At Tonight’s Debate, Will Anyone Get Gas?

Stocks closed in on their biggest one-day gain since the Fed announced new stimulus measures in mid-September. Experts said the rally was driven by better-than-expected earnings from blue chip stocks and very optimistic numbers from the retail and housing sectors. That said, we’ll have to see what happens in the financial sector after the surprise resignation of CitiGroup head Vikram Pandit. His departure came one day after the bank reported an 88 drop in third-quarter profits. Also keep your eye on the tech sector—another big area for our clients and both IBM and Intel reported disappointing Q3 earnings. Intel blamed a decline in demand for PCs and IBM blamed lackluster tech spending globally and currency fluctuations. What you need to ask yourself as both an investor and as a B2B marketer, is this: In the case of all three of these aforementioned Blue Chips, are we looking a lackluster global demand, unpopular products, ineffective marketing or inability to innovate fast enough. We think it’s the last two.

The Debate, Round 2

So we’re going to try the town-hall thing again tonight. Remember 2008, when Mr. Obama squared went at it against John McCain in a town hall brawl. Gasoline prices were about $3.80 a gallon; Wall Street was in the middle of its worst week ever; President Bush had just created TARP and the economy—rather how the heck to fix it—dominate the verbal sparring.

In some circles, cynics would say not much has changed. Gasoline prices average $3.78 today—much higher in California and the northeast; unemployment remains historically very high; and each side will blame the other for not being specific enough about who has the better plan to jumpstart the economy.

REMEMBER: CAMPAIGN PROMISES AREN’T LEAGALLY BINDING! Both sides will be trying to sell you on their vision, but that’s all it is—a vision of the future. By a healthy skeptic about anything you hear tonight.As was the case four years ago, energy independence is likely to come up as gas prices are up 16 percent in the past two months alone. Four years ago, Mr. Obama said prices at the pump were high enough to make energy policy “priority number one” for his administration; health care was explicitly meant to be “priority number two.” Gas prices are about the same, but priorities sound a little different. Hmm.

Conclusion

As a wise man once said, it’s a recession when your neighbor loses their job; it’s a depression when you lose your own job. Are we better off than we were four years ago? Most Americans would say yes—but how much better after four years of anguish and a whole lot of effort?

As was the case in 2008, both parties will probably trumpet energy as the magic cure for the slow growth economy—even if their prescriptions have very different side effects and very mixed results. If people don’t have jobs to drive to or need more fuel to keep their fleets running, then it doesn’t matter how low gas prices go when there’s no demand for the stuff.

We’re not going to tell you how to vote in November. But, we’re urging you to take the process seriously and remember this: the Election is just the first step…you need to stay on your elected officials throughout their terms to honor their promises and be accountable to their constituents. Otherwise it’s just a lot of hot air.


TAGS: Obama, Romney, gas prices, presidential debates, CitiGroup, IBM, Intel, economy, Vikram Pandit


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Don’t Sweat the Stock Market, Sovereign Debt crisis or Jobs Report

There’s lots of work to be done and companies are spending money. They’re just not hiring full-timers to do it. Be wary of over-weighting your marketing portfolio on Facebook.

It’s a lazy, muggy Saturday in August. Like millions of American’s we’re headed to the airport, but not for vacation. We’re on our way to a hot, landlocked Midwestern city for the start of a client’s biggest annual convention. That’s right. It kicks off on the first Saturday in August, goes full tilt first thing Sunday morning and extends only into Monday for most attendees. Perhaps it’s a sign of the times, but more and more B2B event organizers have realized that to attract a crowd in this zero-job-security economy, they’ve got to minimize the amount of time attendees spend out of the office. And they better stress the educational and business development parts of the conference, and de-emphasize the aura of a drunken social junket.

We’re not going to spend much time here re-hashing yesterday’s jobs report and the roller coaster week on Wall Street. From a glass half full perspective, it wasn’t so much the 120,000 new people added to American payrolls last month, it was the breadth of the new jobs, as many sectors—not just one or two-- showed some initial signs of hiring activity. Are we worried about the bloodbath on Wall Street which essentially wiped out the entire year’s worth of gains in 2011? Not so much. The market has long been decoupled from the overall economy as corporate earnings are more a factor of (a) low interest rates; (b) relatively easy access to credit and (c) the ability to sustain operations with fewer employees which improves the bottom line.

NOTE: None of the aforementioned factors are sustainable in the long term—especially doing more with less, as frustrated underappreciated workers will bolt for the doors when the job market eventually improves. While many are concerned about the debt ceiling right now, we’re more concerned about the “Great Brain Drain” that will eventually devastate companies who don’t start taking better care of their burned out talent.

OUR TAKE: If you’re a savvy B2B marketer, business are being very selective about how they spend their dollars for advertising, capital improvements, technology and raw materials, but they ARE spending—and they’re doing so at a healthier clip than individual American consumers. Our advice, be just as selective about who you target and fortunately there are a great many tools out there to help you stay hyper focused on the best prospects for new business.

If you’re waiting for us to start trumpeting the merits of mobile and social media, you’ll be disappointed. There are hundreds of thousands of other blogs you can spend time with. We just want you to be smart about how you use these widely publicized, albeit hard to measure tools. And just like the financial advisors whose balanced portfolio approach will successfully guide their clients through the latest financial crisis, you don’t want your marketing portfolio too heavily invested in any single channel.

Face the facts about Facebook

New research indicates that Facebook shouldn’t automatically be the linchpin of your social media strategy. Data from ROI Research, Inc. found that companies who actively use social media found Twitter more effective than Facebook for getting your customers/followers to talk about your product or service, recommend it to friends and buy it. ROI researchers found Twitter to be 13 percent more likely than Facebook to induce followers to attend your promotional or sponsored event; 12 percent more likely to talk about your company or product; 6 percent more likely to recommend your company or product and 12 percent more likely to link to an ad for your company or product.

And that’s not all. Upstart StumbleUpon.com recently unseated Facebook as the No.1 social media site for referring traffic to other website, according to the web analytics firm, StatCounter. If you haven’t checked it out yet, StumbleUpon.com is a search engine that finds and recommends videos, articles and other web-based content to you based upon your tastes and the interests of your peers.

Finally, a Smartbrief poll on Social Media found that marketers and others interested in social media in business say their companies have not lost money because of social media, but more than 25 percent said they “spent too much on maintaining a social presence for the level of return we’re seeing.” Another 3 percent said they lost money because of legal issues, leakage of sensitive information, or brand damage.

Bottom line. You need to use the tools that most effectively connect you to your clients, customers and prospects for the long-term. You don’t need to be cool for the sake of being cool. Don’t be afraid to experiment. But just like investors who chase the latest fad, marketers who chase the latest cool communication tools without carefully weighing its merits and pitfalls will get burned in the long run.

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Time Warner Leverages SI Swimsuit Issue to Launch All-Access Subscription Model

Watch out for ‘brain drain’ at your company as economy improves

In case you somehow missed it, the annual midwinter Oogle-palooza for the publishing industry, aka. the Sports Illustrated Swimsuit Issue hit newsstands, mailboxes and inboxes this week and once again managed to raise eyebrows and male pulse rates. But, this year the buzz wasn’t just about the risqué swim attire, which included see-through suits, body paint suits, and one “suit” which consisted of nothing more than a strategically placed kayak paddle. According to Bloomberg Sports (see video report), Time Warner is using its billion-dollar Swimsuit Issue franchise as a launching pad for its new “all-access” subscription model. Here’s the bet—raise subscription prices 23 percent in hopes that subscribers (and advertisers) will buy into SI’s full range of content delivery platforms including digital, online, mobile and tablet (other than Apple-i).

Our take? Even without Apple on board, the all-access model is a good call will gain traction throughout the publishing business as some content – action sports, celebrities, how-to and yes near-naked women—is simply more compelling with audio and video streaming than words on a page. However, we don’t like the strategy of charging subscribers—and presumably advertisers, more for the privilege. It shouldn’t be treated as a premium offering so much as a must-have for any publisher hoping to survive and stay relevant 11 years into the new century.

Just as most publishers are still figuring out newsstand sales by the number of returns they receive nine months later and are still sending annoying renewal notices—rather than billing subscribers’ credit cards via negative option—they need to get out of the quaint mindset of being publishers and realize they’re competing against bloggers, social networks, software companies, mobile apps, cable companies and telecom’s for subscriber/advertiser mindshare. It’s a faster, more cut-throat game than they’re used to—with smarter, hungrier players who generally pay their staffs better to come up with ideas.

Producer price index hits highest level in 27 months

On Wednesday, the Labor Department reported that producer prices in the United States rose in January. The core index, which excludes the volatile food and energy sectors, rose 0.5 percent, the biggest jump in 27 months, the agency said. Yesterday, The Fed announced it expected economic growth of 3.4 percent to 3.9 percent this year, up from the previous forecast of 3 percent to 3.6 percent. Even Fed head Ben Bernanke said “the economy is straightening out” but joblessness could remain high for several more years as companies continue to post profits with a smaller workforce than they had before.

Brain drain on the horizon at your company?

Our take? Despite the lousy job and housing market, the latest economic growth report, coupled with the recent rise in consumer and producer prices shows we’re essentially operating in a non-recessionary climate. It’s hardly a go-go era, but essential staples for households and businesses are being purchased on an ongoing basis and of course, advertising and marketing spend will have to grow to lift demand.

Here in the B2B media business, we don’t put too much stake in the jobs reports. Our industry has always been a fluid one based on ideas and contacts—not raw output or years of service you’ve put in at the same company or government organization. We’ve always relied on a deep pool of experienced independent contractors to get things done and there’s more than enough work to go around—it just doesn’t fit into the W2+B (steady paycheck, plus benefits) hiring model.

What’s more, the lift in “intention to hire” is the biggest in 11 years according to researchers at Bernhart Associates who conducted a survey of digital and direct marketers.

As New York Times columnist Bob Herbert pointed out last week, businesses have figured out how to prosper without putting the unemployed back to work in jobs that pay well and offer decent benefits. Corporate profits and the stock markets are way up. Businesses are sitting atop mountains of cash. Put people back to work? Forget about it. Has anyone bothered to notice that much of those profits are the result of aggressive payroll-cutting —companies making do with fewer, less well-paid and harder-working employees?

Unfortunately, Bob (and corporate America), you have to look at the long-term viability of “doing more with less.” Just as your customer prospect pipeline dries up when you cut back too far on your advertising and marketing programs, too many workers who’ve been doing double- and triple-duty to hold onto their jobs during the downturn are simply getting exhausted and not seeing commensurate increases in compensation or status for holding the fort down during the depths of the recession. They’re out the door as soon as the first decent opportunity comes along. Many organizations will be facing a serious “experience vacuum” as knowledgeable workers bolt for the doors and take their smarts, contacts and ideas they were too afraid (or disgruntled to share) with them.

It will take years for the influx of newbies to get up to speed and become productive. Let’s hope you’re treating your best people as well as you can right now. Now that the economy’s on the rebound, your toughest test is yet to come. Gotta go now. They just posted behind the scenes videos about the making of the Swimsuit Issue. The Twittersphere’s abuzz with rumors of wardrobe malfunctions.


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Don’t Let the Dow and Prez Fool You. Economy’s Got a Long Way to Go

But, smart B2B marketers uncover great opportunities in all economies. Let the Super Bowl, not Washington or Wall Street, guide you in 2011.

You can expect the President to put forth the rosiest picture possible in his State of the Union Address tonight as the Dow crossed the 12,000 barrier for the first time since mid-2008. Factory production, retail sales and existing home sales are rising, while unemployment claims are holding steady or slightly declining in many parts of the country.

Between standing Obama-vations from the Democratic half of the audience, The Prez will likely gloss over some persistent drags on the economy beyond the obvious “jobless recovery.” Not only is the official out-of-work rate stuck around 9.4 percent, but with the slight uptick in economic conditions, many of the long-term jobless who’ve simply given up are returning to the job search game. That will likely drive the jobless RATE even higher. Meanwhile most state and local governments are broke and won’t be able to meet their pension obligations or payrolls much longer unless they continue gouging businesses and homeowners in their districts. Many parts of Europe remain unstable, China is flirting with hyper-inflation and higher food and energy prices could throw a wet blanket on household spending.

Mind you. We’re not predicting more doom and gloom here. Just be smart, so you can make the most of this recovery. Pessimism solves nothing. Remember back in April 2009when everyone else was ducking and covering? We called the end of the recession and followed it up a few weeks later with a sunny assessment of the media landscape.

Why we’re being pinpoint bullish: Super Bowl

What we like about the financial markets this time around is that most of the run up is based on legit corporate earnings and the overall market P/E is in the teens--relatively cheap by historical standards. And then there’s the Super Bowl.

Chevy and GM are back after a two-year hiatus. As many as nine card brands may be jockeying for position to pay $3 mil for 30 seconds of your time in what’s typically the most-watched TV program of the year. We’re not so much encouraged by the game day air time as by the pre-game run up—starting up to 4 weeks out and driven by online and social media. The smart money also says to look for social couponing giant Groupon to join the fray. This could signal wide scale acceptance of the social couponing category and a possible resurgence of the IPO market.

“While we’re clearly seeing a recovery, it will be more muted than after other downturns,” Zenith Optimedia CEO, Steve King, said in a statement earlier this month. It will take until at least 2012 to match 2008 overall ad spending levels, he added. Zenith predicts Internet advertising will increase 48 percent from 2011 to 2013, followed by commercial TV, movie theater ads (+19%), outdoor advertising (+18%) and radio up 10 percent, with print advertising falling two percent.

Making sense of converging media

No one honestly knows which platform, device or gadget is going to be the true winner in this decade of media convergence. And do we really have to crown a king? Blogger Seth Godin had a nice way of sorting out the landscape in his post last week.

“I don't believe this is a winner take all situation, any more than one bestselling book makes all other books obsolete,” wrote Godin. “I think different pillars work for different devices, and there will continue to be winners in all of them.”

So look beyond the dizzying array of technology and media consumptions options we’re facing. If the intense competition for our screens, brains and wallets brings us more options with better service and realistic pricing, then we say Amen to the chaos. Bring it on.

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Quantitative Easing Not Relieving Qualitative Pain

But, stocks, housing, private sector jobs and Wall Street bonuses are on the rise. Financial, tech and airline sectors are rebounding with marketing dollars in tow. Why B2B marketers need to act now.

Maybe it took what the President called a good old fashioned “shellacking” of his party in last week’s midterm elections to get the Administration to see how far out of favor they have fallen from the business community, not to mention conservative and independent voters. When we say business community, we’re talking everyone from your local small businesses to the Fortune 500. Mr. Obama said he needed to "make clear to the business community, as well as to the country, that the most important thing we can do is to boost and encourage our business sector and make sure that they're hiring.”

Business runway getting longer

“The legislative uncertainty that’s kept businesses on their heels the past several years is starting to lift,” said Jeffrey Kleintop, chief market strategist at LPL Financial [www.lpl.com], whom several of us met yesterday at a financial advisor conference in New York. “The Fed’s been a little clearer about what it wants to do and that’s giving businesses a longer runway.”

As just about everyone on the planet knows by now, the Federal Reserve said it would buy $600 billion of U.S. government bonds over the next eight months to drive down interest rates and encourage more borrowing and growth. The strategy, officially known as “quantitative easing” (QE2) has had a positive effect on the financial markets, but could backfire in the long run.

If not managed carefully, the Fed’s spending spree on government bonds could be highly inflationary, since it would flood the economy with money and raise worries about too much government spending. Also, it could continue driving down the value of the U.S. dollar which gets other countries pretty pissed. Why? Because a weaker dollars hurts their exports and can spike inflation in their own countries as outside capital surges in from investors seeking better returns than they’re finding in U.S. markets. The Prez may want to wear a helmet and mouth guard to the G-20 Summit starting in South Korea tomorrow.

That said, we like E2’s chances of succeeding at this stage of the business cycle if it’s deployed gradually and intelligently – two big IFs. In addition to the impact of cheaper borrowing, higher stock prices (see below) could encourage households to spend more and businesses to invest more, and a weak dollar could make U.S. exports cheaper and thus easier to sell in normal times.

Why B2B marketers need to act now

Instead of waiting around for the all-clear signal for the government: here are some of our own leading indicators that the worst is over and now is the time to invest for the surge in consumer and B2B demand that’s likely to pass you by if you’re not ready:

Finance and tech ad rebound continues in business magazines

According to MediaWeek data released last week, ad pages in Forbes are up a whopping 353 percent from this time a year ago, Fortune is up 88 percent, Fast Company is up nearly 58 percent, Entrepreneur is more than 52 percent ahead of last year’s pace and Wired is up 11.4 percent. The leading brands depend overwhelmingly on the technology and financial services sector and generally run longer and more complex media schedules as they have to reach buyers in a long-term sales cycle with multiple purchase decision influencers to win over.

Airlines rebounding

After collectively losing $26 billion during the previous two years, according to the International Air Transport Association (IATA) www.iata.org, the majority of national and international carriers are reporting one of their most profitable quarters in years (for the 3 months ended 9/30) and they’re on track to be in the black again by nearly $9 billion. IATA says average fares for first-class and business travel within North America are up a whopping 140 percent from this time a year ago and up about 20 percent for travel to Europe. Air travel is one of the first things to go when consumers and businesses are pessimistic about their bottom lines. We’re very bullish on this trend and travel-related advertising dollars should start flowing back to leading brands in all media categories serving consumer and B2B.

Wall Street bonuses up

Investment banks and financial firms are planning to dole out larger paychecks and bonuses this year than in 2009. Top Wall Street pay consultant Alan Johnson says he expects compensation by Wall Street firms to rise 5 percent in 2010. The Wall Street Journal projected a similar rise. A recent survey of financial firms by our friends at eFinancial Careers said they expect higher pay in 2010 than they received a year ago. While the number of people working in high finance is tiny compared to the number of people working on Main Street, they account for a disproportionate share of wealth (and consumer spending) and that usually trickles down into main street as well as ad spending by Main Street-supported businesses.

Stock markets up

As of this posting, the Dow and S&P 500 are both up about 8.8 percent for the year and the broader based Wilshire 5000 is up nearly 11 percent. Investors are showing more confidence in the equity markets and have reduced their cash holdings to 17 percent from 21 percent according to a recent Capgemini survey of high net worth individuals. Add to this microscopic interest rates and the likelihood that the Bush tax cuts are likely to be extended by at least one or two more years according to LPL’s Kleintop – “it’s the legislative path of least resistance” – and you’ve got a pretty favorable equities climate.

Private sector job gain

Sure unemployment’s stuck at 9.6 percent, but while the government is shedding jobs at a disturbing clip, more private sector jobs have been created this year than during the entire Bush administration. That’s right. 2010 has had more private job creation than during the entire 8 year tenure of George W. Bush.
According to The Department of Labor, this is the ninth straight month of private sector job growth in the midst of a devastating recession that has put a serious strain mostly on the poor and middle class. There have been a total of 863,000 private sector jobs created in 2010, exceeding the total created under the Bush/Cheney regime. We don’t make this stuff up, the DOL does.

Housing

Existing-home sales rose again in September, affirming that a sales recovery has begun, according to the National Association of Realtors. Existing-home sales, jumped 10 percent to a seasonally adjusted annual rate of over 4.5 million in September from a 4.1 million in August. In a late October news release, Lawrence Yun, NAR’s chief economist, said the housing market is in the early stages of recovery. “A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions,” he said.

Entrepreneurship

Whether or not we ever return to a 95 to 96 percent rate of “full employment,” the steady-paycheck lifestyle of a loyal employee dedicating one’s career to a single large manufacturing or corporate service entity is pretty much over.

If you’ve ever thought about starting your own business, read Seth Godin’s recent post How can you do it?!

The timing may never be better.

Remember, things were never quite as good as they seemed in the frenzied years leading up to the Great Disruption, and now they’re not as bad as the media, economists and out-of-favor politicians would lead you to believe. The time strike is while the iron’s getting hot; not when it looks, smells and feels like it really is hot. By that time it’s too late as someone else has already taken the iron and formed it into their own shape and vision.

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Survey Indicates Business World More Complex Than Ever

Creativity and innovation the keys to business survival. Heed economic indicators, not schizophrenic stock market. Five keys to a real-world business plan.

U.S. financial markets continued their slide, hampered by uncertainty over how tough U.S. regulators will get with Wall Street speculators and how many blue-chip financial institutions may get sucked into the mounting European debt crisis. The key word here is “uncertainty” not actuality.

In the real world, consumer confidence is rising as the job market and housing front continue to improve. On Tuesday, The Conference Board said its Consumer Confidence Index rose to 63.3 points, up from 57.7 points in April. The index got a boost from the six-month consumer outlook which jumped to 85.3 from 77.4, the highest since August 2007. A reading of 90 indicates economy on solid footing, 100 means growth. Index hit a record low of 25.3 back in Feb 2009. Home sales were better than expected in April. Existing home sales were the highest in five months according to National Association of Realtors (NAR) and median home prices rose for the second straight month, 2.1 percent in April despite an 8-month inventory on the market. And ad spending continues to rebound as researcher IDC projected U.S. online ad spending to shoot up 12.6 percent by end of 2010, it has now raised that number to 19 percent to $31.5 billion. The change follows a string of surprisingly strong numbers for all segments of online advertising, even display, which had been in decline for the past two years. Last week, the Interactive Advertising Bureau said internet ad spending rose 7.5 percent in Q1 to $5.9 billion.

Creativity key to corporate survival

A newly released IBM study of 1,500 CEOs found that 79 percent expect increased global complexity and only 49 percent feel prepared to deal with it. The IBM study was based on face-to-face interviews with leaders of all size companies in 33 industries and 60 companies.

Surveyed execs identified “creativity” as the single most important leadership competency for enterprises seeking a path through this complexity. How so? Creative leaders expect to make deeper business model changes to realize their strategies. To succeed, they take more calculated risks, find new ideas, and keep innovating in how they lead and communicate.

CEOs now realize that creativity trumps other leadership characteristics. Creative leaders are comfortable with ambiguity and experimentation. To connect with and inspire a new generation, they lead and interact in entirely new ways. CEOs saw the need to seed creativity across their organizations rather than set apart “creative types” in siloed departments like product design. To benefit from the diversity of ideas each employee can contribute. Standouts encourage a new mindset of questioning. They invite employees at all levels to challenge assumptions based on past experiences and scrutinize “the way we’ve always done things.”

Our take? Great ideas, but a commitment to creativity and agility is more easily said than done when you factor in quarterly analysts and shareholder pressure and a hyper-paranoid workforce that’s scared to death of having a mistake pinned on them.

5 keys to a real world business plan

According to blogger, Seth Godin, the traditional corporate or venture capital-seeking business plan is a croc.

“If I want the real truth about a business and where it's going, I'd divide the modern business plan into five sections,” quips Godin:

1. Truth
2. Assertions
3. Alternatives
4. People
5. Money

The truth section describes the world as it is. Tell me about the market you are entering, the needs that already exist, the competitors in your space, technology standards, the way others have succeeded and failed in the past. The assertions section is your chance to describe how you're going to change things. We will do X, and then Y will happen. We will build Z with this much money in this much time. The alternatives section tells me what you'll do if that happens. How much flexibility does your product or team have? If your assertions don't pan out, is it over? The people section rightly highlights the key element... who is on your team, who is going to join your team. 'Who' doesn't mean their resume, who means their attitudes and abilities and track record in shipping. And the last section is all about money. How much do you need, how will you spend it, what does cash flow look like, P&Ls, balance sheets, margins and exit strategies.

Cell phones use more for data than calls

CITA, the wireless industry association reported last week that the amount of data in text, music, e-mail and other activities surprassed voice calls on mobile devices in 2009.

According to comScore, total cell phone subscribers from 2009 to 2010 is about the same, but the number of users going online is up across almost all Web categories. Visitors to social networking sites like Facebook and Twiter increased 78 percent. Many more users are going to reference site like Answer.com or wiki, up 46 percent and banking sites up 45 percent.

Top categories for browsing on mobile devices

1. Search 32.1M users +36%
2. Social networking 27.3M users +78%
3. Weather 26.1M users _+ 21%
4. News 24M users +29%
5. Sports info 19.7M users +25%

Don’t be fooled by the schizophrenic stock market. This recovery – no matter how fragile – is the real deal. Today’s market leaders are the ones who’ve had the pedal to the metal since the depths of the recession, not the “duck and cover” crowd. Agility, creativity and the willingness to make mistakes (and learn from them) will guide you through all types of water, no matter how turbulent.

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