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.
Wednesday, September 30, 2009
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.
Thursday, July 23, 2009
Ad Spending Plans, Economic Indicators Trending Up
Will agencies, consumers join the party? Business Week on the block.
Business Week is officially up for sale and there ain’t exactly a bidding war brewing for the once venerable bible of the business world. The nationwide unemployment rate closes in on a generation-high 10 percent and housing prices languish, yet new research indicates economic pessimism among marketers, and to a lesser extent, agency media buyers appears to have bottomed out last spring. NOTE: If you recall, we called the recession statistically all but over in this blog back in early April although we cautioned it could take 12 months or more for spending, confidence and decision-making to improve.
Ad spending was miserable in the first half of 2009 –- down nearly 15 percent according to Interpublic group -– but ad spending PLANS are now trending upward, according to a new report from Advertiser Perceptions Inc (API). API says Cable TV and outdoor media also are improving and now have more media decision makers planning to boost their budgets than to decrease them over the next six months, and while broadcast TV, radio, magazines and national newspapers all are still negative on balance, they are also all improving from low confidence points earlier this year.
"Leading the way are marketers, who are more optimistic than their agencies," said API partner, Ken Pearl, in a statement. API historically conducts big semi-annual surveys tracking the perceptions of advertisers and agency media buyers about the major media, including their confidence levels, but opted to conduct the confidence tracking more frequently this year to monitor an inflection point in the advertising economy.
The most recent survey, which is based on the responses of more than 200 media decision makers over the past several weeks, indicates that their plans for most major media are once again ascending, especially among marketers who seem slightly more optimistic than their agency counterparts.
Ad Optimism Is Improving For Most Media, High For Mobile/Online
MEDIA ....“OPTIMISM”...........STATUS........TREND
Mobile ......57............. Optimistic....Improving
Online.......53..............Optimistic....Improving
Cable TV.... 17..............Optimistic....Improving
Outdoor......12..............Optimistic....Improving
Broadcast TV.-7..............Pessimistic...Improving
Radio........-12.............Pessimistic...Improving
Magazines....-17.............Pessimistic...Improving
Natl. Newsp..-36.............Pessimistic...Improving
Local Newsp..-47.............Pessimistic...Declining
Source: Advertiser Perceptions Inc. "Optimism" is defined by the number of percentage points separating the percentages of respondents citing plans to increase or decrease their advertising budgets in each medium over the next six months. Trends are based over three bi-monthly tracking reports conducted so far this year.
“It's imperative that we begin to shake up the way we think about traditional media,” commented a reader of Joe Mandese’s popular MediaPost column. “It's a fallacy that each medium is an island unto itself. We must move into a new phase of using all the media we have available to us in concert with one another.
Said another poster: “Being in Media ad sales it is good to see a positive trend at last. This generally means that business is starting to move past the current recession. Since the Fall is buying season it would be nice to hear something other than ‘no budget’”.
Let’s hope marketers and agencies are putting their money where their mouths are and focusing on the road ahead, not the rear view mirror. Just make sure you folks stay off your cell phones when driving.
Business Week is officially up for sale and there ain’t exactly a bidding war brewing for the once venerable bible of the business world. The nationwide unemployment rate closes in on a generation-high 10 percent and housing prices languish, yet new research indicates economic pessimism among marketers, and to a lesser extent, agency media buyers appears to have bottomed out last spring. NOTE: If you recall, we called the recession statistically all but over in this blog back in early April although we cautioned it could take 12 months or more for spending, confidence and decision-making to improve.
Ad spending was miserable in the first half of 2009 –- down nearly 15 percent according to Interpublic group -– but ad spending PLANS are now trending upward, according to a new report from Advertiser Perceptions Inc (API). API says Cable TV and outdoor media also are improving and now have more media decision makers planning to boost their budgets than to decrease them over the next six months, and while broadcast TV, radio, magazines and national newspapers all are still negative on balance, they are also all improving from low confidence points earlier this year.
"Leading the way are marketers, who are more optimistic than their agencies," said API partner, Ken Pearl, in a statement. API historically conducts big semi-annual surveys tracking the perceptions of advertisers and agency media buyers about the major media, including their confidence levels, but opted to conduct the confidence tracking more frequently this year to monitor an inflection point in the advertising economy.
The most recent survey, which is based on the responses of more than 200 media decision makers over the past several weeks, indicates that their plans for most major media are once again ascending, especially among marketers who seem slightly more optimistic than their agency counterparts.
Ad Optimism Is Improving For Most Media, High For Mobile/Online
MEDIA ....“OPTIMISM”...........STATUS........TREND
Mobile ......57............. Optimistic....Improving
Online.......53..............Optimistic....Improving
Cable TV.... 17..............Optimistic....Improving
Outdoor......12..............Optimistic....Improving
Broadcast TV.-7..............Pessimistic...Improving
Radio........-12.............Pessimistic...Improving
Magazines....-17.............Pessimistic...Improving
Natl. Newsp..-36.............Pessimistic...Improving
Local Newsp..-47.............Pessimistic...Declining
Source: Advertiser Perceptions Inc. "Optimism" is defined by the number of percentage points separating the percentages of respondents citing plans to increase or decrease their advertising budgets in each medium over the next six months. Trends are based over three bi-monthly tracking reports conducted so far this year.
“It's imperative that we begin to shake up the way we think about traditional media,” commented a reader of Joe Mandese’s popular MediaPost column. “It's a fallacy that each medium is an island unto itself. We must move into a new phase of using all the media we have available to us in concert with one another.
Said another poster: “Being in Media ad sales it is good to see a positive trend at last. This generally means that business is starting to move past the current recession. Since the Fall is buying season it would be nice to hear something other than ‘no budget’”.
Let’s hope marketers and agencies are putting their money where their mouths are and focusing on the road ahead, not the rear view mirror. Just make sure you folks stay off your cell phones when driving.
Wednesday, July 08, 2009
You Can Stimulate Your Way Back to Stability
But you can only invent your way back to prosperity.
“Historically, recessions are a time when new companies are born and great companies separate themselves from the competition,” quipped Thomas Friedman last week in a NY Times editorial.
Amen to that, Tom, who opined further: “We might be able to stimulate our way back to stability, but we can only invent our way back to prosperity. We need everyone at every level to get smarter.”
Getting companies smarter is more easily said than done these days, but it’s happening and not just at Google, Amazon and Facebook.
The Times’ Friedman still believes America, with its unrivaled freedoms, VC industry, research universities and openness to new immigrants has the best assets to be taking advantage of this moment – to “out- innovate our competition.” Unfortunately, most corporate coffers are nailed shut. Easy bank financing is a faded memory and venture capital is going through a seismic contraction.
“Personally I think the funds have gotten too big. Our biggest challenge is to think smaller and make smaller, smarter investments,” noted VC icon, Alan Patricof of Greycroft Partners at a recent venture investing conference in San Francisco.
According to the National Venture Capital Association, investment in venture capital funds shrank to $4.3 billion in the first quarter of 2009, from $7.1 billion in the same quarter of 2008. That’s a whopping 40-percent drop, but some experts think it’s a blessing in disguise, because it lowers the flow of capital into these funds. There won’t be as much excess money chasing bad deals and the VC industry may start seeing double digit returns some day. NVCA says investors are seeing about six-percent annually on their money over five years, down from 48 percent annually at the start of this decade.
With easy bank financing and easy VC money a thing of the past, organizations large and small are going to have to keep operating smarter.
More proof against cutting back on ads in a downturn
Just as cutting back on innovation during tough times comes back to haunt you when better times return, dramatically cutting back on advertising can be severely damaging to your market share and reputation.
Two recent surveys surveys of banking and retail consumers by research firm, Ad-Ology, found advertisers who cut back substantially during the downturn are building negative brand association. For instance:
• 48% of respondents agreed such advertisers “must be struggling”
• 12% of responds agreed “they may not be in business much longer.
Could good ol’ common sense be making a comeback? Read below for two examples.
Pearls of wisdom from the common-sense department
Generic Web site names that are self-explanatory deliver much higher click-through rates than a more abstract or clever name, says a new study by Memorable Domains. The study compares three sites using AdWords pay per click campaign for ads for electric bikes. “ElectricBicycles.co.uk” got 45 percent more clicks than “YourBikes.co.uk” and 105 percent more clicks than “InaHurry.co.uk”
Why? Experts says the self-explanatory site name makes sense and reassures prospects to see search terms reflected in a Web site address.
Tech companies: research says disclose price info if you want to make the sale
Many marketers are reluctant to disclose prices online, but that’s what many prospects want. According to a 2008-09 Marketing Sherpa {www.marketingsherpa.com} survey of 3,108 decision makers. Eighty-nine percent agreed that a technology vendor got the sale or inside track for a sale at their company because they were more open than rivals about their pricing.
There’s never been a better time to re-examine every way you do business, from selling into new markets, supporting existing customers and developing new products and services. But, while your immersed in financial navel-gazing, remember, you’ve can’t neglect to keep the advertising and marketing faucet turned on. And while you’re at it, make sure you tell ‘em exactly what it is you do and how much you charge. It’s just a matter of how (not how much) you choose to invest your marketing dollars in explaining your value proposition.
Turning the spigot on and off as business conditions fluctuate isn’t the answer. Your customers will see through the ruse during good times and forget about you when times get tough. Not only will you fail to separate yourself from the competition, but your competitors will start separating you from your long-time customers.
“Historically, recessions are a time when new companies are born and great companies separate themselves from the competition,” quipped Thomas Friedman last week in a NY Times editorial.
Amen to that, Tom, who opined further: “We might be able to stimulate our way back to stability, but we can only invent our way back to prosperity. We need everyone at every level to get smarter.”
Getting companies smarter is more easily said than done these days, but it’s happening and not just at Google, Amazon and Facebook.
The Times’ Friedman still believes America, with its unrivaled freedoms, VC industry, research universities and openness to new immigrants has the best assets to be taking advantage of this moment – to “out- innovate our competition.” Unfortunately, most corporate coffers are nailed shut. Easy bank financing is a faded memory and venture capital is going through a seismic contraction.
“Personally I think the funds have gotten too big. Our biggest challenge is to think smaller and make smaller, smarter investments,” noted VC icon, Alan Patricof of Greycroft Partners at a recent venture investing conference in San Francisco.
According to the National Venture Capital Association, investment in venture capital funds shrank to $4.3 billion in the first quarter of 2009, from $7.1 billion in the same quarter of 2008. That’s a whopping 40-percent drop, but some experts think it’s a blessing in disguise, because it lowers the flow of capital into these funds. There won’t be as much excess money chasing bad deals and the VC industry may start seeing double digit returns some day. NVCA says investors are seeing about six-percent annually on their money over five years, down from 48 percent annually at the start of this decade.
With easy bank financing and easy VC money a thing of the past, organizations large and small are going to have to keep operating smarter.
More proof against cutting back on ads in a downturn
Just as cutting back on innovation during tough times comes back to haunt you when better times return, dramatically cutting back on advertising can be severely damaging to your market share and reputation.
Two recent surveys surveys of banking and retail consumers by research firm, Ad-Ology, found advertisers who cut back substantially during the downturn are building negative brand association. For instance:
• 48% of respondents agreed such advertisers “must be struggling”
• 12% of responds agreed “they may not be in business much longer.
Could good ol’ common sense be making a comeback? Read below for two examples.
Pearls of wisdom from the common-sense department
Generic Web site names that are self-explanatory deliver much higher click-through rates than a more abstract or clever name, says a new study by Memorable Domains. The study compares three sites using AdWords pay per click campaign for ads for electric bikes. “ElectricBicycles.co.uk” got 45 percent more clicks than “YourBikes.co.uk” and 105 percent more clicks than “InaHurry.co.uk”
Why? Experts says the self-explanatory site name makes sense and reassures prospects to see search terms reflected in a Web site address.
Tech companies: research says disclose price info if you want to make the sale
Many marketers are reluctant to disclose prices online, but that’s what many prospects want. According to a 2008-09 Marketing Sherpa {www.marketingsherpa.com} survey of 3,108 decision makers. Eighty-nine percent agreed that a technology vendor got the sale or inside track for a sale at their company because they were more open than rivals about their pricing.
There’s never been a better time to re-examine every way you do business, from selling into new markets, supporting existing customers and developing new products and services. But, while your immersed in financial navel-gazing, remember, you’ve can’t neglect to keep the advertising and marketing faucet turned on. And while you’re at it, make sure you tell ‘em exactly what it is you do and how much you charge. It’s just a matter of how (not how much) you choose to invest your marketing dollars in explaining your value proposition.
Turning the spigot on and off as business conditions fluctuate isn’t the answer. Your customers will see through the ruse during good times and forget about you when times get tough. Not only will you fail to separate yourself from the competition, but your competitors will start separating you from your long-time customers.
Wednesday, June 24, 2009
Mid-Year Media Reflections
Digital drives ad industry growth and business models. But it’s not all about the new.
Whether or not we’re pulling ourselves out of this (hopefully) once-in-a-generation economic quagmire remains to be seen. New jobs are being created, but the rate of unemployment is at 25 year highs in most parts of the country. The financial markets surged 40 percent after hitting 12-year lows in March, but they’ve been stuck in neutral the past month and most indices are about where they were at the start of the year. That means, investors haven’t lost real money, but they’re not keeping up with inflation either. Home sales are rising, but the median price of homes continues to plummet. Interest rates remain at historic lows, but no one’s really in a position to act on the bargain rates.
Despite this macro-inertia, it’s heartwarming to see that as in tough times before, innovation is thriving – no thanks to the venture capital community -- and long delayed-tough decisions are being made across all industries and walks of life.
In the media business, newspapers and magazines are taking it on the chin as both subscribers and advertisers are fleeing to more immediate and lower-cost outlets for news, information and entertainment. No surprise there. Some of the lost advertising and subscription revenue will return when the economy rebounds, but the rules of the game have changed so much that the tipping point has long since been passed.
What’s most striking about the media landscape in this downturn is that the audience (not the media gatekeepers) have stormed the cockpit and taken over the controls. Whether you’re in old media, new media or somewhere in between, you better get used to the idea that the audience/customer is calling the shots, not you. Get used to it.
Audience in control
Christian Dirschl, Content Architect for global information company Wolters Kluwer calls it the 4A’s: “Anyone can say Anything about Any topic at Any time.”
As Michael Marcel Fenez, Global Leader of Pricewaterhouse Coopers’ Entertainment & Media practice observed in a report released last week, “The accelerated migration to digital technologies has reinforced and proliferated new consumption habits and ‘digital behaviors’ as consumers seek more control over where, when and how they consume content while, more than ever, watching their pennies and seeking the best value from the choices they make.”
Over the next five years, PWC projects newspapers will lose $13 billion, dropping about 32 percent of its advertising revenue as digital technologies become increasingly widespread. The report expects print advertising overall to fall the most from $36.7 billion in 2008 to $24.3 billion in 2013. Online advertising revenue is anticipated to decline over the next two years. PWC expects online ad revenue to grow at a 2.5 percent compound annual rate from 2008.
Can’t hide from the digital migration
Fenez says the economic downturn has accelerated and intensified the digital migration among both providers and consumers of content. “Companies who grasp the opportunities which are appearing in this fast changing marketplace and are agile enough to adapt their business models will be able to take full advantage of the potential and new revenue models as they emerge.”
For instance, end-user spending through digital/ mobile platforms accounted for 23.4 per cent of the overall consumer/end-user/ access market in 2008 and should account for 78 per cent of total growth during the next five years, says PWC.
Consumers are taking control in various ways.
• They’re “time-shifting” via digital video recorders and video-on-demand to free them up from the TV schedule enabling them to watch what they want when they want.
• Increased broadband penetration is enabling them to get what they want from wherever they want while improvements in technology allow better downloading and streaming.
• Growth in mobile access is allowing consumers to access the Internet from any location and giving rise to the popularity of high-end devices such as smartphones, iPods, and the Kindle that combine mobility and access.
• The advances in digital music are also allowing consumers to purchase songs individually through digital channels (unavailable in physical format) and generating growth in “sideloading,” which allows consumers to buy music less expensively online, then transferring that music to mobile devices.
The changing face of advertising
PWC predicts that over the next five years, as consumers receive an increasing proportion of their E&M through digital/mobile platforms, advertisers will shift their resources to reflect the increasingly fragmented ad market. In the mobile arena, opportunities across the advertising continuum will enable the growth between brands and consumers, ranging from click-through banner ads and pre-roll ads on video clips through coupons and online subscriptions.
The growing proportion of Internet and mobile advertising in the overall global advertising mix will rise from around 12 percent in 2008 to 19 percent in 2013.
Age of accountability
However, the migration reinforces the need for greater transparency and accuracy over audience metrics which together with accountability for ad results, is becoming a “must have” in this new media world.
“Though operating in challenging and fast-moving times, this has never been such an exciting time for the industry,” say Fenez. “The accelerating digitization is why there is no place to hide from new models and dynamics across the industry. The winners will be those players who focus on driving and leading change that delivers real value for consumers.”
It’s Not All About the New
“Never adapt technology for the sake of technology,” cautioned Richard Oppenheim in a recent CPA Technology Advisor editorial. Make decisions based on usability and company business support. Technology requires frequent assessments that are often confused by the emotional pull of the new, the sexy and the visually gorgeous. Knowing how and when to make the decisions to change technology means doing evaluations and analysis that effectively measure the impact of that change on dollars, resources and people.”
Great ideas can come from anywhere at any time from all types of people and organizations. Don’t throw out the old, just to make room for the new, but keep your eyes wide open for new opportunities, apps and technologies that can bring fun and bottom line value to your business. Explore everything. It doesn’t matter if you’re currently twittering or tweeting, just keep testing, tweaking and exploring.
Whether or not we’re pulling ourselves out of this (hopefully) once-in-a-generation economic quagmire remains to be seen. New jobs are being created, but the rate of unemployment is at 25 year highs in most parts of the country. The financial markets surged 40 percent after hitting 12-year lows in March, but they’ve been stuck in neutral the past month and most indices are about where they were at the start of the year. That means, investors haven’t lost real money, but they’re not keeping up with inflation either. Home sales are rising, but the median price of homes continues to plummet. Interest rates remain at historic lows, but no one’s really in a position to act on the bargain rates.
Despite this macro-inertia, it’s heartwarming to see that as in tough times before, innovation is thriving – no thanks to the venture capital community -- and long delayed-tough decisions are being made across all industries and walks of life.
In the media business, newspapers and magazines are taking it on the chin as both subscribers and advertisers are fleeing to more immediate and lower-cost outlets for news, information and entertainment. No surprise there. Some of the lost advertising and subscription revenue will return when the economy rebounds, but the rules of the game have changed so much that the tipping point has long since been passed.
What’s most striking about the media landscape in this downturn is that the audience (not the media gatekeepers) have stormed the cockpit and taken over the controls. Whether you’re in old media, new media or somewhere in between, you better get used to the idea that the audience/customer is calling the shots, not you. Get used to it.
Audience in control
Christian Dirschl, Content Architect for global information company Wolters Kluwer calls it the 4A’s: “Anyone can say Anything about Any topic at Any time.”
As Michael Marcel Fenez, Global Leader of Pricewaterhouse Coopers’ Entertainment & Media practice observed in a report released last week, “The accelerated migration to digital technologies has reinforced and proliferated new consumption habits and ‘digital behaviors’ as consumers seek more control over where, when and how they consume content while, more than ever, watching their pennies and seeking the best value from the choices they make.”
Over the next five years, PWC projects newspapers will lose $13 billion, dropping about 32 percent of its advertising revenue as digital technologies become increasingly widespread. The report expects print advertising overall to fall the most from $36.7 billion in 2008 to $24.3 billion in 2013. Online advertising revenue is anticipated to decline over the next two years. PWC expects online ad revenue to grow at a 2.5 percent compound annual rate from 2008.
Can’t hide from the digital migration
Fenez says the economic downturn has accelerated and intensified the digital migration among both providers and consumers of content. “Companies who grasp the opportunities which are appearing in this fast changing marketplace and are agile enough to adapt their business models will be able to take full advantage of the potential and new revenue models as they emerge.”
For instance, end-user spending through digital/ mobile platforms accounted for 23.4 per cent of the overall consumer/end-user/ access market in 2008 and should account for 78 per cent of total growth during the next five years, says PWC.
Consumers are taking control in various ways.
• They’re “time-shifting” via digital video recorders and video-on-demand to free them up from the TV schedule enabling them to watch what they want when they want.
• Increased broadband penetration is enabling them to get what they want from wherever they want while improvements in technology allow better downloading and streaming.
• Growth in mobile access is allowing consumers to access the Internet from any location and giving rise to the popularity of high-end devices such as smartphones, iPods, and the Kindle that combine mobility and access.
• The advances in digital music are also allowing consumers to purchase songs individually through digital channels (unavailable in physical format) and generating growth in “sideloading,” which allows consumers to buy music less expensively online, then transferring that music to mobile devices.
The changing face of advertising
PWC predicts that over the next five years, as consumers receive an increasing proportion of their E&M through digital/mobile platforms, advertisers will shift their resources to reflect the increasingly fragmented ad market. In the mobile arena, opportunities across the advertising continuum will enable the growth between brands and consumers, ranging from click-through banner ads and pre-roll ads on video clips through coupons and online subscriptions.
The growing proportion of Internet and mobile advertising in the overall global advertising mix will rise from around 12 percent in 2008 to 19 percent in 2013.
Age of accountability
However, the migration reinforces the need for greater transparency and accuracy over audience metrics which together with accountability for ad results, is becoming a “must have” in this new media world.
“Though operating in challenging and fast-moving times, this has never been such an exciting time for the industry,” say Fenez. “The accelerating digitization is why there is no place to hide from new models and dynamics across the industry. The winners will be those players who focus on driving and leading change that delivers real value for consumers.”
It’s Not All About the New
“Never adapt technology for the sake of technology,” cautioned Richard Oppenheim in a recent CPA Technology Advisor editorial. Make decisions based on usability and company business support. Technology requires frequent assessments that are often confused by the emotional pull of the new, the sexy and the visually gorgeous. Knowing how and when to make the decisions to change technology means doing evaluations and analysis that effectively measure the impact of that change on dollars, resources and people.”
Great ideas can come from anywhere at any time from all types of people and organizations. Don’t throw out the old, just to make room for the new, but keep your eyes wide open for new opportunities, apps and technologies that can bring fun and bottom line value to your business. Explore everything. It doesn’t matter if you’re currently twittering or tweeting, just keep testing, tweaking and exploring.
Tuesday, May 19, 2009
Headfake or a Legit Rally?
Nobody knows. But at least some folks are out on the field and they're “in it to win it.”
New numbers from Forrester Research predict that interactive marketing spending will hit $25.6 billion this year -- up 11 percent from $23.1 billion in 2008, despite being flat, as marketers shift money from traditional media to digital channels. That total, which also includes search, email, social media and mobile marketing dollars, is expected to more than double to nearly $55 billion by 2014. "This growth is due to marketers seeking lower cost, more accountable channels which are also widely used by their customers," wrote Forrester analyst Shar Van Boskirk, in a blog post previewing the firm's interactive spending forecast due out in June.
A recent Forrester survey of more than 200 marketers found that 60 percent planned to increase interactive budgets by pulling back spending on traditional outlets. The biggest victim of the trend will be direct mail, which stands to be slashed by 40 percent. Print will not fare much better, with spending on newspapers expected to be cut by 35 percent, and magazines by 28 percent.
By contrast, mobile and social media will enjoy the biggest spending gains in interactive -- increasing nearly 70 percent to $391 million and almost 60 percent to $716 million, respectively, in 2009. But the recession's toll on other segments will leave display advertising virtually flat at $7.8 billion, and email up only slightly to $1.2 billion. Search marketing, which will get a lift from the shift of traditional and online display ad dollars, is expected to grow 14% to $15.4 billion.
Over the next half decade, however, Forrester expects online display advertising to grow at a faster compound annual growth rate (17%) than search (15%) or e-mail marketing (11%). We’re reaching out to Forrester to see if they will explain this phenomenon in their next report due out in June.
As a harbinger of things to come, American Business Media's just-released 2009 Media Financial Survey, showed B2B media company revenue declined 2.2 percent in 2008 versus 2007, but revenue growth in online, live events, and data products helped offset declines in revenue for magazines. Of the six key B2B media company revenue categories (Magazines, Custom Publishing, Data, Online, Tradeshows and Conferences), Online revenue showed the strongest growth, increasing 15.1 percent in 2008, and rising at a CAGR of 26.8 percent from 2006. Magazines were the weakest performers, showing an 8.4 percent decrease in 2008, and a decline of 3.9 percent on a CAGR basis over the three year period.
Search and display ads work together
Just as global marketers are learning to weave together old and new media into their campaigns, it no longer has to be an either/or decision about which form of digital to deploy. New research from iProspect indicates display ads do influence search behavior. The findings rely on data to support industry rhetoric that display ads and search work together to provide a bigger impact on campaigns. The "Search Engine Marketing and Online Display Advertising Integration Study" suggests that while 31 percent of people click on display ads, nearly as many – 27 percent -- go to search engines to provide a search. More than 20 percent type the company Web address into their browser and directly navigate to the Web site, and 9 percent respond by investigating the product, brand, or company through social media.
More signs of things at least not getting worse
• Although unemployment (8.9%) is at its highest level in decades, NEW claims for state unemployment benefits fell sharply last week, the fourth decline in five weeks. Many economists say this trend provides further evidence that the pace of layoffs has slowed after months of steep job cuts.
• Nonfarm payrolls fell 539,000, the smallest decline in six months
• The equity markets are not giving back their historic gains of the past two months – the Dow and S&P are up nearly 30 percent from their March lows and at or near positive territory for the year to date…..Bring on the headfake.
• OpenTable, the online restaurant reservation service, could soon become the first venture-backed company to be brought to the public markets in nine months. It’s a real company, whose service is easy to use, widely adopted with a legit balance sheet behind it. {Disclosure: We have perused its SEC filings, but have no financial stake in this company}
Fred Wilson, a partner at Union Square Ventures and a blogger about venture capital, recently wrote that the I.P.O. drought for venture-backed companies would end in the next year and perhaps by the end of this year. “I don't know if this market rally we've been having is a headfake or the end of the bear market. My gut says we'll see at least one more pronounced down move before we see bottom.”
For one, he said, venture capitalists have been punished long enough for selling shares of so many undeserving companies during the dot-com bubble. There are many high-quality companies sitting in the pipeline, ready to go public as soon as they can, he said. He argued that many of them — including OpenTable — have business models such as subscriptions, which make for strong public companies.
It’s similar to the equity markets in which many traders and analysts remain cautiously bullish on stocks. How come? In part it’s because pressure is rising for investors sitting on the sidelines to put to work their excess cash, which is garnering little interest because of the Federal Reserve's rock-bottom target aimed at spurring an economic recovery.
"The fundamentals almost don't matter at the moment," Cantor Fitzgerald strategist Marc Pado, told the Wall Street Journal today, pointing to recent data from the Investment Company Institute showing that retail investors are holding almost $4 trillion in cash reserves. "If we even get a small percentage of that money come into the market, you can easily get another leg to this rally."
Back to I.P.O.’s, the picture is not exactly rosy. I.P.O. filings are down 94 percent compared to last year and there have been only four I.P.O.’s this year, versus 28 by this time last year, according to Renaissance Capital’s IPO Home.
Still, there are some good signs for technology companies in the pipeline. Over the last 12 months, tech I.P.O.’s have been the most popular. Technology I.P.O.’s have returned on average 28 percent and health care and biotech I.P.O.’s have returned 24 percent, while all other sectors, including clean energy, have posted negative average returns, according to IPO Home.
Can the Big 3 business magazines save themselves?
Like the Big 3 automakers, the Big 3 business magazines may have to undergo a dramatic and painful restructuring to stay in the media game, says TechCrunch columnist Sarah Lacy. She says it’s a near certainty that Forbes, Fortune and BusinessWeek, will be cutting staff and frequency, but can still maintain some form of long-form investigative stories they’re famous for.
Here’s Lacy’s call for competing with blogs, Web pubs and other immediate, lower-cost forms of journalism: "ruthlessly collapse" the print and online versions into one unit, churn out one or two cover-length pieces per print issue while filling the rest with the best stories and user comments from the Web.” Then cut the money spent on courting new subscribers, and shift the entire marketing budget to promoting the Web product or real-life conferences and branded events. You’ve now got one publication, not two pretending to be one. One publication is a lot cheaper, even if it's printed on dead trees. Under this system, Lacy says, 99 percent of your staff's focus is on the online product, with the other one percent devoted to writing lengthy features for the print pub, which will continue to attract a separate audience. Yes, your pub will operate more like a blog, but it won't sacrifice the print ad revenue stream, either.
Food for thought.
As we’ve mentioned numerous times in recent months, every crisis breeds opportunity. You’re never going to get an “ALL CLEAR” memo in your inbox saying “The Great Disruption” is finally over, so it’s OK to resume hiring, spending and innovating. So if you think there’s even a reasonable chance things are not getting worse, then they’re probably a lot better than you think.
As Daniel Pink , author of Free Agent Nation, notes, our nation’s continued viability depends on what he calls the “imagination economy” – things like creativity, vision and playfulness – that cannot be outsourced. Now’s the time.
New numbers from Forrester Research predict that interactive marketing spending will hit $25.6 billion this year -- up 11 percent from $23.1 billion in 2008, despite being flat, as marketers shift money from traditional media to digital channels. That total, which also includes search, email, social media and mobile marketing dollars, is expected to more than double to nearly $55 billion by 2014. "This growth is due to marketers seeking lower cost, more accountable channels which are also widely used by their customers," wrote Forrester analyst Shar Van Boskirk, in a blog post previewing the firm's interactive spending forecast due out in June.
A recent Forrester survey of more than 200 marketers found that 60 percent planned to increase interactive budgets by pulling back spending on traditional outlets. The biggest victim of the trend will be direct mail, which stands to be slashed by 40 percent. Print will not fare much better, with spending on newspapers expected to be cut by 35 percent, and magazines by 28 percent.
By contrast, mobile and social media will enjoy the biggest spending gains in interactive -- increasing nearly 70 percent to $391 million and almost 60 percent to $716 million, respectively, in 2009. But the recession's toll on other segments will leave display advertising virtually flat at $7.8 billion, and email up only slightly to $1.2 billion. Search marketing, which will get a lift from the shift of traditional and online display ad dollars, is expected to grow 14% to $15.4 billion.
Over the next half decade, however, Forrester expects online display advertising to grow at a faster compound annual growth rate (17%) than search (15%) or e-mail marketing (11%). We’re reaching out to Forrester to see if they will explain this phenomenon in their next report due out in June.
As a harbinger of things to come, American Business Media's just-released 2009 Media Financial Survey, showed B2B media company revenue declined 2.2 percent in 2008 versus 2007, but revenue growth in online, live events, and data products helped offset declines in revenue for magazines. Of the six key B2B media company revenue categories (Magazines, Custom Publishing, Data, Online, Tradeshows and Conferences), Online revenue showed the strongest growth, increasing 15.1 percent in 2008, and rising at a CAGR of 26.8 percent from 2006. Magazines were the weakest performers, showing an 8.4 percent decrease in 2008, and a decline of 3.9 percent on a CAGR basis over the three year period.
Search and display ads work together
Just as global marketers are learning to weave together old and new media into their campaigns, it no longer has to be an either/or decision about which form of digital to deploy. New research from iProspect indicates display ads do influence search behavior. The findings rely on data to support industry rhetoric that display ads and search work together to provide a bigger impact on campaigns. The "Search Engine Marketing and Online Display Advertising Integration Study" suggests that while 31 percent of people click on display ads, nearly as many – 27 percent -- go to search engines to provide a search. More than 20 percent type the company Web address into their browser and directly navigate to the Web site, and 9 percent respond by investigating the product, brand, or company through social media.
More signs of things at least not getting worse
• Although unemployment (8.9%) is at its highest level in decades, NEW claims for state unemployment benefits fell sharply last week, the fourth decline in five weeks. Many economists say this trend provides further evidence that the pace of layoffs has slowed after months of steep job cuts.
• Nonfarm payrolls fell 539,000, the smallest decline in six months
• The equity markets are not giving back their historic gains of the past two months – the Dow and S&P are up nearly 30 percent from their March lows and at or near positive territory for the year to date…..Bring on the headfake.
• OpenTable, the online restaurant reservation service, could soon become the first venture-backed company to be brought to the public markets in nine months. It’s a real company, whose service is easy to use, widely adopted with a legit balance sheet behind it. {Disclosure: We have perused its SEC filings, but have no financial stake in this company}
Fred Wilson, a partner at Union Square Ventures and a blogger about venture capital, recently wrote that the I.P.O. drought for venture-backed companies would end in the next year and perhaps by the end of this year. “I don't know if this market rally we've been having is a headfake or the end of the bear market. My gut says we'll see at least one more pronounced down move before we see bottom.”
For one, he said, venture capitalists have been punished long enough for selling shares of so many undeserving companies during the dot-com bubble. There are many high-quality companies sitting in the pipeline, ready to go public as soon as they can, he said. He argued that many of them — including OpenTable — have business models such as subscriptions, which make for strong public companies.
It’s similar to the equity markets in which many traders and analysts remain cautiously bullish on stocks. How come? In part it’s because pressure is rising for investors sitting on the sidelines to put to work their excess cash, which is garnering little interest because of the Federal Reserve's rock-bottom target aimed at spurring an economic recovery.
"The fundamentals almost don't matter at the moment," Cantor Fitzgerald strategist Marc Pado, told the Wall Street Journal today, pointing to recent data from the Investment Company Institute showing that retail investors are holding almost $4 trillion in cash reserves. "If we even get a small percentage of that money come into the market, you can easily get another leg to this rally."
Back to I.P.O.’s, the picture is not exactly rosy. I.P.O. filings are down 94 percent compared to last year and there have been only four I.P.O.’s this year, versus 28 by this time last year, according to Renaissance Capital’s IPO Home.
Still, there are some good signs for technology companies in the pipeline. Over the last 12 months, tech I.P.O.’s have been the most popular. Technology I.P.O.’s have returned on average 28 percent and health care and biotech I.P.O.’s have returned 24 percent, while all other sectors, including clean energy, have posted negative average returns, according to IPO Home.
Can the Big 3 business magazines save themselves?
Like the Big 3 automakers, the Big 3 business magazines may have to undergo a dramatic and painful restructuring to stay in the media game, says TechCrunch columnist Sarah Lacy. She says it’s a near certainty that Forbes, Fortune and BusinessWeek, will be cutting staff and frequency, but can still maintain some form of long-form investigative stories they’re famous for.
Here’s Lacy’s call for competing with blogs, Web pubs and other immediate, lower-cost forms of journalism: "ruthlessly collapse" the print and online versions into one unit, churn out one or two cover-length pieces per print issue while filling the rest with the best stories and user comments from the Web.” Then cut the money spent on courting new subscribers, and shift the entire marketing budget to promoting the Web product or real-life conferences and branded events. You’ve now got one publication, not two pretending to be one. One publication is a lot cheaper, even if it's printed on dead trees. Under this system, Lacy says, 99 percent of your staff's focus is on the online product, with the other one percent devoted to writing lengthy features for the print pub, which will continue to attract a separate audience. Yes, your pub will operate more like a blog, but it won't sacrifice the print ad revenue stream, either.
Food for thought.
As we’ve mentioned numerous times in recent months, every crisis breeds opportunity. You’re never going to get an “ALL CLEAR” memo in your inbox saying “The Great Disruption” is finally over, so it’s OK to resume hiring, spending and innovating. So if you think there’s even a reasonable chance things are not getting worse, then they’re probably a lot better than you think.
As Daniel Pink , author of Free Agent Nation, notes, our nation’s continued viability depends on what he calls the “imagination economy” – things like creativity, vision and playfulness – that cannot be outsourced. Now’s the time.
Tuesday, May 05, 2009
Millionaire Returns to Prime Time. Investors and Home Buyers Return to Markets
And you just had your budget slashed and headcount trimmed. How to sell beyond the spreadsheet.
It’s just so predictable. We’re on the verge of one of the greatest economic recoveries in a generation and Corporate America is still figuring out how to hunker down and get even leaner and meaner. At HB we’re all for spending wisely, but at some point, you can’t keep asking what’s left of your staff to run on fumes, smoke, mirrors and duct tape.
Sooner or later you’re going to have to start investing in talented people and regaining your market share with some smartly placed ad spending. If not, you’re not only going to be left alone on the launch pad; you’re going to be singed by your competitors’ after-burner fumes. Pink slips continue across all sectors of the workforce, including the media business. Conde Nast shutters Portfolio. More marketing directors report cuts in spending. IDC's marketing barometer study, which looked at b-to-b marketing trends for the first quarter of 2009, noted overall spending was down about 10 percent.
So what. Back in March on this blog, we called the statistical end to the Great Recession (aka “Great Disruption”) of 2008-2009. Since then, positive indicators keeping cropping up like dandelions in the northern climes of this country. You don’t have to look too hard to find them.
The Equity Markets: The S&P 500 is in positive territory for the year – having rebounded more than 34 percent from its 12 year low in March. The Nasdaq Composite Index is up nearly 12 percent for the year.
Housing: Pending sales of previously owned homes rose for a second month in March, while construction spending edged higher. A Federal Reserve survey of loan officers showed demand for prime mortgages rose in the first quarter for the first time since early 2007. The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in March, rose 3.2 percent as first-time buyers waded into the market to take advantage of favorable prices and mortgage rates, and an $8,000 federal tax credit.
Consumer Confidence: For the first time in five years, more Americans than not think the country is “headed in the right direction” (48% to 44%) according to the latest Associated Press/Roper GfK Roper Public Affairs poll released last week.
Popular Culture: The game show “Who Wants to Be a Millionaire” – which got a nostalgic boost from “Slumdog Millionaire’s” dominance of the Oscars this spring, will return to prime time (ABC-TV) for a two-week tournament this summer, with Regis Philbin again as host. (Disclosure: my wife works in production for this show). Millionaire, which has been quietly chuggling along nicely in syndication for years, since being dropped from prime time in 2001 (with “only” 10 million viewers). At its height in the late 1990s, it had 30 million viewers. Wealth and life-altering hope is back.
Macro Economy: The U.S. economy is on track for a recovery later this year, but the pickup is likely to be sluggish and the jobless rate is likely to rise further, Federal Reserve Chairman Ben Bernanke said Tuesday. "We expect economic activity to bottom out, then to turn up later this year," he said in testimony prepared for delivery to the congressional Joint Economic Committee. Bernanke said the expected recovery will only gradually gain steam and that the economy would grow below its longer-run potential for a while. "Businesses are likely to be cautious about hiring, implying that that the jobless rate could remain high for a time, even after economic growth resumes," he said. Go back and review your history books. That’s a green light if we’ve ever seen one! He didn’t even mention that borrowing rates, oil prices and inflation rates are at the lowest levels in a generation.
What Online Publishers Can Learn From Print Sales
Since we’re sometimes accused of being too hard on print media, we’d like to point out a smart pro-print piece in Online Publishing Insider blog the other day by Kevin Mannion of Sky Road Consulting. Again, we don’t believe in bashing print or any other media. We just don’t believe the days of a single media dominating the landscape are likely to return.
Here are some excerpts of Mannnion’s commentary: “As a rule, digital media is numbers and results-oriented, while print has traditionally relied on a more conceptual sell. Online selling is geared to the spreadsheet; print to the PowerPoint presentation. Print selling emphasizes market knowledge, educating clients --especially on the marketer side -- on buying dynamics, and telling a compelling sales story that shows clients how they will succeed. Digital selling is fast, RFP-oriented, emphasizing media technology knowledge and campaign metric optimization.
Successful digital selling requires going beyond the spreadsheet, while selling print ads needs to be more metrics-oriented than ever before. But the best online sales teams have learned from the legacy of print selling. They don't rely on hits and clicks and answering RFPs with agency spreadsheets neatly filled in with the right numbers. They know how to move beyond the RFP to market creation. And most important, they know how to sell their audience engagement story -- and sell it as a highly compelling advertiser/audience engagement story.Simple truth: Advertisers care about how you can help them see more business through their sales funnel.”
Sure, we could spend the rest of this space hedging our optimism with talk about “bear market rallies”, less-tha-stellar bank stress test results and fears of inflation. But if you want your organization to be a leader rather than a follower, you’ve got to throw out your lifelines, commit to business as usual and start gobbling up market share that your rivals are leaving on the table. If you don’t someone else will.
Final answer!
It’s just so predictable. We’re on the verge of one of the greatest economic recoveries in a generation and Corporate America is still figuring out how to hunker down and get even leaner and meaner. At HB we’re all for spending wisely, but at some point, you can’t keep asking what’s left of your staff to run on fumes, smoke, mirrors and duct tape.
Sooner or later you’re going to have to start investing in talented people and regaining your market share with some smartly placed ad spending. If not, you’re not only going to be left alone on the launch pad; you’re going to be singed by your competitors’ after-burner fumes. Pink slips continue across all sectors of the workforce, including the media business. Conde Nast shutters Portfolio. More marketing directors report cuts in spending. IDC's marketing barometer study, which looked at b-to-b marketing trends for the first quarter of 2009, noted overall spending was down about 10 percent.
So what. Back in March on this blog, we called the statistical end to the Great Recession (aka “Great Disruption”) of 2008-2009. Since then, positive indicators keeping cropping up like dandelions in the northern climes of this country. You don’t have to look too hard to find them.
The Equity Markets: The S&P 500 is in positive territory for the year – having rebounded more than 34 percent from its 12 year low in March. The Nasdaq Composite Index is up nearly 12 percent for the year.
Housing: Pending sales of previously owned homes rose for a second month in March, while construction spending edged higher. A Federal Reserve survey of loan officers showed demand for prime mortgages rose in the first quarter for the first time since early 2007. The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in March, rose 3.2 percent as first-time buyers waded into the market to take advantage of favorable prices and mortgage rates, and an $8,000 federal tax credit.
Consumer Confidence: For the first time in five years, more Americans than not think the country is “headed in the right direction” (48% to 44%) according to the latest Associated Press/Roper GfK Roper Public Affairs poll released last week.
Popular Culture: The game show “Who Wants to Be a Millionaire” – which got a nostalgic boost from “Slumdog Millionaire’s” dominance of the Oscars this spring, will return to prime time (ABC-TV) for a two-week tournament this summer, with Regis Philbin again as host. (Disclosure: my wife works in production for this show). Millionaire, which has been quietly chuggling along nicely in syndication for years, since being dropped from prime time in 2001 (with “only” 10 million viewers). At its height in the late 1990s, it had 30 million viewers. Wealth and life-altering hope is back.
Macro Economy: The U.S. economy is on track for a recovery later this year, but the pickup is likely to be sluggish and the jobless rate is likely to rise further, Federal Reserve Chairman Ben Bernanke said Tuesday. "We expect economic activity to bottom out, then to turn up later this year," he said in testimony prepared for delivery to the congressional Joint Economic Committee. Bernanke said the expected recovery will only gradually gain steam and that the economy would grow below its longer-run potential for a while. "Businesses are likely to be cautious about hiring, implying that that the jobless rate could remain high for a time, even after economic growth resumes," he said. Go back and review your history books. That’s a green light if we’ve ever seen one! He didn’t even mention that borrowing rates, oil prices and inflation rates are at the lowest levels in a generation.
What Online Publishers Can Learn From Print Sales
Since we’re sometimes accused of being too hard on print media, we’d like to point out a smart pro-print piece in Online Publishing Insider blog the other day by Kevin Mannion of Sky Road Consulting. Again, we don’t believe in bashing print or any other media. We just don’t believe the days of a single media dominating the landscape are likely to return.
Here are some excerpts of Mannnion’s commentary: “As a rule, digital media is numbers and results-oriented, while print has traditionally relied on a more conceptual sell. Online selling is geared to the spreadsheet; print to the PowerPoint presentation. Print selling emphasizes market knowledge, educating clients --especially on the marketer side -- on buying dynamics, and telling a compelling sales story that shows clients how they will succeed. Digital selling is fast, RFP-oriented, emphasizing media technology knowledge and campaign metric optimization.
Successful digital selling requires going beyond the spreadsheet, while selling print ads needs to be more metrics-oriented than ever before. But the best online sales teams have learned from the legacy of print selling. They don't rely on hits and clicks and answering RFPs with agency spreadsheets neatly filled in with the right numbers. They know how to move beyond the RFP to market creation. And most important, they know how to sell their audience engagement story -- and sell it as a highly compelling advertiser/audience engagement story.Simple truth: Advertisers care about how you can help them see more business through their sales funnel.”
Sure, we could spend the rest of this space hedging our optimism with talk about “bear market rallies”, less-tha-stellar bank stress test results and fears of inflation. But if you want your organization to be a leader rather than a follower, you’ve got to throw out your lifelines, commit to business as usual and start gobbling up market share that your rivals are leaving on the table. If you don’t someone else will.
Final answer!
Tuesday, April 21, 2009
Still Optimistic About Media Recovery Despite Print Woes
Tech sector and digital advertising leading early sorties against stubborn downturn. A ‘wall of money’ is coming. Stop staring at your feet.
If your business model depends on print advertising, then the first three months of 2009 is a quarter you’ll no doubt try to bury and forget. Magazine ad pages were down 26 percent from the first quarter of 2008 and according to one report in the New York Times, newspaper ad dollars could fall as much as 30 percent in Q1 when those numbers come in.
“The latest Publishers Information Bureau (PIB) data reflect the advertising paralysis triggered by the late 2008 economic meltdown. Marketers froze ad budgets, which affected placement in first quarter magazines,” said Ellen Oppenheim, Executive Vice President & Chief Marketing Officer, Magazine Publishers of America. Advertising page declines were seen in the ad categories most affected by the slowdown: automotive (-47%), finance (-46%) and retail (-34%).” Of the more than 220 magazines tracked by PIB, only 15 posted ad page gains. Of the remaining titles, 75 percent were down significantly, posting double-digit ad page losses. Ouch.
So where are the bright spots?
Technology is one sector that’s poised for a rebound -- both in how it makes things and how it markets those things. For instance, tech companies spent only 23 percent less in print advertising this year than they did in Q1 of 2008’s. While painful, this looks pretty rosy compared to the stinginess of auto, finance and retail advertisers. And unlike those in other industries, tech company marketers are aggressively shifting their budgets to the Web and other emerging media.
“About 15 percent of our spend is on digital,” Beth Comstock, CMO of General Electric told BtoB Magazine this week. “In my mind that is not enough. One of my goals is to increase that spend.” GE is believed to be the first major advertiser to use live streaming video within a banner ad, which it introduced on 10 Web sites last year featuring CEO Jeff Immelt.
Overall, Internet advertising totaled $23.4 billion in 2008, up nearly 11 percent over 2007 according to the Interactive Advertising Bureau and PricewaterhouseCoopers. The IAB’s March Internet Advertising Report showed digital video revenue more than doubling in 2008 to $734 million. One driver of this growth, said IAB’s Jeremy Fain, is that marketers can now take advantage of video without even having video assets. They’re starting to create Web-specific video content instead of repurposing it, and increasingly, they’re including clickable “hot spots” within the video for deeper exploration by the viewer.
Expect to see more video from B2B marketers, particularly from companies with medium to long range sales cycles. Intel CEO, Paul Otellinie said recently that PC sales have reached bottom and he forecasts moderate growth. Intel also said consumer demand remained relatively stronger than corporate demand and demand in US and China is recovering more than it is in Europe, Japan and emerging markets. One area of the computer business that has been relatively strong has been sales of low-cost Internet machines the industry calls mini-notebooks or netbooks. By and large, these devices are being marketed to supplement, not replace, units already on the desktops and travel bags of personal and business users.
Another positive indicator is the health of tech-oriented stock indices, which are in positive territory for the year. Yes we said positive. While the Dow is down more than 10 percent for the year and the S&P 500 down almost eight percent, the Nasdaq Composite is up two percent for the year and the Nasdaq 100 is up more than eight percent. That’s right, up.
Last week, David Resler, a Nomura Securities analyst told the Wall Street Journal: “The data we got today fit into the idea that companies are slashing production at a breakneck rate and that's paring inventories pretty aggressively. Once those inventories are depleted, it doesn't take much to start spurring a little demand," One promising sign last week was a dip in the inventories-to-sales ratio. That is where the signs of recovery or rebound will show up first."
Recessions Spur Innovation
“Recessions have always been incubators for innovation and personal initiative,” wrote Forbes columnist, Richard C. Morais, this week. He points to The Kaufman Foundation’s entrepreneurial activity index, up 15 percent from two years earlier and the fact that 60 percent of recently laid-off workers are considering changing industries or careers – about twice the normal rate.
As Morais’ colleague, Ken Fisher, admonished: “Investors refuse to think a few years out to the resurgence of the economy because they’re busy staring at their feet. This huge bear market has presented huge opportunities. Beyond simple cheapness, we’re on the cusp of the biggest global monetary and fiscal stimulus relative to the world’s GDP in history. There is a wall of money coming. And then a boom!”
Or as comedienne, Lily Tomlin once quipped: “No matter how cynical you get, it is impossible to keep up.”
If your business model depends on print advertising, then the first three months of 2009 is a quarter you’ll no doubt try to bury and forget. Magazine ad pages were down 26 percent from the first quarter of 2008 and according to one report in the New York Times, newspaper ad dollars could fall as much as 30 percent in Q1 when those numbers come in.
“The latest Publishers Information Bureau (PIB) data reflect the advertising paralysis triggered by the late 2008 economic meltdown. Marketers froze ad budgets, which affected placement in first quarter magazines,” said Ellen Oppenheim, Executive Vice President & Chief Marketing Officer, Magazine Publishers of America. Advertising page declines were seen in the ad categories most affected by the slowdown: automotive (-47%), finance (-46%) and retail (-34%).” Of the more than 220 magazines tracked by PIB, only 15 posted ad page gains. Of the remaining titles, 75 percent were down significantly, posting double-digit ad page losses. Ouch.
So where are the bright spots?
Technology is one sector that’s poised for a rebound -- both in how it makes things and how it markets those things. For instance, tech companies spent only 23 percent less in print advertising this year than they did in Q1 of 2008’s. While painful, this looks pretty rosy compared to the stinginess of auto, finance and retail advertisers. And unlike those in other industries, tech company marketers are aggressively shifting their budgets to the Web and other emerging media.
“About 15 percent of our spend is on digital,” Beth Comstock, CMO of General Electric told BtoB Magazine this week. “In my mind that is not enough. One of my goals is to increase that spend.” GE is believed to be the first major advertiser to use live streaming video within a banner ad, which it introduced on 10 Web sites last year featuring CEO Jeff Immelt.
Overall, Internet advertising totaled $23.4 billion in 2008, up nearly 11 percent over 2007 according to the Interactive Advertising Bureau and PricewaterhouseCoopers. The IAB’s March Internet Advertising Report showed digital video revenue more than doubling in 2008 to $734 million. One driver of this growth, said IAB’s Jeremy Fain, is that marketers can now take advantage of video without even having video assets. They’re starting to create Web-specific video content instead of repurposing it, and increasingly, they’re including clickable “hot spots” within the video for deeper exploration by the viewer.
Expect to see more video from B2B marketers, particularly from companies with medium to long range sales cycles. Intel CEO, Paul Otellinie said recently that PC sales have reached bottom and he forecasts moderate growth. Intel also said consumer demand remained relatively stronger than corporate demand and demand in US and China is recovering more than it is in Europe, Japan and emerging markets. One area of the computer business that has been relatively strong has been sales of low-cost Internet machines the industry calls mini-notebooks or netbooks. By and large, these devices are being marketed to supplement, not replace, units already on the desktops and travel bags of personal and business users.
Another positive indicator is the health of tech-oriented stock indices, which are in positive territory for the year. Yes we said positive. While the Dow is down more than 10 percent for the year and the S&P 500 down almost eight percent, the Nasdaq Composite is up two percent for the year and the Nasdaq 100 is up more than eight percent. That’s right, up.
Last week, David Resler, a Nomura Securities analyst told the Wall Street Journal: “The data we got today fit into the idea that companies are slashing production at a breakneck rate and that's paring inventories pretty aggressively. Once those inventories are depleted, it doesn't take much to start spurring a little demand," One promising sign last week was a dip in the inventories-to-sales ratio. That is where the signs of recovery or rebound will show up first."
Recessions Spur Innovation
“Recessions have always been incubators for innovation and personal initiative,” wrote Forbes columnist, Richard C. Morais, this week. He points to The Kaufman Foundation’s entrepreneurial activity index, up 15 percent from two years earlier and the fact that 60 percent of recently laid-off workers are considering changing industries or careers – about twice the normal rate.
As Morais’ colleague, Ken Fisher, admonished: “Investors refuse to think a few years out to the resurgence of the economy because they’re busy staring at their feet. This huge bear market has presented huge opportunities. Beyond simple cheapness, we’re on the cusp of the biggest global monetary and fiscal stimulus relative to the world’s GDP in history. There is a wall of money coming. And then a boom!”
Or as comedienne, Lily Tomlin once quipped: “No matter how cynical you get, it is impossible to keep up.”
Sunday, April 12, 2009
Recession Petering Out? (Part 2)
Readers express cautious optimism laden with caveats.
Last week’s post: “Recession Running Out of Steam?” seemed to hit a nerve with many of you. While no one actually called us crazy, feedback fell generally fell between “not getting worse” and “cautious optimism with lots of caveats.” Mike, who runs a small regional law firm in the Southeast, was pretty representative of our readers:
“Hank, I like your optimism. In certain sectors and regions, the recession/depression will bottom by the end of this year. In others, like credit card debt, commercial real estate and commercial debt and vacation home and high end housing ($500K+) (no realistic financing), I think we are a long way from bottom.
Much depends on how the world reacts to whatever happens with GM, some recovery in international activity (China, Panama Canal, etc.) and some private money coming back into the credit markets. The banks will not get anybody out of this mess and they never have been a part of any solution.”
Whether or not you really do feel more optimistic right now, it’s important continue projecting an upbeat attitude within your organization and when dealing with clients, customers and investors. Here’s why. Winners like to associate with winners. People naturally gravitate to companies and leaders who seem to have things going in the right direction and they’re more likely to stay in contact with you and make referrals if they think there’s going to be a positive “rub off” effect by associating with you.
Here’s are some more upbeat factoids you can use in your sales scripts and Powerpoint presentations:
• The percentage of Americans who think this country is headed in the right direction just hit 39% up from 15% when Obama took office (Source: NYT/CBS News poll).
• 20% of Americans now think the economy is getting better -- up from 7% who thought so in mid January (Source: NYT/CBS News poll).
• The equity markets finished five consecutive weeks of gains. The 25% surge in the S&P 500, for instance, was its best performance over that span since 1938.
• The Index of Volatility (VIX) on the Chicago Options Exchange reached to its lowest close since late September, just ahead of Wall Street's meltdown. That means financial markets are stabilizing and hopefully moving back to fundamentals over fear.
• We’re starting to see signs of life in the credit markets: The 30-year fixed mortgage dropped to 4.61% -- believed to be the lowest level on record.
• Thomson Reuters said businesses with better credit ratings issued $200 billion of debt in the first quarter of 2009, up from $188 last year.
• The London Interbank Offer Rate (LIBOR), which tracks short-term/overnight borrowing costs between banks, fell to 1.16%, down from 1.27% last month and from 4.8% a year ago. The next to nothing rates banks are charging are among the lowest levels ever recorded.
• The U.S. Federal Reserve said consumer borrowing on credit cards dropped last month at an annualized rate of $7.8 billion (9.7%), the sharpest drop since the Fed began keeping records in 1968.
How does this help me?
On one hand, high levels of consumer saving, means folks are still pretty fiscally constipated. They're reluctant to open their wallets to increase spending as employers cut millions of jobs and and reduce pay and benefits for those still hanging on to their jobs. But this reluctance to spend also means consumers are saving more than they have in decades. That’s not great if you’re in retail and consumer staples, but it’s actually a good sign if you market financial services, electronics, autos, high-end appliances, professional services and other goods and services with a long term sales cycle or purchase consideration phase. In other words, advertising’s going to matter more than it has in a long time as both an awareness builder and decision influencer.
Both consumers and businesses are doing more homework than ever before they commit to a purchase decision. You better be out there – and you better be out there with a compelling story to tell.
How top agencies are helping clients tell stories
“We live in a time of extraordinary change—change that will be amplified and accelerated by the recession, ushering in perhaps a new age of business transformation,” said John Favalo, managing partner-group B2B at Eric Mower & Associates, the #2 midsize agency in 2008 according to BtoB magazine’s Top Agency rankings
“Business models, marketing and communications will transform, and successful agencies will be instrumental in helping clients through the dramatic changes.” Eric Mower also had its best year on record last year, increasing its total agency revenue by 30% and winning major new clients such as GE Energy.
Favalo said one of the most important things an agency can do to succeed during these challenging times is deliver relevant, personal solutions to clients, based on their unique needs. “We make business-to-business person-to-person,” he said. For example, the agency developed an online application called “Solutions Advisor” for Motorola's Enterprise Mobility unit. The tool serves up custom solutions for clients and prospects based on their information needs.
Agencies of all sizes say they are expanding their social media and video practices to keep up with client demand.
“Our work in social media is increasingly essential to the needs of our clients,” said Tom Stein, president-CEO of Stein Rogan+Partners, winner of BoB’s small the small agency category. “We see some very interesting vectors between search marketing, social media and more traditional media such as print, broadcast and online.”
For example, Stein Rogan created a social community of school district administrators for client SchoolWires, a provider of communications technology. Called “Share,” it enables users to share templates, forms, reviews and other user-generated content.
So whether or not you’re convinced the recession has hit bottom, it’s time to start behaving as though the recovery has started. Now is the time to crank up your marketing, R&D and staffing so you’re locked and loaded when two years of pent up spending and decision-making finally lets loose. It’s going to be a time of dramatic change with unprecedented opportunities for those who have been making – not struggling to follow -- the new rules of the marketplace.
Last week’s post: “Recession Running Out of Steam?” seemed to hit a nerve with many of you. While no one actually called us crazy, feedback fell generally fell between “not getting worse” and “cautious optimism with lots of caveats.” Mike, who runs a small regional law firm in the Southeast, was pretty representative of our readers:
“Hank, I like your optimism. In certain sectors and regions, the recession/depression will bottom by the end of this year. In others, like credit card debt, commercial real estate and commercial debt and vacation home and high end housing ($500K+) (no realistic financing), I think we are a long way from bottom.
Much depends on how the world reacts to whatever happens with GM, some recovery in international activity (China, Panama Canal, etc.) and some private money coming back into the credit markets. The banks will not get anybody out of this mess and they never have been a part of any solution.”
Whether or not you really do feel more optimistic right now, it’s important continue projecting an upbeat attitude within your organization and when dealing with clients, customers and investors. Here’s why. Winners like to associate with winners. People naturally gravitate to companies and leaders who seem to have things going in the right direction and they’re more likely to stay in contact with you and make referrals if they think there’s going to be a positive “rub off” effect by associating with you.
Here’s are some more upbeat factoids you can use in your sales scripts and Powerpoint presentations:
• The percentage of Americans who think this country is headed in the right direction just hit 39% up from 15% when Obama took office (Source: NYT/CBS News poll).
• 20% of Americans now think the economy is getting better -- up from 7% who thought so in mid January (Source: NYT/CBS News poll).
• The equity markets finished five consecutive weeks of gains. The 25% surge in the S&P 500, for instance, was its best performance over that span since 1938.
• The Index of Volatility (VIX) on the Chicago Options Exchange reached to its lowest close since late September, just ahead of Wall Street's meltdown. That means financial markets are stabilizing and hopefully moving back to fundamentals over fear.
• We’re starting to see signs of life in the credit markets: The 30-year fixed mortgage dropped to 4.61% -- believed to be the lowest level on record.
• Thomson Reuters said businesses with better credit ratings issued $200 billion of debt in the first quarter of 2009, up from $188 last year.
• The London Interbank Offer Rate (LIBOR), which tracks short-term/overnight borrowing costs between banks, fell to 1.16%, down from 1.27% last month and from 4.8% a year ago. The next to nothing rates banks are charging are among the lowest levels ever recorded.
• The U.S. Federal Reserve said consumer borrowing on credit cards dropped last month at an annualized rate of $7.8 billion (9.7%), the sharpest drop since the Fed began keeping records in 1968.
How does this help me?
On one hand, high levels of consumer saving, means folks are still pretty fiscally constipated. They're reluctant to open their wallets to increase spending as employers cut millions of jobs and and reduce pay and benefits for those still hanging on to their jobs. But this reluctance to spend also means consumers are saving more than they have in decades. That’s not great if you’re in retail and consumer staples, but it’s actually a good sign if you market financial services, electronics, autos, high-end appliances, professional services and other goods and services with a long term sales cycle or purchase consideration phase. In other words, advertising’s going to matter more than it has in a long time as both an awareness builder and decision influencer.
Both consumers and businesses are doing more homework than ever before they commit to a purchase decision. You better be out there – and you better be out there with a compelling story to tell.
How top agencies are helping clients tell stories
“We live in a time of extraordinary change—change that will be amplified and accelerated by the recession, ushering in perhaps a new age of business transformation,” said John Favalo, managing partner-group B2B at Eric Mower & Associates, the #2 midsize agency in 2008 according to BtoB magazine’s Top Agency rankings
“Business models, marketing and communications will transform, and successful agencies will be instrumental in helping clients through the dramatic changes.” Eric Mower also had its best year on record last year, increasing its total agency revenue by 30% and winning major new clients such as GE Energy.
Favalo said one of the most important things an agency can do to succeed during these challenging times is deliver relevant, personal solutions to clients, based on their unique needs. “We make business-to-business person-to-person,” he said. For example, the agency developed an online application called “Solutions Advisor” for Motorola's Enterprise Mobility unit. The tool serves up custom solutions for clients and prospects based on their information needs.
Agencies of all sizes say they are expanding their social media and video practices to keep up with client demand.
“Our work in social media is increasingly essential to the needs of our clients,” said Tom Stein, president-CEO of Stein Rogan+Partners, winner of BoB’s small the small agency category. “We see some very interesting vectors between search marketing, social media and more traditional media such as print, broadcast and online.”
For example, Stein Rogan created a social community of school district administrators for client SchoolWires, a provider of communications technology. Called “Share,” it enables users to share templates, forms, reviews and other user-generated content.
So whether or not you’re convinced the recession has hit bottom, it’s time to start behaving as though the recovery has started. Now is the time to crank up your marketing, R&D and staffing so you’re locked and loaded when two years of pent up spending and decision-making finally lets loose. It’s going to be a time of dramatic change with unprecedented opportunities for those who have been making – not struggling to follow -- the new rules of the marketplace.
Friday, April 03, 2009
Recession Running Out of Steam
When will decision-making freeze start to thaw?
Remember back in late 2007 when you got that disturbing memo from the U.S. Department of Commerce announcing plans to kick-off the next great global recession? Of course not. So what makes you think you’re going to be notified when this painful economic downturn finally ends? Trust me, you’re not.
By the time you get the “all clear” signal and spread the good news to your colleagues, it’ll be too late. Your competitors -- who smartly put new products and services into the pipeline during the depths of the downturn – will have passed you by. Their salespeople will have a leg up on yours, with a much better story to tell potential customers. And since they didn’t can all their experienced (i.e. more expensive) people and slash their marketing budgets as severely as you did during the “panic,” they’re taking away big chunks of your market share and mindshare every day. Good luck getting that back …..It’ll only take a few years.
Granted, we’ve got a long way to go. As I write this, the U.S. Labor Department is announcing 663,000 more U.S. jobs vaporized in March. That’s pushing the official unemployment rate to 8.5 percent, its highest level in 25 years. But, in this hyper-speed global economic climate, you’ve got to have new products, services and people at the ready to support them in advance when pent up demand for your goods is finally unleashed. And this is going to be one heck of a release.
Not convinced we’re on the road to recovery. Read on (or go jump off a ledge).
1. Economists and Wall Street analysts (egged on by the media) have successfully predicted 15 of the last three recessions. They have the same lousy battering average predicting recoveries and no bona fide “expert” has stepped up to give the green light on this recovery yet. So I like our chances.
2. The labor market historically lags the stock market and other economic indicators by six to 12 months. Even today’s depressing news about the job market was largely discounted by investors as the grim job loss numbers, albeit painful, were in line with what analysts and investors expected. The market actually went up again today and continued its four-week rally in which it has gained 21 percent– its best four-week advance since July 1938.
READER NOTE: I recommend Barton Biggs’ tome: “Wealth, War and Wisdom” (Wiley & Sons, 2008) for a great perspective on the stock market’s ability to forecast global economic conditions during the 1930s and 1940s. The parallels are striking between today’s climate and that of the Great Depression and World War II. It’s a scary, but interesting read (Disclosure: we have no financial interest in sales or promotion of Mr. Biggs’ book).
3. Manufacturing. The Institute for Supply Management said its March report index rose 36.3, from 35.8 a month ago. New factory orders increased 8.1 percent and General Motors isn’t going to be allowed to make cars anymore unless it starts making them affordable, reliable and environmentally sound.
4. Housing. The National Association of Realtors reported that sales of pending homes rose a seasonally adjusted 2.1 percent in February from a month earlier, bolstered by double-digit increases in the Northeast and Midwest. The index of pending-home sales — which encompasses deals that have signed contracts but have not closed — bounced off a record low. The group’s index of affordability rose to a record as home prices continued to slide and mortgage rates declined to a microscopic 4.61 percent.
5. Huge cash on the sidelines. The stock market is rallying at a time when four out of five institutions and affluent individual investors are planning to switch advisors. “It’s an amazing time with huge upside potential for everyone, including financial advisors,” notes HB client, John Bowen, founder of CEG Worldwide, LLC the nation’s leading coaching, research and advisory firm for wealth management professionals. “This is not a recession or The Great Depression again. It’s The Great Disruption,” says Bowen. The rules of the game are changing fast and will never go back to where we were before. Despite massive erosion of investor wealth over the past 12 months, John’s firm and his clients are actually having one of their best years ever.
6. Broad-based rally. On most positive trading days the Russell 2000 has outgained the S&P500, which has outpaced the Dow Jones index. Companies of all size, industries and market caps are starting to rebound.
7. The Financial Accounting Standards Board (FASB) might finally change the rules on "mark to market" ccounting so bank assets will be measured by their cash flow, not the last trade. Not only is this a healthy dose of pragmatism but it could dramatically impact bank financial statements, valuations and profitability.
8. Labor shortage. That’s right, we said shortage. Even with unemployment rising, some companies now realize they may have cut back their payrolls too aggressively. Duh! Workers who survived the cuts are doing at least twice the work they did before for the same pay or less. They’re burned-out, paranoid, dispirited, and planning their exit strategies, not thinking about company growth.
A neighbor of mine runs an online lead generation company and customer acquisition service. He said some of his clients’ sales reps are taking days, even weeks, to respond to even high-priority leads. They simply don’t have enough manpower to handle demand. He said one of his clients in the mortgage finance is begging her boss to hire back at least 80 of the loan officers they let go in 2008 to handle the workload.
9. Some of the more innovative and adaptable sectors of the advertising industry are still growing at impressive rates. For instance, Internet advertising rose in 2008, according to a report released earlier this week by the Interactive Advertising Bureau and PricewaterhouseCoopers. Internet advertising in the United States grew to $23.4 billion in 2008, an increase of 10.6 percent from 2007, according to the Internet Advertising Revenue Report from the Interactive Advertising Bureau, a trade group representing online advertisers. That was the only category of advertising spending that grew in 2008 other than cable television, which rose 7.8 percent, according to Nielsen figures supplied for the report.
10. Weather. While our hearts go out to those in the flood-ravaged upper Midwest, spring has come to the Northeast, where let’s face it, a great deal of major companies and investment firms reside. There’s always a feeling of accomplishment in these parts that you’ve survived another winter and the onset of spring make everyone feel better and more optimistic. And for many home owners in the northeast, heating oil prices (our biggest worry nine months ago…HA!) ended up being only half as high as what we were dreading as recently as last summer.
11. Hero redemption. Tiger Woods is back on the pro golf tour and Lance Armstrong is cycling again. I don’t play golf, but a great number of corporate decision-makers still do and more than a few are biking and triathloning. After surviving cancer, drug allegations and now a broken collar-bone, Lance will some how manage to get himself into contention for an unprecedented 8th win at the Tour de France, the world’s toughest athletic event. Meanwhile, Tiger won the Arnold Palmer Invitational in typically dramatic last-hole fashion, his first competition after a year-long injury layoff. TV ratings were through the roof and that’s yet another sign for the corner office-set that things may be finally returning to normal in the world.
12. Even lawyers are taking a hit. The days of fat retainers, exorbitant hourly rates and paying first year associates more than the President of the United States makes, may be coming to an end. Law firms may have to start charging clients on a fixed-fee project basis, like every other professional service firm does. Leading law firms have historically avoided mass layoffs, concerned that their reputations would take a hit. But some have been putting those inhibitions aside. The Law Shucks blog now has a “layoff tracker,” and it is pretty telling. Top firms are rapidly thinning their ranks, and several — including Heller Ehrman, a venerable 500-plus-lawyer firm founded in 1890 — have closed. While not a lawyer basher by nature, having law firms align their fees and associate compensation with the rest of us will make everyone’s goods and services a little more affordable.
13. Perspective. Whether or not you believe the worst of this crisis is over, we may finally be taking a healthier approach to work-life balance in this country. “Today’s average business person exists in a perpetual state of exhaustion and stress that is born out of feeling that they are burdened by more responsibilities to meet than they have time and energy to devote to doing so,” said Chuck Peck, CEO of Cape Coral, Florida-based Wealth Intelligence Network. “They work, work, work, yet feel they are merely chasing their own tails. They never seem to be able to meet all the obligations of life without neglecting their commitments to themselves, their relationships, and their families, and vice versa.” The key, says Peck, is to keep moving. “An object at rest stays at rest; an object in motion stays in motion. Always stay in motion.”
Words to live by.
So let’s get back to work. Hire good people to help us and treat them right. Market the heck out of what we have to offer and let’s start making money again.
Remember back in late 2007 when you got that disturbing memo from the U.S. Department of Commerce announcing plans to kick-off the next great global recession? Of course not. So what makes you think you’re going to be notified when this painful economic downturn finally ends? Trust me, you’re not.
By the time you get the “all clear” signal and spread the good news to your colleagues, it’ll be too late. Your competitors -- who smartly put new products and services into the pipeline during the depths of the downturn – will have passed you by. Their salespeople will have a leg up on yours, with a much better story to tell potential customers. And since they didn’t can all their experienced (i.e. more expensive) people and slash their marketing budgets as severely as you did during the “panic,” they’re taking away big chunks of your market share and mindshare every day. Good luck getting that back …..It’ll only take a few years.
Granted, we’ve got a long way to go. As I write this, the U.S. Labor Department is announcing 663,000 more U.S. jobs vaporized in March. That’s pushing the official unemployment rate to 8.5 percent, its highest level in 25 years. But, in this hyper-speed global economic climate, you’ve got to have new products, services and people at the ready to support them in advance when pent up demand for your goods is finally unleashed. And this is going to be one heck of a release.
Not convinced we’re on the road to recovery. Read on (or go jump off a ledge).
1. Economists and Wall Street analysts (egged on by the media) have successfully predicted 15 of the last three recessions. They have the same lousy battering average predicting recoveries and no bona fide “expert” has stepped up to give the green light on this recovery yet. So I like our chances.
2. The labor market historically lags the stock market and other economic indicators by six to 12 months. Even today’s depressing news about the job market was largely discounted by investors as the grim job loss numbers, albeit painful, were in line with what analysts and investors expected. The market actually went up again today and continued its four-week rally in which it has gained 21 percent– its best four-week advance since July 1938.
READER NOTE: I recommend Barton Biggs’ tome: “Wealth, War and Wisdom” (Wiley & Sons, 2008) for a great perspective on the stock market’s ability to forecast global economic conditions during the 1930s and 1940s. The parallels are striking between today’s climate and that of the Great Depression and World War II. It’s a scary, but interesting read (Disclosure: we have no financial interest in sales or promotion of Mr. Biggs’ book).
3. Manufacturing. The Institute for Supply Management said its March report index rose 36.3, from 35.8 a month ago. New factory orders increased 8.1 percent and General Motors isn’t going to be allowed to make cars anymore unless it starts making them affordable, reliable and environmentally sound.
4. Housing. The National Association of Realtors reported that sales of pending homes rose a seasonally adjusted 2.1 percent in February from a month earlier, bolstered by double-digit increases in the Northeast and Midwest. The index of pending-home sales — which encompasses deals that have signed contracts but have not closed — bounced off a record low. The group’s index of affordability rose to a record as home prices continued to slide and mortgage rates declined to a microscopic 4.61 percent.
5. Huge cash on the sidelines. The stock market is rallying at a time when four out of five institutions and affluent individual investors are planning to switch advisors. “It’s an amazing time with huge upside potential for everyone, including financial advisors,” notes HB client, John Bowen, founder of CEG Worldwide, LLC the nation’s leading coaching, research and advisory firm for wealth management professionals. “This is not a recession or The Great Depression again. It’s The Great Disruption,” says Bowen. The rules of the game are changing fast and will never go back to where we were before. Despite massive erosion of investor wealth over the past 12 months, John’s firm and his clients are actually having one of their best years ever.
6. Broad-based rally. On most positive trading days the Russell 2000 has outgained the S&P500, which has outpaced the Dow Jones index. Companies of all size, industries and market caps are starting to rebound.
7. The Financial Accounting Standards Board (FASB) might finally change the rules on "mark to market" ccounting so bank assets will be measured by their cash flow, not the last trade. Not only is this a healthy dose of pragmatism but it could dramatically impact bank financial statements, valuations and profitability.
8. Labor shortage. That’s right, we said shortage. Even with unemployment rising, some companies now realize they may have cut back their payrolls too aggressively. Duh! Workers who survived the cuts are doing at least twice the work they did before for the same pay or less. They’re burned-out, paranoid, dispirited, and planning their exit strategies, not thinking about company growth.
A neighbor of mine runs an online lead generation company and customer acquisition service. He said some of his clients’ sales reps are taking days, even weeks, to respond to even high-priority leads. They simply don’t have enough manpower to handle demand. He said one of his clients in the mortgage finance is begging her boss to hire back at least 80 of the loan officers they let go in 2008 to handle the workload.
9. Some of the more innovative and adaptable sectors of the advertising industry are still growing at impressive rates. For instance, Internet advertising rose in 2008, according to a report released earlier this week by the Interactive Advertising Bureau and PricewaterhouseCoopers. Internet advertising in the United States grew to $23.4 billion in 2008, an increase of 10.6 percent from 2007, according to the Internet Advertising Revenue Report from the Interactive Advertising Bureau, a trade group representing online advertisers. That was the only category of advertising spending that grew in 2008 other than cable television, which rose 7.8 percent, according to Nielsen figures supplied for the report.
10. Weather. While our hearts go out to those in the flood-ravaged upper Midwest, spring has come to the Northeast, where let’s face it, a great deal of major companies and investment firms reside. There’s always a feeling of accomplishment in these parts that you’ve survived another winter and the onset of spring make everyone feel better and more optimistic. And for many home owners in the northeast, heating oil prices (our biggest worry nine months ago…HA!) ended up being only half as high as what we were dreading as recently as last summer.
11. Hero redemption. Tiger Woods is back on the pro golf tour and Lance Armstrong is cycling again. I don’t play golf, but a great number of corporate decision-makers still do and more than a few are biking and triathloning. After surviving cancer, drug allegations and now a broken collar-bone, Lance will some how manage to get himself into contention for an unprecedented 8th win at the Tour de France, the world’s toughest athletic event. Meanwhile, Tiger won the Arnold Palmer Invitational in typically dramatic last-hole fashion, his first competition after a year-long injury layoff. TV ratings were through the roof and that’s yet another sign for the corner office-set that things may be finally returning to normal in the world.
12. Even lawyers are taking a hit. The days of fat retainers, exorbitant hourly rates and paying first year associates more than the President of the United States makes, may be coming to an end. Law firms may have to start charging clients on a fixed-fee project basis, like every other professional service firm does. Leading law firms have historically avoided mass layoffs, concerned that their reputations would take a hit. But some have been putting those inhibitions aside. The Law Shucks blog now has a “layoff tracker,” and it is pretty telling. Top firms are rapidly thinning their ranks, and several — including Heller Ehrman, a venerable 500-plus-lawyer firm founded in 1890 — have closed. While not a lawyer basher by nature, having law firms align their fees and associate compensation with the rest of us will make everyone’s goods and services a little more affordable.
13. Perspective. Whether or not you believe the worst of this crisis is over, we may finally be taking a healthier approach to work-life balance in this country. “Today’s average business person exists in a perpetual state of exhaustion and stress that is born out of feeling that they are burdened by more responsibilities to meet than they have time and energy to devote to doing so,” said Chuck Peck, CEO of Cape Coral, Florida-based Wealth Intelligence Network. “They work, work, work, yet feel they are merely chasing their own tails. They never seem to be able to meet all the obligations of life without neglecting their commitments to themselves, their relationships, and their families, and vice versa.” The key, says Peck, is to keep moving. “An object at rest stays at rest; an object in motion stays in motion. Always stay in motion.”
Words to live by.
So let’s get back to work. Hire good people to help us and treat them right. Market the heck out of what we have to offer and let’s start making money again.
Wednesday, March 25, 2009
You Have This Window of Opportunity Called a Crisis. Better Move Fast
Do you have the right people around you now? Chances are you don’t.
“When you have that window of opportunity called a crisis, move as quickly as you can, get as much done as you can. There’s a momentum for change that’s very compelling,” Anne Mulcahy, Xerox Chairwoman and CEO told the New York Times Sunday.
Rupert Murdoch, head of another global behemoth that still considers itself nimble, seems to agree: “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.”
“Adaptability and flexibility. We have to change all the time,” continues Mulcahy. “The people who really do the best are those who actually sense it, enjoy it almost, the lack of definition around their roles and what they can contribute.”
Sounds great, Anne. That’s the entrepreneurial spirit that Xerox and many other great American companies were built upon. But, how do you train HR departments and company recruiters – traditionally the champions of internal process -- to find good people who relish “the lack of definition around their roles and contribution?” Anyone? Anyone at all?
That’s right. Most can’t do it because they have to fill “slots” and “silos” that were budgeted under the company’s legacy business model. They want people who can “fit in” to the pre-existing “culture.” That’s HR speak for: Stay in your box. Don’t look outside your box or else you’ll have a pink slip in your box.
Says Mulcahy: “We’ve learned a lot about identifying failure quickly. As much as it’s sometimes hard to make choices about where you invest, it’s equally hard to make choices about where you don’t invest and what you eliminate.”
Not all failures are equal, cautions William Davidow, of venture capital firm, Mohr Davidow Ventures.
A company (or project) might fail because its timing was bad or because the entrepreneur was a poor manager. Davidow says that despite a recent Harvard Business School survey to the contrary he expects a higher follow-on success rate for failed entrepreneurs than first-timers, and a serial entrepreneur will find it easier than a first-timer to get in the door to meet him. “I would want to know why the least deal failed and what the person learned from it.”
The same thinking should be applied to managers and top brass of media, information and technology companies. To find the leaders who are going to lead you out of this financial (and decision-making) deep freeze we’re in, you’ve got to seek out those who’ve made a few stumbles along the way….It’s more about what they learned than how well they could (or couldn’t) cover up those mistakes and re-assign blame.
Mulcahy is a rarity among Fortune 500 CEOs who has run a human resource department. She acknowledges that most HR departments don’t get useful and honest feedback from employees and they tend to get hung up on fairness above all else.
“Not everybody is created equal,” she says, “and it’s equally important for companies to identify high potentials, accelerate their development and pay them more. I think companies tend to get confused with processes they think are fairest and that is not what companies need.”
Amen to that.
“When you have that window of opportunity called a crisis, move as quickly as you can, get as much done as you can. There’s a momentum for change that’s very compelling,” Anne Mulcahy, Xerox Chairwoman and CEO told the New York Times Sunday.
Rupert Murdoch, head of another global behemoth that still considers itself nimble, seems to agree: “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.”
“Adaptability and flexibility. We have to change all the time,” continues Mulcahy. “The people who really do the best are those who actually sense it, enjoy it almost, the lack of definition around their roles and what they can contribute.”
Sounds great, Anne. That’s the entrepreneurial spirit that Xerox and many other great American companies were built upon. But, how do you train HR departments and company recruiters – traditionally the champions of internal process -- to find good people who relish “the lack of definition around their roles and contribution?” Anyone? Anyone at all?
That’s right. Most can’t do it because they have to fill “slots” and “silos” that were budgeted under the company’s legacy business model. They want people who can “fit in” to the pre-existing “culture.” That’s HR speak for: Stay in your box. Don’t look outside your box or else you’ll have a pink slip in your box.
Says Mulcahy: “We’ve learned a lot about identifying failure quickly. As much as it’s sometimes hard to make choices about where you invest, it’s equally hard to make choices about where you don’t invest and what you eliminate.”
Not all failures are equal, cautions William Davidow, of venture capital firm, Mohr Davidow Ventures.
A company (or project) might fail because its timing was bad or because the entrepreneur was a poor manager. Davidow says that despite a recent Harvard Business School survey to the contrary he expects a higher follow-on success rate for failed entrepreneurs than first-timers, and a serial entrepreneur will find it easier than a first-timer to get in the door to meet him. “I would want to know why the least deal failed and what the person learned from it.”
The same thinking should be applied to managers and top brass of media, information and technology companies. To find the leaders who are going to lead you out of this financial (and decision-making) deep freeze we’re in, you’ve got to seek out those who’ve made a few stumbles along the way….It’s more about what they learned than how well they could (or couldn’t) cover up those mistakes and re-assign blame.
Mulcahy is a rarity among Fortune 500 CEOs who has run a human resource department. She acknowledges that most HR departments don’t get useful and honest feedback from employees and they tend to get hung up on fairness above all else.
“Not everybody is created equal,” she says, “and it’s equally important for companies to identify high potentials, accelerate their development and pay them more. I think companies tend to get confused with processes they think are fairest and that is not what companies need.”
Amen to that.
Sunday, March 15, 2009
Virtual Events Are Enhancing, Not Replacing, Live Events
Savvy marketers are fine-tuning event ROI despite lousy economy and corporate travel restrictions.
Even in today’s crappy economic climate, live events are a cost-effective marketing and business building strategy. According to the Center for Exhibition Industry Research, companies spend five times as much ($1,039 vs. $215) to identify and contact a prospect in the field as they do to meet face-to-face at a trade show.
As BtoB's Ellis Booker quipped in his latest Op Ed piece , businesspeople have a biological need to be around other business people in order to do business. “Make no mistake, events aren’t going away – even in today’s dismal economy. In-person gatherings are an essential step for moving business relationships and commerce along, not to mention educating audiences and collecting qualified leads. “
Booker is right. Business people are still going to be networking and shaking hands. They’re just going to be using technology more often, before, during and after events to open doors, close the deal and measure results.
Pre-event exhibitor scouting and due diligence can be done more effectively online. Many aspects of product demos can be done online. And hybrid events – in which live events broadcast to a larger audience at multiple locations off-site – can expose your event to attendees who never would have attended otherwise.
So while booth space, attendance and sponsorship may be down this year, the quality of attendees will be up (a lot more decision-makers and a lot fewer lackeys). That means fewer tire-kicker business cards to wade through if you’re an exhibitor and fewer inexperienced company reps to get in our way if you’re a buyer seeking a solution. Either way, that spells ROI and a lot fewer cancelled flights, bad meals and lost luggage.
Even in today’s crappy economic climate, live events are a cost-effective marketing and business building strategy. According to the Center for Exhibition Industry Research, companies spend five times as much ($1,039 vs. $215) to identify and contact a prospect in the field as they do to meet face-to-face at a trade show.
As BtoB's Ellis Booker quipped in his latest Op Ed piece , businesspeople have a biological need to be around other business people in order to do business. “Make no mistake, events aren’t going away – even in today’s dismal economy. In-person gatherings are an essential step for moving business relationships and commerce along, not to mention educating audiences and collecting qualified leads. “
Booker is right. Business people are still going to be networking and shaking hands. They’re just going to be using technology more often, before, during and after events to open doors, close the deal and measure results.
Pre-event exhibitor scouting and due diligence can be done more effectively online. Many aspects of product demos can be done online. And hybrid events – in which live events broadcast to a larger audience at multiple locations off-site – can expose your event to attendees who never would have attended otherwise.
So while booth space, attendance and sponsorship may be down this year, the quality of attendees will be up (a lot more decision-makers and a lot fewer lackeys). That means fewer tire-kicker business cards to wade through if you’re an exhibitor and fewer inexperienced company reps to get in our way if you’re a buyer seeking a solution. Either way, that spells ROI and a lot fewer cancelled flights, bad meals and lost luggage.
Friday, March 06, 2009
Teaching Your In-Box Who’s Boss
Stop wasting time, eliminate guilt and get more done. Advice from the experts.
TO: Readers
FROM: Hank B
RE: E-mail management
FYI: Farhad Manjoo had an interesting take in yesterday’s New York Times about the age-old problem of handling (or not feeling guilty about ignoring) the deluge of daily e-mail that’s dominating our work and personal lives these days. Borrowing heavily from productivity gurus Merlin Mann and David Allen, Manjoo offered some good tips for making your online life less stressful and more productive. Next week, I’ll offer up some snarky responses to folks who call you on the phone (or stop you in the hall) to say: “Hey, did you get my e-mail?”
Expert suggestions for better e-mail mojo:
• Limit Your Time With E-Mail. Turn off all auto-notifications that alert you to incoming mail, and if you must check mail while you’re on the go, keep it to a minimum.
• Clear Your In-Box. Set aside an hour or two to respond to every important message that has dogged you in the last couple months (anything older than that is too ancient to bother with).
• Archive It. Most e-mail messages require no action or response on your part. Skim through these missives (or leave them unread), then shoot them into your archive and forget them.
• Respond. If the e-mail message calls for an easy answer, send it. David Allen, author of Getting Things Done has a rule of thumb that comes in handy here: If responding is going to take two minutes or less, you’re better off doing it now than procrastinating.
• Forward It. If the message is better handled by someone else — your boss, your sister, anyone but you — send it off to that person, then archive it.
• Hold It For Later. OK. Some e-mail messages demand complicated answers that require some thought. Other messages simply require information (or permission/approval) not yet available. Don’t pull the trigger finger too soon. Let it sit until you get the ammunition you need.
Amen. It’s your inbox and no one else’s. You own it. You decide where, when and how to respond to all this missives demanding your attention. Thanks Farhad.
TO: Readers
FROM: Hank B
RE: E-mail management
FYI: Farhad Manjoo had an interesting take in yesterday’s New York Times about the age-old problem of handling (or not feeling guilty about ignoring) the deluge of daily e-mail that’s dominating our work and personal lives these days. Borrowing heavily from productivity gurus Merlin Mann and David Allen, Manjoo offered some good tips for making your online life less stressful and more productive. Next week, I’ll offer up some snarky responses to folks who call you on the phone (or stop you in the hall) to say: “Hey, did you get my e-mail?”
Expert suggestions for better e-mail mojo:
• Limit Your Time With E-Mail. Turn off all auto-notifications that alert you to incoming mail, and if you must check mail while you’re on the go, keep it to a minimum.
• Clear Your In-Box. Set aside an hour or two to respond to every important message that has dogged you in the last couple months (anything older than that is too ancient to bother with).
• Archive It. Most e-mail messages require no action or response on your part. Skim through these missives (or leave them unread), then shoot them into your archive and forget them.
• Respond. If the e-mail message calls for an easy answer, send it. David Allen, author of Getting Things Done has a rule of thumb that comes in handy here: If responding is going to take two minutes or less, you’re better off doing it now than procrastinating.
• Forward It. If the message is better handled by someone else — your boss, your sister, anyone but you — send it off to that person, then archive it.
• Hold It For Later. OK. Some e-mail messages demand complicated answers that require some thought. Other messages simply require information (or permission/approval) not yet available. Don’t pull the trigger finger too soon. Let it sit until you get the ammunition you need.
Amen. It’s your inbox and no one else’s. You own it. You decide where, when and how to respond to all this missives demanding your attention. Thanks Farhad.
Friday, February 27, 2009
Recessions Can Spawn the Best Ideas
Too bad the wrong folks are getting bailed out (and axed). Reforecast this!
Thomas Friedman really nailed it in his recent New York Times Op-Ed piece “Start Up the Risk-Takers.”
Like Friedman, I bet you're disgusted that the nation’s largest “wealth destroying machines” (GM, Chrysler, AIG, Citigroup, etc.) are strong-arming taxpayers into bailouts while deserving early-stage companies (with huge job creation potential) can’t get funding. Why? Because the old guard claims their funerals will cost us more than keeping them on life support will.
They keep selling it. We’re not buying it. And hopefully Washington isn’t either.
“That is not how we got rich as a country, and it’s not how we’ll get out of the crisis,” notes Friedman. “Some of our best companies, such as Intel, were started in recessions, when necessity makes innovators even more inventive and risk-takers more daring.”
While you don’t normally associate “inventiveness” and “risk-taking” with old line manufacturing and financial services companies, we media types think of ourselves as a little more daring. We like to hang with the technology stars at big conferences. We "whiteboard it" out of the box. But unlike our technology brethren, who really have the stones to reinvent their business models as market conditions change, we can’t quite walk the walk after talking the talk.
B2B media leaders talk about innovation, but tend to skulk back to what they know best when the chips are down. That means protecting their longstanding investments in print media, direct mail and face to face events – and the people behind them – while slashing resources devoted to new media and cross-media platforms. That’s a cowardly approach that will come back to haunt many of you when the economy rebounds.
Tech companies know that now is the time to double down on R&D so you’re poised for growth when conditions improve. Unfortunately, too many B2B media leaders are bailing out version 1.0 these days, when they should be focusing on version 3.0. This simply gets you from one quarter to the next, where you'll spend half your time reforecasting instead of generating new business.
Print, direct mail and face-to-face events still deserve a seat at the table, but they no longer drive innovation, profit margins or enterprise value. And never will again.
As Friedman advises: “Let’s make sure all the losers clamoring for help don’t drown out the potential winners who could lift us out of this.” Words to live by whether you’re selling cars, banking services, insurance policies or advertising space. It’s all about measurable ROI.
Thomas Friedman really nailed it in his recent New York Times Op-Ed piece “Start Up the Risk-Takers.”
Like Friedman, I bet you're disgusted that the nation’s largest “wealth destroying machines” (GM, Chrysler, AIG, Citigroup, etc.) are strong-arming taxpayers into bailouts while deserving early-stage companies (with huge job creation potential) can’t get funding. Why? Because the old guard claims their funerals will cost us more than keeping them on life support will.
They keep selling it. We’re not buying it. And hopefully Washington isn’t either.
“That is not how we got rich as a country, and it’s not how we’ll get out of the crisis,” notes Friedman. “Some of our best companies, such as Intel, were started in recessions, when necessity makes innovators even more inventive and risk-takers more daring.”
While you don’t normally associate “inventiveness” and “risk-taking” with old line manufacturing and financial services companies, we media types think of ourselves as a little more daring. We like to hang with the technology stars at big conferences. We "whiteboard it" out of the box. But unlike our technology brethren, who really have the stones to reinvent their business models as market conditions change, we can’t quite walk the walk after talking the talk.
B2B media leaders talk about innovation, but tend to skulk back to what they know best when the chips are down. That means protecting their longstanding investments in print media, direct mail and face to face events – and the people behind them – while slashing resources devoted to new media and cross-media platforms. That’s a cowardly approach that will come back to haunt many of you when the economy rebounds.
Tech companies know that now is the time to double down on R&D so you’re poised for growth when conditions improve. Unfortunately, too many B2B media leaders are bailing out version 1.0 these days, when they should be focusing on version 3.0. This simply gets you from one quarter to the next, where you'll spend half your time reforecasting instead of generating new business.
Print, direct mail and face-to-face events still deserve a seat at the table, but they no longer drive innovation, profit margins or enterprise value. And never will again.
As Friedman advises: “Let’s make sure all the losers clamoring for help don’t drown out the potential winners who could lift us out of this.” Words to live by whether you’re selling cars, banking services, insurance policies or advertising space. It’s all about measurable ROI.
Tuesday, February 17, 2009
The Upside of Down Trade Show Attendance
Intimacy and ROI could improve
A recent survey from industry trade group Meeting Professionals International (MPI) and American Express said seven percent of business meetings scheduled for 2009 have already been cancelled and attendance will be down about 12 percent for meetings and conferences that remain on the calendar. Obviously the weak economy has companies dramatically cutting back on travel, entertainment and professional education budgets. Many organizations “don’t want to look like they are spending money foolishly at a time when people are losing their jobs,” said Jack Riepe, a spokesman for the Association of Corporate Travel Executives (ACTE) in a recent NY Times interview. ACTE said 71 percent of its members expect to spend less on travel this year and increase their reliance on teleconferences and Webinars. So where’s the silver lining I alluded to?
First, 2009 may prove to be the year of the Web events, as event planners, out of necessity, are going to have to start finding time-efficient low-cost ways to bring their great content and networking opportunities to attendees can’t afford to be out of the office for days at a time. They also might learn that Web events are a great, low-risk way to test out a new conference idea or seminar track before you go to the expense of rolling it out in the real-world.
Even for in-person events, attendees and exhibitors may find better show experiences this year despite diminished attendance. First, you’re in better position to negotiate deals on airfare, lodging, restaurants, rental cars, etc. which should keep the bean counters back at the home office happy. Also, since attendance is down, you’ll have an easier time getting access to keynote speakers and presenters. At the exhibit hall, you won’t have to wait as long to see demos of products and services you really want to “tire-kick.” And since exhibitors can’t afford to send the usual phalanx of support staff and “demo dollies,” you’re more likely to interact with a highly knowledgeable member of the product development or client support team at the vendor’s booth. If you’re an exhibitor, lower attendance doesn’t necessarily mean lower ROI. With reduced travel budgets, companies can only afford to send their key decision-makers to events, so you’ll have a higher likelihood of more meaningful conversations and your percentage of qualified leads – not simply business cards collected -- should go way up.
Let’s face it. We’re all eating our share of humble pie these days. But the extra calories won’t show up on the innovators who stay lean and mean and learn to co-exist with the Web.
A recent survey from industry trade group Meeting Professionals International (MPI) and American Express said seven percent of business meetings scheduled for 2009 have already been cancelled and attendance will be down about 12 percent for meetings and conferences that remain on the calendar. Obviously the weak economy has companies dramatically cutting back on travel, entertainment and professional education budgets. Many organizations “don’t want to look like they are spending money foolishly at a time when people are losing their jobs,” said Jack Riepe, a spokesman for the Association of Corporate Travel Executives (ACTE) in a recent NY Times interview. ACTE said 71 percent of its members expect to spend less on travel this year and increase their reliance on teleconferences and Webinars. So where’s the silver lining I alluded to?
First, 2009 may prove to be the year of the Web events, as event planners, out of necessity, are going to have to start finding time-efficient low-cost ways to bring their great content and networking opportunities to attendees can’t afford to be out of the office for days at a time. They also might learn that Web events are a great, low-risk way to test out a new conference idea or seminar track before you go to the expense of rolling it out in the real-world.
Even for in-person events, attendees and exhibitors may find better show experiences this year despite diminished attendance. First, you’re in better position to negotiate deals on airfare, lodging, restaurants, rental cars, etc. which should keep the bean counters back at the home office happy. Also, since attendance is down, you’ll have an easier time getting access to keynote speakers and presenters. At the exhibit hall, you won’t have to wait as long to see demos of products and services you really want to “tire-kick.” And since exhibitors can’t afford to send the usual phalanx of support staff and “demo dollies,” you’re more likely to interact with a highly knowledgeable member of the product development or client support team at the vendor’s booth. If you’re an exhibitor, lower attendance doesn’t necessarily mean lower ROI. With reduced travel budgets, companies can only afford to send their key decision-makers to events, so you’ll have a higher likelihood of more meaningful conversations and your percentage of qualified leads – not simply business cards collected -- should go way up.
Let’s face it. We’re all eating our share of humble pie these days. But the extra calories won’t show up on the innovators who stay lean and mean and learn to co-exist with the Web.
Wednesday, February 11, 2009
Think Before You Slash That Marketing Budget
A downturn opens the door to gain market share and out-innovate your competitors. Recommended reading
By now, you’ve probably been exposed to hundreds of articles and blog posts in the media trades justifying the need to keep the marketing faucet on at all times – no matter how painful. But in the current issue of Harvard Business Review, of all places, Boston Consulting Group partners David Rhodes and Daniel Stelter, argue convincingly that “companies that injudiciously slash marketing spending often find that they later must spend far more than they saved in order to recover.” (See Seize Advantage in a Downturn).
Rhodes and Stelter look at marketing as part of an overall “recession checklist.” They patiently demonstrate that many companies fail to see opportunities hidden in economic downturns. But, before jumping in with both feet, you first need to a thorough, but rapid assessment of your own vulnerabilities and then move decisively to minimize them. More
By now, you’ve probably been exposed to hundreds of articles and blog posts in the media trades justifying the need to keep the marketing faucet on at all times – no matter how painful. But in the current issue of Harvard Business Review, of all places, Boston Consulting Group partners David Rhodes and Daniel Stelter, argue convincingly that “companies that injudiciously slash marketing spending often find that they later must spend far more than they saved in order to recover.” (See Seize Advantage in a Downturn).
Rhodes and Stelter look at marketing as part of an overall “recession checklist.” They patiently demonstrate that many companies fail to see opportunities hidden in economic downturns. But, before jumping in with both feet, you first need to a thorough, but rapid assessment of your own vulnerabilities and then move decisively to minimize them. More
Friday, August 22, 2008
What B2B Marketers Can Learn from the Olympics
Old and new media working together. Plus, our latest reader survey results. <more>
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