Category Archives: Leadership

Lessons from 2012 for Business & Politics

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ap_presidential_debate_romney_obama_pointing_thg_121016_wgThe 2012 election drives home some basic new realities about how we communicate and conduct our business and our daily lives.  The advent of the digital and social world has changed us forever.  In politics as in business we see those who are on the leading edge, and the stragglers.  Many of my clients, and certainly my future clients, have come to this understanding late.

Here are a few thoughts on how this worked out for the latest election cycle.  Everything we saw as business and communications work nearly exactly the same in business as politics.  One side triumphed over the other, and the reasons were more for business practices in the conduct of the marketing for the election, than in purely political leanings.  Just a few thoughts…

 Nate Silver and the Pundits  The biggest winner of the 2012 election cycle was 538 - by Nate Silver.  The success of Nate with his ‘system’ that followed individual polls, weighted the results, and then posits results by election area, became a new standard for tracking forecasts.  The single poll as a key talking point will recede as conglomerated results become the new norm.  This will also impact the role of the pundit who is basing their forecasts on feelings and not empirical data.  Pundits were especially routed in this election cycle when their results did not match the data on the ground, and the final results.  They are now relegated to mere ‘talking heads’ and all of their wishing on hoping are just that.  Show me the data is what we now expect.

The Role of Social Media  The biggest change in this campaign from 2008 to 2012 was the role of social media.  2008 was the digital campaign yea . 2012 became the social campaign, all of the benefits of the digital conduit for communications, along with tailored messaging, and listening, with their targeted audiences.  Obama’s team built a large social-digital staff that literally drove the campaign.  Nothing did more for the Obama campaign, and this will set the standard for all future campaigns.  Little time here for the details, and I will go into more detail in future posts, but for now, we must see that a return to more traditional messaging will not work in future campaigns.  The die is cast.

The Power of Print Media  Print media still lives, and will still have a key role in future campaigns, just as they do for day to day business, but it will play a lesser role in the future.  The power of the press, and especially of the official endorsements no longer drives the electorate.  Day by day, their hold on the public is loosened.  The results of who endorsed each of the candidates had a low correlation to the final outcome.  We now want newspapers to tell us what is going on, but not who to vote for…we’ll get that from our friends on social media or general social contacts, if we need those at all to make up our minds.

The major dollars spent at the end of the campaign by the Romney campaign in print and television did very little to move the needle.  By the time they ran, minds had already been made up.  Words and print images are simply not as powerful and recent and visual images on the web or on television.

The Party Vs. The Campaign  In this election cycle we were treated again to the real power of incumbency.  Though many thought Obama carried a lot of negative baggage, and that incumbency in a poor economic climate would act as a drag, it did not turn out that way.  As the incumbent, he was able to rebuild his election team from 2008, and take advantage of all of their previous experiences to come up with an even stronger campaign organization.

Romney was perceived to have been a great organizer, but it didn’t work out that way in this campaign.  With a long primary, his team was late coming up to speed, and messaging and marketing continually ran behind.  They also gave up the advantage when the Obama campaign was able to define them before they could build their own image.

Campaign Timing  In past campaigns both sides usually started at roughly the same time, the incumbent having an advantage.  In the current election cycle, the challengers were exceptionally late due to a long and contentious primary campaign.  The party used to play a larger role in the overall campaign, but in recent campaigns it is the candidate who basically runs the entire show.  Funding still comes from the party, but direct campaign funds and the direction of the campaign really are driven by the candidate.

I first saw this with Richard Nixon, who had the California campaign staff taking the lead and driving the campaign.  This worked for most campaigns from Carter, the Bushes and Bill Clinton, but in this last cycle we saw the Chicago group take out the Boston group who struggled to mount the right campaign.  They went to battle ill prepared for what was ahead, and the experienced crew out managed them.  Future campaigns should take heed from this.  Next time there will be no incumbent, but the team with the best plan, crew, message, and funding sources will likely win – all other politics aside.  The same goes in business.  Thinking you have the best ‘product’ will not trump the best marketing campaign, especially in a short ‘campaign’ with a finite deadline on election day.

Digital Donations  The Romney strategy was based on large donations and the use of PACs to drive their message, and they did exceptionally well in this area, both in the primary and election campaigns.  The money was flowing, but the results did not match the massive amounts spent, much of it too late to change minds already set by the other side.

The very large PAC infusion of money, much of it from just a small group of very wealthy donors did not accomplish the goal of total domination.  In the end, the other guys had some strong PACs as well, but even more they discovered the power of small digital donations via text or emails.  The power of small donations by the many, repeated several times by strong messaging did the trick.  The key fact is that the masses that donated also took the time to vote in large numbers.  The ‘engaged’ donor became the very engaged voter.  For me that was the big win that I did not see coming, especially the size of total donations via this methodology.

Audiences and Precise Targeting  In the world of direct mail the Republicans set the standard, and their lists were gold to the party.  Election cycle after election cycle they yielded fantastic results.  I’m sure they performed well this cycle as well, however, the Obama team who switched the ball game to heavy digital marketing outperformed them.  Appeals went out on a nearly daily cycle; immediacy trumped the heavy mail package.

What we found out later is, that in this new 2012 cycle, the digital team advanced the art and science well beyond their initial efforts in the past cycle.  Offers were tested, run, revamped – all within the span of a few hours, something impossible in direct mail.  The single most interesting fact that I found out later were that nearly all of the appeals tested worked…they all worked.  Message may be the key, but in this case it was more likely that methodology triumphed.  For business, resisting digital and social marketing is at your peril.  They must be a part of your mix in the future if you want to win the business in your daily marketing cycles.

Generations & Ethnicity…and Single Women  Perhaps nothing explains the results of the 2012 election than the results shown by generations and ethnicity.  They certainly skewed in both directions.  But the bigger question is what this means to our electoral and business future.  Targeted messaging is critical to identifying and supplying messaging to each audience.  The days of mass marketing producing and mass result in the general marketplace are fast fading.

In future any marketer must target and message for their audiences, each with their own concerns and issues.  Not only is the messaging variable, so is the media.  Fewer of us subscribe to a daily paper.  Confession here, as an old direct marketer and newspaper advertising executive, I used to subscribe to all the local papers on a daily basis.  Now I have just one paper on Sunday, and the other for 4 days a week.  All the rest of my news comes from the Internet via computer, iPad and iPhone.  I also consume at least 3 times more total information as a result.  For me, less is truly better.

For many, the iPhone, and other fully featured phones are now their prime communication vehicle and news source.  Any business, or candidate, who does not take this into account, will not survive the next election cycle if they need that audience to win.  As we saw the older audience does not use these tools as much now, but that audience is literally dying out.  Not good ways to run a campaign in the future, if you want to have a future.

Single women also went heavily for Obama, married women more Romney.  Messaging alone wouldn’t change the results here.  It becomes a platform issue of what each party stands for.  Is a party platform a key component of the message and do they need to be in synch.  Much was made of the distinction in this case and through the Republicans courted single women, their overall message that was ‘heard’ was negative.  Now we need to heed and message to gender, age, marital status, ethnicity and generational location as key factor in future campaigns.  This is a very tough challenge for any marketer in business or politics and will determine the results of most future elections here.

Unforeseen Events  Unforeseen events, like ‘Sandy’ will not be unforeseen in the future. What?  I expect that future elections will forecast for every possible event and preparations will be at hand.  Kind of like packing for a trip to Hawaii, but bring your snow skis anyway.  With the outcome resting on any unforeseen event, they simply have to be built into our future radar.  There is not time to regroup and react – bring the kitchen sink with you, we may need it will be the new motto.

Closing thoughts…  Future elections, and future business will never be the same.  Our digital and social tools have changed everything.  I also expect this trend to continue as newer processes replace the old.  Keepup, use the tools, or lose it all.  No looking back now.

Big Data vs. Big Money…and the Winner Is?

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Dewey vs Truman and Now Romney vs Obama

Sometimes things don’t turn out the way everybody thought!

The election is over, and the team clothed in Blue won, and the margin was large.  After such a contentious election cycle I’m sure all would agree -no more.  The question that I raised in my last post on the eve of the election was “Will Nate Silver be a god or a goat?”  Well we now know that he was spot on in his predictions for the outcome of the election with Obama winning nearly all of the contested states.

How did Nate Silver call the outcome?  He did it by an algorithmic review of all polls (he does not conduct any polls of his own) weights the averages, and then forecasts the likelihood of winning the electoral votes in a given state.  No punditry, shear match, some science, and enough sense to lower the values of what were the outlier polls like Gallup and Rasmussen that did not fit the general results of the other polls.  Viola, we have a whole new way to pick the winner.

So, what happened to the Republicans, who were still forecasting victory right up to the last minute which gave us some memorable moments when Karl Rove had a meltdown on Fox, and Mitt Romney had to write a last minute speech that no one thought he would need since it was obvious to them that he was going to win…ouchers.

So this election came down to a couple of very big things – Big Money and Big Data.  On the Big Data side the Democrats used all of the data tricks learned in the ‘08 election, and then brought in a number of new wrinkles.  They built a large team in Chicago to manage the data, armies of staff and volunteers to use the data to blanket the targets with multiples of messages.  No stone was unturned in reaching and motivating their target audiences.  They had a mission and it was about turnout, and they did it, surpassing their efforts of 2008.  I expect now that major elections in the future would be based on these efforts.

On the losing side, the focus had been on Big Money, mainly big donors who gave directly to the party, and to the Super Pacs.  The Koch brothers and Sheldon Adelson were the big whales contributing an estimated 250 million between the two.  These efforts were supposed to be all that was needed to blanket the airwaves with TV buys that would sway the election in their direction.  In the past this has done it, and more money was spent – over a billion dollars in this heroic effort to carry the day.

The funny thing is that the Obama team also raised huge dollars – they also hit the billion-dollar mark, much by large donations, but a huge portion came from donations, mostly over the Internet.  Their strategy was to go after small sums from a large pool, and then to hit them again and again.  They test all kinds of messaging, and guess what, nearly all of the messaging worked  – and the donations flowed.  The public was really in the dark on the effectiveness of this effort until well after the election – certainly the Republicans were in the dark based on their surprised look at the end of the contest.

I’m not here today to talk politics – my interest lies in the technology and the application of the technology.  I have friends, who are political consultants, and “I forgive them for that, they know not what they do.”  My interest is in understanding how we best influence decisions, mainly commercial or business decisions through communications.  Would the brute force application of traditional print and broadcast media work in todays world – certainly one side thought that it would.  They were experts in direct mail fundraising with golden lists that delivered the manna in each election cycle. On the other side, with a new digital toolbox that worked last time, could it keep up with the promise of a sea of paid media that would not end?  Could they do it again since the other side knew how they were going to proceed?

They did it again…and in my next post I will go into more detail on just how they did it and what this all means to us in our business practices.  Big Data and the Digital World are real and anyone who does not utilize these tools in whole or in part will probably not make it until the next election cycle.  More on Monday!

Not Dead Yet! Just a Little Diminished Around the Edges!

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I love the scene in Monty Python and the Holy Grail, circa back in my callow youth, where they were collecting bodies from the ‘Black Death’.  If they weren’t dead, a quick bonk to the head speeded up the process.  I think in today’s media world we are seeing this played out over and over again.  I confess I had bought into this talk, but I think there is still some life ‘in the old girl yet.’

What gives me hope is that baby whom cover the industry are starting to see the patterns that are evolving that show some various tracks key newspapers are taking to ensure their survivability. My favorite is from Alan Mutter of Newsosaur who in his recent article “What’s Next for Newspapers”  highlighted three paths that could offer some hope for newspapers and newspaper staffs who are looking for some relief.

Alan’s three possible paths to the future he labels as: Farm It, Milk It and Feed It.  He has plausible representations for each, and it makes for a great read.  This has been made all the more urgent in trying to move towards a recognizable future for newspapers with the decision of Rupert Murdoch to split his media empire into two segments – print and everything else.  That news was met with a round of – “it’s abut time” and the blessings of the market with an upturn.  If anyone really understands the future of media it is Rupert Murdoch.  Whatever sentiment he had for his holdings was dashed with cold water after the media circus in England that has stained his reputation.  His head is now ruling his heart…and his pocketbook.

In the next post I’ll start reviewing these options, and perhaps have some additional ones to through on the discussion pile.  Back soon…now for a viewing of Monty Python on my iPad ap.  A great bargain for a few bucks, and a few moments with some lively songs and the Knights Who Say Nea always leaving me smiling.

What Does Warren Know That We Don’t Know?

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Warren Buffett - Now Loose with Open Check Book

Warren Buffett – The New ‘King of All Media

Warren is on the loose…again, and he brought his check book.  What does the Oracle of Omaha know that the result of us don’t.  For one thing he knows a great investment, and that means something he can own for a long time.  That habit is not in vogue in todays fast trading world.  Warren is looking to own assets that will appreciate over time, while bringing in some great cash flow, year in and year out.  I remember those days, but then my idea of long range planning is “what are we going to do after lunch?”  Warren is worried about the next decade, not what’s for lunch!

Warren, really Berkshire Hathaway, bought most of the print units of Media General, sans the Tampa Tribune, which will stand on its own for Media General, or until they find a way to sell it off as well.  Media General got some great cash and a chance to stay alive for awhile, something many major media companies are trying to do.  Warren got all of these holdings at a good price along with the real estate.  The price is significantly lower than the multiples paid in the past decade when all of these media companies sold or recapitalized, and then the bust hit.  Media companies can still make money, if they are not mired in debt – that is what Warren knows.

With our transition to a digital media world, in progress as we speak, there is still room for print media in local markets.  I should qualify that and say ‘print’ is not really the operative word going forward, but news media leader in a local market with a print product is more to the point.  As the ‘voice’ of the community – their earned mantle – they can be important and profitable businesses.  Kind of like having gone through a takeover by a venture capital company.  Make it leaner, and meaner and you can still make a buck.  Lots of jobs will be shed, but then that is better than oblivion.

With this deal Mr. Buffett and Berkshire have seats at the table with Media General, as well as with The Washington Post Company, as well as a stake in The Buffalo News. He is quickly gaining influence throughout the industry by his unabashed belief in the continuing role of the newspaper in the community.  He provides both financial and moral support to an industry in need of both, and at a very critical time.  The biggest players like the New York Times, Washington Post and Wall St. Journal exist on a different plane.  They are national papers of record that large audiences look to, their issues are different. Local and regional papers have different needs and Warren understands.  With his purchases, not only does he have a seat at the table, but now he sits at the head of the table, and all eyes are on him.

Facebook is launching today what could be one of the truly huge IPOs with a value over $100B.  FB is one of the contributing factors to the demise of newspaper readership.  No they are not the main culprit, but more of a symptom of the decline of newspaper subscriptions.  The newspaper was the watercolor content provider for social currency up through the last 10 years.  If you wanted to be able to join the conversation at work, you read the newspaper.  TV was also a source of conversation with your friends and co-workers.  Now you keep in touch by digital means, texting and emailing…and the Facebook.  Newspapers, in this new age, have lost a lot of their relevance of social currency.  By the way it opened at $38 and has moved across $40 where it is as of this post.  Oh for the days when newspaper sales attracted half of the attention of the FB IPO.

Warren understands that the local market is the last great place to have a real chance to still have an open forum in the community.  There is still a chance in our ever growing social world that the local paper can have a real chance to drive that social discussion.  As in the past, this is not about altruism, it is about having a good earning business.  Newspapers will never command the high multiples when they are sold, because they will never be the monopolies of the past.  With low debt and reduced operating costs newspapers can deliver a return that a ‘buy and hold’ kind of guy like Warren can appreciate.  This strategy can be the one that can save local papers, and I don’t see much else that will.

Good luck Warren!  We are all pulling for you and your strategy for the sake of our industry, and our communities.  We’ll be waiting for more good news in the future.  By the way how about some love for Orange County – The Register is available, and I hear the price is too good to pass up.

Postal Reform Now…Will Congress Act to Save or Kill USPS?

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Is the Postal Service going downhill??

“Industries Fear the Ripple Effects of Proposed Postal Service Cuts” – Was the title of the article in by Ron Nixon in the New York Times yesterday.  It is a good statement of some of the key issues that are being taken up starting this week in Washington.  All sides are lined up to help shape the final outcome.  Today ,CCN Money  has picked up the story as well.  It seems that all eyes are on Congress as they take up the issue of “postal reform.”  All this while all the ears are on the Supreme Court as they take up the issue of ‘Obamacare.’  We certainly do live in interesting times.  As the pace of change and disruption our world picks up we must expect many more battles in the future to go along with these two. 

Congress has begun work on their vision for Postal Reform, if reform is what they really have in mind.  All of the various constituencies are lined up on both sides of the issue.  Some want more, and others want the USPS to do less.  On the plus side are the wine and beer lobbies that want to be able to use the USPS to ship their products, something the USPS is prohibited from doing by law.  On the negative side the insurance and banking industries are lined up to ensure that the USPS not move into their fields, as some in Congress has suggested they do to create more revenues.

Like the newspaper business which is also undergoing its own transformation, the USPS is a huge enterprise that employees nearly 600,000.  Beyond that the entire direct marketing field, including mailing companies, printers and direct marketers employees over 10 times that amount.  This is a big deal, and we need to get it right.  As was noted in the article the field supports over $1 trillion in annual economic activity.  It helped to put both of my sons through college, so it is still dear to me.

Nearly every business relies on the post office to deliver packages, advertise services and send out bills. This postal supply chain supports millions of American jobs in fields as diverse as banking, agriculture, media and manufacturing.  This is an urgent issue since the USPS is losing nearly $36 million a day.  As volumes of mail have decreased with former users now going to digital methods of delivery.  Even the USPS has said that it does not expect to get those missing volumes back in the future.

The USPS is also saddled with a Congressional mandate to pre-fund future retirements, the only government agency to have to do so, to the tune of $5.5 billion.  Relief from this mandate would cut the shortfall in half.  A sign that this is a big deal is the nearly $300 million spent over the last three year by those lobbying on all sides of this issue – both the USPS employee unions and industries who work in the direct marketing field.

Postmaster General Patrick Donahoe has proposed closing half of the post offices, approximately 3700 and shutting half of the mail processing centers, 250 there.  Both changes, along with stopping Saturday delivery, would also help to bring down the shortfall.  In a world that has gotten to email and instant messaging for time vital business and personal communications, there would seem to be some wiggle room for printed mail – derisively called ‘snail mail.’  A big question is how fast do we need to be, especially if we want to price reduction, or at least fewer price increases.  And yes, the USPS is also asking for a 50 cent first class stamp.

Postmaster General Donahoe said in prepared testimony.  “If Postal Service were a private company, we would be engaged in Chapter 11 bankruptcy proceedings.”  The Senate is beginning the process now, and the House will begin deliberations, probably next month.  A key deadline for consideration is May 15, when a moratorium on closing postal facilities will expire.

Currently under consideration is a bill that passed a Senate committee in November that would tap the overpayment of the future retirement benefits, currently at $10.9 billion to pay down postal service debt (to the U.S. Treasury) and use up to $2 billion for incentives to get a number of long term employees to retire.  The USPS has also planned to open its own health care for employees in hopes of cutting their costs, but there is pretty widespread opposition to that from Congress and the employees.

The USPS is a legacy system with a long history.  Like so many of our other ‘legacy’ systems, including newspapers, they are in deep trouble with the change in the economy in our broadening digital age.  Change is great for some, though it sucks for others.  I live in both worlds, and yes, I still want things the way they used to be.  The question is how much am I willing to pay to have that.  We make those choices each day, and we are making those choices now regarding our postal system.

In the face of the current situation I have to applaud Postmaster General Donahoe and his staff, though that is a strange position for me.  I prospered under the USPS, and endured a lot of petty regulations as well.  They clearly understand where they are today, where the world is going, and have surfaced a plan that will help them to move forward under their current legal and financial burdens.  Congress has the keys to open doors for them to endure and preserve the current levels of service many still desire.  They also have the keys to the vault and say no more.  I compliment the PG for a real and thoughtful plan, and I hope our elected officials will make the right choices.  In the face of the coming elections later this year – this should prove to be good theater, and maybe even good politics.

Gary Pruitt and the Future of Newspapers and Journalism

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Gary Pruitt, new head of Associated PressIt was announced yesterday that Gary Pruitt will be leaving the leadership of McClatchy, the 3rd largest newspaper chain in the U.S.  Gary, just 54, was the leader of the charge of newspaper conglomeration in the early part of the 21st century.  Timing is everything, and Gary’s was not good on that call.  Now it seems that he will be making a better call by becoming the chief executive of The Associated Press.  This is a plum job in journalism and Gary has made his way to the top of the pile of what is now print journalism.

I’d like to give Gary a new nickname – Prescient Pruitt, for knowing when it is time to leave.  The definition of the word  prescience [ˈprɛsɪəns] n – knowledge of events before they take place; foreknowledge [from Latin praescīre to foreknow, from prae before + scīre to know].  I think that says it all in the face of the current state of the newspaper business in 2012.

Not to say that Gary can take all the blame, there is enough of that to go around for all who failed to see the train coming down the track, but he was the big gun with the big check book who bought everything in sight, just before the bottom fell out.  With so many papers have been sold for high multiples, the debt they took on has helped to sink nearly all of them.  This in the face of a natural decline of the media in the face of the digital onslaught they were about to face.

I wish Gary well in his new role, I had a number of professional dealings with McClatchy when they were my client in the 90’s, and they were a class act.  From everything I have heard of Gary, he is as well.  Now he will have to help journalism from this new position at A.P. providing content (not news) that will flow through the presses and the digital screens of readers to keep real journalism alive.

There is much more to say about the state of newspapers and marketing – once they were a singular entity, but now more loosely linked – and where the state of media is going.  Newspaper revenues have declined to 1984 levels in 2012 – I know Gary did not see that coming – and digital revenues are screaming upward.  Can newspapers maintain their position of strength?

A similar issue faces the U.S. Postal Service – after great periods of growth for decades their volumes have declined, and they face major cutbacks and reorganization to remain viable and cost effective for mailers and mail recipients.  Both media are linked together in their future.  What do they need to do to survive, and the bigger question is – can they survive.  More TK!

A Last Chance for Yahoo?

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Change comes again to Yahoo along with staff cuts

It’s hard to think that having come so far in just such a short period of time that Yahoo is in so much danger.  Major cuts are being aimed their large products organization, as well as other arenas in which the company has lagged.  Like many in similar situations they are also cutting: Public relations and marketing, research, marginal businesses and their weaker regional efforts.

Yahoo struggling for some time just hired PayPal President Scott Thompson as its new CEO. Scott was most recently in charge of the large eBay online payments unit.

He starts next week, but big changes are coming fast.  Staff conference have already begun and an all-hands meeting on Yahoo’s main Silicon Valley campus is scheduled ASAP.

Thompson also hired Boston Consulting Group to help focus the company on “growth” initiatives and to find the best path for Yahoo going forward.

Scott appears to be looking for areas to quickly jumpstart Yahoo after a failed turnaround over the last round of turnaround leadership.  Cuts are likely, but the focus will also be looking for new areas to move into.  That what consultants can do for you, find the costs, and find the new directions.  Let’s hope that BCG has a great compass to find that new direction.

Adding to Scott’s woes is the news that Prabhakar Raghavan,the head of its labs unit will be departing for Google.  His research at Yahoo focused on search technologies, with particular interests in text, web mining, and algorithm design.

Sources said was spurred by the likelihood of major job cuts in his research unit.

Staff cuts will happen, and they could be significant.  Staff at Yahoo have been through this before, or their predecessors have, but the effect is still chilling, and these could be larger than ever before.  With 14,000 employees and a large contingent of software contractors not in that count, the ‘dead pool’ is significant, but costs must be slashed if Yahoo is to survive.

In a conference call to analysis Scott said “Our leadership is engaged in a process that will generate significant strategic change at Yahoo, but final decisions have not yet been made at this point. Beyond that, we will not comment.”

In other words, get ready for some big shoes to start dropping and very soon.

Whether we are talking about the USPS, newspapers or older digital media like Yahoo, the future will go the quick and nimble, and the adaptable.  There is no longer any ‘legacy’ left in media…’what have you done for me lately’ is now all that matters.

A Tale of Two Texans

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Lance Armstrong- A Reputation RestoredAll is right with Texas, and all is thusly right with the World.  As a former Texan, circa 1980-1983 I am a living testament to the uniqueness of Texas, actually really it’s the Texans who are so ‘unique.’  I now enjoy having Son#1 living in Austin, the unique heart of Texas, with his native Texan wife and native Texan daughter.  I loved living in Texas, back then, and they love Texas of the 21st Century.  The last few months have been trying times for Texans as they cheered and mourned the fates of two favorite sons – Rick Perry and Lance Armstrong.  Now there is resolution for both.

Rick Perry is back in Texas, some are happy, and some are sad.  Texans love to cheer on favorite sons, but Rick didn’t come home with a victory, and Texans hate to lose.  Texas papers are reporting the polls are showing that Perry’s favorability ratings have fallen in the state.  They interpret this to mean that many Texans are not happy to have Rick back in the state after his run for the Presidency.  His poor showing on the stump reflects poorly on them they think.  Ouch!

Lance Armstrong is back in Texas, in fact he never left.  Not only is Lance a great cyclist, perhaps the greatest of all times based on his Tour de France record, but he is a great businessman.  Lance built an entertainment empire out of Austin, one that would be the envy of any rock impresario.  It helped to build Austin into a center of the earth for entertainment of all ilks with the SXSW each spring.  I’ve never been, but my son is there every year, and now each year he is a contributor in the digital field

Texas in a unique place with its own culture, actually cultures, since there is no single culture to embrace all Texans, except for Pride, and in Texas that is spelled with a capital ‘P’.  They love to win, and love it when they get to bring home the glory.  In the case of Perry and Armstrong, both favorite sons with unique stories, Texans regaled in their successes, and held fast to them when both got into ‘trouble.’

The Texas miracle is built on two factors – lots of cash, and a tight network of ‘good old boys.’  It was many of these good old boys who bank rolled the Perry run for President.  Texans don’t like to lose, that is in every area including both money and face.  Rick came up ‘short’ in both areas.

The money was bad enough for the donors; they can make it back, but losing ‘face’ with Rick’s poor performance in the debates and on the stump.  Not only did Rick come back to Texas diminished from his performance, he came back to a deflated Texas, where many are now questioning the ‘Texas Miracle’ he was touting on the stump.  That was embarrassing to all Texans, and Rick may find it hard to mount any future campaigns.  His network is still strong, and full of cash, but they are likely looking to the future with other names in mind.

One more opportunity for Lance came this week with the Susan B. Komen flap over cutting off funds to Planned Parenthood.  Stepping in to help offset the cut in funds were Michael Bloomberg, Mayor of New York and Lance Armstrong’s Livestrong Fund who matched funds lost from the Komen actions.  Nothing like a lot of great publicity announced almost simultaneously with the announcement that there would be no further legal actions planned against Lance for the doping/steroid allegations.  Wow, what more can a man do to get his reputation back.

Texas, like California, has a very unique culture.  They love their favorite sons, but sometimes when those sons go astray there is a price to pay.  For both Rick Perry and Lance Armstrong, going ‘astray’ has had consequences on their reputation.  The press has been all over the both of them.  It appears that Lance has weathered the storm, and is back on top in Texas.  His reputation is being restored, or at least it has been expunged from the official records.  He will recover.

Rick Perry embarrassed Texans with his poor performance, his reputation is now down.  It remains to be seen if it will recover.  Time will tell, time will tell.  For Lance, all is good, and all is forgiven.  Perhaps Lance should consider a run for the Governor for the next term.  I know a few Texans who would vote for him now.

Groupon CEO Survives Digital Suicide on 60 Minutes

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Last week Andrew Mason, the 31-year-old CEO of newly public Groupon conducted an interview with Leslie Stahl of 60 Minutes.  I was excited to get to see for myself just how crazy this newly minted multimillionaire could show himself.  Groupon is know for its wild culture, and Andy did not disappoint.  The words, the look and the attitude were just what I was expecting.  Lesley, to her credit, seemed taken back, not that she hasn’t interviewed a number of crazies over the years, but this was a masterpiece of craziness.

Crazy how?  Crazy in that Groupon continues to struggle to achieve real relevance since going public.  As the biggest tech IPO in some time it was to be a real bellwether of things to come for others seeking to go public.  The price was set relatively high at $20 per share, and it hit the mid-thirties in the first day, but then retreated.  The bloom quickly faded from the rose and it continued to slog along in the low 20’s, sometimes dipping below.

One thing for sure Mason was still high on the ‘juice’ of their success, though smarting from the comedown of having to restate their earnings.  They had forgotten to include things like ‘sales expenses’ that included the returns back to the advertisers after sales had been booked.  Ouch!

Started in 2008, Groupon was one of the few businesses that actually took advantage of the economic downturn.  Blessed with a large pool of available talent, many recently displaced from their current jobs, they were able to build a solid team to blanket the market with a novel concept.  Pay nothing up front, get a lot of customers in your doors, and get around 50% back when the customers pay Groupon.  Groupon gets all of the money upfront, and the clients have to collect from Groupon.

In the existing advertising world a number of clients have tried to negotiate these deals with newspapers and others, but this was generally for remnants that the newspaper knew would go unsold anyway.  This did not happen often, though more today, and Groupon created a new model for the financial transaction.  Would it work?  Yes, but there are catches.  This is built on the model of getting new customers, and the goal of building loyal customers.  This has been the real sore point from my research with a number of Groupon advertisers.

Most of the Groupon advertisers have found that redeemers of Groupon offers are not returners later.  Having found one deal they get hooked, and then search for the next deal.  Others have found the process somewhat confusing and hard to understand and are not flocking back for more of the same medicine.  The last factor is the holdouts that have not jumped on the bandwagon for ‘daily deals’.  This is the sector that, in the tight economy, has shut down their discretionary spending.  They are not enticed to buy something they didn’t really need just because it was 50% off.  Tight times mean tight wallets for many, and enticing offers just won’t work well with this group.

What does this mean for Groupon?  Groupon will continue, and will continue to produce some great results for some types of businesses.  For many though they will burn and churn through a number of clients who will never do a Groupon deal again.  Competition will continue to grow, why because the barrier to entry is low.  Existing forms of advertising will also offer daily deals, most already have just on that bandwagon.  The churn and the increased competition will make it hard for Groupon to be the 800 lb gorilla many had thought.

What does this all mean?  Groupon will continue, but it will not become the growth stock many had hoped.  Those who bought the initial offering will come out ok, but those who bought in the 30’s will never recoup their full investment.  This could change if Groupon evolves beyond its existing concept, demonstrates solid growth, and solid customer retention through great sales results at the advertiser level.

I wouldn’t bet on it.  I also don’t believe that monkeys can fly, even if Andrew Mason thinks they can.  Time for Andrew to grow up, put on a tie and be responsible.  I’ll be reading the results weekly to see how it goes.  And regarding the interview?  It was classified as a PR nightmare the next day.  The stock price went up for a couple of days and then declined back to around 20 again.  I guess that proves the old adage – ‘buy on the bad news, and sell on the good news.’  It’s Monday, and the price remains about the same.  Put on the tie Mr. Mason!