Print Media is Running Out of Time

Posted on March 12, 2013 by Lyn Bunch

No More Time!

The transition from our legacy analog world of ink and paper is accelerating. Major changes in newspapers over the last several years with revenues significantly down to levels not seen in 10 years. Growth ceased, and status quo is hard to digest to those in the industry that used to grow by showing up. Population growth meant circulation growth. Those trends no longer exist, and print media outlets are starting to drop like flies. First it was newspapers, now the trend has extended to magazines and direct marketing publications.

In a recent Daily Beast article by Daniel Gross “Why Time Warner Felt It Had to Spin Off Magazine Unit Time Inc we see why this is happening. Its all about stock prices. This trend is now making its way felt through the entire communications field from newspapers, magazines and direct marketing publications.

Newspapers were the first to feel the pinch of declining revenue. The grind of producing, printing and delivering daily papers IS not easy, and its expensive to do it every day, especially on those days when the paper is not full of ads. Recent changes in newspaper ownership around the county brought some promise of hope when heavy hitters like Warren Buffett bought in and gave some hope to other owners that were still viable. But Warren likes to buy and hold, and he likes to buy things he knows a lot about – and HE still reads his paper daily. Not everyone agrees with Warren, nor do they all have his deeps pockets.

Even with his very deep pockets Rupert Murdoch owns bunches of papers in the US and in Australia and England, but Rupert also owns lots of digital media in those markets as well. He also sees the enduring value in the print, but he was one of the first to see that revenues were lagging in print, and those lagging revenues reflected poorly on the ability for the overall stock value of these publicly traded companies to grow. He has lead the move to split his holdings into discrete segments – digital on one side and print media on the other. Future dollars for investment and growth are attached to the digital side, and print you’re now on your own now.

Recently Time Warner felt the urge to ‘unmerge’ its holding and to spin off its magazine unit, including Time, Fortune, Money and Sports Illustrated and make them a new stand alone organization and take them public as their own group. The magazines are still profitable, but they cannot keep with the market and are thus a drag on corporate earnings.

Harte-Hanks, Inc. originally started off as group of small Texas newspapers, but chose a different way to grow outside of newspapers and moved into direct marketing, and over 20 years sold off all other holdings, including all of their newspapers and became a powerhouse in shoppers publications covering millions of households in California and Florida. A still thriving industry for small communities covering a market just below that of the newspaper they provided cost effective targeted advertising and in the process stole market share from larger local newspapers. Those golden days are now over. Having written down all of their goodwill equity in the declining value of The Pennysaver, they were able to unload them quickly.

In December the Florida operations were sold back to their founder Dick Mandt, a former boss of mine, and his team of highly effective industry managers. Were they losing money -no, but they had to go. Sources tell me that the same thing is likely in California where the original Pennysaver circulates. Staff cuts are being made, offices are closing, and they appear to be on the same trajectory as Florida. Can they still make money – yes. But they can’t grow in the manner that a public company needs them to.

Like Time, Inc., Harte-Hanks, is a publicly traded company and must show growth. The huge revenue base of the Pennysaver could not keep up the growth curve for Harte-Hanks and stock prices lagged. Decision time came, and decisions were made. Heads rolled, and the new management staff has a mandate for growth, and a tight timeline. This is the new story for print and direct marketing, especially for those mailed publications. If you are on the big march and you fail to keep up – we’ll leave you a canteen of water, and a couple of biscuits, but your on your own. Tough love, I think we call it! Time is not always on our side.

Lessons from 2012 for Business & Politics

Posted on December 20, 2012 by Lyn Bunch

The 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?

Posted on December 13, 2012 by Lyn Bunch

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!

The Origins of Newspapers…and a View to Our Future

Posted on June 25, 2012 by Lyn Bunch

From Whence It All Began

As we look at the fall and decline of newspapers as we knew them in the U.S., I came across a recent article in The Telegraph from London. It highlights the origins of the newspaper in London circa 1700. The Monitor came alive as laws on libel changed in England and spurred a revolution in how news was spread and shared in the culture that eventually shaped our own. “Fleet Street: the surprising origins of Britain’s newspaper industry.” By Dr. Matthew Green appeared today and is very enlightening. I hope you’ll take a moment to read the article; it’s a lively read, and great insights

The Daily Courant was England’s first daily newspaper, and the first daily Fleet Street paper, The Monitor are at the genesis, making Fleet Street synonymous with daily news in Great Britain. What started with those papers quickly grew to “31 papers – six dailies, 12 tri-weeklies and 13 weeklies – were being hawked on the streets of London, with an average combined weekly circulation of 100,000.”

Dr. Green, the author, points out that the news was always partisan. Attempts to the contrary to paint it, as ‘vessels of truth and enlightenment’ are just wrong. We now see that “plagiarism was rife” government scandals ruled the day and writers, well known today like Daniel Defoe, wrote for pay from the highest bidder.

Fleet Street is still the home to the England’s news today, but a lot has changed. Now all of the papers have digital editions, many of which I read on a regular basis. They are also heavily in broadcast media – cable in England, and their impact is pervasive. Recent scandals on their impact and taping of cell phones have lead to the Leveson Inquiry on the link to newspapers and politicians as well. I guess in many ways little has really changed over 4 centuries.

Like the growth of the internet and later online news version of printed papers, and then wholly digital publications like Huffington Post, the original growth of printed papers from Fleet Street “triggered a new addiction, something the journalist Joseph Addison defined in 1712 as a ‘news frenzy.”

What we see from this profile is that, actually, little has changed. There is a strong desire to know what’s going on, people will pay, and everyone loves gossip. Four centuries later we still love gossip and salacious news, partisan politics helps to drive the news cycle, and we still pay…though that is probably the crux of where the future of ‘newspapers” lies in the future.

Our daily news cycle still focuses on breaking news, and news of triumph and tragedy, murder and mayhem. Like the 18^th century, we still love a scandal, and the bigger the better. If its not really that big, the press will make it big. Scandal is still key, but now we have better flaks and more media to help bury it. That and the fact that tomorrows news cycle will bring more scandal, so time, now ever fleeting will help to give it a faster death.

The biggest challenge for newspapers is that their business model, how to deliver the news and who pays for it, are changing. The dynamics of a 24-hr news cycle and free online content, perhaps not free forever, are key challenges for a print cycle that begins at midnight to deliver it to your driveway at 5am, are now stretched to, what many would say (me too!), is its ‘logical end.’

As we move forward it is also ‘logical’ for us to look to Fleet Street to see how the adapt to the digitalization of news, make it financially viable, and lead us to a future where we can still get all of the news…but still recognize that it will be as partisan as it ever was. ‘Everything old is new again!”

The End of Newspapers…or a New Beginning?

Posted on June 16, 2012 by Lyn Bunch

The Orange County Register

With all of the discussions regarding the future of newspapers, and I am a big participant in those discussions, I found perhaps one of the best pieces by Matthew Ingram, yesterday in GigaOm – “The Hard Truth: Newspaper monopolies are gone forever.” This is one of the better pieces on what is getting to be a big discussion. This is almost as big a discussion as the state of the U.S. and world economy. There are lots of opinions, but not a lot of energy on what to do about it. Both seem to be heading on their own course, like a mighty river in a flood. Get out of the way and wait until it subsides. Truth is the newspaper business is subsiding, and now we are seeing the results.

…And the results aren’t pretty! Revenues, advertising revenues really, are in decline. Subscriptions are in decline. Page counts are down, and the news hole – real news, is down. Content is up, but we really don’t buy newspapers for content do we? The truth is, and Matt Ingram catches it well – newspapers succeeded because they were ‘the only game in town – monopolies who could charge whatever the market would stand.

Over the course of the next several days I will try to make sense of what I think all this means to the larger constituencies – readers, advertisers, and the general community. Can newspapers survive? Do we care? Are we worried about the loss, and how can it be replaced. Is it the loss of the daily paper, the habit we all grew up with, or is it the loss of real journalism – news we care about, and news that enlightened us that we fear losing?

I’ve been wrestling with this for a long time…and I need to get it out – for myself, and for my clients, many of whom come from the same generation and don’t like the changes they see coming.

Next post- from the home turf – The end of Freedom Communications and the OC Register, the Libertarian paper in a Libertarian/Republican county.

What Does Warren Know That We Don’t Know?

Posted on May 18, 2012 by Lyn Bunch

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.

Warren Buffet – A Savior for Newspapers

Posted on May 7, 2012 by Lyn Bunch

“Warren Buffett Says He May Buy More”

by Peter Kafka in All Things Digital

Berkshire Hathaway’s Warren Buffett, who owns the Buffalo News, the Omaha World-Herald and a big chunk of the Washington Post, told shareholders today that he may buy more newspapers. “I think there is a future for newspapers that exist in an area where there is a sense of community,” he said. “I think the economics will be ok, but it will be nothing like the old days.”

If there is one man who can set the direction for newspapers it could be the Warren. He still sees the value because he see the total proposition, not just the bottom line. In many of the recent sales of newspapers this kind of logic has prevailed – as in San Diego, Philadelphia, and the potential of Eli Broad buying the Los Angeles Times. Money seeking influence. I think we have found our new business model. As the saying goes “Everything old is new again!

Can Groupon Survive?…and Should It?

Posted on April 3, 2012 by Lyn Bunch

Is the end near for Groupon?

It’s been years since I got my first penalty flag for piling on, nearly 50 years to be exact. Today I’m getting my next one. I’ve had more than a few over the years, but this is a ‘fun one.’ Today I’ll take one for the team and talk about Groupon again. Talk about penalty flags, they are setting records for their first year as a public company. Like the targeting scandals in the NFL, they could be coming close to getting a death penalty called on them. Time to stop and reflect on where they are now, and ponder can they save it before someone comes in and takes the ball from them.

Last week they were forced to admit that they had overstated their earnings in the latest quarter. The CFO fell on his sword and was officially let off the hook by the CEO. However, the investment industry doesn’t take well to these kinds of ‘mistakes’ and a drumbeat has come up with a chant looking for changes NOW, with a decree that this can’t happen again.

The market came on line at the same time and hammered the stocks on Monday, and yet again today. The price is now well below the initial offering price, but the overall market value of the company is still strong…too strong actually, and this is the real problem for Groupon.

Groupon was started with a great idea – daily deals that would shake money from the pockets of the public mired in a recession. They were sitting on their wallets and needed a real reason to open them back up. Groupon started the ball rolling, created buzz in the market, and produced some amazing results for many of their client businesses. Consumers fell in love the ‘daily deals’ and a new marketing segment was born.

It started so quickly, and the results were so strong for a number of advertisers, that many thought that this model would be the key driver for local marketing and would overtake all of the other media including daily newspapers. Investors roared in with loads of cash. Big money on Wall St. was looking for a place for high returns, and fodder for the mill on IPOs. The die was cast and Groupon went public in a blitzkrieg not seen since WWII. But then…the roof fell in, and here we are today. What happened?

What happened is that the creative spirit that drove the design and initial rollout of Groupon has no depth or maturity. The CEO Andrew Mason has been shown to have some great ideas, but no real management depth. A real manager should have been brought in – they needed an adult.

Secondly, the infrastructure to account for all the transactions and dollars is woefully inadequate. In these deals the money is collected up front by Groupon and then the remainder after the Groupon split, is paid back to the client company as they are redeemed. So here’s the picture- lot’s of cash rolling in, and slowly rolling back out over time. Sounds like a big bank that needs lots of financial controls – and there weren’t any, or at least, not enough. I’ve dealt with this many times in my career in business and consulting, and this always leads to problems. With all that cash on hand, you just have to feel wealthy and successful, but then the money has to rollout to clients and suppliers and the giddy ‘wealth effect’ sets in. This is where Groupon is today.

And now the ultimate penalty could be coming. The SEC, as toothless as they are, is now starting to investigate Groupon for having to restate their earnings. It doesn’t look good for Groupon, especially in light of the fact that the SEC needs a win to help them in their fight to keep their funding from being cut further by Congress.

If having the SEC on your case is not enough, an influential segment of the blogging community is also coming after Groupon. Rocky Agrawal in his reDesign blog opens with “Groupon was forced to restate fourth quarter earnings, sending its stock down 6% in after-hours trading. This surprised me as much as my $2 investment in the Mega Millions jackpot not paying off.” Ouch!

Rocky picks apart the business model of Groupon and that it is neither a coupon or marketing company, but rather a receivables factoring company. They are a sub=prime lender in effect, living off of one cash stream while they try to meet the spread on the other end. I think he is spot on in his points here. One thing for sure is that they are not the saviors of the marketing field, not newspaper killers. Newspapers have committed suicide over the last several years and needed no one to do the job for them.

So what next. Enjoy your daily deals. Groupon or someone else will continue to provide them. They work for many on both sides of the transaction, but not for all, as many complaints will show. I think the real issue is that Groupon can survive as a business, just not as a publicly traded one. A great idea, but a horrible timing in the rush to the public market. Yeah, they are a sub-prime business and Wall St. yet again was at the ready to make the deals cause they get paid no matter what.

I’d be willing to place a small wager that in this game, like the housing markets they have bets all across the line – win or lose, black or red, and they know how the numbers work. They will be the ultimate winner in this ‘daily deal’ at the expense of shareholders.

Gary Pruitt and the Future of Newspapers and Journalism

Posted on March 22, 2012 by Lyn Bunch

It was announced yesterday that Gary Pruitt will be leaving the leadership of McClatchy, the 3^rd 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 21^st 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 Death by Inches for Newspapers

Posted on March 13, 2012 by Lyn Bunch

Sometimes you see a chart that stops you dead in your tracks. I saw one today in The Atlantic that graphically displayed growing and shrinking industries. My sons both inhabit the top-growing field of the Internet…and I, still have my past linked to the bottom industry – Newspapers. Ouch!

This is a great chart because it shows growth and size of the industry losses or gains in terms lost at a single glance. I hope we can see more of these from the suppliers – LinkedIn Analytics.

As I deal with clients and prospects this will be part of my kit bag to help explain key opportunities, and the pockets of pain at the same time. This is why the recession has been both so deep, and so persistent. As employment shifts from the old sources to the high growth areas it is easy to see that needed skill sets must be transformed or much of the pain for those who have lost jobs will find it to be permanent.

Analog Sherpa

Media, Marketing & Management For A Digital World

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