Don’t Look Now: The Worlds of Media and Technology are Throwing Some Curves that Few of Us Saw Coming

Print Advertising Up? : If you were one of the many who were ready to bury print, hold on to that shovel. News came from the Publishers Information Bureau (PIB) that print advertising was actually UP in the first quarter. Though it wasn’t up by much, the fact that print saw a .5% lift in the first quarter of 13 vs. the same quarter in 2012 is surprising to many. Has print found its level? Is the bleeding over? Is this the start of a print comeback (unlikely)? Who knows?

More time will need to pass before we can identify a true trend but what it does mean is that at least a temporary tourniquet has been wrapped around print advertising for the time being. Stay tuned on this one.

PC Sales Down: Speaking of trends, for the first time in forever, PC sales have been down for four consecutive quarters. Bad news for the PC industry as a whole and especially bad news for Microsoft who supplies all of the much heralded and ultimately much maligned Windows 8 operating system into all but Apple’s Mac PCs. Who would have thought that Bill Gates would probably end up spending more years of his life running his foundation than running the company that owned technology for so many years.

TV a Giant Mess: Aereo head Barry Diller, formerly Chairman and CEO of Fox from 1984 – 1992 and a trusted lieutenant of his majesty Rupert Murdock, is now on Murdock’s “hit list” (speaking in business terms only) as Aereo is offering consumers a cheap entry ($10/month) into the world of television using virtually all methods of watching a program other than a television. “Borrowing” the signals that are already “out there”, Aereo is bypassing the retransmission fees that cable and satellite operators pay to broadcast the station owners’ signals. Station owners who previously existed quite nicely on advertising revenue alone have now become dependent on both advertising AND the profitable fees that they charge. Having Aereo do an end around is not sitting well with the established industry and they were in court day one when Aereo announced their business model. But now, the horse is out of the barn and it will be interesting to see how this plays out. The one thing very clear is that TV like all other media is having to redraw the rules on the fly.

 

Original Programming: Remember when all TV programming came from the Big 3 networks and nowhere else? Then came premium channels like HBO and Showtime. Then other networks like AMC, FX and Syfy followed suit with quality original programs proving that the playing field had widened. Now we have Netflix creating its own quality programming (see House of Cards), and Google through its YouTube website creating original programming. One job I would not want to have today is head of programming at one of the Big 4 networks. Doesn’t sound like job stability to me.

“Would You Like Some Phone and Internet With that TV Programming? We are quickly getting to the point where we will not have independent phone, internet and TV providers. Time Warner Cable has been hocking their triple threat of cable, internet and now digital phone service for a few years now. Yesterday came word that Dish wants to buy Sprint so they can do a similar bundle. Only one problem. Sprint was already approached by Japanese telecom SoftBank that agreed to buy Sprint last fall. Now Dish is trying to up the ante. Seems to me these mega communication companies are going to eliminate competition and consumer bills will continue to rise.

Would You Pay For Your Trade Magazines?

As the terrain in print media continues to change, one area that has not received much attention is trade publications. When I started in the business over 30 years ago, the SRDS (Standard Rate and Data Service) book that was our bible for publication rates and circulation was one hell of a doorstop as it included over 3,500 publications. That’s just business pubs. There is a separate listing for consumer, newspaper, broadcast, online, etc.

I don’t have an accurate count today but like all print media, suffice to say there are far fewer than 3,500 publications. We have all seen the health of print media on life support over the last seven years or so. Perhaps newspapers have been the hardest hit as hundreds of newspapers have either gone out of business, shortened their frequency of issue (see New Orleans Times-Picayune) or cut their reporting staff to the bone.

What is rarely reported is the relative health of business publications. We have seen scores of them fold during the recession and others left standing are a shadow of their former selves. Still, there are some that appear to be as strong as they were going into the recession. Is it that some markets are still strong consumers of print?

Is it that some publishers have played the game right to somehow keep their print product vital? We are not sure of the answer but it is clear that not all trade publications are ready to take their ball and go home quite yet.

Newspapers provide an interesting laboratory for this discussion. The PEW Project for Excellence in Journalism reports that 450 dailies now have some type of pay wall. Further, their most recent report notes that the NY Times is now generating more revenue on circulation (both print and online) than ads.

That got us to thinking. The traditional model for creating revenue for trade publications has been advertising. The magazines are mailed to the recipients free under controlled circulation meaning that you have to “qualify” as a valid recipient to receive the publication, thereby assuring the advertiser that they are reaching the intended audience as stated in the publication’s circulation statement.

While newspapers have always charged for the print version of the paper, the advertising is what really kept everyone employed. When the advertising dropped off dramatically during the train wreck that was the recession combined with the meteoric rise in digital, the ability to print a newspaper and have it by your front door the next morning became a losing venture for many newspaper publishers. Their only option was to cease publishing a print version and go solely online or fold entirely. But that’s where the real problem surfaced. Newspapers found that charging for online content when most people had grown up expecting it to be free created a disconnect with their readers. The Wall Street Journal and the NY Times were at the front end of trying to determine the appropriate model for success. After various starts and stops, both papers now have a pay wall that is working. As noted above, the NY Times is even generating more revenue with circulation than with advertising. This statement would have been almost unheard of just a couple of years ago.

Now back to the question of trade publications. Yes, they have all transitioned online with a multitude of online advertising options from banner ads to enewsletter sponsorships to eblasts and video sponsorships. The problem is that none of these opportunities come close to generating the same income as a full-page ad in their print version. Even if we all agree that print is less important today than it was in the glory days, the cost of print still seems to be “grandfathered” in when it comes to rates. If online is where it is at today, why can I buy a group of online offerings for less than one full-page print ad?

So now the ultimate question. If business publication companies are so sure of their product, why don’t they consider a paid circulation option or at least a pay wall online for their content?  Are they afraid that their audience would just not ante up? Recently, a major publisher of medial journals created a very nice iPad app to allow people to read their journals online. Until now, you just had to download the app and read any issue or article you wanted. But now, they have decided to charge $12.99 for each issue if you are not already a subscriber. It would be interesting to know how much revenue they generate with this tactic at the end of the year. And next year, will they charge even their subscribers for the online version of the magazine?

Changing business models has been a major point of discussion at publishing companies for years now. They are constantly looking for other avenues of income. That is why so many publishers have gone into the trade show business. At first, it was a hedge against  the risk that other departments within the company were suffering but many found it to be a tremendous winner (at least as long as the trade show business remains healthy).

It will be very interesting to see how this plays out over the next couple of years. Stay tuned.

Why Is Branding Really Important and What Am I Really Getting For It?

This is a question that we hear all the time. The clamber for the answer to that question has gotten louder and louder as the web has become a greater and greater force? Because online advertising can typically deliver a higher degree of accountability (clicks, landing pages, etc.), clients tend to feel they are getting clear metrics from these opportunities while “traditional” advertising is just a bunch of nebulous “branding.”

If there was any question as to the value of branding and what it really delivers, the recent news that Samsung had outspent Apple in terms of mobile phone ads in 2012 should be a real eye opener. It’s not just that Samsung spent $401 million advertising their phones in 2012 (Apple spent a measly $333 million), it’s what they got for that money.

While no one can dispute that the Apple brand has become ubiquitous since the introduction of the iPhone, Samsung proved that with a strong, creative campaign that even had the nerve to call out their rival, Samsung won a place in the hearts of many a high-end, gotta have the latest, greatest thing, smart phone buyer. Clearly, this was not solely about the message. Samsung has produced a phone that truly rivals the iPhone in quality, functionality and the all-important “cool factor.” The real news is that Samsung leaped from 19% of the global smart phone market in 2011 to 30.3% in 2012–all while launching a hugely expensive ad blitz that included Super Bowl advertising. During that same period, iPhone sales continued to grow but at a much slower pace. Apple now has a 19.1% share. So, in essence, in one year, Samsung went from a very strong second place to a dominating first place position. How did this happen?

I know of several Apple fans that abandoned their much beloved iPhones for a Samsung Galaxy clearly affected by the marketing blitz and buzz created by the all-encompassing Samsung campaign.

What does all of this mean for your brand? Advertising and marketing work. But for it to work, you can’t run an ad here and online campaign there and expect results. You have to make a long-term commitment to marketing in your company. While you write those checks, you have to look at it like an investment in your future rather than a line item in the expense column.

Samsung did it. You can do it too.

Observations for a Cloudy Day in March

Some random thoughts have been creating a log jam in my brain so consider this blog post Brain Drano to clear the clog.

What Yahoo’s Announcement Means to Offsite Workers   

The recent announcement by Marissa Mayer, CEO of Yahoo, that all employees who currently work offsite will need to start working onsite starting in June is sure to stir things up for the thousands of workers who currently work offsite for their company. In our type of business, this is very common. In fact, a number of employees of our clients also work from home, at least part of the time. Making the decision to allow an employee to work from home is not an easy one. From the employee’s position, they need to have the self-discipline to be able to accomplish the daily tasks without getting side tracked by video games, running errands, or picking up a few things at the mall. From the employer’s standpoint, there must be an inherent trust that the employee will do everything he or she would have been doing if they were at work. In many companies, it comes down to how important it is to have interaction with colleagues during the day. In a creative business such as ours, I still feel that working together is a good thing.  The bottom line is that there is no black and white answer to this. It is ultimately the company’s choice as to whether they want to offer this “perk” to their employees. The issue with Yahoo is that they were offering the offsite option and are now taking it away. If you take candy away from the baby, there will be repercussions.

Is 3-D Printing Creeping Up On Everybody?

By now, you are probably familiar with the process of 3-D printing. Although it has been around for a while, like all things in the technology world, the price and availability have made this technology now possible for the masses. The end result could change business in a dramatic way. Also known as “additive manufacturing”, 3-D printing allows the user to create a three-dimensional product from a digital file. By piling layer upon layer of material, the process ultimately creates a finished product that can be used as a part in a car, a plane or virtually any type of equipment. The possibilities in terms of one-off prototyping are almost scary. Some of these printers are now priced around $2,000. As this technology continues to improve, it will change manufacturing forever. Some predict it will even be a catalyst for bringing offshore jobs back home. Keep your eyes peeled on this one.

Sequestration and the Art of Doing Nothing      

I don’t care where you stand politically; you have to wonder how we got here.

We just passed the deadline for avoiding the severe budget cuts that would take place only if the two sides could not meet halfway. It’s not like they didn’t have almost two years to do it. I know the arguments on both sides and I also know that in any disagreement, somebody’s got to give a little for the greater good. None of the people in congress or the administration will pay the price for their inability to act like adults. This is clearly no way to run a country and if you listen to the political historians, we have never run the country this poorly in the past. Sit down, have a beer and make a decision already. We all deserve so much better.

Becoming a Gang Member Without Even Trying

One of my favorite radio shows “This American Life” (heard on most NPR stations on the weekend) recently featured a 2-part series that focused on Harper High in the South side of Chicago. The story brought to light the composition of today’s gangs. At least in Chicago, the police have done a very good job of going after the large gangs and gang leaders, but what was left in the vacuum are scores of mini-gangs who rule a two or three block area and bump heads with other mini-gangs on all sides of their “territory.” Because the whole thing is territorial, you are considered a member in good standing of the gang that rules your block whether you want to be or not. Therefore, when you are walking home from school, you are walking home as a member of your gang. You don’t need to be wearing certain colors. You don’t need your hat tilted a certain way. It’s all done by your address.

In many ways, the result has actually been worse than when just a few large gangs ruled the roost. Want proof? Check the Chicago murder rate in the last few years and you won’t wonder why Chicago (at least the South Side) is considered the murder capital of the country. Thousands of innocent kids are literally prisoners in their own house. The police are at a loss. There are no leaders. There is no hierarchy.

There are just a bunch of thugs protecting their territory. Welcome to Gangland 2013, Chicago style.

When Ignorance Truly is Bliss

We’ve all had the experience where we are talking to someone who is far less skilled or learned in a particular subject than we are but we are nonetheless amazed when they make a comment that we never had thought of in relation to the subject in which we consider ourselves “experts.” How can this happen, we ask?

I think the answer lies in a different way of thinking about the subject than we have been using. This is probably why children learn in such a different way than adults and why many children can learn a foreign language so much easier than adults. As adults, we bring all of the prejudices and experiences of our life to a problem. People who do not delve into these areas much approach the subject more like children do when they are learning something new. They simply look at things and report what they see–not being concerned about what accepted thinking is in part because they don’t even know what accepted thinking is.

What is the lesson here? I think we need to get off of our high horses in some instances and listen to opinions outside our field of interest. Rather than judge these people on what they don’t know, invite their ideas into our experience and see if they have possibly forged a new path that we never would have thought about.

When we think about the world of technology and all of the child prodigies who have come up with new ideas that advanced the field, these young wizards clearly were not basing their inventions on what was accepted thinking of the time. They were bringing their own genius to the problem and working within the confines of their own mind. That is truly “out of the box” thinking. It is ironic that what we consider “out of the box” thinking may prove to be sheltered by the box of our brains and it is only when we really go outside the box into the world that things get too cluttered.

Understanding the Difference Between Predictions and Forecasts

I am an admitted stats geek. Every since I turned over my first baseball card to look at the past year’s stats of my favorite baseball player, I have had a fascination with statistics. When I majored in psychology in college, I found that stats played a major role in that field as well.

That is why when my son presented me with Nate Silver’s book “The Signal and the Noise: Why So Many Predictions Fail — But Some Don’t”, I was intrigued. I knew he was the hot ticket as regards political predictions having called not only the presidential election correctly but 49 out of the 50 key races in each state. Republicans pooh poohed him since many of his predictions went against the Republican grain but if you read his book, his political leanings (left as they may be) have absolutely nothing to do with his work. On the contrary, if you approach statistics as scientifically as Mr. Silver does, you are going to account for any prejudice in your findings.

The book takes each chapter as a separate case study. One addresses how the financial melt down of 2008 could have been easily avoided. The signs for the impending problem were all there but the key players were making so much money, nobody wanted the merry-go-round to stop turning. Another chapter looks at baseball, a perfect laboratory for statistics since every pitch and at bat has been documented for over 100 years.

Mr. Silver spent 4 years researching and writing the book and, as such, the opinions are not just his but those of experts in a variety of fields who help create the conclusions he puts forward. If you are looking for a magic bullet that will determine every political race, when to buy or sell stocks, who will win the world series and how to beat Las Vegas at their game, this is not the book for you. Rather than provide a single answer, Mr. Silver points out that well researched statistical predictions do not provide one answer. They provide a series of potential outcomes and express them by a percentage of probability.

For me, this book was a rich desert (and I like deserts). As I like reading about politics, business and financial matters, baseball and gambling, this book was a home run for me. Every chapter was an adventure and gave me new insight into the field.

Because of the way the book is structured, if there is a chapter that is not of interest to you, can can skip it and find out how weather forecasters have made some of the greatest strides in the past 20 years of all people in the prediction business but the ability to predict earthquakes is not much better than it was 50 years ago.

I happen to be interested in all of the areas in which the book explores. Give it a read. It is sure to open up your mind about how you look at your business and how you make your investments, if not anything else.

But lest I forget, here is how Mr. Silver defines the difference between a Prediction and a Forecast.

“1. A prediction is a definitive and specific statement about when and where an earthquake will strike: for instance a major earthquake will hit Kyoto, Japan on June 28.

2. A forecast is a prohabilistic statement, usually over a longer time scale: there is a 60 percent chance of an earthquake in Southern California over the next thirty years.”

Everybody Hates Advertising

Despite the fact that we are in the business of promoting products our clients make so that others might become aware of them and (hopefully) purchase them, in the world of consumer advertising, agencies and marketers have an uphill battle. For years, people have bemoaned having to wade through the 18 minutes of advertising in a typical one hour TV show. The great news is that now we have the ability to avoid it in ways that involve more than leaving the family room for the kitchen to grab another beer or going to the bathroom after that third beer.

First it was TIVO. Now it is the DVR that we get from our cable company. We watch our shows when we want to and enjoy them without the interruption of pharmaceutical advertising. We simply FF through the ads. Or we watch our shows “on demand” and avoid the advertising altogether. The point is, we are constantly looking for the magic bullet that will allow us to avoid TV ads. Yet, TV advertising continues to be the most expensive advertising you can buy. How is this happening?

Online advertising has not proven to be the panacea that all had hoped it would be for advertising. If it was, you would not have every major online destination including Facebook looking for ways to make money on their platform. And how engaged are we to watch a 30 second ad before our youtube video starts playing?

This is a serious problem for consumer advertising. I remember reading that dentists have a high suicide rate because everybody they see does NOT want to be there. You could say the same thing for the people who produce TV ads. Nobody wants to see what you are creating. I would imagine that can get to you after a while. The problem is that the industry has not really manned up to the problem. Agencies are still cranking out TV ads (most of them unwatchable) and marketers are still spending mega bucks to get them on the air primarily because they don’t see any better model out there and that is the way they have always done it. It reminds me of the record industry thrusting their collective heads deep into the sand when they were confronted with Napster. Fortunately for them, Steve Jobs saved their respective jobs by doing deals with them that literally saved their companies and the industry in general.

I feel we are on the cusp of a crossroads where things are about to change. I don’t know when or how at this point, but I feel it in the air. On the business-t0-business side, I think we are in a totally different dynamic. Our audience is primarily at work when they consume our creative product. It is their job to learn what is new and improved in their industry and, for the most part, they want to see advertising that relates to their needs. Our challenge is how to deliver it. Print is now talked about like it is the scourge of the earth. Online is not producing enough qualified leads. Nobody is ever satisfied. But given all of those problems, I would rather be in the position of figuring out the best method for providing advertising to a willing audience than trying to figure out how to sneak my message through to an audience that is trying every method to avoid my message.

Everything Old Is New Again

Next year one of our clients will be celebrating their 150th anniversary. Yes, you read right. 150 years. The company was started in 1863, right in the middle of the Civil War.

We are preparing a complete campaign throughout the year celebrating this amazing accomplishment. In doing some research,our photographer Bob Spore came upon an issue of Crain’s Cleveland Business dated March 8th, 1982. The issue was relevant because our client had advertised in this issue some 30 years ago. But the real eye opener was the headline on the front page. It read “Execs hunker down amid plant closings”. Then, just below the fold was another article titled “Amid turmoil, Press aims at new markets”.

Yes, in 1982, we were in the same place we are in now in many ways. Manufacturers are holding on to their wallets not sure of what the future will bring. How bad were things in 1982? A 2009 story in the New York Times (in the deepest part of our recent meltdown) was headlined “The Economy is Bad But 1982 Was Worse.”  The story never changes. In the second headline, the word “Press” was referring to the Cleveland Press, Cleveland’s second newspaper at the time. It was just two months away from folding, leaving Cleveland, still a major manufacturing hub in those days, with just one daily. Today, we all know the story about the Plain Dealer. It’s almost like a death watch waiting for the announcement that is sure to come that the PD will only publish three or four days a week. In the period of just 30 years, we have gone from a vibrant two newspaper town (competition is good) to a half a newspaper town. Sure, the content of cleveland.com will be online 24/7 but it is another institution biting the dust. When Newsweek stops printing magazines, you know we are in a different world.

But the message to the younger crowd is simply this. Everything old is new again. No matter what we are experiencing, there is probably something in our recent past that we can turn to for a historical lesson. We even learned today that there is precedence for the terrible shootings in Newtown. An eerily similar story came out of Scotland in 1996.

It’s one thing to have historical precedence. It’s another thing to learn from it.

How Online News Sources Could Have Saved Print

It’s not a new argument but as the Plain Dealer (formerly called the Cleveland Plain Dealer before they made a veiled attempt to sound more northeast ohioy than just Cleveland) struggles to survive with a destiny of a 3-day a week issuance clearly on the horizon, I cannot help but think it didn’t have to be this way.

There are many reasons why print has suffered and no print vehicle has suffered more than daily newspapers. We are all glued to our digital devices today. Whether its an iPhone, iPad or Kindle Fire, we don’t leave the house, eat a meal or drive to the corner without our information in a box right at our fingertips. I get all that. But there is another reason we gravitate to these devices to get our news. IT’S FREE! And there is no turning back. Years ago, the web gods decided that we deserved to get our news free and that paying for a newspaper was just too old school. Well I’m here to say that I look forward to jogging to my paper box at the end of my driveway at 6:30 and spreading out the paper with my second cup of coffee, quickly scanning the spread to see what I want to pursue further and then digging in. Can I do that as quickly on my iPad?  I’m not so sure. I can scan headlines quicker possibly but I cannot get overall context as fast as I can by spreading out the paper. And then there is the tactile thing as well.

Sure, the WSJ, NYT and others have built their pay walls but it’s too little, too late. The damage is done. We’ve been spoiled beyond repair. Nobody is replacing the bricks in Humpty Dumpty’s wall at this point. If online news sources had charged for their content right out of the gate, would it have made a difference in saving print? We’ll never know. It’s quite possible young people would have gravitated to mobile devices anyway but we sure didn’t have to speed the process. If there was a Vegas line for when print would go away, I’m betting on not anytime soon. Call it blind faith.

The Mystery Is Over

The contentious election has been decided. Regardless of how you feel about the outcome, I hope everyone can agree that this country needs to heal. This election process has divided the country more than any in my lifetime. It has forced married couples to sleep in separate bedrooms. It has ended lifelong friendships. It has broken apart families. These political divisions always existed. There is nothing wrong with that. Political differences has always made for lively discussions over dinner, at parties, etc. But in the past, those discussions were just that — discussions. Today, they are arguments that end in yelling or screaming or just walking away in disgust.

If republicans look at these results and decide that “the country is screwed for another four years” or democrats gloat and feel that “we sure showed them”, we are sure to continue on this path that cannot and will not end well.

In the past, politicians have always moved toward the middle regardless of how they personally felt. It was best for the country and it was the only way to really get things done. For our country to move forward, both sides will need to move toward the middle as that is truly where most Americans live. The fringes are louder and more boisterous and they make for great TV but they don’t necessarily represent what most people believe.

We need only look at the approval ratings of congress to see clearly what the problem is. As that approval rating rises, so too will the healing of the country begin.

Maybe Rodney King had it right all along.

“Why can’t we all just get aloing.”