Gaming now part of the information paradigm shift at work, home and school. Spike in agency reviews point to ad spending turnaround and need for fresh thinking.
“This is the first generation in recorded history in which the kids are smarter than their parents,” said Tom Hood, CPA, a popular blogger and new media professor who led a poignant social networking panel discussion I attended last week. “They’re way ahead of us in terms of digital technology, interactive media and collaboration.”
While the younger generation doesn’t have the personal spending power or corporate budget influence of its elders, the wired generation is influencing spending decisions (and driving rapid adoption) of anything related to technology, media consumption and social networking. If you market anything that touches a U.S. household or workplace with people under age 30 on the premises, then you better think about ways to market to AND THROUGH the younger generation.
My fifth grader does his school reports in PowerPoint, saves them to a pen drive, turns the device in to his teacher who inserts it into her classroom PC and displays the assignment on a chalk-free SmartBoard for all his classmates to critique. My first grader is an active “MMOGer” (massively multiplayer online gamer) interacting after school each day with virtual peers on Club Penguin, a 12-million member online community containing a range of Web based games and activities in which players user cartoon penguins as avatars, waddle around, chat, play mini-games and participate in other activities with one another in a snow-covered virtual world. Both kids and their pals have taught themselves to use Mom’s digital SLR camera to shoot YouTube videos of their sports and car racing exploits, complete with music, slow motion and title credits. I’m staying out of it, mildly amused. But when the ads start rolling in, I’m insisting on taking a cut to pay for “studio rental” time.
My kids also got their hands on my clunky standard-issue cell phone during a long car trip. Turns out it has a camera, video recorder and app for downloading games and music. Who knew? Like me, they wouldn’t be caught dead reading the manual. Unlike me, they have the patience and intuition to experiment with mysterious looking buttons on the side of the phone and don’t get frustrated when it fails to do what one expects it to do. They still can’t do anything about the spotty voice service, but to this generation, a cell phone is a multi-media toy that happens to have voice capabilities. It’s not a semi-reliable mobile communication tool that we view it as. They also don’t have to deal with the new charges showing up in my monthly bill – yet.
Unlike the games their older siblings grew up with, today’s educational games tend to be online and social, allowing kids to interact and collaborate to achieve common goals. As the New York Times reported last week, the newest educational games, unlike the stand-alone boxed games of the 1990s, are set up like services in which children can enter a virtual world, try on a character and solve problems that may relate to the real world. Newer games work concepts of math, science and language into the actual game mechanics, instead of stopping for something that feels like schoolwork.
For another take on responsible online destinations for kids, check out Fifty P where kids can get real-life lessons on financial literacy and savings plans without stern lectures about the value of money from their elders.
Marketing to the short attention, time-shifting consumer
The debate rages on about whether or not humans can truly perform simultaneous mental processes, but we’re multi-tasking more than any previous generation and there’s no sign of turning back. A recent University of Melbourne study found that people who use the Web at work for personal use are actually nine percent MORE productive, not less, than those who don’t.
If you’re in marketing, you better get used to increasingly shorter attention spans and you’ll have to work harder than ever to reach those targets in a three-screen time shifting world.
Economy
The recession is technically over, stock markets are up double-digits for the year and the Fed yesterday promised not to raise its rock bottom interest rates for an “extended period.” What’s more, the government last week said the economy grew 3.5percent in the third quarter, its first quarterly expansion in a year. Unfortunately, experts says economic growth will remain “weak for a time” as the jobless rate surpasses the 10 percent barrier for the first time in 27 years and retailers brace for a Grinch-like Holiday shopping season. With both consumers and corporations in extended “wait and see” mode, media partners should expect short term, opportunistic ad spending flurries, but no sustained uptrend that you can take to the bank.
Media
U.S. ad spending fell 15.4 percent in the first half of 2009, according to Nielsen Company data with online advertising the only sector expected to record positive growth for the year -- a projected 9.2. percent to $54.1 billion, according to Zenith Optimedia research. All other media are shrinking, notes Zenith in a recent report (PDF) “Most are shrinking at around the market average rate, but newspapers and magazines are in steep decline: we forecast newspaper ad expenditure to fall 17 percent this year, and magazine ad expenditure to shrink 20 percent. In both cases this is a particularly severe example of a longer-term trend; these media have been in decline since 2007, and we expect them to remain in decline for the rest of our forecast period.”
Despite print media’s long-term struggles, signs are emerging that the painful advertising slump of the past two years may finally be easing. The Wall Street Journal reported last week that a long list of major marketers, including UPS, Unilever, US Army, General Motors, Yum Brands and Emirates Airlines, are seeking overtures from new advertising firms. According to the Journal, when the online shoe retailer Zappos.com invited pitches for its small account earlier this year, more than 100 ad agencies submitted credentials.
"Clearly we are seeing the beginnings of an ad recovery. The volume of ad reviews is way up," Russell Wohlwerth, principal of Ark Advisors, a consulting firm that matches ad firms with marketers, told the Journal. But over the past few years, the process of searching for a new advertising or media-buying firm has dramatically changed. About 80 percent of reviews now include procurement departments, up from 30 percent to 40 percent about five years ago, consultants say. And decisions are being made in the conference room not the golf course.
For nation’s newspapers print circulation plummets, but Web visits up
New figures released last week by the Audit Bureau of Circulation showed double-digit circulation drops for 22 of the nation’s top 25 papers amid an industry-wide decline of 10.6 percent for the six months ended September 30. At just 44 million copies, U.S. daily papers sold fewer editions than at any time since the 1940s. Industry execs say part of the readership loss is self-imposed. By that they mean rising manufacturing costs and dropping ad revenue has forced them to cut “unprofitable circulation” which in industry parlance refers to those with bad credit, low incomes, intermittent subscriptions and readers who live in outlying areas. But, few will argue that the Web has siphoned off millions of print readers and advertising dollars. Newspaper Web sites are updated more frequently than their ink-stained brethren. Web papers don’t arrive wet, late or tattered and by and large they’re free. This year, newspaper Web sites have had more than 72 million unique visitors, up 20 percent from 60 million in 2007 according to Nielsen Online reports for the Newspaper Association. We see this trend continuing on an exponential
The younger generation thrives on collaboration, speed and entertainment, said blogger Tom Hood.
If you’re in marketing, particularly B2B, then keep in mind the fact that “Young people may be new to the world of work, but their bosses are immigrants to the world of the Web.”
Look to gaming if you want to win the game.
Friday, November 06, 2009
Monday, October 19, 2009
Recession Over, Or Are We Just Sick of Hearing About It?
Unemployment flirting with 10 percent, but Dow eclipses 10K, Google ads and Goldman bonuses flying high and ABC show about horny ‘cougars’ rejects big ad buy about same topic.
As we alluded to in our last rant here, most people’s outlook on the state of the U.S. economy depends on whether or not you’re working. With interest rates historically low, deals galore on the retail and housing fronts and the financial markets up over 20 percent this year, you’ve got pretty good buying power if you’re lucky enough to have a job. If you’re out of work -- like more able-bodied Americans are than at any time in a quarter century, then things aren’t looking too rosy.
Employers are mired in a long-term hiring and capital investment freeze. More homeowners than ever are underwater on the mortgages and/or not keeping current with their payments. New companies, or new divisions of existing aren’t being formed to create new jobs. Older workers are afraid to leave the workforce due to insecurity over their retirement accounts and that’s clogging up the normal payroll succession plan as millions of energetic new college graduates can’t get a foot in the door.
The challenge for today’s marketers is to resonate with all sectors of your customer base, regardless of what life circumstances they’re encountering, and that means a one-size fits all global branding campaign may not do the trick.
So, how are global marketers responding? They’re tapping into that “less worse than last year” psychology and slowly reinvesting in their brands.
Stephanie Clifford of the NY Times had a nice take on this phenomenon the other day,
“It may be a sign that the recession is ending, or it may be a sign that consumers are sick of hearing about it,” quipped NY Times columnist, Stephanie Clifford last week. “While economists and investors study housing starts and gross domestic product predictions to measure economic vibrancy, General Electric (“The American renewal is happening right now”), Bank of America (“America. Growing stronger every day”), Levi’s (“Pioneers! O Pioneers!”) and other companies are using commercials to proclaim that America’s future is bright. And that may be something of a self-fulfilling prophecy.” Let’s hope she’s right. As Brand Union/WPP’s Robert Scalea told Clifford: “Marketing is always a reflection of societal values, and many times, for smarter marketers, it’s a driver of them.”
Google vs. Dow as bellwether of the ad economy
On Thursday, Google reported better than expected Q3 financial results – 27 percent increase in net income -- on the strength of its ad sales program. CEO, Eric Schmidt declared the worst of the recession over and that Google was embarking on a new phase of investment, hiring and acquisitions. Many analysts contend that Google’s results are closely correlated with online spending – one of the few bright spots in the advertising sector --- and are likely to be trumpeted across many sectors of the industry.
“We’re seeing double-digit increases in budgets for 2010 from our clients,” Bryan Wiener, head of digital agency 360i {www.360i.com} told The New York Times last week.
How will you read magazines in 10 years?
From Conde Nast to McGraw Hill to the Economist Group, it’s clear that the cash cow of print-based, high-ticket, hard-to-measure, brand advertising has been slaughtered. Conde shuttered four titles, including the much-admired Gourmet. Bloomberg LLP snagged Business Week for next to nothing and Economist Group’s editorially poignant, but ad-challenged CFO still can’t get a date to the buyout prom.
Is that finally it for the magazine medium? We think not. Magazines will continue to be relevant, but how we engage in them may be changed forever. Over the next decade, three in five “readers” of magazines won’t be interacting with their favorite titles in dead-tree form, according to a recent survey of nearly 400 Wall Street Journal readers. Nearly 30 percent said they’d be reading online; another 20 percent said they’d be reading via E-reader or mobile device and nearly one in 10 said they wouldn’t be reading at all.
If print media is a key component of your marketing mix, then you better take notice.
How will you read magazines in 10 years?
PRINT*********42%
ONLINE********29%
E-READER******17%
PHONE**********3%
I WON’T********9%
Source: Wall Street Journal
Said one respondent to the WSJ survey: “Unfortunately the selection for how we will read magazines in the future is too simplistic. If wise, publishers will realize that that are creating content and can deliver it in different forms, print, online, phone e-reader and not as magazines but as articles, so that if I am interested in food, I can read a gourmet article from ‘gourmet magazine’ which as a magazine of today's format need not exist.” Brother, you got that right.
Are these TV people for real?
David Letterman, the curmudgeonly late night talk show host for CBS and product Worldwide (Can’t Keep it in My) Pants, gets exposed for running a broadcast equivalent of the Wall Street Boom-Boom run in his offices and gets an instant ratings boost. Jay Leno, who was supposed to be dead in the water in prime time is far exceeding rating expectations. For a fraction of what it costs to put on a prime time drama, Leno is helping NBC rake in the profits by re-reading local newspaper headlines, quizzing airhead LA pedestrians about current events and challenging B-list celebs to simulate slow-speed car chases on a Burbank studio parking lost. And it works. So to all the cable shows about house-flipping, home makeovers and savvy real-estate investing at a time when record numbers of Americans are in foreclosure or underwater on their mortgages. Then there’s Cougar Town, ABC’s popular new Courtney Cox sitcom about spurned 40-something women prowling for 20-something studly men. More than seven million viewers are tuning in each week and apparently the has enough ad dough in the pipeline to turn down a huge proposed media buy from a Web site for real-life cougars on the grounds of decency concerns.
We’re not passing ethical judgment here. We’re just pointing out that the mood has lightened up enough in this country so that support for these shows, and the vicarious thrills they provide, may point to hopes of better times ahead.
Conclusion
As a Miami University professor noted in the aforementioned Stephanie Clifford piece: “The truth is, we want to believe they’re right. Deep down inside, even skeptics want to be hopeful” in these times.
As we alluded to in our last rant here, most people’s outlook on the state of the U.S. economy depends on whether or not you’re working. With interest rates historically low, deals galore on the retail and housing fronts and the financial markets up over 20 percent this year, you’ve got pretty good buying power if you’re lucky enough to have a job. If you’re out of work -- like more able-bodied Americans are than at any time in a quarter century, then things aren’t looking too rosy.
Employers are mired in a long-term hiring and capital investment freeze. More homeowners than ever are underwater on the mortgages and/or not keeping current with their payments. New companies, or new divisions of existing aren’t being formed to create new jobs. Older workers are afraid to leave the workforce due to insecurity over their retirement accounts and that’s clogging up the normal payroll succession plan as millions of energetic new college graduates can’t get a foot in the door.
The challenge for today’s marketers is to resonate with all sectors of your customer base, regardless of what life circumstances they’re encountering, and that means a one-size fits all global branding campaign may not do the trick.
So, how are global marketers responding? They’re tapping into that “less worse than last year” psychology and slowly reinvesting in their brands.
Stephanie Clifford of the NY Times had a nice take on this phenomenon the other day,
“It may be a sign that the recession is ending, or it may be a sign that consumers are sick of hearing about it,” quipped NY Times columnist, Stephanie Clifford last week. “While economists and investors study housing starts and gross domestic product predictions to measure economic vibrancy, General Electric (“The American renewal is happening right now”), Bank of America (“America. Growing stronger every day”), Levi’s (“Pioneers! O Pioneers!”) and other companies are using commercials to proclaim that America’s future is bright. And that may be something of a self-fulfilling prophecy.” Let’s hope she’s right. As Brand Union/WPP’s Robert Scalea told Clifford: “Marketing is always a reflection of societal values, and many times, for smarter marketers, it’s a driver of them.”
Google vs. Dow as bellwether of the ad economy
On Thursday, Google reported better than expected Q3 financial results – 27 percent increase in net income -- on the strength of its ad sales program. CEO, Eric Schmidt declared the worst of the recession over and that Google was embarking on a new phase of investment, hiring and acquisitions. Many analysts contend that Google’s results are closely correlated with online spending – one of the few bright spots in the advertising sector --- and are likely to be trumpeted across many sectors of the industry.
“We’re seeing double-digit increases in budgets for 2010 from our clients,” Bryan Wiener, head of digital agency 360i {www.360i.com} told The New York Times last week.
How will you read magazines in 10 years?
From Conde Nast to McGraw Hill to the Economist Group, it’s clear that the cash cow of print-based, high-ticket, hard-to-measure, brand advertising has been slaughtered. Conde shuttered four titles, including the much-admired Gourmet. Bloomberg LLP snagged Business Week for next to nothing and Economist Group’s editorially poignant, but ad-challenged CFO still can’t get a date to the buyout prom.
Is that finally it for the magazine medium? We think not. Magazines will continue to be relevant, but how we engage in them may be changed forever. Over the next decade, three in five “readers” of magazines won’t be interacting with their favorite titles in dead-tree form, according to a recent survey of nearly 400 Wall Street Journal readers. Nearly 30 percent said they’d be reading online; another 20 percent said they’d be reading via E-reader or mobile device and nearly one in 10 said they wouldn’t be reading at all.
If print media is a key component of your marketing mix, then you better take notice.
How will you read magazines in 10 years?
PRINT*********42%
ONLINE********29%
E-READER******17%
PHONE**********3%
I WON’T********9%
Source: Wall Street Journal
Said one respondent to the WSJ survey: “Unfortunately the selection for how we will read magazines in the future is too simplistic. If wise, publishers will realize that that are creating content and can deliver it in different forms, print, online, phone e-reader and not as magazines but as articles, so that if I am interested in food, I can read a gourmet article from ‘gourmet magazine’ which as a magazine of today's format need not exist.” Brother, you got that right.
Are these TV people for real?
David Letterman, the curmudgeonly late night talk show host for CBS and product Worldwide (Can’t Keep it in My) Pants, gets exposed for running a broadcast equivalent of the Wall Street Boom-Boom run in his offices and gets an instant ratings boost. Jay Leno, who was supposed to be dead in the water in prime time is far exceeding rating expectations. For a fraction of what it costs to put on a prime time drama, Leno is helping NBC rake in the profits by re-reading local newspaper headlines, quizzing airhead LA pedestrians about current events and challenging B-list celebs to simulate slow-speed car chases on a Burbank studio parking lost. And it works. So to all the cable shows about house-flipping, home makeovers and savvy real-estate investing at a time when record numbers of Americans are in foreclosure or underwater on their mortgages. Then there’s Cougar Town, ABC’s popular new Courtney Cox sitcom about spurned 40-something women prowling for 20-something studly men. More than seven million viewers are tuning in each week and apparently the has enough ad dough in the pipeline to turn down a huge proposed media buy from a Web site for real-life cougars on the grounds of decency concerns.
We’re not passing ethical judgment here. We’re just pointing out that the mood has lightened up enough in this country so that support for these shows, and the vicarious thrills they provide, may point to hopes of better times ahead.
Conclusion
As a Miami University professor noted in the aforementioned Stephanie Clifford piece: “The truth is, we want to believe they’re right. Deep down inside, even skeptics want to be hopeful” in these times.
Wednesday, September 30, 2009
Bad News, Recession Over. Risk Taking, Personal Savings Up
Are companies ready for pent up spike in demand? M&A, IPOs, SPACs return. Fasten seatbelts as ides of October approach on anniversary of financial crisis. Have we learned anything?
With the Dow Jones Industrial Average knocking on the door of 10,000 – a benchmark seemingly out of reach six months ago – and nationwide home prices up for the second straight month, both leading and trailing indicators of the economic rebound we first called in this blog in April are all around us. From a technical perspective, the "recession is very likely over at this point," U.S. Federal Reserve Chairman, Ben Bernanke said in a mid-month Q&A session at the Brookings Institution. So why aren’t homeowners and job seekers rejoicing, let alone the marketers who target them?
The Dow 10,000 barrier is mostly psychological, but as Stuart Freeman, senior equity analyst at Wells Fargo Advisors told the New York Times this week: “It’s psychological, but if enough people act on it it’s meaningful. The higher the market goes, the more those on the sidelines sit there and are concerned they’re missing something.”
Why we’re still worried
Home prices nationwide are still 13.3 percent lower than a year earlier, according to the widely followed S&P/Case Schiller Index, but recent monthly gains show that the pace of decline has slowed. Housing aside, several trends concern us at this juncture. First, the Government, including the Fed, is not in the forecasting business. It’s in the restating-the-obvious-but-making-it-official business. Second, we’re not convinced the fundamentals are there to support a sustained rally in the economy. More on that in a minute. Third, and perhaps most frightening, is this economic turnaround might be for real.
What’s wrong with that you say? Plenty. For starters, most companies are not be prepared to handle the surge in pent up demand, as they trimmed their workforces, production capabilities, customer service departments and marketing budgets so severely during the downturn. Cost-cutting occurs faster and deeper, than re-hiring and re-investing. The only thing worse than having customers bail on you when times are lousy is having them bail on you because you can’t handle their orders when times are better.
And here’s where it gets tricky. Even if the Fed and the financial markets are correctly signaling the end of the Great Recession of 2008-09, 15 million able-bodied workers – about 10 percent of the full-time work force -- are out of work. Combine that with stagnant incomes for all workers and higher rates of personal saving (due to fear, not financial discipline) and this could reduce corporate revenue for years to come. We’re also dealing with massive consumer defaults on credit cards, record numbers of mortgage defaults, delinquent student loans and stagnant incomes for those lucky enough to be working. Oh, and housing unit sales (not prices) went down another 2.7 percent in August, we learned last week.
Where is the money going to come from, to purchase those goods and services we need to keep the economy humming? More than 70 percent of Americans still rate the job market “bad” according to a recent Harris Poll. Paychecks have been stagnant for about a decade and using one’s home equity as an ATM machine – essentially what kept the Great Recession at bay for about three years – isn’t a viable fallback this time around.
Cautious Optimism for The Economy Ahead
Results of the latest Harris Poll of 2,498 U.S. adults surveyed online show that there is a slight sense of optimism regarding the economy. Nearly half (46%) of Americans believe the economy will improve in the coming year, while a third (32%) say it will stay the same and 22 percent believe it will get worse. In May, just under two in five believed the economy would improve in the coming year while over one-quarter said they thought it would get worse. But overall, they’re not so confident about their own situation, which is a great departure from most economic climates in which survey respondents tend to say they’re better off – not worse off -- than their neighbors.
One-quarter of Americans believe that their household financial condition will be better in six months while half say it will remain the same and 28 percent believe it will get worse. If there’s a silver lining to this cloud, consider that the 28 percent who say their household's financial condition will get worse in the next six months is the lowest reading for this question since Harris pollsters first asked in February of 2008.
Greed and irrational exuberance
Twitter –- a 60-person online social networking company with a catchy name and no revenue to speak of, was recently valued at $1 billion as it announced plans to raise $100 million to salivating venture capitalists. The markets also bounded higher on signs that companies once again had enough cash, credit and confidence to enter into big M&A deals. Xerox, Abbot Labs, Dell, Disney and Kraft Foods have announced takeover plans. Could credit really be flowing again between banks and corporate giants? At least the lawyers are happy.
What’s more, last week was the busiest for companies completing IPOs since December 2007. The Wall Street Journal reports some two dozen firms have filed plans to go public in the past two months, which is twice the number who filed to go public in the first seven months of this year. Has the IPO pendulum swung back to “Initial Public Offering” from two years of “It’s Pretty-Much Over”?
If that’s not enough to convince you investors are regaining their appetite for risk, more than one billion dollars in acquisitions took place last week through special purpose acquisition companies (SPACs). What’s a SPAC? It’s basically a “blank check offering” that allows investors to raise money through an initial public offering, and then gives them up to two years to buy a business as long as the sale receives shareholder approval. Sounds pretty spaculative.
Media spending still lagging
More than one-third of marketers plan to cut their advertising budgets over the next six months, according to he latest Association of National Advertisers (ANA) study. While an improvement from the 50-percent budget cutting threshold ANA reported earlier this year, the times ain’t exactly flush for marketers or media owners. As even ANA will admit, budget cutting tends to get under-reported in forward looking surveys (turns out 61% of marketers, not 50% cut their budgets over the past six month, according to ANA research).
If you’re a media buyer, now might be the time to pounce, as traditional media owners will do just about anything to get your business. The top 100 advertisers spent 10.2 percent less than they did in the previous year, according to the latest data from TNS media Intelligence and magazine ad pages are down 22 percent through October according to the latest Publishers Information Bureau. Network TV spending was down six percent, and newspaper advertising was down nearly 11 percent over the same period, TNS reports.
Another disturbing data point for media owners is that new research indicates lead generation is what advertisers want these days, not building brands or customer “buzz.” That means every dollar counts and will be measured and held accountable. Nearly 70 percent of marketers surveyed by MarketingSherpa last month said “Generating High Quality Leads” was their biggest challenge, more than twice the number who pointed to brand building, public relations buzz and nearly twice the number who pointed to creating perceived value in “cutting edge” product benefits.
The one bright spot, not surprisingly, was Internet display advertising – up 10.8 percent -- as more marketers shifted funds online. “Perpetual movement is the essence of survival and prosperity online,” quipped Michael Moritz, the Sequoia Capital investor who backed Google, Yahoo and Sugar a fast growing consumer blog network in a New York Times interview last week. “If online media and entertainment companies don’t improve every day, they will just wind up as the newfangled version of Reader’s Digest — bankrupt.”
Welcome to Q4, the last fiscal quarter of this topsy turvey decade. Fasten your seat belts.
With the Dow Jones Industrial Average knocking on the door of 10,000 – a benchmark seemingly out of reach six months ago – and nationwide home prices up for the second straight month, both leading and trailing indicators of the economic rebound we first called in this blog in April are all around us. From a technical perspective, the "recession is very likely over at this point," U.S. Federal Reserve Chairman, Ben Bernanke said in a mid-month Q&A session at the Brookings Institution. So why aren’t homeowners and job seekers rejoicing, let alone the marketers who target them?
The Dow 10,000 barrier is mostly psychological, but as Stuart Freeman, senior equity analyst at Wells Fargo Advisors told the New York Times this week: “It’s psychological, but if enough people act on it it’s meaningful. The higher the market goes, the more those on the sidelines sit there and are concerned they’re missing something.”
Why we’re still worried
Home prices nationwide are still 13.3 percent lower than a year earlier, according to the widely followed S&P/Case Schiller Index, but recent monthly gains show that the pace of decline has slowed. Housing aside, several trends concern us at this juncture. First, the Government, including the Fed, is not in the forecasting business. It’s in the restating-the-obvious-but-making-it-official business. Second, we’re not convinced the fundamentals are there to support a sustained rally in the economy. More on that in a minute. Third, and perhaps most frightening, is this economic turnaround might be for real.
What’s wrong with that you say? Plenty. For starters, most companies are not be prepared to handle the surge in pent up demand, as they trimmed their workforces, production capabilities, customer service departments and marketing budgets so severely during the downturn. Cost-cutting occurs faster and deeper, than re-hiring and re-investing. The only thing worse than having customers bail on you when times are lousy is having them bail on you because you can’t handle their orders when times are better.
And here’s where it gets tricky. Even if the Fed and the financial markets are correctly signaling the end of the Great Recession of 2008-09, 15 million able-bodied workers – about 10 percent of the full-time work force -- are out of work. Combine that with stagnant incomes for all workers and higher rates of personal saving (due to fear, not financial discipline) and this could reduce corporate revenue for years to come. We’re also dealing with massive consumer defaults on credit cards, record numbers of mortgage defaults, delinquent student loans and stagnant incomes for those lucky enough to be working. Oh, and housing unit sales (not prices) went down another 2.7 percent in August, we learned last week.
Where is the money going to come from, to purchase those goods and services we need to keep the economy humming? More than 70 percent of Americans still rate the job market “bad” according to a recent Harris Poll. Paychecks have been stagnant for about a decade and using one’s home equity as an ATM machine – essentially what kept the Great Recession at bay for about three years – isn’t a viable fallback this time around.
Cautious Optimism for The Economy Ahead
Results of the latest Harris Poll of 2,498 U.S. adults surveyed online show that there is a slight sense of optimism regarding the economy. Nearly half (46%) of Americans believe the economy will improve in the coming year, while a third (32%) say it will stay the same and 22 percent believe it will get worse. In May, just under two in five believed the economy would improve in the coming year while over one-quarter said they thought it would get worse. But overall, they’re not so confident about their own situation, which is a great departure from most economic climates in which survey respondents tend to say they’re better off – not worse off -- than their neighbors.
One-quarter of Americans believe that their household financial condition will be better in six months while half say it will remain the same and 28 percent believe it will get worse. If there’s a silver lining to this cloud, consider that the 28 percent who say their household's financial condition will get worse in the next six months is the lowest reading for this question since Harris pollsters first asked in February of 2008.
Greed and irrational exuberance
Twitter –- a 60-person online social networking company with a catchy name and no revenue to speak of, was recently valued at $1 billion as it announced plans to raise $100 million to salivating venture capitalists. The markets also bounded higher on signs that companies once again had enough cash, credit and confidence to enter into big M&A deals. Xerox, Abbot Labs, Dell, Disney and Kraft Foods have announced takeover plans. Could credit really be flowing again between banks and corporate giants? At least the lawyers are happy.
What’s more, last week was the busiest for companies completing IPOs since December 2007. The Wall Street Journal reports some two dozen firms have filed plans to go public in the past two months, which is twice the number who filed to go public in the first seven months of this year. Has the IPO pendulum swung back to “Initial Public Offering” from two years of “It’s Pretty-Much Over”?
If that’s not enough to convince you investors are regaining their appetite for risk, more than one billion dollars in acquisitions took place last week through special purpose acquisition companies (SPACs). What’s a SPAC? It’s basically a “blank check offering” that allows investors to raise money through an initial public offering, and then gives them up to two years to buy a business as long as the sale receives shareholder approval. Sounds pretty spaculative.
Media spending still lagging
More than one-third of marketers plan to cut their advertising budgets over the next six months, according to he latest Association of National Advertisers (ANA) study. While an improvement from the 50-percent budget cutting threshold ANA reported earlier this year, the times ain’t exactly flush for marketers or media owners. As even ANA will admit, budget cutting tends to get under-reported in forward looking surveys (turns out 61% of marketers, not 50% cut their budgets over the past six month, according to ANA research).
If you’re a media buyer, now might be the time to pounce, as traditional media owners will do just about anything to get your business. The top 100 advertisers spent 10.2 percent less than they did in the previous year, according to the latest data from TNS media Intelligence and magazine ad pages are down 22 percent through October according to the latest Publishers Information Bureau. Network TV spending was down six percent, and newspaper advertising was down nearly 11 percent over the same period, TNS reports.
Another disturbing data point for media owners is that new research indicates lead generation is what advertisers want these days, not building brands or customer “buzz.” That means every dollar counts and will be measured and held accountable. Nearly 70 percent of marketers surveyed by MarketingSherpa last month said “Generating High Quality Leads” was their biggest challenge, more than twice the number who pointed to brand building, public relations buzz and nearly twice the number who pointed to creating perceived value in “cutting edge” product benefits.
The one bright spot, not surprisingly, was Internet display advertising – up 10.8 percent -- as more marketers shifted funds online. “Perpetual movement is the essence of survival and prosperity online,” quipped Michael Moritz, the Sequoia Capital investor who backed Google, Yahoo and Sugar a fast growing consumer blog network in a New York Times interview last week. “If online media and entertainment companies don’t improve every day, they will just wind up as the newfangled version of Reader’s Digest — bankrupt.”
Welcome to Q4, the last fiscal quarter of this topsy turvey decade. Fasten your seat belts.
Tuesday, September 08, 2009
Summer of Discontent to Continue?
All signs point to ‘not sure,’ but innovation thriving. Smart ad dollars will find the right home.
Economists and investors were buoyant Friday when the Labor Department announced we lost only a quarter of a million U.S. jobs. Despite the fact that nearly one in 10 (9.7%) able bodied Americans are now officially out of work – the highest jobless rate since 1983 – and millions more have essentially given up trying, Federal Reserve policy makers said they were increasingly confident the downturn had ended and the economy would start growing again in the second half of the year. What’s a quarter million lost jobs when we saw 700,000+ jobs evaporating monthly during the winter?
A “’jobless recovery” may be underway, but experts say we’re still vulnerable to “adverse shocks” and we’re in for a slow, halting rebound. Not exactly the powerful, “makeup-sex” kind of recovery we’ve been accustomed to when rocketing out of previous recessions. Economists say businesses will remain skittish about hiring. Income growth is sluggish. And credit is still tight for millions of households. A further drag on the employment scene is that older workers, who would normally be retiring at their current ages, are fearful of leaving the workforce as the value of pensions, 401ks and uncertainty about social security keeps them feeling anything but secure. Pretty scary, and there’s no little blue pill to fix all that.
A jobless recovery doesn’t conjure warm, fuzzy feelings for marketers, media professionals and other WANT-creators. We’re the folks who depend on businesses and households NOT being able to do more with less. They need to buy, invest, get bigger, better and of course v2.0 and new and improved.
But this trend toward austerity goes against our consumer DNA. It’s not likely to sustain itself as workers burn themselves out or find new jobs; companies lose orders because they can’t fill demand, and U.S. households, just can’t resist bargains. Demand will eventually win out over restraint, and the spending/hiring cycle will ramp up in due time. Just make sure you’re ready for it.
Unusual recession
“This has been an unusual recession in term of severity and the circumstances that triggered it,” noted Abby Joseph Cohen, president of the Global Markets Institute at Goldman Sachs in a recent interview in The Investment Professional magazine. “There has been enormous financial disruption along with a deep and painful recession.” Unlike the prior two recessions which were relatively mild and in which the economy responded well to standard pro-growth policy tools like interest rate reduction and targeted fiscal stimulus policy, the Great Correction of 2008-09 was more extreme and standard policy tools couldn’t be applied, said Joseph. It has been marked by a frozen financial system and economic climate. Goldman Sachs economists expect GDP to be slightly positive in the second half of 09, although Joseph warns the U.S. economic recovery will be linked with the global economy more so than ever before.
What could derail the recovery? Joseph points to three things:
1. Ongoing weakness in the domestic U.S. economy
2. Unresolved financial issues involving mortgages, credit cards and commercial real estate
3. Potential policy missteps in the U.S. and abroad
What’s been lost in all this consternation about the economy is the extent to which innovation (and adoption of new technology) has accelerated.
A nation of early adopters
We’re all gadget geeks now, according to a Forrester Research report released last week which surveyed more than 50,000 households in the U.S. and Canada. Researchers found 63 percent of Americans now have broadband connections, and nearly 10 million households added HDTV in the past year, a 27 percent increase.
Despite the recession, online spending remained strong, with older consumers leading the way. On average, older consumers spent on average $560 online in the past quarter, and one in five, spend over $1,000 over that period. In addition, researchers found that 86 percent of families with children had mobile phones and were more likely to use music, video playback and other advanced features.
More people are also migrating away from the home and office to access the Web via their smartphones. About 15 percent of cellphone owners were using the Internet on their phones in 2008, showing that for a growing number of Americans, there is an increasing “expectation that all the same services and resources are available to us, no matter where we are,” said Charles Golvin, Forrester analyst in a statement.
Outlook murky for ad advertising
All signs point to a relatively robust recovery in ad spending beginning next year, said Matthieu Cooper, a UBS analyst in a recently released report from his forum on the global media climate. Not everyone agrees. For starters, magazine ad pages were down 28 percent for the first half of 2009, according to Publishers Information Bureau. Again, that’s nearly 30 percent lower than the first half of 2008 – which wasn’t exactly a banner year for the print media folks.
Most analysts and ad execs agree the worst is over, but there is little consensus on the strength and duration of the recovery. One reason for caution is that advertisers are waiting….waiting …waiting to commit their budgets. As a result, ad execs and media companies say they have little clarity about spending prospects even for the short term. We may even be seeing a shift back to subscriptions, paid content and other forms of non-advertising revenue.
PWC says the gap between advertising and other forms of media company revenue will continue, as ad spending will remain below 2008 levels for at least another half decade. By contrast, spending on media and entertainment by consumers and businesses will rise to $812 billion in 2013, from $707 billion this year.
If you’re smart, you’ll embrace the new climate of working harder for your money. Marketers and media owners who really take the time to understand their partners’ needs will find a home for the smart dollars still circulating out there. Those that don’t may find themselves left out in the cold, waiting for the good times to return. And it may be a mighty long wait.
Economists and investors were buoyant Friday when the Labor Department announced we lost only a quarter of a million U.S. jobs. Despite the fact that nearly one in 10 (9.7%) able bodied Americans are now officially out of work – the highest jobless rate since 1983 – and millions more have essentially given up trying, Federal Reserve policy makers said they were increasingly confident the downturn had ended and the economy would start growing again in the second half of the year. What’s a quarter million lost jobs when we saw 700,000+ jobs evaporating monthly during the winter?
A “’jobless recovery” may be underway, but experts say we’re still vulnerable to “adverse shocks” and we’re in for a slow, halting rebound. Not exactly the powerful, “makeup-sex” kind of recovery we’ve been accustomed to when rocketing out of previous recessions. Economists say businesses will remain skittish about hiring. Income growth is sluggish. And credit is still tight for millions of households. A further drag on the employment scene is that older workers, who would normally be retiring at their current ages, are fearful of leaving the workforce as the value of pensions, 401ks and uncertainty about social security keeps them feeling anything but secure. Pretty scary, and there’s no little blue pill to fix all that.
A jobless recovery doesn’t conjure warm, fuzzy feelings for marketers, media professionals and other WANT-creators. We’re the folks who depend on businesses and households NOT being able to do more with less. They need to buy, invest, get bigger, better and of course v2.0 and new and improved.
But this trend toward austerity goes against our consumer DNA. It’s not likely to sustain itself as workers burn themselves out or find new jobs; companies lose orders because they can’t fill demand, and U.S. households, just can’t resist bargains. Demand will eventually win out over restraint, and the spending/hiring cycle will ramp up in due time. Just make sure you’re ready for it.
Unusual recession
“This has been an unusual recession in term of severity and the circumstances that triggered it,” noted Abby Joseph Cohen, president of the Global Markets Institute at Goldman Sachs in a recent interview in The Investment Professional magazine. “There has been enormous financial disruption along with a deep and painful recession.” Unlike the prior two recessions which were relatively mild and in which the economy responded well to standard pro-growth policy tools like interest rate reduction and targeted fiscal stimulus policy, the Great Correction of 2008-09 was more extreme and standard policy tools couldn’t be applied, said Joseph. It has been marked by a frozen financial system and economic climate. Goldman Sachs economists expect GDP to be slightly positive in the second half of 09, although Joseph warns the U.S. economic recovery will be linked with the global economy more so than ever before.
What could derail the recovery? Joseph points to three things:
1. Ongoing weakness in the domestic U.S. economy
2. Unresolved financial issues involving mortgages, credit cards and commercial real estate
3. Potential policy missteps in the U.S. and abroad
What’s been lost in all this consternation about the economy is the extent to which innovation (and adoption of new technology) has accelerated.
A nation of early adopters
We’re all gadget geeks now, according to a Forrester Research report released last week which surveyed more than 50,000 households in the U.S. and Canada. Researchers found 63 percent of Americans now have broadband connections, and nearly 10 million households added HDTV in the past year, a 27 percent increase.
Despite the recession, online spending remained strong, with older consumers leading the way. On average, older consumers spent on average $560 online in the past quarter, and one in five, spend over $1,000 over that period. In addition, researchers found that 86 percent of families with children had mobile phones and were more likely to use music, video playback and other advanced features.
More people are also migrating away from the home and office to access the Web via their smartphones. About 15 percent of cellphone owners were using the Internet on their phones in 2008, showing that for a growing number of Americans, there is an increasing “expectation that all the same services and resources are available to us, no matter where we are,” said Charles Golvin, Forrester analyst in a statement.
Outlook murky for ad advertising
All signs point to a relatively robust recovery in ad spending beginning next year, said Matthieu Cooper, a UBS analyst in a recently released report from his forum on the global media climate. Not everyone agrees. For starters, magazine ad pages were down 28 percent for the first half of 2009, according to Publishers Information Bureau. Again, that’s nearly 30 percent lower than the first half of 2008 – which wasn’t exactly a banner year for the print media folks.
Most analysts and ad execs agree the worst is over, but there is little consensus on the strength and duration of the recovery. One reason for caution is that advertisers are waiting….waiting …waiting to commit their budgets. As a result, ad execs and media companies say they have little clarity about spending prospects even for the short term. We may even be seeing a shift back to subscriptions, paid content and other forms of non-advertising revenue.
PWC says the gap between advertising and other forms of media company revenue will continue, as ad spending will remain below 2008 levels for at least another half decade. By contrast, spending on media and entertainment by consumers and businesses will rise to $812 billion in 2013, from $707 billion this year.
If you’re smart, you’ll embrace the new climate of working harder for your money. Marketers and media owners who really take the time to understand their partners’ needs will find a home for the smart dollars still circulating out there. Those that don’t may find themselves left out in the cold, waiting for the good times to return. And it may be a mighty long wait.
Tuesday, August 25, 2009
Recession’s Over (If You Still Have Customers or a Job)
Savvy marketers carefully placing their bets. Research confirms C-Suite and business travelers increasingly embrace the Web. Don’t be a ‘shoulda-woulda-coulda.’
Factory output is growing again. That’s right, the smokestacks and assembly lines are humming anew as we registered the first uptick in the monthly National Association of Manufacturers (NAM) Index since December 2007. Experts say manufacturers cut production so sharply during downturn that they depleted inventories and must now ramp up production to meet demand. Any of this sound familiar to you over-reactive media buyers?
Most economists surveyed by The Wall Street Journal earlier this month believe that the recession is over – a milestone we first called in this blog back in April ("Recession Running Out of Steam"). Stocks have been rallying throughout the summer doldrums, and even Fed Chairman Ben Bernanke declared last week that the global economy is starting to emerge from recession. The S&P 500 stock index closed at a 10-month high after last week’s nearly two percent advance.
On average, surveyed economists expect to see a 2.4 percent increase in output in the third quarter, at a seasonally adjusted annual rate. Construction of new single-family homes has started to climb. Auto sales are up and even sales of existing American homes rose a surprising 7.2 percent to their highest level in nearly two years as cheaper prices and the availability of tax credits continued to entice buyers. Cynics will say it’s a bottom-feeding frenzy, with buyers pouncing in distressed and foreclosed homes. But the smart money says this is more than just a housing sector version of the cash-for-clunkers auto program.
Regular followers of this blog know we’ve seeing nothing more than a natural shakeout of home ownership as we revert to the historical mean of 63.5 home ownership among U.S. households. That’s just a tad under two out of three as we saw in the mid 1980s. Home ownership rose to about 70 percent in mid 2005, just before the bubble burst. It’s now about 67.5 percent and experts say it will gradually go back to 63-ish range over next 10 years. That’s a painful regression to the mean, but just like a .400 baseball hitter entering the dog days of August, you can’t fight the long-term law of averages forever. We love you Joe Mauer, but you can’t beat the almighty Oracle of Equilibrium of the long haul.
The labor market remains one of the biggest soft spots for the economy, though the July monthly jobs report had raised hopes that the worst may be over. Here’s another way to look at it. At no point in our nation’s history have more households felt the need to have both spouses working. And how many American households feel they can get by on just one income? Less than half. That’s right, just 47 percent, according to Country Financial’s Job Loss and Financial Security survey of nearly 800 married employees.
The flip side of equilibrium, of course, is that suffering sectors, like employment will eventually return to the historical norm of about 4.5 percent, from today’s 9.5 percent. You can bet your last Obama button we’ll get there before his first term ends and that’s a heck of a lot of jobs created.
If you buy or sell advertising, you better start taking these macro factors into account, or you’ll be caught in a media inventory shortage that could derail even the best laid of marketing plans.
Webcasting, not just a cool medium. It helps the bottom line
If the live conference and events business didn’t have enough on its plate, a new study by the National Business Travel Association found airports and local governments are not only gouging travelers with prices, but sticking it to them in taxes. The NBTA study found travelers not only pay a local sales tax, but they also spend up to 172 percent more in taxes aimed at visitors each day that they stay at a hotel, dine and rent a car.
In addition to the convenience and improved technology of Webinars, Webcasts and audio seminars, the travel industry continues to sock it to business travelers. Taxes targeting travel-related services – especially at the nation’s busiest airports, like Chicago O’Hare (no surprise), can cost a Fortune 500 company, $50 million to $60 million a year, says NBTA research. “In a tough economic environment, many state and local governments have relied on the old habit of targeting travelers to make up revenue shortfalls, said NBTA.
It’s official. The C-Suite is online
The Internet is the most important source of business information for 60 percent of top executives finds a new report from Forbes and Gartner Group.
Researchers found senior executives spend nearly 16 hours on the Web each week and nearly three in five C-Suite execs hit the Web before they go to work. When they get to work, nearly seven out of eight (86%) check e-mail and half (46%) visit Web sites BEFORE they do any other work. Here’s what they’re up to according to the Forbes/Gartner research gurus:
• 73 percent are doing research
• 65 percent are looking for business and financial news
• 52 percent are checking on competitors and industry trends
• 45 percent are seeking information about products and services
• 32 percent are investigating potential new business partnerships.
So when you’re inundated with wimpy pronouncements from the experts like “cautious optimism,” or “eventual gains” or “starting to emerge,” just think back to where we were six to 12 months ago in the depths of “doom and gloom.” We’ve come a heck of a long ways and if you don’t think that’s a turnaround, then you might want to call your physician and you’re your blood pressure checked. Now is the time to pounce on whatever delayed purchase or strategic initiative you’ve been mulling over. It’s going to be a long, long time before you see cheaper, easier, better or funner time to cut yourself a good deal.
Factory output is growing again. That’s right, the smokestacks and assembly lines are humming anew as we registered the first uptick in the monthly National Association of Manufacturers (NAM) Index since December 2007. Experts say manufacturers cut production so sharply during downturn that they depleted inventories and must now ramp up production to meet demand. Any of this sound familiar to you over-reactive media buyers?
Most economists surveyed by The Wall Street Journal earlier this month believe that the recession is over – a milestone we first called in this blog back in April ("Recession Running Out of Steam"). Stocks have been rallying throughout the summer doldrums, and even Fed Chairman Ben Bernanke declared last week that the global economy is starting to emerge from recession. The S&P 500 stock index closed at a 10-month high after last week’s nearly two percent advance.
On average, surveyed economists expect to see a 2.4 percent increase in output in the third quarter, at a seasonally adjusted annual rate. Construction of new single-family homes has started to climb. Auto sales are up and even sales of existing American homes rose a surprising 7.2 percent to their highest level in nearly two years as cheaper prices and the availability of tax credits continued to entice buyers. Cynics will say it’s a bottom-feeding frenzy, with buyers pouncing in distressed and foreclosed homes. But the smart money says this is more than just a housing sector version of the cash-for-clunkers auto program.
Regular followers of this blog know we’ve seeing nothing more than a natural shakeout of home ownership as we revert to the historical mean of 63.5 home ownership among U.S. households. That’s just a tad under two out of three as we saw in the mid 1980s. Home ownership rose to about 70 percent in mid 2005, just before the bubble burst. It’s now about 67.5 percent and experts say it will gradually go back to 63-ish range over next 10 years. That’s a painful regression to the mean, but just like a .400 baseball hitter entering the dog days of August, you can’t fight the long-term law of averages forever. We love you Joe Mauer, but you can’t beat the almighty Oracle of Equilibrium of the long haul.
The labor market remains one of the biggest soft spots for the economy, though the July monthly jobs report had raised hopes that the worst may be over. Here’s another way to look at it. At no point in our nation’s history have more households felt the need to have both spouses working. And how many American households feel they can get by on just one income? Less than half. That’s right, just 47 percent, according to Country Financial’s Job Loss and Financial Security survey of nearly 800 married employees.
The flip side of equilibrium, of course, is that suffering sectors, like employment will eventually return to the historical norm of about 4.5 percent, from today’s 9.5 percent. You can bet your last Obama button we’ll get there before his first term ends and that’s a heck of a lot of jobs created.
If you buy or sell advertising, you better start taking these macro factors into account, or you’ll be caught in a media inventory shortage that could derail even the best laid of marketing plans.
Webcasting, not just a cool medium. It helps the bottom line
If the live conference and events business didn’t have enough on its plate, a new study by the National Business Travel Association found airports and local governments are not only gouging travelers with prices, but sticking it to them in taxes. The NBTA study found travelers not only pay a local sales tax, but they also spend up to 172 percent more in taxes aimed at visitors each day that they stay at a hotel, dine and rent a car.
In addition to the convenience and improved technology of Webinars, Webcasts and audio seminars, the travel industry continues to sock it to business travelers. Taxes targeting travel-related services – especially at the nation’s busiest airports, like Chicago O’Hare (no surprise), can cost a Fortune 500 company, $50 million to $60 million a year, says NBTA research. “In a tough economic environment, many state and local governments have relied on the old habit of targeting travelers to make up revenue shortfalls, said NBTA.
It’s official. The C-Suite is online
The Internet is the most important source of business information for 60 percent of top executives finds a new report from Forbes and Gartner Group.
Researchers found senior executives spend nearly 16 hours on the Web each week and nearly three in five C-Suite execs hit the Web before they go to work. When they get to work, nearly seven out of eight (86%) check e-mail and half (46%) visit Web sites BEFORE they do any other work. Here’s what they’re up to according to the Forbes/Gartner research gurus:
• 73 percent are doing research
• 65 percent are looking for business and financial news
• 52 percent are checking on competitors and industry trends
• 45 percent are seeking information about products and services
• 32 percent are investigating potential new business partnerships.
So when you’re inundated with wimpy pronouncements from the experts like “cautious optimism,” or “eventual gains” or “starting to emerge,” just think back to where we were six to 12 months ago in the depths of “doom and gloom.” We’ve come a heck of a long ways and if you don’t think that’s a turnaround, then you might want to call your physician and you’re your blood pressure checked. Now is the time to pounce on whatever delayed purchase or strategic initiative you’ve been mulling over. It’s going to be a long, long time before you see cheaper, easier, better or funner time to cut yourself a good deal.
Wednesday, August 12, 2009
Can Web Advertising Adjust to Privacy Rules Proposed by Big Government?
Worst of recession appears over, but now real work begins in age of creative destruction.
The Fed held its ground on interest rates today. Yesterday, the U.S. Labor Department said productivity in the second quarter gained 6.4 percent -- the biggest quarterly gain in nearly six years despite an ongoing contraction in the overall economy. More than a few economists have suggested companies are adjusting to the recession by cutting jobs and workers' hours. Or maybe companies are becoming more innovative. Mind you, that’s not the same as “doing more with less” because innovation is proactive and forward-thinking. “Doing more with less” is reactionary, and often a desperation tactic that leads ultimately to worker burnout and defection – not long term profitability when the economy rebounds.
With stocks at their highest levels since autumn, interest rates holding steady, unemployment not getting too much worse at least statistically (see Wall Street Journal video report and the “cash for clunkers” program injecting signs of hope into the auto industry, some analysts are predicting a correction.
Sure there are plenty of signals about this being a “suckers rally,” but even bearish traders are giving credence to the market turnaround. “You can’t knock this market down,” Joe Saluzzi, co-head of equity trading told the New York Times last week. “Every dip is bought. Any sort of downdraft is picked up right away. I’m extremely bearish but I will not short this.” What’s more, the National Association of Realtors said the increase in pending sales – a forward looking measure of the market offered signs that the market is on the mend. New and previously owned sales have leveled off and single family home prices have begun to show some stability.
So just as consumers and businesses are getting their wallet-opening muscles limbered up, the government. may want to throw a wet blanket on the hottest area of ad growth during the past decade, including the recession.
Government online privacy rules a ‘setback to innovation’?
“We’re not committing ourselves to imposing regulation; what we would like to do is figure out useful tools and a more comprehensive way of looking at privacy protections that may obviate the need for rules,” said David Vladek new head of the Federal Trade Commission’s (FTC) Bureau of Consumer Protection in a recent statement. The message is you have to be more transparent about what you’re doing and the privacy “frameworks” the industry has been using historically are no longer sufficient, he said.
Vladek wants sites collecting personal data to get consumers consent whenever they visit the site (opt in)…. But marketers say such a tactic would be disastrous. “It’s impossible to communicate the value prop to a consumer at the point of and advertisement,” Matt Wise CEO of Q Interactive a Chicago online marketing firm told the New York Times and other trade media last week. It would be a tremendous setback to innovation.“
At HB, we think the solution relies somewhere in between in the form of a mutual trust system between innovators and regulators. Marketers and other data gatherers need to be more accountable, if not necessarily transparent, to regulators and consumers about the proprietary personal data they’re gathering – and how they’re gathering it. On the flip side, regulators need to take the time to understand fully how the online marketing mechanism works, why it’s so powerful, and how it’s changing the future of commerce worldwide. Regulators, shouldn’t be allowed to introduce sweeping legislation to punish a few bad apples, without fully understanding the industry they’re trying to govern. Otherwise their actions could bring one of the few growing sectors of our economy to a halt. And that includes emerging platforms such as online video (see below)
Keep your eye on online video
Online video viewing has grown across all age groups, according to new research (pdf) from the Pew Research Center's Internet & American Life project. Not surprisingly, young adults continue to lead the adoption curve in online video viewing, though adults ages 30-49 also showed big gains over the past year; 67 percent now use video-sharing sites, up from 57% in 2008 according to the Pew study, Researchers found nearly two thirds (62%) of adult internet users have watched online video on a video-sharing website, a figure that has nearly doubled from 33 percent in 2006. The study also found that 19 percent of online adults use video-sharing sites on a typical day (compared with 8 percent in 2006).
While much of the content on video-sharing sites is still user-generated, a growing archive of professional content is becoming increasingly available through YouTube and network-sponsored video portals such as Hulu, MarketingCharts reports. In response, more than one-third (35%) of internet users now say they have viewed a TV show or movie online. This compares with just 16% of internet users who had watched or downloaded movies or TV shows in 2007.
Video outranks social networks, twitter
Pew noted that the use of video-sharing sites currently outranks many other online pastimes of American adults, though video viewing does not always get a proportionate amount of media attention. Watching online videos on sites such as YouTube and Google Video is more prevalent than the use of social networking sites (46% of adult internet users are active on such sites), podcast downloading (19% of internet users) and the use of micro-blogging tools such as Twitter (11% of internet users).
The darkest days are over, but the good times are a long way off. Innovation, whether benign or in the form of “creative destruction” is the only thing that will get us back on the path to prosperity. Let’s just be responsible about how we innovate (or monitor those who innovate).
The Fed held its ground on interest rates today. Yesterday, the U.S. Labor Department said productivity in the second quarter gained 6.4 percent -- the biggest quarterly gain in nearly six years despite an ongoing contraction in the overall economy. More than a few economists have suggested companies are adjusting to the recession by cutting jobs and workers' hours. Or maybe companies are becoming more innovative. Mind you, that’s not the same as “doing more with less” because innovation is proactive and forward-thinking. “Doing more with less” is reactionary, and often a desperation tactic that leads ultimately to worker burnout and defection – not long term profitability when the economy rebounds.
With stocks at their highest levels since autumn, interest rates holding steady, unemployment not getting too much worse at least statistically (see Wall Street Journal video report and the “cash for clunkers” program injecting signs of hope into the auto industry, some analysts are predicting a correction.
Sure there are plenty of signals about this being a “suckers rally,” but even bearish traders are giving credence to the market turnaround. “You can’t knock this market down,” Joe Saluzzi, co-head of equity trading told the New York Times last week. “Every dip is bought. Any sort of downdraft is picked up right away. I’m extremely bearish but I will not short this.” What’s more, the National Association of Realtors said the increase in pending sales – a forward looking measure of the market offered signs that the market is on the mend. New and previously owned sales have leveled off and single family home prices have begun to show some stability.
So just as consumers and businesses are getting their wallet-opening muscles limbered up, the government. may want to throw a wet blanket on the hottest area of ad growth during the past decade, including the recession.
Government online privacy rules a ‘setback to innovation’?
“We’re not committing ourselves to imposing regulation; what we would like to do is figure out useful tools and a more comprehensive way of looking at privacy protections that may obviate the need for rules,” said David Vladek new head of the Federal Trade Commission’s (FTC) Bureau of Consumer Protection in a recent statement. The message is you have to be more transparent about what you’re doing and the privacy “frameworks” the industry has been using historically are no longer sufficient, he said.
Vladek wants sites collecting personal data to get consumers consent whenever they visit the site (opt in)…. But marketers say such a tactic would be disastrous. “It’s impossible to communicate the value prop to a consumer at the point of and advertisement,” Matt Wise CEO of Q Interactive a Chicago online marketing firm told the New York Times and other trade media last week. It would be a tremendous setback to innovation.“
At HB, we think the solution relies somewhere in between in the form of a mutual trust system between innovators and regulators. Marketers and other data gatherers need to be more accountable, if not necessarily transparent, to regulators and consumers about the proprietary personal data they’re gathering – and how they’re gathering it. On the flip side, regulators need to take the time to understand fully how the online marketing mechanism works, why it’s so powerful, and how it’s changing the future of commerce worldwide. Regulators, shouldn’t be allowed to introduce sweeping legislation to punish a few bad apples, without fully understanding the industry they’re trying to govern. Otherwise their actions could bring one of the few growing sectors of our economy to a halt. And that includes emerging platforms such as online video (see below)
Keep your eye on online video
Online video viewing has grown across all age groups, according to new research (pdf) from the Pew Research Center's Internet & American Life project. Not surprisingly, young adults continue to lead the adoption curve in online video viewing, though adults ages 30-49 also showed big gains over the past year; 67 percent now use video-sharing sites, up from 57% in 2008 according to the Pew study, Researchers found nearly two thirds (62%) of adult internet users have watched online video on a video-sharing website, a figure that has nearly doubled from 33 percent in 2006. The study also found that 19 percent of online adults use video-sharing sites on a typical day (compared with 8 percent in 2006).
While much of the content on video-sharing sites is still user-generated, a growing archive of professional content is becoming increasingly available through YouTube and network-sponsored video portals such as Hulu, MarketingCharts reports. In response, more than one-third (35%) of internet users now say they have viewed a TV show or movie online. This compares with just 16% of internet users who had watched or downloaded movies or TV shows in 2007.
Video outranks social networks, twitter
Pew noted that the use of video-sharing sites currently outranks many other online pastimes of American adults, though video viewing does not always get a proportionate amount of media attention. Watching online videos on sites such as YouTube and Google Video is more prevalent than the use of social networking sites (46% of adult internet users are active on such sites), podcast downloading (19% of internet users) and the use of micro-blogging tools such as Twitter (11% of internet users).
The darkest days are over, but the good times are a long way off. Innovation, whether benign or in the form of “creative destruction” is the only thing that will get us back on the path to prosperity. Let’s just be responsible about how we innovate (or monitor those who innovate).
Wednesday, July 29, 2009
Dow Holds Above 9,000. Home Sales Improve
Recession innovators extending lead over the pack. Mobile advertising gains.
In most parts of the United States, the recession seems to be losing steam and economies are beginning to stabilize, the Federal Reserve said today in a snapshot of economic activity from across the country. This assessment is based on the Fed’s latest “beige book” (PDF)which gauges economic conditions from 12 distinct areas of the country.
“Recession is over, economy is recovering — let’s look forward and stop the backward-looking focus,” John E. Silvia, Wells Fargo’s chief economist, wrote yesterday in a research note.
We're one-third of the way out of the recession, according to Kiplinger's Recovery Index, which tracks six key economic indicators. The National Association of Realtors (NAR) just said that sales of previously occupied homes rose 3.6 percent last month, the third straight month to do so. It was the highest level of sales since October 2008 and beat analysts expectations. Meanwhile, the Case-Shiller index of home prices in 20 metropolitan areas, produced by Standard & Poor's, rose 0.5% in May from the month before, the first increase after 34 straight months of decline. If you’re keeping score, the median sales price nationwide is now up to $181,800, up from 174,700 last month -- still 15 percent below $215,000 a year ago – but a key positive trend to be sure.
According to Kiplingers, home prices may be bottoming out after two years of decline (some say they bottomed out six months ago), but at least people are buying stuff. Said the Kippies: "Home sales activity is a key indicator of the economy's health because buying a house involves such a large commitment of funds, reflecting confidence about the future. Rising home sales also show that banks are willing and able to lend, which is another requirement of a healthy economy."
But, what about the sky high unemployment rate? Oh that. Jobless claims are still at record highs, but since unemployment lags behind other economic indicators, that’s not the downer it may appear – provided you’re among the lucky few still working. Breaking from historical patterns, the unemployment rate -- currently at generation-high 9.5 percent -- is ONLY one to 1.5 percentage points higher than would be expected under one economic rule of thumb, Lawrence Summers, President Barack Obama's top economic adviser told the Wall Street Journal last week. Since the recession began in December 2007, the economy has lost 6.5 million jobs, 4.7 percent of total employment. The unemployment rate has jumped five percentage points, while the economy has contracted by roughly 2.5 percent.
If you can take a moment to ignore the painful shrinkage to your retirement account, investments and college savings plans, the midsummer stream of earnings reports from major companies is refreshing, and so is the market's reaction to them. So far, July's quarterly results are reassuring in the macro view. Neither the economy nor the indexes are on the verge of backsliding, and they've helped push the Dow above 9,000. Some 61 percent of the companies in Standard & Poor's 500-stock index to report for the quarter beat analysts' forecasts.
White House budget director Peter Orszag and Fed Chairman Ben Bernanke have all talked publicly about the unusual disconnect between growth and employment. Though today's disparity between growth and jobs is especially stark, a jobless recovery wouldn't be new: The past two recessions were marked by firms reluctant to resume hiring right away after demand recovered. The current disconnect could reflect an unanticipated surge in productivity -- companies finding ways to increase output with fewer workers. That could set up the economy to grow rapidly in future years. Rising productivity is the linchpin of economic growth and rising living standards.
As history shows time and time again, if the wisdom of the crowd thinks things are getting better, then they eventually WILL get better, because so much of our economy (and marketing strategy) is based on psychology, rather than true fundamentals. as we predicted earlier this year (“Recessions Can Spawn the Best Ideas”) companies that hunkered down during the depths of the downturn – rather than full scale retreat – are starting to show the fruits of those decisions.
Innovation Rules
Last week Apple Computer reported its best non-holiday quarter ever -- earnings up 15 percent -- despite continued malaise in the overall electronics sector. Meanwhile the U.S. financial markets leapt to their highest level since November on news that The Conference Board’s Index of leading economic indicators rose for the third straight month in June. While the increase was a modest 0.7 percent, the index hasn’t had a three-month win streak since 2004 and seven of the 10 data points it tracks showed improvement including building permits. The S&P 500 Index – in which 70 percent of companies have posted better than expected earnings -- is up 5.3 percent for the year and up 41 percent since its early March nadir. The broader Wilshire 5000 Index is up 7.5 percent for the year.
Analysts point to unexpectedly strong sales of Macintosh computers and a surge in iPhone purchases. We’ve been banging the “innovate when times are worst” drum for months here in this blog and Apple’s an example of why. Its products work and function the way the human brain thinks. {Disclosure: we have not financial or promotional interest in Apple Computer, Inc.). Apple customers – not corporate I.T. wonks or Indian outsourcing farms – control the customer experience.
“We’re making our most innovative products ever and our customers are responding,” said Steve Jobs, Apple CEO in a statement. Shaw Wu, a Kaufman Brothers analyst, told the New York times that Macs were “resonating with increasing numbers of customers, as it is arguably the best platform for what people do today, which includes Web surfing and creating and managing content.”
Thanks to the Web, the rules are dramatically changing in the music industry too. The Internet, not record labels, is increasingly calling the shots when it comes to promoting and distributing music. Physical album sales fell 20 percent to 362 million last year, according to Nielsen, but sales of individual digital tracks rose 27 percent to 1.07 billion – that’s right billion – more than enough to make up the shortfall.
Major record labels no longer have an iron fist on creating and selling professional music and getting air time on the radio. Polyphonic and other savvy startups are running their record labels like VC firms, by investing in promising bands, allowing them to record their own music and choose outside contractors to handle their publicity, merchandising, touring, etc. Instead of groveling for advances and praying for royalties if they create a hit, musicians share in all the profits from their music and touring. Guess what, they’ll also maintain ownership of their own copyrights and master-recordings. Can you imagine Sony, Warner or EMI cutting deals like that with up-and-comers, let alone their stars?
The year of the true multimedia campaign?
Three in four (74%) of advertisers using the Internet are doing so more than they did a year ago, while half (49%) who use print are using it less, according to a recent Linked In / Harris poll (PDF) of 1,015 ad agency and marketing execs nationwide. The poll not only found 69 percent of mobile marketers are using the medium more than they did a year ago, but more than half of online advertisers overall, are using the Web as part of a broader multi-media campaign. Just one in seven (14%) Web advertisers, are committing dollars only to online.
We’re not out of the woods by a long shot. But those who continued to trust their instincts, resourcefulness and innate sense of direction during the darkest days are going to be the first ones seeing the clearing through the trees.
In most parts of the United States, the recession seems to be losing steam and economies are beginning to stabilize, the Federal Reserve said today in a snapshot of economic activity from across the country. This assessment is based on the Fed’s latest “beige book” (PDF)which gauges economic conditions from 12 distinct areas of the country.
“Recession is over, economy is recovering — let’s look forward and stop the backward-looking focus,” John E. Silvia, Wells Fargo’s chief economist, wrote yesterday in a research note.
We're one-third of the way out of the recession, according to Kiplinger's Recovery Index, which tracks six key economic indicators. The National Association of Realtors (NAR) just said that sales of previously occupied homes rose 3.6 percent last month, the third straight month to do so. It was the highest level of sales since October 2008 and beat analysts expectations. Meanwhile, the Case-Shiller index of home prices in 20 metropolitan areas, produced by Standard & Poor's, rose 0.5% in May from the month before, the first increase after 34 straight months of decline. If you’re keeping score, the median sales price nationwide is now up to $181,800, up from 174,700 last month -- still 15 percent below $215,000 a year ago – but a key positive trend to be sure.
According to Kiplingers, home prices may be bottoming out after two years of decline (some say they bottomed out six months ago), but at least people are buying stuff. Said the Kippies: "Home sales activity is a key indicator of the economy's health because buying a house involves such a large commitment of funds, reflecting confidence about the future. Rising home sales also show that banks are willing and able to lend, which is another requirement of a healthy economy."
But, what about the sky high unemployment rate? Oh that. Jobless claims are still at record highs, but since unemployment lags behind other economic indicators, that’s not the downer it may appear – provided you’re among the lucky few still working. Breaking from historical patterns, the unemployment rate -- currently at generation-high 9.5 percent -- is ONLY one to 1.5 percentage points higher than would be expected under one economic rule of thumb, Lawrence Summers, President Barack Obama's top economic adviser told the Wall Street Journal last week. Since the recession began in December 2007, the economy has lost 6.5 million jobs, 4.7 percent of total employment. The unemployment rate has jumped five percentage points, while the economy has contracted by roughly 2.5 percent.
If you can take a moment to ignore the painful shrinkage to your retirement account, investments and college savings plans, the midsummer stream of earnings reports from major companies is refreshing, and so is the market's reaction to them. So far, July's quarterly results are reassuring in the macro view. Neither the economy nor the indexes are on the verge of backsliding, and they've helped push the Dow above 9,000. Some 61 percent of the companies in Standard & Poor's 500-stock index to report for the quarter beat analysts' forecasts.
White House budget director Peter Orszag and Fed Chairman Ben Bernanke have all talked publicly about the unusual disconnect between growth and employment. Though today's disparity between growth and jobs is especially stark, a jobless recovery wouldn't be new: The past two recessions were marked by firms reluctant to resume hiring right away after demand recovered. The current disconnect could reflect an unanticipated surge in productivity -- companies finding ways to increase output with fewer workers. That could set up the economy to grow rapidly in future years. Rising productivity is the linchpin of economic growth and rising living standards.
As history shows time and time again, if the wisdom of the crowd thinks things are getting better, then they eventually WILL get better, because so much of our economy (and marketing strategy) is based on psychology, rather than true fundamentals. as we predicted earlier this year (“Recessions Can Spawn the Best Ideas”) companies that hunkered down during the depths of the downturn – rather than full scale retreat – are starting to show the fruits of those decisions.
Innovation Rules
Last week Apple Computer reported its best non-holiday quarter ever -- earnings up 15 percent -- despite continued malaise in the overall electronics sector. Meanwhile the U.S. financial markets leapt to their highest level since November on news that The Conference Board’s Index of leading economic indicators rose for the third straight month in June. While the increase was a modest 0.7 percent, the index hasn’t had a three-month win streak since 2004 and seven of the 10 data points it tracks showed improvement including building permits. The S&P 500 Index – in which 70 percent of companies have posted better than expected earnings -- is up 5.3 percent for the year and up 41 percent since its early March nadir. The broader Wilshire 5000 Index is up 7.5 percent for the year.
Analysts point to unexpectedly strong sales of Macintosh computers and a surge in iPhone purchases. We’ve been banging the “innovate when times are worst” drum for months here in this blog and Apple’s an example of why. Its products work and function the way the human brain thinks. {Disclosure: we have not financial or promotional interest in Apple Computer, Inc.). Apple customers – not corporate I.T. wonks or Indian outsourcing farms – control the customer experience.
“We’re making our most innovative products ever and our customers are responding,” said Steve Jobs, Apple CEO in a statement. Shaw Wu, a Kaufman Brothers analyst, told the New York times that Macs were “resonating with increasing numbers of customers, as it is arguably the best platform for what people do today, which includes Web surfing and creating and managing content.”
Thanks to the Web, the rules are dramatically changing in the music industry too. The Internet, not record labels, is increasingly calling the shots when it comes to promoting and distributing music. Physical album sales fell 20 percent to 362 million last year, according to Nielsen, but sales of individual digital tracks rose 27 percent to 1.07 billion – that’s right billion – more than enough to make up the shortfall.
Major record labels no longer have an iron fist on creating and selling professional music and getting air time on the radio. Polyphonic and other savvy startups are running their record labels like VC firms, by investing in promising bands, allowing them to record their own music and choose outside contractors to handle their publicity, merchandising, touring, etc. Instead of groveling for advances and praying for royalties if they create a hit, musicians share in all the profits from their music and touring. Guess what, they’ll also maintain ownership of their own copyrights and master-recordings. Can you imagine Sony, Warner or EMI cutting deals like that with up-and-comers, let alone their stars?
The year of the true multimedia campaign?
Three in four (74%) of advertisers using the Internet are doing so more than they did a year ago, while half (49%) who use print are using it less, according to a recent Linked In / Harris poll (PDF) of 1,015 ad agency and marketing execs nationwide. The poll not only found 69 percent of mobile marketers are using the medium more than they did a year ago, but more than half of online advertisers overall, are using the Web as part of a broader multi-media campaign. Just one in seven (14%) Web advertisers, are committing dollars only to online.
We’re not out of the woods by a long shot. But those who continued to trust their instincts, resourcefulness and innate sense of direction during the darkest days are going to be the first ones seeing the clearing through the trees.
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