest rates where high and agencies made a bundle on the “float.” The client paid you and you deposited the money, and paid it out to the media later, pocketing a tidy sum of interest. Well, others disputed that saying that the mega-shops were real sharks with cash management but the mid-sized guys never really made a lot out of it or were that great at it. The question is getting moot today as many advertisers pay networks, stations, cable players and publications directly. Also, the clients are smarter. Why should they give their agency an interest free loan?
To be continued in about 48 hours.
If you would like to contact Don Cole, you may reach him at doncolemedia@gmail.com
Friday, October 22, 2010
Mid-Sized Malaise--Part Two
This is the second installment of a series that I am writing on Mid-Sized Advertising Agencies.
Staffing and Compensation
Here is an area that may get less press than other agency issues but, to me, appears to be the biggest source of frustration.
A longtime agency CEO put it bluntly—“including me we have four senior people left and about 45 kids. There are a few old clerks in accounting but almost everyone else is under 30. Those of us who are senior are really stretched. The kids are eager and some have great potential. But one of us graybeards has to be at virtually every meeting. We are tired and too old for this stuff.”
The idea of having a handful of old pros and a large roster of rookies percolates through many conversations with agency chiefs. Advertising has always been a young person’s game but now many shops do not have the next generation of top managers waiting in the wings as they cannot afford to keep them on staff. A few admitted that there is not going to be a next generation unless things change and quickly.
With money tight, raises are getting really scarce except for those at the very bottom of the pyramid. One chief said “Raises? Forget about them. I haven’t had one in years and all senior people have been frozen for several years as well. This may sound cynical but where can they go? We are virtually the only game in town and our competition, if you want to call them that, is in worse shape than we are. I would like to give increases but we are barely breaking even these days”. A few others told me that they and their partners have all taken pay cuts but kept the employees salaries flat.
The feeling of being trapped is very real. A copywriter in his 30’s told me “my boss is a liar. He tells new employees, interviewees, and school groups that he has never cut anyone’s salary. That is not the whole story. Four years ago I had a $60,000 salary and a $15,000 bonus. He told me that I had a bright future. So, with pressure from my wife and in-laws, I bought a nice house. The next year my bonus was $5,000 and I have not had one since. There is no other place in town that I can work and get my current salary. I can’t move as I am under water by $100-120K on my mortgage. So he has me right where he wants me. I know he is not totally to blame but I feel as if I am in prison”.
The feeling of indentured servitude is surprisingly widespread. A radio rep with whom I am quite friendly may be the dean of all salespeople nationally. He told that when he started over 50 years ago in newspaper sales, there were dozens of agencies in his fairly large city with meaningful billing. Today, he says, there are only five left standing and only one media director who knows what she is doing. Others echoed similar comments particularly those from the Midwest. One cable executive called it “The Incredible Shrinking Agency Base.”
Hiring youngsters makes sense from another perspective. “We don’t pay re-location expenses anymore for anyone. Maybe I would for someone I hand picked to replace me”, said a CEO. “Taking on young kids is great. They fill their car full of stuff and maybe have a U-Haul attached. I pay for their gas. They get a small apartment and if they get a chance somewhere else, they leave. Or, if it doesn’t work out, they do not have to worry about a mortgage. Our local talent pool is pretty slim, but there is no shortage of people wanting that first break with us”. Many people echoed this sentiment.
Salaries are interesting. A few recruiters and CEO’s told me that some jobs are paying 65-70% of what they did several years ago. And, there is no shortage of applicants. The problem said one is that “you get a kid who is not ready for the job, someone with a family who is desperate but bitter about the low pay, or someone on the skids who cannot possibly work out.”
Another whom I have known for years told me that the quality of candidates is declining. “Too many young people have not fully embraced their discipline. They are bitter that they cannot move up the ladder and, along with their seniors, have adopted a hunker down mentality. They have lost any sense of vision that I saw in people years ago. If you want to staff an agency properly you need to get into peoples' hearts and heads. Today, many candidates know enough buzzwords to fool the H.R. person and sometimes the CEO. This is especially true in digital. Out of 100 people that I speak with, only 3-5 really know the nuances of new media”.
With several people I raised the issue that has bothered me for the last five years. Young people come for informational interviews or are my students at the two universities where I am an adjunct professor. They ask me about a future in advertising. It is a tricky issue. How do you answer an earnest young person honestly? They almost definitely cannot have the kind of career that many of us have had nor is it likely they will have anywhere near the fun that I and many of you have experienced. So, I have been guarded and say that starting in advertising will teach you a lot about sales, marketing, being able to handle pressure and to stand on your own two feet. But, I never talk of the long term.
I posed this issue during an interview with someone who I admire tremendously. He gave the best answer that I heard and an honest and practical one at that. “I would tell them to go to work for a mid-sized agency. If you are any good, they will get you in the mix fast and in front of the best clients they have. You will learn a great deal. After a few years, I would encourage them to go client side where things are really happening these days.”
A few people admitted that they could lose some great people if the economy bounces back and bigger shops will raid them and offer a great deal more money. But the consensus was “I don’t see that happening for several years.”
All of this is typical of America today. Teachers, police, fireman, civil servants, bankers, and scores of fields have seen wages stuck for the last few years. Advertising was always different. Talent and achievement were rewarded early and often. Not so any longer.
For those of us with a long term view, it is clear that the people in advertising have changed. During the Mad Men era, many of the best and brightest went in to the ad game. When I started in the early ‘70’s, management at many shops was full of Ivy Leaguers or those from the top NESCAC schools (Amherst, Williams, Colby, and Bowdoin). Copywriters were erudite and quietly working on novels on weekends. Advertising was very lucrative, sexy, fun, and considered important. Today, the cream of the crop goes into investment banking or law.
To be continued—look for the next installment in about 48 hours
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Staffing and Compensation
Here is an area that may get less press than other agency issues but, to me, appears to be the biggest source of frustration.
A longtime agency CEO put it bluntly—“including me we have four senior people left and about 45 kids. There are a few old clerks in accounting but almost everyone else is under 30. Those of us who are senior are really stretched. The kids are eager and some have great potential. But one of us graybeards has to be at virtually every meeting. We are tired and too old for this stuff.”
The idea of having a handful of old pros and a large roster of rookies percolates through many conversations with agency chiefs. Advertising has always been a young person’s game but now many shops do not have the next generation of top managers waiting in the wings as they cannot afford to keep them on staff. A few admitted that there is not going to be a next generation unless things change and quickly.
With money tight, raises are getting really scarce except for those at the very bottom of the pyramid. One chief said “Raises? Forget about them. I haven’t had one in years and all senior people have been frozen for several years as well. This may sound cynical but where can they go? We are virtually the only game in town and our competition, if you want to call them that, is in worse shape than we are. I would like to give increases but we are barely breaking even these days”. A few others told me that they and their partners have all taken pay cuts but kept the employees salaries flat.
The feeling of being trapped is very real. A copywriter in his 30’s told me “my boss is a liar. He tells new employees, interviewees, and school groups that he has never cut anyone’s salary. That is not the whole story. Four years ago I had a $60,000 salary and a $15,000 bonus. He told me that I had a bright future. So, with pressure from my wife and in-laws, I bought a nice house. The next year my bonus was $5,000 and I have not had one since. There is no other place in town that I can work and get my current salary. I can’t move as I am under water by $100-120K on my mortgage. So he has me right where he wants me. I know he is not totally to blame but I feel as if I am in prison”.
The feeling of indentured servitude is surprisingly widespread. A radio rep with whom I am quite friendly may be the dean of all salespeople nationally. He told that when he started over 50 years ago in newspaper sales, there were dozens of agencies in his fairly large city with meaningful billing. Today, he says, there are only five left standing and only one media director who knows what she is doing. Others echoed similar comments particularly those from the Midwest. One cable executive called it “The Incredible Shrinking Agency Base.”
Hiring youngsters makes sense from another perspective. “We don’t pay re-location expenses anymore for anyone. Maybe I would for someone I hand picked to replace me”, said a CEO. “Taking on young kids is great. They fill their car full of stuff and maybe have a U-Haul attached. I pay for their gas. They get a small apartment and if they get a chance somewhere else, they leave. Or, if it doesn’t work out, they do not have to worry about a mortgage. Our local talent pool is pretty slim, but there is no shortage of people wanting that first break with us”. Many people echoed this sentiment.
Salaries are interesting. A few recruiters and CEO’s told me that some jobs are paying 65-70% of what they did several years ago. And, there is no shortage of applicants. The problem said one is that “you get a kid who is not ready for the job, someone with a family who is desperate but bitter about the low pay, or someone on the skids who cannot possibly work out.”
Another whom I have known for years told me that the quality of candidates is declining. “Too many young people have not fully embraced their discipline. They are bitter that they cannot move up the ladder and, along with their seniors, have adopted a hunker down mentality. They have lost any sense of vision that I saw in people years ago. If you want to staff an agency properly you need to get into peoples' hearts and heads. Today, many candidates know enough buzzwords to fool the H.R. person and sometimes the CEO. This is especially true in digital. Out of 100 people that I speak with, only 3-5 really know the nuances of new media”.
With several people I raised the issue that has bothered me for the last five years. Young people come for informational interviews or are my students at the two universities where I am an adjunct professor. They ask me about a future in advertising. It is a tricky issue. How do you answer an earnest young person honestly? They almost definitely cannot have the kind of career that many of us have had nor is it likely they will have anywhere near the fun that I and many of you have experienced. So, I have been guarded and say that starting in advertising will teach you a lot about sales, marketing, being able to handle pressure and to stand on your own two feet. But, I never talk of the long term.
I posed this issue during an interview with someone who I admire tremendously. He gave the best answer that I heard and an honest and practical one at that. “I would tell them to go to work for a mid-sized agency. If you are any good, they will get you in the mix fast and in front of the best clients they have. You will learn a great deal. After a few years, I would encourage them to go client side where things are really happening these days.”
A few people admitted that they could lose some great people if the economy bounces back and bigger shops will raid them and offer a great deal more money. But the consensus was “I don’t see that happening for several years.”
All of this is typical of America today. Teachers, police, fireman, civil servants, bankers, and scores of fields have seen wages stuck for the last few years. Advertising was always different. Talent and achievement were rewarded early and often. Not so any longer.
For those of us with a long term view, it is clear that the people in advertising have changed. During the Mad Men era, many of the best and brightest went in to the ad game. When I started in the early ‘70’s, management at many shops was full of Ivy Leaguers or those from the top NESCAC schools (Amherst, Williams, Colby, and Bowdoin). Copywriters were erudite and quietly working on novels on weekends. Advertising was very lucrative, sexy, fun, and considered important. Today, the cream of the crop goes into investment banking or law.
To be continued—look for the next installment in about 48 hours
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
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