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.

Integrated Marketing – an Imperative for Success Today

Posted on May 16, 2012 by Lyn Bunch

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!

Love Letters from Washington to the USPS

Posted on May 9, 2012 by Lyn Bunch

In the manner in which it can only do, the Senate has passed legislation aimed at solving some of the problems the USPS is facing. As only they can do…they punted, and now the House will have the ball for the rest of the game. On May 15, time will be out so they need to act soon.

What did they accomplish? According to most who care about the issue – not much. Lots of posturing, and little action. Retirement incentives for nearly 100,000 postal employees, a ‘study’ of dropping Saturday delivery, a return of $5.5B in ‘overpayments into the retiree health plan along with not having to continue the onerous advance payments they had been conscripted to do in 2006. They would also allow the USPS to find some new revenue sources like the delivery of wine and beer which they are forbidden by law to do currently.

Wow – study Saturday delivery. Oh, and they also sent a strongly worded letter to the Postmaster General not to do any post office or distribution center closings, please, until they got back to them. Our top 100 legislators in the U.S., and this is all they can come up with. Now it’s on to the House.

The House is going through its ‘due diligence with no due haste of any many. With their view they also want to punt the issue down the road. After having asked for bold solutions and suggested that the Postmaster General and his staff run this like a business, they are now saying ‘ wait a minute.’ It is obvious from their public comments that they in the House intend to do just that…for many minutes.

Notes have been passed back an forth Senate to House to USPS in a never ending cycle and now some news is coming out as of today that the USPS has agreed not to close any post offices for now. The threat of closing many rural post offices was too much for all of the Senators and Congressman. We’ll effectively deal with that after the fall election. Surprised, not so much on my part.

The USPS has many problems, but the courage to create a ‘business plan’ that could stem their losses was not one of them. They came up with one, but it meant pain, and we don’t do pain well in an election year on any house or on either side of the aisle. Change will have to come in 2013. But what kind of change do we really want.

It is absolutely true that we communicate differently now than in the past. Old legacy media and forms of communications are being changed to newer digital forms. Mail, newspapers, land line telephones are not the key means to reach out and ‘touch someone’ that they used to be. Get over it, and move on! We still need all of these to have total access to information and a free dialog that is so important to our way of life. We need the USPS, but we do need to trim its costs just as newspapers have had to trim theirs to stay alive. Let’s hope our national legislators have the real courage to tackle this issue and to help place the USPS on a solid footing for the sake of our future. I’ll be putting out a Mothers Day card tomorrow, and I hope I’ll get a couple of Fathers Day cards next month – we need the cheer that only they can bring when you pull them out of the envelope.

The USPS is NOT a business, it is a real part of the American way of life, and I for one want it to stay, even if I don’t like all the grumpy clerks down at my local P.O. here in Irvine. Heck, even I get grumpy once and a while. I welcome your comments, email or even drop me a card in the mail. Our friends at the post office will appreciate it too!

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!

Lomography – Analogs Having Fun in a Digital World

Posted on April 30, 2012 by Lyn Bunch

“Lomography, an Analog Company Surviving in a Digital World” is a blog article by Jenna Wortham in the April 26 New York Times in the Technology section. I was struck by the title of a subject area I live in – Analog people coping and growing the Digital World, but I was totally unfamiliar with Lomography. As a consultant, I work with organizations to help integrate their people “Analogs” with their new digital surroundings and processes. I also work on guiding companies to bridge to our old Analog world and their adoption of digital strategies. Sometimes I feel like a luddite, but then I’m really a geeky nerd of the lower-high level order. I like digital things, but I like people more. Making them play well in both worlds is how I earn my living as a consultant now.

I am a child of two worlds, both the analog, now code for human side of things, and the digital, which is where the world is rapidly moving. Often the two worlds don’t mix well together, especially for boomers like many of my friends and associates. Having purchased one of the first iPhones (day 2) I am a card carrying geek, and that is how many of my friends, and family saw me. The gadget king is at it again. Now everyone in the family has iPhones, iPads and we Skype on the weekends with our family in Texas. We’re bought in!

Though I have all the digital tools I earn my living by helping others integrate them into their lives, their businesses, and help them survive a dark side of digital implementation…distraction, and a sense of loss of real human interaction. The question of personal productivity and multi-tasking is also now open for discussion. Not every gadget or digital process really makes us more productive research is recently finding.

That is why I loved this article by Jenna Wortham. It captures the true sense of ‘surviving in a digital world by humans/analogs. In 2008 my 20 year consulting practice branched in this arena and I became the Analog Sherpa. My tagline was, and still is…”An Analog Sherpa for a Digital World.” Now you can see why this article impacted me so much.

With the bankruptcy of Kodak recently the challenge of surviving a digital onslaught is high, just ask daily newspapers – or the USPS whose volumes are about to send them down, at least for a re-tooling.

Where did Lomography come from? Lomography started 20 years ago in Austria, by a group of photographers and artists who stumbled across a cheap Russian camera called the Lomo that used 35-millimeter film. The Lomo camera produced unique and charming photographs that often contained artsy blurry streaks and were oversaturated with color due to the camera’s body design and construction.

Matthias Fiegl, one of the artists who went on to found the company started smuggling Lomo cameras back from Russia to Western Europe in the early 1990s and sell them among his friends and then host exhibitions to celebrate the art photographs.

In the age of skype, cheap digital video cameras Mr. Fiegl found something different – sharing actual prints with all of their unique flaws from the film and cheap cameras. Retro was back, and suddenly it was different and cool. People got hooked. Now a large Facebook community is organizing Lomographer meet-ups around the world. Instant is out, and unusal is in. Waiting is a part of the attraction for the Lomographers.

They still use digital cameras and the iPhone – instant is not verboten, but the fun of seeing something later, and not perfect is even more cool. The digital world and the analog world can co-exist side by side…and be cool at the same time. There is hope for the Analog Sherpa in this digital world…and I’m still cool to boot. Cool!

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.

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

Posted on March 27, 2012 by Lyn Bunch

Is the Postal Service going downhill??

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

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

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

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

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

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

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

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

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

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

A Last Chance for Yahoo?

Posted on March 6, 2012 by Lyn Bunch

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

Posted on March 5, 2012 by Lyn Bunch

Tomorrow, 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 21^st 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 21^st 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.

No More “Kodak Moments”

Posted on February 10, 2012 by Lyn Bunch

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.

This 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.

Analog Sherpa

Media, Marketing & Management For A Digital World

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