The glass is half full

recession cartoon

I know it may surprise some of you to learn that The Genius is actually a relentless optimist. Critical as I may sometimes be, the truth is I have a natural tendency to look for the positive in people and situations. It’s just not as entertaining to write about the nice stuff. Sorry.

Given my optimistic nature, it’s been rather annoying to watch tv, read magazines, or even make small talk with my neighbors lately—because everyone has their panties jammed waaaaaaay up their @#$*! as a result of “the current economic situation” [insert melodramatic music here].

Listen, people. I understand that the sh*t has hit the proverbial fan. I’m not denying the facts. We all had one big over-indulgent party together, and now we’re suffering from one MASSIVE hangover. But it doesn’t do us any good to dwell, now does it? Does complaining all day about how much your head aches make things better?

Genius that I am, I’m fairly certain that “this too shall pass” and in the meantime, we best not PANIC. Which is why I took the time out of my very busy and extremely important schedule to throw together a little bit of thinking aptly titled “The Glass is Half Full.” Lest you dismiss it as yet another martini-induced rant, I assure you, it’s got real data. Naturally, it has a few curse words. And most definitely, it offers some fresh perspective.

I hope you’ll enjoy it, and… if you’re so inclined, perhaps you’ll even pass it on. Because just about everyone could use a bit o’ good news.

Breast implants wont hide the fact that you’re not very creative

And neither will a really fat media budget… but we’ll get to that…

Two days after returning from the AdAge Digital Conference, I’m still stuck on the Earned vs. Paid Media discussion that kicked off the event.

It all started with Fred Wilson’s opening keynote which proclaimed:

paidvearned1

In case you’re new to the “paid” vs. “earned” debate, here’s a handy little diagram from David Armano, VP of Experience Design with Critical Mass:

Nifty, eh? And applicable not just to digital media but to ALL media (IMHO).

But what’s really interesting isn’t the rising trend toward earned and away from paid [a hotly debated issue!], but the bizarre skewing of creativity vs. spending within the two models (also from Fred’s presentation which can be downloaded here):

tvearned

Is it me or does it appear the Paid Media approach is um… a little bit o’ cheating? A la “Just in case I’m not creative enough… I’ll BUY enough visibility to hammer the goddamn message home.”

WTF????!!!!

So all this thinking was percolating in my teeny weeny brain when Simon Clift, CMO of Unilever stated rather bluntly (and probably to the great horror of his media planners):

I’m convinced fat media budgets help make people lazy, and we’ve thought about [whether we] should cut media budgets on some specific projects in order to force people to come up with ideas.”

It’s no secret that the very best, most compelling “case studies” in marketing, advertising, and PR are those that succeeded in spite of tiny [or non-existent] media budgets—not because of them.

Yet the model that our industry was built on demands—and most certainly relies—on EXPOSURE, REACH, EYEBALLS, IMPRESSIONS [insert synonym of choice] doing the bulk of the heavy lifting.

I’m sorry, people, but that’s so 1999.

Which is why, true to character, I shall now throw down the proverbial gauntlet:

IF YOU WANT TO HAVE A JOB IN MARKETING, ADVERTISING, OR PR 5 YEARS FROM NOW, PLEASE STOP COUNTING ON A FAT MEDIA BUDGET TO COMPENSATE FOR YOUR LACK OF CREATIVITY.

I hate to be the bearer of bad news (or do I? Jury’s still out…), but better be honest now than sorry later.

Earned media is here. It’s aggressive. And it has no respect for its elders.

So instead of fighting it, why not give it a big ole hug?

F**k paid media.

Just got out of the morning session of AdAge Digital Conference where Union Square Ventures’ Fred Wilson discussed the idea that it’s time we start investing in “earned media” in addition to the good ole fashioned paid variety. Then he shared this point of comparison:

Two ad spots during the Superbowl cost roughly $4MM plus another $1MM to produce the ad. That means an advertiser is spending $5M to get roughly 10MM people exposed (but not engaged), for 30 to 60 seconds.

CareerBuilder’s Monk-e-Mail campaign cost $250k in creative and execution fees (earned media, not paid) and got 30MM users to actually interactfor an average of 8 minutes each.

Whip out your calculator and you’ll quickly see that the pure cost per impression for the paid media campaign is $.50—versus $.000833 for the earned media campaign. And that’s not even factoring in the length of time they spent on the site or the viral/network effect downstream.

Is it me or is the shift to earned media A TOTAL NO BRAINER?

The only thing I don’t understand is why a smart guy like Fred would pussyfoot around the issue and say “in addition to” not “instead of”.

Throw down the gauntlet, Fred! Stir the pot! PUH-LEASE!!!!!!!!!!!!

(Also, thank you for giving me a lovely excuse to drop an f-bomb. And for sharing that story about the Jonas Brothers. Much obliged.)

On the Radar: March 27

Photo credit: Erik Johansson

Photo credit: Erik Johansson

After a bizarre afternoon complete with bomb scares and armed bank robbers, I managed to cobble together some tasty tidbits for y’all. Are you feeling the love?

1. Having run out of options, Microsoft has stooped to differentiating themselves from Apple on the basis of price alone. Next week, they’ll start giving away free toasters with every purchase. Watch this pathetic ad, complete with the money quote: “I’m just not cool enough to be a Mac person.” Actually, you’re not rich enough. Go >>

2. In a shocking turn of events, YouTube has added a Twitter button to its “share” toolbar, making it [gasp!] possible for users to Tweet about their favorite videos. I’m not sure which is more f**ked up—the fact that it took YouTube this long to add a Twitter button or that TechCrunch thinks this is a big deal? Honestly, I have belly button lint that’s more cutting-edge than this. Go, if you must >>

3. JetBlue puts out this “confidential” message to CEOs; results in Genius peeing herself laughing—and provides further evidence that flying is for pigeons. Watch >>

4. “App of the Week,” Shazam, which IMHO is magic. Pure magic. Also, it’s free!

5. Last but certainly not least, I give you a whole new way to experience penis-envy >>

Let the good times roll!

WTF?????

Roughly once a week, I get an email like this one in my inbox:

spam

Normally I don’t even open them — I just hit the “SPAM” button on gmail and move on. But today, curiosity tapped me on the shoulder and I opened this little gem, and thought… WHAT. THE. F**K?!?

Where do these emails come from?

What’s their purpose?

Is it some kind of twisted market research tactic?

Is it just cyber-trash?

Does ANYBODY actually respond to these? They must, right? Or they would cease to continue?

What’s the CTR on these, I wonder? Higher than normal? Lower?

Seriously, folks…. WTF???!!!!?

Now that Curiosity had me going, I decided to dig through my Spam folder to see what other treasures I might find. I found plenty.

First there was this one, which bestowed upon me the good news that some random dead guy left me $30,100,000. Not too shabby.

spam2

And this one, in which a clever businessman from Hong Kong hand-picked me to launder a mere $10.6M in exchange for a piece of the action:

spam3

Nice!

Next, we have a dying woman in the Netherlands who wishes to leave me $1,500,000 to help widows and orphans—a career change I wasn’t planning on, but am now reconsidering since it is clearly quite lucrative. I also enjoy that she tells me point blank, “Do take this email as a contribution to fake (Spam)” right in the opening paragraph. Priceless!

spam4

I could go on all day with these. My Spam folder is littered with them… right alongside irresistible offers like “Lose Weight Quickly & Naturally!”, “Stay in Your Domicile to Earn 20grand in 30days”, and—my favorite—”Flush out excess pounds from your colon!”

Yes, these are actual subject lines, folks.

Which brings me back to my original question: WTF???

The sky is falling! The sky is falling!

chickenlittleIf you think Chicken Little is just letting off some steam, think again. This sh*t is bananas, people. And not in a sassy, Gwen Stefani kind of way.

What am I talking about? The massive, apocalyptic upheaval taking place across the media industry right now… the realization of the Chaos Scenario.

[insert melodramatic sound effect here]

Before I inundate you with data points certain to cause heart palpitations, let me pause for a moment to say this: Chicken Little was a total spazz. From his perspective, the sky WAS falling. From mine, it was just a storm passing through. If only he had stopped panicking long enough to find shelter and maybe some galloshes, CL might still be here today pecking away at corn meal, instead of gracing my dinner table all crispy and warm.

Now—back to the Apocalypse!

After posting yesterday’s “The end of advertising as we know it” piece, I sat down to read the March 23 edition of Ad Age, which just arrived on my doorstep that afternoon. What, pray tell, is on the cover? This headline:

Future May Be Brighter, but It’s Apocalypse Now

Sure, it’s an article penned by the same guy who presented the Chaos Scenario in the first place [Bob, if you're reading this, I think you totally ROCK]. But “I was right!” bias aside, he’s got a real point.

As evidence, I submit Exhibit A: Bloodshed across every corner of the media industry!!!!

NEWSPAPERS:

  • Amid 23% population growth in the past two decades, US newspaper circulation has dropped 20%

MAGAZINES:

  • Newsstand sales—the “profit engine of the ad industry”—fell 12% in 2008.
  • Gross ad pages have dropped 22% so far in 2009 (and 2008 wasn’t exactly rosy!).

Lest you dismiss these data points as ‘just another victim of the recession,’ consider for a moment the remote possibility that it’s not; that the core issue behind these numbers isn’t circumstantial—it’s structural. To quote Wendy Harris Millard, co-CEO of Martha Stewart Living Omnimedia, “Advertising simply cannot support all the media that’s out there.”

UH OH. That’s bad, right?

BROADCAST:

  • Clear Channel, the fearsome behemoth that some predicted would consume the entire nation like a cancer if not stopped, recently laid off 9% of its workforce, dumped 56 of its TV stations and is now struggling under the weight of $20 Billion in debt—with little prospect of salvation.
  • Bernstein Research predicts a 20-30% drop in 2009 TV station ad revenue.
  • CBS’s prime-time audience was down 2.9% in the last reporting period.
    ABC: -9.7%.
    NBC: -14.3%
    Fox: -17.5%

Meanwhile, the COST of advertising on television has continued to climb:

“The average price of reaching 1000 households with a a 30-second spot in prime time was $22.65 in 2008… but effectively more like $32, because between 150 and 200 of those 1000 households use DVRs to skip past the ads.”

So basically you get to pay more than ever to reach fewer people than ever. Awesome!

Of course, this might explain why “by mid-February, 71% reported having slashed their budgets, and 6% more said the cuts were on their way.”

OUCH.

ONLINE:
The inevitable “disequilibrium between supply and demand” has taken its toll on online publishers as well.

  • Usage is soaring, but value is in the toilet.
  • Average click-through rates online are near zero.
  • Consumers have gotten pretty good at ignoring and/or avoiding even the most clever ads online.
  • Yahoo, the most trafficked website on the planet (3.5 Billion daily page views), has lost nearly 2/3 of its market cap since last spring.
  • Doom. Gloom. And more doom.

So now what? Panic? Take a cyanide pill? Go back and get your MBA?

photo credit: "Oh My God the Sky is Falling" by Liam Cooke

photo credit: "Oh My God the Sky is Falling" by Liam Cooke

No doubt, most industry observers (and participants) will find themselves frozen—with that deer-in-headlights look—for some time. Some will indeed panic, drink heavily, and/or send me hate mail.

Which is why I’m here to remind you that everytime a door closes, another one opens.

To some, the glass looks half empty. To me, it’s undoubtedly half full.

Insert 3rd illustrative cliche here.

Here’s the deal, people:
The universe operates in an unstoppable cycle of birth, death, and rebirth. At the moment, we are—COLLECTIVELY (as a species, and perhaps even beyond)—in the throes of a profound and utterly incredible death/rebirth cycle, magnified by the increasing interconnectedness that technology now affords.

The question is, are you going to be the guy whining about how sour the lemons are? Or the one who makes a lot of people happy—and gets rich in the process—making the most delicious, refreshing lemonade?

The end of advertising as we know it?

laptoptv

I guess this is “old news,” as the data I’m about to share comes from a 2007 IBM Global Business Services study (aptly titled “The end of advertising as we know it”)—but perhaps that makes it even more compelling. Here goes:

71% of the 2400 consumers surveyed across five countries said they spend >2 hours/day on the Internet—not including work-related activities. In other words, almost 3/4 of this global sample spends several hours DAILY of their precious leisure-time online. [side note: do any of these people have children? Because if they do, what business do they have with 2 whole hours of daily leisure time?! I don't get it.]

Meanwhile, 48% of the folks surveyed said they spend >2 hours/day watching TV.

In 2009, I’d bet my britches that the gap between those numbers has only grown larger with web use (fueled by time-intensive destinations like Facebook, YouTube, MMOs, virtual worlds, etc.), iPhone apps, on-demand TV, TiVo, DVR… and more(!) encroaching at a relentless pace on the Grandaddy of all advertising mediums.

The question is, as a brand, agency, or marketing professional… what are you doing about it?

Three heads in the sand

The “pretend it’s not happening” approach, while popular, is ill-advised. The music industry tried it a few years back when digital music first appeared on the scene. Now they’re hemorrhaging money and market share and being outsmarted by downstream vendors who responded to the shift toward digital.

[sigh]

Please don’t follow in doomed footsteps.

Even if I’m totally wrong about the increased gap (and we all know, the Genius is rarelyif ever—wrong), you can’t hide from the fact that you’ve still got a few disruptive forces that aint going nowhere, notime soon. Namely:

1. Consumers want control.
And not just of what they watch but how they watch it—and interact with it—as well as how they filter what they view, including ads.

And young people? They’re not having any of the “I WILL YELL LOUDLY AT YOU TILL YOU BUY SOMETHING” strategy of old. By next year, young Americans will outnumber Baby Boomers and make the shift toward digital (which they were BORN using, wanting, understanding, and expecting) a fait accompli.

I do hope you’re ready.

2. “Impact” is the new “Reach”.
Admit it. You’ve grown used to a world where “Reach” was the Holy Grail of marketing. For years, it’s been all about “impressions”, the idea being that the more eyeballs you snared, the more sales would result.

Now that the drugs have worn off, many marketers are dealing with a nasty hangover called “REALITY”. Just because you show up at a party looking wicked hot and flirt with EVERY guy, doesn’t mean you’ll go home with a ring on your finger. Get my drift? Same logic applies to the “spray and pray” philosophy of Old Marketing.

The party is over, folks. And the rulers (those funny things you measure stuff with) have come out.

Well… maybe not rulers per se. We’re all still trying to wrestle that nasty Metrics Monster to the ground. Oddly, I think he likes the wrestling and is growing fond of a good Full Nelson. [Dear God, it's the drugs talking again...!]

Ahem.

Fact: Virtually all of us are enduring the joys of recession-mandated “rectal exams” in the form of account reviews, lowered credit limits, tighter budgets, and greater demand for true ROI. Impressions, clicks, even those new-fangled “engagement” metrics aren’t cutting it. The question is how did those impressions, clicks, and “engaged” consumers translate into increased brand awareness, positive word-of-mouth/mouse, and purchases downstream? If you haven’t figured out how to measure that yet, you’d better hop to it. Quick.

2/3 of the advertising executives IBM polled expect 20% of advertising revenue to shift from impression-based to impact-based formats within three years.

Yep. P.S. that research was published 2 years ago.

And last but not least,
3. The Consumer is also the Creator.
Thanks to technology, consumers have been empowered not just to choose their own destiny—but to create it. In the same way that we’ve seen the rise of “Reality TV” over the past several years, so User Generated Content is becoming The Dominant Force online. IBM’s previously referenced survey, for example, already showed in 2007 that UGC sites are the top destination for viewing online video content.

Look out, Mad Ave!

Which leads me back to my earlier question: Time’s are changin’. The masses are moving from one screen to another… to many. As a brand, agency, or marketing professional… what are you doing about it?

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