Tag Archives: advertising

Print Media is Running Out of Time

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No More Time!

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.

Driving a New Leadership Paradigm

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Ursula Burns, CEO of Xerox

Ursula Burns, CEO of Xerox

I was intrigued to see a number of articles recently  in various media that all touched on some themes that I find are continually playing out in our new digital world.  The trends mirror what I’ve been seeing with my clients as well, but these seem so stunning.  What are they?  In our change from a physical world to a digital and social one, we are seeing some of our premier companies making that transition under the leadership of women.  Apparently there is no glass ceiling in the digital world, and as Martha would say…”that’s a good thing.”

Who are some of these leaders – the heads of IBM, Xerox, and HP.  Some of the bluest of the ‘blue chip’ companies and all facing great challenges, and most are doing well…extremely well!  I was taken by this trend because I started my career as a sales rep at Xerox in the early 70’s.  Xerox then had just recently started then to hire women in the sales force.  They were a novelty to most of the managers, all men, who wondered if they should treat them differently than men.  Xerox had a culture very similar environment to my old fraternity house.  Men got yelled at when they didn’t perform.  Could they do the same with women.  Could they take them into their offices and counsel then=m, with the door closed?  What if they started to cry? The good news is that everyone learned and adapted quickly and within a short period of time, a couple of years, half of all hires were female, and many of the new managers were also women.

At IBM  who we competed with in the copier marketplace we noticed a similar trend taking place and I knew a few of the early female sales managers, and they were great, and they prospered and grew quickly up the ranks as IBM was very interested an taking advantage of the new resource.

At HP, the course was a little different and men were still the dominant group and they intended to stay that way.  I knew a number of HP managers later on in the 80’s and they still acknowledged that it was still mainly a man’s world.  How the world has changed.

In these three organizations, leaders in their fields, are now headed by women, a fact a rarity in the corporate world of giant organizations.  All of these women, and many others, too numerous to list here, have changed the paradigm forever.  Now, a quick look at these three outstanding women.

At Xerox , Ursula Burns,  is now the CEO.  She started at Xerox as an intern, then an executive assistant and then succeeded Anne Mulchay in 2009.  Now that is amazing, for a woman to succeed another woman in a technology company.

“I took over a company that was solid, but every day was becoming significantly less important in the minds of people,” Ms. Burns said.

This transition happened all while Xerox was moving from selling copiers to selling services and providing backoff support.  A big change from 40 years of growth, but they are pulling it off. This is not something easy to pull off – “That transformation is earth-shattering for our company,” she said recently  To cement it, Ms. Burns led Xerox’s $6.4 billion acquisition of Affiliated Computer Services in 2010.

“What we do well, unlike these really sexy companies like Googles or Apples that have these great things you can see and touch and feel, we actually work in the back office of large companies,” she said. “So most clients don’t really know we’re there.”

IBM built the computer industry, and dominated the word processing field when it was all about typewriters, and later copiers.  Now computers are everywhere, but few are in the ‘clean rooms’ of old where IBM was the dominant player.  They now exist on desks, the cloud, your pocket – they really are everywhere, and IBM is leading that charge to conquer the world of ‘big data’.  This is now the third wave of computing they will discover and and learn on their own – just like “Watson” the supercomputer that conquered Jeopardy.  We are now in the age of cognitive computing!

Virgiani Rometty, CEO, Chairwoman of IBM

Leading the charge as CEO and Chairman of the Board is Virginia Rometty who has spent her entire career at IBM.  Under her watch IBM’s stock is now at its highest point in its history.  IBM is now a consulting company and sifting through all of the ‘big data’ that is spewing forth all over the world.  The key for IBM is constant reinvention.  A good metaphor for all of us to keep in mind.  Change is the new constant.

“Part of it is I get the honor of taking over a company that is a strong company,” she said.

But, she said, she knew she could not coast on their success, and instead charted a clear way forward, including work in cloud computing, analytics and growth markets.

“One of the great things I learned from Sam and Lou is no matter what, you always have to focus on reinvention,” Ms. Rometty said. “Never love something so much that you can’t let go of it.”

Meg Whitman, CEO of HP

Meg Whitman now CEO at Hewlett-Packard, is facing different challenges – survival.  After a great career in consulting and early leadership at EBay where she cemented her reputation. Meg Whitman is now heading HP in trying to turn around a company that has suffered over the last several years of a revolving management team and rapidly changing focuses.

HP is struggling to find its focus in software and hardware and to become relevant in a word this is now incresingly mobile focuses and led by Apple and other tablet makers.  After launching their own tablet in 2010 they quickly killed it…too soon many said.  The current forecast is grim for 2013, and Meg is looking for enough time to turn this around.

Though Meg attempted a run in politics in California, losing to Jerry Brown, she maintains close ties to Mitt Romney.  If HP doesn’t work out there could be something in Washington for Meg, if Mitt were to win.  She is a continual winner, and given enough time, she will find a way to win.

Why are these women import to this narrative?  We have entered a new era, and everything is different.  Business is different.  Old legacy businesses including all media is rapidly going digital.  Mobile communications has changed how we communicate, and when we communicate.  Barriers are being broken down that perpetuated the status quo.  Through all of this we have discovered whole new ways of living and working, whether we want to or not there is no going back.  Women are now fundamentally a part of business, and rightfully a part of management.  We are all the better for all of these changes.

The Care and Feeding for The Orange County Register

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OC Register Masthead from Peak Year 2005

OC Register Masthead from Peak Year 2005

Recently I wrote on the future of newspapers, something many of us with roots in the industry do as a daily pastime. In all of my research, I still think the models of the future that Alan Mutter of Newsosaur postulated for newspapers recently best portray a reasonable future as indicated by the paths many current papers are taking.  Briefly they are:

Farm it – The Buffett Model.  Buy and hold…and hope!

Feed It – Rupert Murdoch Model.  Give the fire some fuel and oxygen and hope that it creates a sustainable blaze.  After having split his media empire into digital and non-digital, this may be a real key for many to follow.  Especially to those public companies that have to report their financials.  Print is no longer a growing methodology, and as such, is dead to public companies as a forward-looking model. Even Harte-Hanks, who pioneered the advertising-only Pennysaver model to millions and millions of circulation, has seen the light and is reported to looking for buyers for their huge franchise.  It can still generate some good cash flow, but looks horrible on quarterly 10K reports.  “Time to set those doggies free” my buddy Bill would say.

Milk It – Newhouse Model.   Why bother to feed the cow, just keep milking it for all you’ve got until it runs dry.  Hope you don’t grab a bull…that could be bad.  This is how those in the industry see most of the changes for newspapers, and what they see in New Orleans is not pleasing to the palate of the N.O. residents and readers.

My Experience there – I during the 90s I was in advertising director at The Orange County register. Those were truly the best of times, when newspapers were at their zenith, and competition kept us strong. It was fun to compete with The Los Angels Times, and to add a number of specialty products to our overall marketing mix. At one time, there were as many as 7 OC Register sales representatives who could be calling on any potential advertiser in Orange County. The favorite expression of senior management was quoted” time to impose our will”.  Sadly, that was what we did with rates, and that was the beginning of a long downward slide for the Orange County Register, and a number of other newspapers that followed the strategy.  Newspapers were still mini-monopolies, and the profits flowed.

Revenues peaked during the early part of the next decade encouraging the family ownership to seek an opportunity to cash out. They did and several of those in the family who took the buyout are still smiling today. Those family members who did not and stayed with freedom communications ultimately lost everything in the recent bankruptcy. In talking with some of the recent employees I hear and almost Universal joy and optimism based on their initial meetings with the new ownership group.

However, most also said it’s too soon to tell how things will actually shake out. They’re also saying that they think there will be a change in the editorial focus of the newspaper, and hoping to see a return to a more centrist albeit still Libertarian viewpoint of the paper.  Over the last several years, under the new ownership and management, the paper had gone strongly to the right and far beyond the historical Libertarian viewpoints of the founding families. This was also not reflected in the larger viewpoint of a changing and dynamic Orange County, which is not the singular conservative bastion from the days of John Wayne.   A strict editorial slant, either left or right is not a positive factor in the newspaper world that is searching for the largest audience possible, even the Hoiles family, had understood that factor and kept their politics in check.

Based on everything I have seen and heard I think it is still too soon to tell exactly which model the OC Register is likely to follow, though I think we can rule out the Newhouse – Milk It model.  New ownership would not have invested to simply let it go without some kind of fight.  New money in, especially from someone outside of the established print community as the new owners as probably signals they want to accomplish something, and also want a return on their investment dollars – something unique in print today.

That leaves Feed It or Farm It!  Based on a strong foothold in Orange County we are still a highly desirable market that will rise again when housing takes off in the future.  For now I’ll go with my heart in hand and say they will “Feed It” and try to do everything they can to build a strong multi-media franchise with the paper as the core product.  This fits the community, and what I think is a great opportunity.  They will not be able to impose their will, or dictate a political bent, but I think they can make small gobs of money, year after year if they play their cards right.  I’m keeping my fingers crossed.

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.

The End of Newspapers…or a New Beginning?

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The Orange County Register

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?

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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.

Integrated Marketing – an Imperative for Success Today

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The Wheel of Marketing Choices

The integrated imperative!  That’s where marketing is today.  Heed the headline, or perish. There really aren’t any options.  Over the last several years my clients and I have noticed that marketing has gotten harder to do well, we had fewer choices and those produced good results.  There are more marketing choices, channels and media options than we thought possible just a few years ago.  Choosing wisely and making it work across channels and markets – integration, is what it really driving our marketing world today…and to do it well is hard!

On May 10, Steve McKee, in Business Week, authored the article “Integrated Marketing: If You Knew It, You’d Do It”  He starts with the opening paragraph – If it ain’t broke, don’t fix it, is such a cliché that it has spawned its own cliché: If it ain’t broke, break it. Unfortunately, that’s just what many companies do unwittingly to their branding programs, playing into the hands of public enemy No. 1 in today’s marketing environment: Fragmentation.

The rest of the article made the case for integrating the marketing, mainly keeping a consistency of messaging across multiple platforms we all endure today.  It is a delightful read, and one that many of his readers commented on in a favorable manner.  For the most part I agree, but the key message he iterates is ‘integrated marketing is hard!’  Yes it is, and this is why so few are able to do it well, if at all.

The boomer generation grew up with tightly bracketed marketing channels.  You bought the best and then hoped for good results.  The good news is that your audience had fewer choices and they were generally on the receiving end – be it newspapers, television, radio or out of home.

That world doesn’t exist today, and everything is hard.  So many choices, and so many places for your audience to be hiding.  The digital world is wonderful with all of its options on both sides, but for the marketer it is tough to juggle all those balls.  Three key channel options for most, have now turned into 8 to 12.  On top of that it is now ‘social’ so your audience can talk back to you…and you better be listening, because they’ll carve you up if you aren’t.  Trust me, I have, and they have left scars for not listening and not responding fast enough.

The McKee article is a good read, and I implore you to look at it.  You should also read the reader comments which come mainly from industry participants, who mostly agree, but they also have their particular bents.  They are in agreement that ‘integrated marketing is hard.’  Yes it is, but there is no choice.  The world we knew was broken, and there is no going back.  Multiple channels, both analog and digital need to be attended to and used appropriately to reach your target ‘audiences’ (emphasis on the plural) if you are to survive.

Many of my clients have long histories, they love their new options, but still talk about how it ‘used to be.’  We commiserate, have a cup of coffee, and then get on with reality and plan how to cover their broad patch of media options.  All of this with careful attention to keeping the message consistent and true to each channel of their multi-faceted customer and target base.  It takes more time, and more money, but it produces better results.  Isn’t that what we are all looking for?  It’s a new world, and I love it!

AT&T Exits From the Yellow Pages – check it out on Yelp

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It was announced this week that AT&T has agreed to sell a majority stake in its Yellow Pages business to Cerberus Capital Management. The price was reported to be $950 million dollars, for a declining business that AT&T was happy to jettison and get on to more important areas of their business.

The deal was for primarily cash with AT&T receiving 750 million in cash, with a 200 million note on the backend. AT&T will maintain a 47% stake in the business, but Cerberus will handle all day-to-day operations. Cerberus has pulled a number of rabbits out of their hat in the past, but this one looks to be particularly difficult.

During its heyday through the 1990s the Yellow Pages franchise, which included AT&T and a number of other telephone companies, and even a number of independent publishing companies, had a wildly profitable business. Recently the business, as a print operation, has become a boat anchor.  Revenue was down 30% in just the last two years.  The goal for Cerebus is to help turn the business into a digital operation that will compete with a number of newer players including Google and Yelp.

It has been a number of years since my family has kept or used a printed Yellow Pages directory at home. Like so many our tendency today is to simply Google what we are looking for hit the return and we have our answers. If we are looking for additional information, we’ll take the time to go to yelp for additional feedback from users where have actually used the service were looking for. In Orange County, CA where I live, Yelp is helpful but certainly not the powerhouse that I found when I was working in the San Francisco Bay Area. There looking through Yelp was like reading a novel, and I discovered a number of incredible writers who took the time to elaborate on their personal experiences at the various restaurants and shops they wrote about.

AT&T will use the time and the money to help grow their electronic portion of the communications field. With their growing competition this would seem to have been a good move. Cerberus will attempt to do something I that seems impossible, but they have done the impossible before, and I’m confident they have a plan to do it again.  As a private equity firm they don’t have to meet the needs of the market and shareholders and that is critical for them to have the time and hard efforts to pull this off.

Good luck to both AT&T and Cerebus, we won’t hold our breath, but we wish you well. I wonder if Cerberus would also like to buy a few good newspapers, I know of a number that can be had for well under $950 million. In fact they might be able to purchase several former large newspaper-publishing groups for the same figure.  There is one that is headquartered in Orange County (Freedom) that I hear can be had for well less than a billion.