Friday, January 29, 2010

Where Print went wrong...sorry Digital Ad Networks

Print has had a double whammy when it comes to revenues. One is their fault which was free news sites with digital ad networks, the second was out of their control - Craig's List which killed the Classified Ad revenue source.

But first I want to do a quick review of the past vs. the present.

Before the Internet if you wanted news most major cities had 1-2 newspapers, 3 major TV networks that did world, national and local news, and the radio. They competed within each market for eyes and ears and were pretty much protected from non-local competition.

With the Internet what has evolved is that every news source competes now globally. Using my own example growing up my family watched the TV news outside NY City and we subscribed to Newsday. I moved to LA and subscribed to the LA times and also watched Network News. Over time I now read the Digital Versions of the LA Times, NY Times, Economist, BBC, Washington Post, and Huffington Post. I never watch Network TV News. I do watch the Daily Show live and online. I also listen to news Podcasts from the BBC, NPR, and Economist. I read the print versions of Business Week, Fortune, and Rolling Stone. I also read local Entertainment Papers like LA Weekly, Village Voice, etc. All this accounts for 85% of my news consumption.

So now print competes world wide. And seriously I have estimated an industry maximizes competition and productivity when there isn't 500,000 competitors. So there will be a shake out eventually where many cities have no major print newspaper such as San Francisco, Boston, and Denver already deal with.

Prior to the Internet we all agreed to pay for print versions of news sources. Then came the Internet and this idea of Digital Ad Networks evolved. By not charging a subscription for Online viewing of news they lost a revenue stream. Now granted if I pay $0.50 for a print paper that is just subsidizing the true cost of printing and distributing. The rest comes from Print Ads. So removing the physical print and distribution they could charge less than the $0.50 and break even on that portion.

But the Digital Ad Networks promoted a lie to the Print Industry. That their Ad Distribution Networks are better than Static Ads on Print Pages (like a pdf would be). And this was the huge revenue killer. They lost control of this part of their revenue stream. Computer OEM's, Software OEM's, and Internet providers make no extra money if Ads are blocked, like Firefox allows. 700,000 downloads of Firefox's Ad Blocker Plus happen each week for the browser with 22% market share. Viruses have people fearful of interactive ads. I myself use No Script which prevents Java from running on websites unless I allow it. So while I disable Ad Blocker on sites I get free content from, the actual Ad Networks are all prevented from running on my browser because I have had virus infections before.

Since all the players mentioned before are out for themselves. Print has been left high and dry.

The true solution for this would be that Newspapers etc charge a nominal fee for a subscription. And their pages served to E-Readers should be static with Ads just like Print Ads. This way when I read Page 4 of the NY Times it views just like the hard copy of the paper would. This would guarantee impressions and increase CPM's. Why should a Brand or Marketer pay more, if 1] their Ad is blocked by 1 of 5 browsers? 2] They have even less proof an Ad was seen.

I know the rebuttal. Static Ads will prevent click throughs reducing the increased value and creativity they offer. But seriously now. Click Throughs? You mean the 20 average per 10,000 page views? But seriously now. Most of us use a search engine to find website sites, type in URL's directly, get linked via social media, or we go direct via a book mark. Leave your creative interactive consumer engagement effort for your web site. Make it easy to get there. And boom increased R.O.I.

Apple's first stumble with the IPad

Apple just released it's I Pad. I truly think they blew it here after all this hype. But how can it live up to the hype? Apple obviously wasn't reading any of the posts here or my posts to the Media Trade Journal Articles when it comes to readers and TV everywhere. Plus not only is the name hysterical since my esteemed sister said it was a bunch of men who came up with the name, Hitler was very disappointed. And I agree with his talking points.

Click for:

Hitler's Rebuttal

Over 700,000 people have seen this hilarious creation which highlights many sever limitations of the I Pad. In one fell swoop all the free marketing from Apple fans and Media/Advertising Industry Journalists and Pundits has been countered.

The Wi-Fi and 3G are great. The battery life incredible. But no Flash???? No Firefox?

This blog had suggested in the past the perfect "Insert Brand Here" Tablet Computer will have full HTML and Flash (or equal) with full web surfing and game playing because that is what people want. They want bigger screens for TV and Movies. I myself bring my laptop into my bed to watch DVD's because up close the screen is bigger than the 19" LCD HDTV across on my dresser. I would love a fix for this heavy, hot device from my lap.

And when an "Insert Brand Here" Tablet comes out with Flash(or equal) they will truly be a game changer. The I Pad is really just a large sized I Touch. And the only reason I can think Apple did this was to not have an APP Creator Revolt. Nothing like bragging about 125K Apps in your store front only to have them not work on the I Tab and crushing that whole ecosystem at once.
But what Apple fails to realize in a HUGE way is that App ecosystem be damned other forms with no App Stores who can care less will gladly destroy this ecosystem. HP, Dell, Sony, Upstarts, all have no App Stores!

Interesting because in the past Apple was the company bringing creative destruction to industries.
Now they might suffer the same.

In my next post I am going to address the print industry and where it went wrong and can it be saved.

Wednesday, January 27, 2010

Customers Rule. Examples of Great (Skullcandy)and Piss Poor (Facebook) Business Ethics

I was blessed today to read a great blog post from AdScam that enabled me to add Facebook to this blog post. I apologize to Skullcandy but I think it creates a great contrast to my reader(s). Consumer Businesses forget that the Consumer Rules. without people buying your product (or alive to buy your product in the case of companies that destroy and poison our earth) you have no business. And sometimes the little things can destroy a reputation or enhance it dramatically.

So do you prefer me to start with the good or the bad? The good? Ok Skullcandy. I discovered Skullcandy's really by accident.

They sure did not advertise to me in any way. I was living in Venice Beach on a gorgeous walk street in the summer of 2007 and was enjoying some time in between jobs. I was riding my mountain bike everywhere and taking long rides down the bike bath from Marina Del Rey to Malibu a few mornings every week and my IPod ear phones kept falling out when I would do jumps or tricks.

So I went to Target to get some 'earbud' style earphones and saw this new brand Skullcandy. I loved the style and the price which was around $17. The sound quality was incredible for this price point and I got hooked.
At $17 an item to me is almost toss away if I only need to replace it every year or even twice a year. The INKD's Buds would usually fail where the wire meets the connector for the MP3 player. Normally after 4-6 months and I would just get a new pair. Over time Skullcandy came out with new colors that to me were rad. And I could match the colors to my IPod. I never thought that based on the price point or the product type that Skullcandy would have any type of warranty. Sorry I was an ignorant dumbass I admit it.

Why should a brand that sells $17 items to skateboarders and snowboarders warranty products that would get beat on!?? Unless.....let me think...maybe Skullcandy decided that it was worth it since they might win customers for life? Customers in the 14-30 year age (vs me an old 42 year old fogey)?

So my last set of INKD's failed but sadly after just 2 months and right now I just jog and use them in the gym or while on Amtrak/Walking around NYC. And I thought I should write them and give them feedback on how to improve the product. And sure enough I notice on my new package of INKD's it says go to the website to see the warranty info.
Incredibly not only does Skullcandy warranty against defects for life with a replacement service. They actually refuse to flip the finger to users who beat on their product. They just want honesty. And if your an Extreme Sports Fan who blasts head first into a wall or mountain thus destroying the product, they will still take back the product and issue the owner a 50% off a new set coupon. This totally amazed me. I could not believe the level of dedication to their customers are. Above and beyond and this needs to be a shining example of the consumer comes first.

And because of this I will recommend their brand and products to everyone.

Now the bad? This will be short and easy. Facebook's business model is two fold. Advertising revenue and finding ways to profit on users information and content. They will pimp your content any way they can make a penny. Users are meat and nothing more. They only respond when there is a serious backlash from the community and then they do things on begrudgingly. So in effect they have created a situation where by the moment a new social media network pops up that can replace Facebook. They will be toast.

First it was Beacon. Then they keep trying to have everyone open up their content via privacy changes in very weaselly and slimey ways. Because of this I am what Business Calls a Vocal Terrorist. While I use Facebook I rail against these moves openly every chance I get. The latest version of them being slimes can be read in the following Blog Post from the great George Parker from AdScam.

If you want take How To Screw Your Customer 101 in college just read this post!

AdScam Blog Post

Friday, January 22, 2010

Why the Supreme Court Decision on Corporate Campaign Spending is Bad for Media and Advertising

Yesterday the Supreme Court gave Corporations full freedom of speech rights by ruling they can spend unlimited monies on advertising positive or negative that support their positions. Even though it was never part of the discussion it will be a boon then a bane for Media Companies and Advertising Companies and even Brands which I will discuss.

One of the issues regarding 'ethics' that I struggle with for accessing 'free' content has it's roots with the decision to create a new Media Format way back when called Television. Somehow the revenue metrics for Television allowed content to be viewed for free by consumers supported by Advertising. But it was not a contract with the consumers. Nothing forced consumers to view a commercial. We can switch channels, leave the room etc. So this created a true 'opt-in' relationship with consumers. This has been the root of most of today's troubles for Media Companies aside from the Movie Industry.

Until 2 years ago I was not in Advertising. I was very happy to use FireFox with Ad Blocking and No Scripts Ad-Ons so I see pretty much ZERO digital Advertising. And while I valued Advertising-Media it was a Love-Hate relationship because the industries can be evil in pursuit of profits, such as the marketing of cigarettes to children. I also witnessed the demised of most quality content on the major networks so that in 1999 when High Speed Internet came out I canceled cable for DSL and stopped watching TV altogether. Why pay good money to receive crap in my living room.

After entering the Ad Biz I started thinking about the ethics of accessing content and blocking all the Ads. And while I am a champion for paying directly for content in return for not seeing Ads until this becomes a reality what am I supposed to do? So I have 'unblocked' the Ad Blocker from specific Web Sites that I enjoy free content from out of a sense of Ethics and Honor. But since the Media-Advertising Industry doesn't force people to view advertising I refuse to unblock all websites. Sorry. Earn my eyeball time.

But now things might become different. With the Supreme Court ruling, at first Media Companies and Ad Agencies will benefit from increased Ad Spend for political advertising. In some cases this could be dramatic. As of today the Insurance Industry can buy up all the Ad Time and pitch lies about Healthcare reform because nothing in the Ruling Requires Truth! And they can hide behind Special Interest Entities which make it impossible to know who is paying for the Ads. This will dramatically increase people's negative feelings towards Media and Advertising and eventually turn people off. They might start TiVoing everything just to remove commercials from their lives.

Case in point during the Kerry - Bush election I was in Ohio and Florida for business and couldn't watch TV because every other commercial was an attack ad against one or the other candidate. I had to give up Sports Center! Now it is going to get worse.

So if a Media Company is willing to take money from groups with Nefarious Purposes (meaning they do not require transparency), then my view of Ethics changes and maybe I shouldn't feel obligated to unblock websites from Ad Blocking. Maybe I will be more ok with eliminating commercials from my life for good?

This will be interesting to see how this unfolds. But as the first case in point. Yesterday my local paper had a full page Ad from a mysterious group with no website, just a gmail address attacking a Democratic Senator over the GOP win in Massachusetts. Was this paid for by Insurance Companies? A Right Wing Religious Group? Who knows. But I am punishing the paper for the lack of transparency and not for the content. So for the next 30 days I am reading the paper online and blocking all Ads.

Thursday, January 21, 2010

Paid Tweeters and how I feel decieved

I am not going to mention any specific people since I do not know the whole story yet. But there is someone in the Advertising/Marketing world with a website and lots of followers on Twitter. I agreed with the FCC's ruling that paid Tweeters somehow must announce they are being paid (this goes for Bloggers too), for the most part I always assumed this was just for products. Like Paris Hilton being paid to state she is buying a Brand of Nail Polish, to separate the 'real life' from the 'paid to respresent' Tweets.

Yesterday while reading an article from a very well known business publication, it seems someone I follow on Twitter, whom I just figured was either sharing, building their own business, or being social. My hunch is that some Tweeters are now paid per Tweet to drive traffic to specific websites. And this can come across as innocent especially when the subject matter seems beneficial, funny, informative etc. And when the article said that while Kim Khardasian someone I would never follow or care about is paid $10k per Tweet (talk about throwing money away on a G Lister) this person gets $900 per Tweet!

So in fairness I have asked this person to explain because I wish to know what they are being paid to promote. Is it all the Tweets? Is it specific ones? I don't want to see the paid Tweets unless they are clearly marketed as Advertising-Promotional so I can decide whether to read, click through any links etc. This isn't to say I won't click through to links. I mean if there is value being shared sure thing. But I do not like deception and currently I have 'Followers Remorse' since I have re-tweeted some of the persons Tweets.

Now to be fair when a Brand or a Website or any Business Entity has a Twitter or Facebook account the people who are managing it obviously are being paid, but we all know they are being paid to promote a product and are on the payroll. But when it is an individual the lines blur. If this specific person makes money when I click through to their website and read content I am very OK with that as long as I can connect the dots. It is very important trust not be broken between Brands, Businesses, and Consumers because it is very hard to win back that trust.

Wednesday, January 20, 2010

The Coming Mobile Commerce Destruction of Retail Profits

I have been kicking around this scenario for a while. It should strike fear in all retailers (and somewhat for Brands too). It will erode customer service especially in times of economic recession when 'price' trumps all else because profits have to be made so service might be cut. And with the increasing power, abilities, and breadth of mobile smart phones and eventually tablet computers small enough to take around with you this will be the bane of brick and mortar stores.

When we shop online we have the ability to compare prices. Thank you Search Engines! Soon we will be doing this in stores that sell 'Commodities'. Commodities in this case is anything I can buy (same or equal) at multiple locations within a short drive. These could be anything small like a bag of Doritos and a case of Pepsi, to big ticket items like HDTV's or even automobiles!

This blog has discussed in the past the Point of Sale fact of life for consumer products. Anything that has a substitute is in danger of a lower price competitor getting the sale no matter how much is spent on Advertising based on the current price in the store. Often this is out of a Brand's control. I have used the Coke vs Pepsi battle as example number 1. The Supermarket not the Brand puts one on sale with the club card as a loss leader (or break even leader) so you buy what is on sale vs maybe your preference. Kiss all those Ad Dollars Goodbye!

Your Supermarket could care less as long as you buy your Cola from them. But to Coke and Pepsi its a revenue issue. I myself prefer Diet Pepsi but buy what is on sale at point of purchase.

In the future (not too far off) a consumer will be able to show up ready to buy and at the point of sale not only decide based on pricing at that store, but also compare with every other retailer within a few mile radius. I can show up at Best Buy and run the Sony 56" HDTV throw my Smart Phone and show that the store down the street has it for $250 less and I demand they match the price or I walk.
I am in Best Buy, this proves my preference to buy from them, will they let me walk?

Or I can compare a Sony and a Panasonic 56" HDTV and I can contact Sony and say I am buying the Panasonic if you don't match their price via Best Buy somehow.

This isn't a browsing dilemma. This isn't a 'let's sow the seeds so we get the sale in 3 months'. This is a 'the person is ready to buy immediately' and if you miss the sale you must wait for the next purchasing opportunity to make the sale. For Coke and Pepsi they might have to wait a few days to a week or two. For a big ticket item it could be years before the next chance. Just think Sony and Best Buy has a chance to sell a 56" HDTV right now with the next chance in 4 years! What do they do? Especially if the consumer notifies them that they prefer to buy Sony! You give a competitor a chance to not only get this sale, but all the free marketing when friends ask how you like your new TV and you say "I preferred the Sony but the price was better on the Panasonic and you know what, its a great TV. I would recommend it to others."

This could be a huge problem for Retailers and Brands. They are not allowed to collude on prices. If a retailer has to contact a brand every time this issue arises to work something out that adds costs to the picture. And worse all the Ad Spend up in smoke. Sony or Pepsi can spend millions getting a consumer to the point of purchase only to lose the sale because the Retailer or the Brand themselves refuse to match the price.

Tuesday, January 19, 2010

My beef with so called loyalty programs

Advertising is like Politics. People tend to stretch terms and lingo to reflect their needs vs reality. And the term 'loyalty program'. It has been thrown around loosely recently specifically for Mobile Marketing and this needs to be clarified and the abuses of the terminology ended once and for all!

Signing up for future offers/contact is not a loyalty program. It is just an agreement to be pitched in the future by a company for their products and services in hopes you will be swayed to buy something down the road. It does not require a purchase of any sort, only that you sign up (opt-in) for these offers. When a business runs a Mobile Campaign to collect phone numbers for their database so they can contact your phone later is not a loyalty program. That just qualifies you to view special offers on your phone. Same as if you sign up for email or direct mail marketing pitches. And these programs are way down on the priority list for people. They might read them but the conversion rate will be lower than true loyalty programs.

Loyalty programs require purchases. They reward you for patronizing a firm with your business, whether personal or professional.

Examples of loyalty programs are supermarket rewards cards, office supply rewards, or as simple as getting a card stamped and after buying 8 coffees you get one on the house. Loyalty programs can be long term or short term. Short term examples are the McDonald's Monopoly Game. The more you buy the higher the chance of winning a prize or free give away. Same with Airline Frequent Flier Miles.

The big reason loyalty programs are so impactful is because you get something back for your patronage beyond the 'deal'. We might be interested to hear from all sort of brands what their current special or promotion is, but if all is even a person chooses the greater reward (kickback). When I search for Airline Flight Pricing I will steer my business to the Airline I have the most frequent flier miles with before choosing a different brand. The simple reason is consolidation brings a faster reward, in this case a free flight.

Thursday, January 7, 2010

The Beauty of the 30 Second Spot

One thing I have beaten to death is measurability and wastage in the Advertising Industry. And I have discussed the issue with Nielsen pumping inflated, deflated, or just plain inaccurate TV/Cable ratings due to a flawed system. And I will admit this is a topic of interest with clients, and I will tell them it is almost impossible to prove someone watched your 30 second commercial. Were they in the room? Were they using a laptop or mobile device curing the commercial? Even polling won't fix things. Yes the subject remembers your commercial. But you bought 6-8 spots during the football game. Did he watch all 6 of exactly the same commercial? So many unanswered questions that not only are almost impossible to solve, but they will remain impossible until people agree to electronic brain impulse monitoring in mass numbers in a way that the monitor can actually confirm you viewed and remembered the advertisement! Good luck!

But figuring out a realistic CPM can be solved relatively easily with an educated guess. And that CPM is higher than the rate published on purchase contracts for the TV/Cable air time. But I am a firm believer that the value of each viewer who truly watches your 30 second spot is probably higher than the realistic estimate. The internet and mobile have presaged the death of the TV Commercial but not medium is as perfect for telling your story, building brand image and personality, exposing consumers to new products, and engaging them for that period of time. Even if I went to a Brand's website I might click on 10 web pages in 30 secs of my choosing (vs choreographed by the Brand), and I might stay 5 seconds of 5 mins. Maybe I will leave the site up in a Browser Tab for 6 hours inflating the Time Spent metric for the website.

But with that 30 second spot you can make people laugh, tell a serious story, pimp your business or product in glowing terms, or major promotional announcements on your terms. And while I will be the first to say that after seeing an Ad once or twice the rest is wasted Ad Dollars spent, there really is not perfect way to fix the shot gun approach of buying slots all over the place to blanket the airwaves in hopes that if you watch TV/Cable at all, you are likely to see an Ad if you fall in the proper age demographic.

Friday, January 1, 2010

Genius, Goof, or Dumb the Nivea New Years Coup

I know Times Square for New Years is a goofy type party of pop culture. But plenty of people get dressed nice and go out to watch the ball then go out partying from there. When I saw.....witnessed...observed of watching the ball fall on TV was the Nivea Coup. Brilliant in one sense....ridiculous in a few others. Somehow Nivea gave out hundreds...thousands of big blue Nivea foam Top Hats that everyone put on. Crowd shots of people waving wearing these hats was funnier than anything Comedy Central pumps out. No matter who gave you the hat it was a corny New Years in NYC give away......but a liquor brand or even beer would be half way conscionable because it is a party...but Nivea? BRILLIANT! Now whether this leads to stronger Nivea sales remains to be seen.

But this is a perfect example of the evils of Advertising. Whether anyone cares to think of the moment and the people. Nivea got a gazillion impressions with the hats. People in and around Time Square (or looking down from the buildings), the TV exposure, and going forward all the personal private photos will forever have the Nivea Brand positioned prominently. All those uploads to share on Facebook or your digital picture frames etc.... so Nivea will be there for years to come. Yet how many of these people made a special trip to NYC for New Years? And why didn't grown Adults think about this stuff more!