A Death by Inches for Newspapers

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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.

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.

The Pony Express Collides with 21st Century

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Postmaster General Patrick DonahoeTomorrow, Patrick R. Donahoe, USPS Postmaster General will be addressing a gathering of key postal businesses from throughout Southern California at a Postal Customer Council event at Knott’s Beery Farm Resort Hotel.   The location is fitting since Knott’s was built on framing images of life in the old west, stagecoaches and railroads – just like our vision of our Postal Service.  I think that is a key to our discussion about how to handle the transformation of the USPS in the 21st century. The USPS like newspapers, printers and mailers are in the midst of a major reshaping as increasing numbers of businesses and all people are moving to digital forms of communications.  The world will never be the same as it was when I started my career selling for Xerox in the 70’s.

Facing great change and pressure the USPS has done a good job in creating plans to bring the service in line with the needs of the 21st century, and stagecoaches are not in the mix. The Postal Service drafted its business plan with analysis from Boston Consulting Group and Accenture.  Based on my reading of the plan, they have gotten good advice, though it has not been well received in Congress, though nothing really is anymore…but that is another problem that modernization needs to impact.

In the last quarter of 2011 the USPS lost $3.3 billion.  The forecast for a full year-end is a $14.1 billion loss for the year ending Sept. 30.  The losses will continue, and continue to grow if nothing is done

First-class stamped mail has declined more than 50% in the past 10 years, from 52 billion deliveries in 2002 to 26 billion in 2011. According to an email from USPS representative Sue Brennan, the drop in mail has resulted in significant excess capacity.

Among the recommendations from the USPS, and their consultants in the new plan to cut losses are:

Rate increases – The U.S. Postal Service wants Congress to help it raise the price of a first-class stamp to 50 cents, an 11 percent increase, as part of its strategy to avoid annual losses as high as $18.2 billion by 2015.  The fact still remains for the USPS is that we are the least expensive postal service in the world- we could even say that we are under priced for the service that we deliver. A price increase would seem to be in line all things considered, including real value.

Staff and facilities reductions – Closure of a number of local post offices and half of the larger mail processing centers would save significant dollars, and would also reduce staff by over 35,000.  This would be a tough call in the middle of a financial downturn, and a national election.  Nine states will see eight or more processing facilities closed.  Almost half of the 223 plants scheduled to be shuttered are located in nine states, including mine.  For the most part, these states, which include California, New York and Texas, have the largest populations in the country.

Curtail Saturday delivery – The Postal Service says it would save $2.7 billion annually by cutting mail delivery to five days a week.  Those of us in urban areas are likely to see this as positive, but rural areas have tended to see this a problem.

Manage Their Own Health Care Benefits – The USPS states that they could save $7.1 billion a year by managing their own health-care benefits.  This, along with not prefunding pension benefits, would be significant, but are a large political football for both sides. The USPSwould have lost only $200 million if not for payments it had to make toward the $5.5 billion it is required by law to set aside for future retiree health benefits annually, something no other government agency needs to do.

Our transistion to a post industrial society is hell for those who still provide the bulk of our labor.  The USPS has dramatically changed over the last couple of decades and automation has made it a model for most of the world, but not even that is not enough well production volumes decrease.  Savings from automation aren’t there any more, and now we have to remove some chairs from the table.  Like newspapers, the transition is painful, but it is still inevitable.  The USPS plan is a good business plan, and Congress should adopt it for the most part.

I wish I could hear the Postmaster General tomorrow.  Unfortunately, I have a previous engagement with a client dealing with digital marketing issues and their competition.  Doesn’t it just figure – new media trumping old media once again.  I hope the USPS gets their way in the end.  The plan is real and reflects the medicine we all need to take now.  In an election year this will drag out and become another political football.  Shame on us for allowing that to happen.

Pinterest – Social Media for ‘Unsocial People’

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Pinterest - Our Fastest Growing New Social MediaI’m a consultant helping businesses adopt digital technologies for their businesses.  My client base is heavily made up of senior executives, most who have little personal experience in social media. To say that they have little personal use for it would be an understatement.  I understand, these are my people after all, but my other people -my family is heavily invested in social media, but personally and professionally.  They have helped me to see the ‘light.’

I am on Facebook since 2008.  I joined so I could understand the dynamics of the FB since I was recommending it to my clients as something they should be using in their integrated marketing mix.  I might as well have been asking my clients, senior executives like myself, to strip naked and walk through the streets.  Their kids might do it, but they certainly weren’t going to.

“Social Media for the Unsocial Person” – what a great tagline for understanding the intersection of senior execs and introverts – older ‘quiet’ people – ‘my people.’  I fashed one recent morning with that thought in my head and wrote it down.  I thought that like myself, many don’t understand how they can use and have fun with social media.  Not wanting to express themselves in words, or divulge ‘secrets’ about themselves, there was something that could work – and in fact was working for me.

Over the last several weeks I have discovered Pinterest.  Like many of my ‘discoveries’ it came from my personal idea factory and digital brain trust – my family.  I don’t know who was first to invite me to Pinterest, my eldest son or my wife.  Both are huge on the net, and both have great writing and visual skill sets.  I love visual things, and color.  I dress with lots of color.  Thank God, my wife checks me each day before I leave or I would have been arrested by the fashion police for some infraction of good taste.

What I did find is that I liked what I saw and I immediately got into looking at all of the visuals, first in the men’s clothing category.  I started ‘repining’ and liking things…wow this is easy.  Then I started finding that others commented on my ‘pins’ and ‘likes’…maybe I do have an eye for these things.

As a male, I feel a little funny about being excited about something that has been heavily adopted by women.  About 82% of active users are female, but then women make up a majority of all social networking sites and spend 30% more time on sites than men according to Nielson.  So why does it excite me – again I am a visual learner.  I listen to audio books for pleasure, but always fiction, and mysteries and action are a majority of that.  I have an extensive business library, but few business audio books – they just don’t sink in for me.  This has been critical for my understanding of ‘me’ – give me images or go home.

Since Pinterest skews so heavily to a female audience as of now, what about a more manly version.  There is a new sites that offers men their own versions – I’m waiting for the scratch and sniff version myself.  These new sites is Manteresting and Gentlemint. Designed by men – we can now look at tool chests and bacon cheeseburgers among other interesting choices.  I’m full right now, and one big tool chest is enough for me, so I don’t think I’ll be jumping on this macho bandwagon soon.  This could be a real hard sell for men, so I think I’ll lurk for awhile and stick with Pinterest for now.

When you take a look at the female demographics – which are similar to other social media you might be scarred until you understand that women account for 85% of all consumer purchases – that includes everything from healthcare to autos.  Wow, a nice tight audience for your goods and services, and it is proving successful for a number of businesses who have jumped in.  Visuals sell products – my 30 years in the advertising field has been well spent – I finally learned something, and it has be reinforced.

What does all this mean – visuals excite, and visuals sell.  It’s a great new niche for many businesses to help them in their marketing efforts.  For those of us who really want to be ‘social’ it is painless and no need to bare our souls to others.  Like something, pin it, and it to your boards and others can share.  A great way to spend a few hours luring over goodies you would like to have, used to enjoy or didn’t know existed.

Pinterest is a great way for everyone, including those of us on the male side of the spectrum, to become ‘social’, now it’s time to check my Facebook page, though don’t expect any status updates – those I mainly keep to myself.  Introversion runs deep and ‘quiet’, but I enjoy seeing and hearing of my friends exploits – check out my ‘pins’ and you’ll understand me better – that’s all you get from me. Social media for unsocial people – that certainly describes me,  and my relationship to Pinterest.  Check it out, especially all you shy people.

A Generational View of Social Media

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Having two sons who are digital natives who live and work in the digital and social world has helped me to bridge the gap in media worlds.  As someone who now works as a consultant in helping my legacy media peers understand the transition – this cartoon helps say it all.  For my sweetie on our 39th Anniversary – yousay it all for me!

Non Sequitor for February 24, 2012

The Future of Newspapers Now in the Hands of The Washington Post?

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Over the weekend Jeremy Peters wrote an article on The Washington Post for The New York Times.  This was a great read, and documents just how difficult the transition is into the digital age of publishing is for newspapers.  This is a must read for anyone following the challenging rebirth of newspapers in this new digital era.

The Leader of the Charge Marcus Brauchli,

The transition has not been easy, but the future looks relatively bright, at least for The Post, in the manner, the methods, and the resources they committed to in leading this critical process. It has not been without bumps, glitches, and lots of hurt feelings, bruised egos, and red ink.

The news business is changing and there is increasing pressure on the publishers, editors, writers, and even the advertising staff. Nearly every newspaper is facing a similar challenge. What is different at The Post is that they have had deep financial resources to help in the transition. Unfortunately, even at The Washington Post for well can run dry.

The cash cow that is helped to finance this transition is their Kaplan division.  Long a financial success and a reader in the for-profit education field, they are now feeling the same financial pressures that the rest of the field has felt in the current economic downturn.  The former cash cow is now just a sick puppy.

Mr. Brauchli has stated “that he refuses to be a prisoner of the past” that may sound a little arrogant to many in the newspaper field, but his actions show that he is living his feelings. In a recent social setting, Mr. Brauchli brought in many of the distinguished writers on the staff of The Post to review the transition and how they could use that to their benefit in the coverage of the 2012 elections.  As the newspaper of record for Washington D.C., The Washington Post is expected to feed it’s pampered local audience of key national influentials the best coverage possible.

Washington Post staff has brought in a number of key tools and techniques to bridge the existing print world with the new digital audience.  This includes locating the print reporters alongside the newer staff, which includes a large contingent of what we now call bloggers.   This is not unlike what you will find at many other large metropolitan newspapers, however one unique factor is that many of these “bloggers” have had some significant success including Ezra Klein a young, California bred, blogger who has had significant success as a political wonk.

I’ve followed Ezra for the last couple of years that have taken great pride in the success since he is a hometown boy from here in Southern California. In fact he attended the same high school as both of my sons. I can’t imagine a better example of what we will be seeing in the next generation of reporters and writers at all of our newspapers.

My pride in the local boy making good aside, along with Ezra there legions of new writers who a publishing content all day long for the electronic versions of The Post.  They are learning minute by minute how to provide just the right content for their audience.  Metrics are viewed by Mr. Baruchli and key editors, and delivered in a continuous stream to their readers and viewers.  This stream of data influences what is being covered and written about throughout the day.  This is also happening at a number of other newspapers around the U.S. and the world.

 

What’s different at The Washington Post is that they are under incredible scrutiny since they are covering the most expensive election cycle in the world.  They have resources not currently available to other chains, under even greater financial pressure.  A lot is at stake here, this includes for The Post, for the American public, and for journalism.  They have a chance to get it right for print journalism, digital journalism, and for the future of journalism.  Lets hope that they get it right.  Our future and the future of the news industry is at stake.

 

 

No More “Kodak Moments”

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There are those things that are touch points to our past.  This was a big week for key events that highlight how far and fast we have gone over the last several years.  Growing up with a Brownie camera and Kodak film I was the model of American youth.  The advertising phrase – ‘ A Kodak Moment’ was the catch phrase for time to store a happy memory that only film could do.  Movies had many scenes of hapless dads and moms trying to capture their ‘Kodak moment’ while their kids were going crazy to get out of the scene.  While working at Disneyland in college there were signs at various locations that encouraged people to take advantage of a Kodak Vantage Point with a sign in Kodak yellow.  Kodak film was sold on Main Street and shops all over the park.

A logo soon to die - KodakThis week we got the news that Kodak, now in bankruptcy for reorganization, was going to drop most of their last links to photography.  This is a sad story, and one we have seen repeated many time over in our ‘ industrial digital transition.’  Old services, products and companies are in decline as our economy, and lives, are changing in this new ‘digital’ world.  Yesterday’s business leaders are tomorrows canon fodder…do they still ‘make’ canon fodder?’

The shame for Kodak is that it saw it coming and did not take the steps needed to survive.  They saw the digital revolution in photography early on, and made some minor adjustments, but in the end the effort was staged to protect their lucrative film business, even when the ‘digital barbarians’ were at the gates.

What will Kodak do now?  Their next phase, if they can survive the bankruptcy courts, will be to continue as a provider to online and retail photo printing services – like Costco, where I get my prints done.  They will also continue in the desktop printer arena, but with heavy competition from HP, Canon and others.  Selling printer paper is also a key factor, but that is a commodity business, and margins are shrinking there as well.

What does the Kodak transition mean for us?  I guess we have great role model for change – or at least what happens when you fail to adapt or change.  Strong brands with years of earned equity in their brand can flame out just as easily as the next brand.  Twinkies and Ding Dongs are still trying to find a new home since their founding baker has faltered.

Kodak shows us that the allure of circling the wagons and protecting the flanks because of high margins for existing core businesses will not work in this new world.  Being both ‘digital and flat’ will be the keys to new high margins.  Kodak saw the light coming down the tunnel and didn’t think it was a train.  Everyone should be alert for their own ‘trains’ being aimed at them now.

My own experience in marketing and advertising has been in the publishing field – newspapers and shoppers, and in the direct marketing – mail.  Think I don’t know the numbers and schedules of all the trains coming down the track – I do now.

My clients, mostly those with strong roots in the pre-digital world, are learning and alert to the transition.  However, the force is strong with those who want to protect what they have built up, and that causes many to falter and lose sight of the pending changes.  Now is the time for reinvention, for all of us.  No more ‘Kodak moments’ will be coming, at least for Kodak in coming months.

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!

Stadiums Yes!, Beaches No!

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Proposed Farmer Field Stadium for Los Angeles

Is this in our future?

I was amused to read the article in the recent Los Angeles Times–” Coastal cities will sponsors: make our beach your sandwich board”.  Boy did that bring back memories for me.  For several years, beginning in 1999, I led a start-up in Southern California that offered advertising on local government vehicles. This was a fun venture for several years, but then the fun for me left of the business. It appears from the comments in the articles that little have changed since that time. Local governments are still looking for new revenue sources, but are not willing to give enough value to attract advertisers who have more attractive ways to reach their audiences.

Beginning in the late 90s, and continuing through the early years, municipal corporate advertising was in its heyday. By the mid-“ought” years the bloom had come off the rose. The hard fought battle to gain acceptance have led to some significant revenue streams. However, it was then that the impact began to be felt from the growing Internet advertising. We could see that the trend would gobble up much of the hard fought growth that had been expensive to win.

The real trend in municipal advertising has come from larger sponsorships mostly to stadium advertising. This is where the big bucks are.  A few dollars have been left over from corporate budgets that have leaked into municipal advertising programs. My experience in the early years of municipal advertising showed me that the concept was viable, and rewarding, but in the long term most programs would not be sustainable. Why? The reality that I found, and others in the same field found, was that the returns for advertisers was not at the level of their expectations. High client churn, meant high sales costs. Within a short period of time, usually within 2 years, the programs started to decline.

Advertising and government places can work, however the price generally doesn’t match the value received and the grief rendered. My experience, and those of other compatriots working in the field at that time, showed that working with the government agencies was costly, time-consuming, and unfulfilling. The dollars earned simply did not match the effort and as such made the venture non-sustainable.  This can work for both sides, if and when, the value ratio can meet expectations of both sides