Over the past decade since I’ve left the publishing business, having learned much from my lifetime mentor, William Ziff, I have used whatever forum I could find to encourage the media business to transform itself. I had witnessed first- hand the dramatic impact that the rise of the interactive medium played upon the industry as publisher of Computer Shopper, arguably the largest monthly publication ever published in terms of folio and ad pages. Selling more newsstand copies each month than Forbes, Fortune and BusinessWeek combined, this magazine carried nearly 8000 annually pages at its height. Today, all that survives of this epic franchise is the interactive shopping service sold to the CNET organization and several print copies that I keep to remind disbelievers.

Bill Ziff passed on several years ago, a tremendous loss for our industry. Bill was not a romantic; he was an incredible visionary and business person. He dared when others chose to sit on the sidelines. He cared very little of critics and would invest real money in ideas that he believed were leading edge; realizing the analysts and spreadsheet jockeys would labor incessantly over the pros and cons to the point where any potential of leadership would be marginalized. Bill was a bold thinker, and so many times, he was dead on. I am proud to be his disciple.

Anyone who has read past articles of mine knows that I have often talked about the dire need for the media business to shake itself from the legacy world and transform. Hundreds of magazines have been closed down over the past few years, circulation declines continue within the newspaper business. The continuing shift of consumers to digital forms of content is irreversible. Only the foolish believe that we will one day return to pre -digital media consumption patterns.

I have believed always that media companies have an incredible opportunity to shape a new business model in the face of this reality. At their core, publishers have always known a tremendous amount about the power of relevant content to attract and retain audiences. We should all be reminded of the days when we willingly paid for this content. The publisher and its team would spend countless hours with marketers and their agencies providing insight on how their advertising and marketing dollars could be optimized within these environments to drive acquisition, retention and greater sales and prospects. I remember the passion that we had in making our case directly to the marketer. While there were frequently battles between the selling organization and the customer agency around who “owned” the client relationship, the bold among us never let this perceived barrier prevent us from carrying the message. We felt an obligation to our customers to provide this level of insight and direction.

Within the DNA of the publishing giants in our industry is a legacy of leading, informing and educating not only consumer audiences but the marketing community. I have lobbied long and hard for the opportunity available to media companies to build integrated operations that leverage this foundational insight and provide new solutions, platforms and services to their customers in the digital age. I never believed that the legacy agency world; despite appending their core business models with “digital divisions” would really embrace a business model that reduced their production and media fees in such a dramatic way.

This would be a time where bold action would require passionate vision and investment to remake a industry. Heck, I did more than talk and write about this idea, I actually rode the elevators up to corporate offices of more than one publishing empire to plead this case. Many scoffed at the idea of building an integrated digital marketing services agency within their company. They questioned the plausibility of the concept, that they could extend their knowledge and insight as trusted advisor into optimizing the new tools of the trade–email , search, social media, web development etc. I remember several instances of gently being shown the door.

It is why I treat recent news and developments around organizations the likes of Hearst and Meredith with great enthusiasm. Rumors around such acquisitions provide some level of vindication. Of course the critics, pundits, industry analysts are quick to over analyze and nay say much of this activity. Some question whether media companies will get “cold feet,” many being quoted coming from the private equity and business broker business. Some wonder aloud about the relative merits of these transactions. Some point to the fact that “agency holding” companies have looked at various targets and walked away when the bidding got more strategic in nature. Proof positive, they argue, of the poor judgment in these moves.

I greet these developments with childlike enthusiasm. I must admit that at times I felt a bit like that madman camped on the grassy median on Park Avenue vociferously proclaiming to all that would listen about impending doom. “Repent!” he shouts. “There is still time!” he declares. Many pass him and laugh, still others criticize, while some actually stand there and listen for a moment. It appears that within the executive offices at some publishing companies that there are those who are not only listening, but acting. They have mustered the courage, conviction and passion to take bold action.

This is just the beginning. What lies ahead is perhaps the greatest challenge. It is as if we have acquired a collection of puzzle pieces, a Rubik’s cube of sorts. Success will be measured not solely on the financial ability to acquire the tools, what is required is the intuitiveness and insight of integrating and building this new definition as integral to the very fiber of the media company. There is much work to be done from a marketing, positioning and selling standpoint. The cultural issues and interpersonal dynamics are substantial in getting this done. The need to recreate a sales organization that can truly adopt a consultative approach that leverages a new and exciting array of interactive platforms and technologies will be a tremendous hurdle. Conflicts may arise between client agencies concerned with media company invading their turf. (We know times have changed when Meredith is names “Agency of the Year.”) Building a culture that continues to push the envelope from a technology and platform development standpoint will be a new initiative for these organizations.

However, there is no choice. The Brooklyn in me is smiling these days. Amidst the stagnant air of the last 10 years, a gentle breeze is blowing. I for one am excited. There should be no cold feet. FINALLY there is bold movement in the right direction. Let’s hope that it continues and that it gains momentum.

Congratulations to all those who have the guts to remake themselves.

“Who at the best knows in the end the triumph of high achievement and who at the worst, if one fails, at least one fails while daring greatly. So that your place shall never be with those cold and timid souls who know neither victory nor defeat.”

Just do it.

Just this past week, the Postmaster General, John Potter, reported to a Washington meeting of congressional staffers a bevy of bad news. Seems that unless the congress acts quickly… the USPS is estimating that they will lose $238 billion dollars over the next 10 years. Yes, BILLIONS of dollars in LOSSES in the coming decade.

What is going on here?

Potter claims that in just the past year, the USPS has seen a drop in its signature product; first class mail down 26 billion pieces and, as such, that the agency has lost $3.8 billion during that period. The forecast is, according to the Postal Service, that the decline in first class mail volume will only grow steeper in the coming years. The agency finally admits that is it “unlikely” that mail volume will “ever” return to pre-recession levels. Potter does believe that he can turn things around with the help of lawmakers… who basically will allow him to change the game in terms of customer service and delivery. This includes an end to Saturday delivery… more layoffs … more postal office closings around the country, etc.

If there is any humor in all of this… it is the fact that the Postmaster General enlisted the help of Boston Consulting Group and McKinsey, spending $4.8 million for research to create “50 options” for turning the dire conditions at the Postal Service around. I don’t delight in the fact that taxpayer money is being used to overanalyze the current market conditions. Once again, there are groups of individuals in our economy that continue to act as if the digital age is a passing fancy, and govern as if there has not been a fundamental and irreversible shift in human communications. As much as some of us want to opine and reminisce about the nostalgia of yesteryear…the I ongoing belief system that communications of all kind, whether interpersonal or commercial ,will revert back to the 1980’s is foolhardy at best….dangerous in the most extreme.

The fundamental problem with the US postal service is that people just like you and I are joined with the majority of consumers who are paying most of our bills online. I can’t remember the last time I put a 42 cent stamp on an envelope and paid a bill. Technology has devastated the core of first class mail which has always been bill presentment and payment. The ease and security built into linking your checking account with online bill pay is not debatable. It is fact. If anyone believes that the generations to come are going to return to the old method of paying bills….it’s just not factually accurate. I know… I know… there will always be people who will challenge this view by saying “not everyone” uses an EZ Pass when paying bridge and tunnel tolls. Not everyone who smokes dies of cancer. Not everyone that eats too many calories gets fat, etc. However, I would believe that my friends over at Boston Consulting and McKinsey wouldn’t need to spend a lot of consulting time proving out that this trend away from print and postage is only gaining steam as we move forward into this decade.

The fact is, email and social media have had a profound impact on the postal service. Think about the number of emails that you send to friends and colleagues during the average day. It’s incredible. All of that traffic on Twitter and Facebook and other locations on the blogosphere that used to be postcards, greeting cards and letters from home that carried postage. Just think of the fortune it would cost you today to put a stamp on every communication you have with a friend, colleague and family member. ALL of those communications used to go thru the postal service. Now… communication is real-time…. 24/7 and accountable. No need to wonder whether the recipient received the message. Everything in the interactive age is instantly trackable.

Marketers are getting it as well. As costs of print and postage rise… and the data that documents the acceptance and preference for digital versions of catalogs and direct mail pieces mounts…a perfect storm has been created. In a challenging economy, and with tightening margins, marketers continue to work on innovative and cost efficient means to acquire, retain and build the lifetime value of their customers. With each passing year… their target customer becomes more of an interactive consumer. Yes, there are still folks who prefer printed catalogs and direct mail pieces. However these print vehicles delivered by the postal service are no longer the primary commerce connection. Direct marketers can simply not afford to continue to spend the money they do as their audience shifts away from this medium. Sending more into the postal service mail box has not proven to be cost-effective. Rising costs on postage and printing versus shrinking margins and a highly competitive marketplace mean cost cutting and more efficient media mix is in order…. now.

Sadly, I cannot offer any real solutions to the Postmaster General and the USPS. I believe that the best that they can do is right size their organization for the market reality. The discussions around closing down post office real estate around the country can do much to lower costs. Shifting the post office facility inside of supermarkets and other retail chains makes a lot of sense. Anything that can be done to make the services…more “self serve” would be a step in the right direction. I would accelerate those moves to save as much cost as can be. Arming more businesses with their own postal meters and machines makes a lot of sense. And while it might seem like heresy… I believe that with all of that cost cutting, the USPS needs to bring down the cost of first class postage as an incentive for a new breed of communicators to explore new ways to leverage this service in new ways. The USPS needs to join forces with the DMA to promote case studies on the power of postal delivery.

Do I think that any of this will work for the long term? I don’t. I believe that the paradigm shift in human communications that we are living in…is profound and irreversible. Yes… there will always be outliers to changes in behavior… but as marketers and business people, we need to store our Pollyanna memories of days gone by in the closet and confront the new reality. We need to lean in on the interactive tools that will allow us to build the businesses of the future in new and exciting ways. Instead of denying and bailing out… we need to go back to work in creating and innovating new ways for displaced employees and business models to remake themselves in the new world.

The end of Saturday delivery is only the beginning. It’s time that those in denial woke up… and started confronting the real issues of life after the postal service.

Al D

I remember vividly some of the tenured billboard sales guys…Joe Chizzini, Ray Amato, Bob Moran… telling me, ”Listen kid, keep your mouth shut and we will teach you this business. Don’t ask too many questions.” George Holtane and the cigar-smoking Dick Itanaga were two of the best creative directors in the billboard business. Dick was the brasher of the two, having little tolerance for sales types.
George had the dry humor and demeanor of Bob Newhart. Dick, George and I became fast friends. I guess because I wasn’t the typical know-it-all sales guy. I was just a “kid.”

I would love to spend time in their offices. In the days before computers, these guys were true artists, and their offices had the light boards, easels and clip art books to prove it. They made magic happen on a daily basis. George would lament to me all the time, “Those guys doing print advertising have a larger landscape to work with in order to get the job done. I have seven seconds.” He’d continue, “You are traveling down the freeway at 65 miles per hour and I have to grab your attention and sell you in seven seconds. “

“We get paid to sell stuff,” said George one day. “All of this creative work doesn’t mean anything… unless it sells.”

It was as if a light bulb went on in my head. If it doesn’t sell, it doesn’t work.

George never did win a heck of a lot of awards or accolades. He could have cared less. His creative work did sell A LOT of stuff for clients—and that was good enough for him. The many days following in my career placed me in midst of many creative agencies and directors. In all honesty… there have been times when I have found myself at odds with creative directors so obsessed with their craft that they miss the Holtane axiom. It’s not that I don’t appreciate theatre and humor in messaging. It’s just this peculiar problem that I have had all of these years. Seems like I am always questioning whether all of this creative design, copy writing, set design, etc., in the end actually rings the cash register.

I have also observed over the years that the mere thought of questioning most creative types in our industry was to be viewed as pedestrian. (“Surely you don’t understand the nuances of and the role of advertising.”) I have received more than a few “scarlet letters” as a result of having the audacity to question the performance of certain ad campaigns. Back in the advertising Stone Age, there was little measurement or analytics to measure effectiveness. Heck….in a thriving economy (remember those days?)…no one really cared a heck of a lot about performance metrics. Great campaigns were “worth the money.” Everything seemed to be selling—who cared whether or not it was because of a winning creative strategy.

There is no need to rehash the state of advertising and our economy in 2010. Suffice to say, this is age of efficiency, accountability and measurability in all aspects of advertising and marketing. To think that marketing and creative directors can perform their crafts ignoring performance metrics is foolhardy. And yet…I continue to get incoming from a band of creative directors who seem to be lost in a time warp.

Note to all you creative types out there: before you get all hot and bothered, please understand that I believe fervently that quality and relevance of messaging is central to selling more stuff for our clients. Back in the old days, creative directors were held in the loftiest of thrones within the advertising arena. Not only did they understand how to create engaging and entertaining campaigns regardless of medium, they seemed to be the only ones in the agency that knew anything about customer need. (I know that there are some of you folks who relish in the nostalgia of those days.)

In the world that we live in today, creating and designing campaigns with little or no desire to monitor effectiveness with the robust suite of analytic and performance tools available to you is criminal. We are here as professionals to provide our customers with superior service. We are charged with the responsibility of understanding our customer’s market sector, competitors and customers’ needs. Chief amongst all responsibilities is using client dollars in the most cost effective manner to “sell more stuff.”

Frankly…if it were me…I would have my analytics team sitting right next to the creative team. In the new world of advertising…your best partners would be this crew. A team that could provide historical insight on the effectiveness of various combinations of content, design, frequency and medium in moving the sales needle for your customer. Nothing wrong with being left-brain focused and high-minded about the creative process. This is in no way intended to limit the level of ingenuity and experimentation utilized in creating campaigns. It’s just that agencies need to be accountable in a new way for the bottom line inside our shops. The days of hiding behind industry plaques and awards given by other creative director associations are over. Awards are nice….but your customer wants results.

Perhaps the revolution needs to start in design and journalism schools. Courses that focus on leveraging customer profile and performance data as a foundation for creative development and execution. Reality demands a much tighter connection between analytics, design and performance. It’s pretty simple: leverage as much audience and historical data as a foundation for your messaging and design. Execute your campaign, and then be ravenous about analytic data about all aspects of the campaign’s interaction with your target customers and prospects. The tools are available today for real time performance updates.

Be in testing and tweaking mode continually, always monitoring performance and transforming campaigns to improve performance metrics. Imagine the day when you and your creative team make your next presentation to your client and demonstrate that you understand their success metrics in all areas of their marketing campaign. When you stand up and show the methodology and data that was leveraged to develop concepts as part of an ongoing learning and adjusting philosophy at your agency. The delight when you report that all of this hard work in learning and monitoring has resulted in a campaigns and executions that have sold the customer more stuff.

On that day….you will have known what George meant so many years ago.

The root cause of this turmoil has been the fundamental shift in terms of consumer media consumption patterns away from legacy vehicles –the likes of direct mail, magazines, television, newpapers etc. –to a suite of interactive platforms. The agency model business and profitability model has been built on a foundation of several fee structures. Both inexorably tied to the media outlets that have been the focus of this work. Agencies have always received placement fees as a percentage of media for schedules run in costly platforms like television, newspapers, radio and magazines. Supplementing these media placement fees has been the core creative capabilities that have served to define and differentiate agencies from each other. Whether Ogilvy or Della Femina, creative directors have always been the rock stars of traditional agencies. Individuals who understood more than the unique selling propositions of their customers value offering; they had the unique ability to craft marketing execution in a format and manner that engaged prospective customers in a deep way creating brand awareness , preference and loyalty. Marketers were willing to plunk down major creative, consulting and production fees commensurate with the respective media platforms to execute the creative vision of these agencies and directors.

With an economy that for decades seemed to be on autopilot, marketers paid little attention to the cost value relationship between campaign cost and execution fees. Sales and profits seemed to be growing as a step function to overall media spending. Budgets burgeoned. Agencies increased the size of their human capital to attend to their ever supportive customer demand for new plans and strategies. Agency research departments were sure to provide clients with a steady diet of industry statistics to bolster the overall philosophy that spending aggressively and broadly to boost overall brand awareness and preference was the right thing to do. I remember those days clearly. There was very little attention paid to concepts like channel relationships, merchandising and any sense of return on investment. Few realized that the foundation was being laid for our current crisis back then. I remember being ridiculed for even questioning the relationship between dollar spend and actual unit sales generated. Not important… I was scolded.

Of course in the early 90’s the world began to change with the rise of a small and inconsequential media platform called the internet. Surely this would be the playground for the technological elite and nerd population. A small segment of the consumer population would embrace the new platform… there was no need for alarm. Some traditional agencies added interactive wings to their organizations to address the need for website and banner builds. Always being careful to relegate this discipline to secondary status within the overall agency P&L. If a customer wanted “interactive” the agency would provide the capability. In that way the legacy agency could still insulate the core legacy media P&L from any thought of dollars shifting from their clients legacy media schedule to this new platform. Surely there would be incremental budget dollars available to support this new initiative. No customer would be foolish enough to fund this distraction with dollars putting the core strategy “at risk.” The age of denial gripped the agency and marketing community at that moment. No one would accept that a day would come when that “nerdy” platform would become the pivot point for all media and communications. Even today…many believe that legacy media is going thru a “cycle,” and that someday…the pundits who are evangelizing about a return to legacy media will be “proven right.” The media landscape continues to be littered with the remains of those whose denial of reality caused not only their own demise…but that of their customers.

The Perfect Storm Comes to Pass
The stage had been set for the perfect storm. An economic recession, shift in media consumption patterns and an omnipresent era of denial collided and threw the entire industry into chaos. In every paradigm shift, the market provides for those who embrace new thinking to profit. Who would have thought that a couple of “egghead nerd types” would redefine the advertising marketplace? And yet that is exactly what Google has done to the marketing and advertising community.

With no loyalty to the old world…the folks at Google realized a fundamental requirement for consumers was their need to find products, services and information quickly and efficiently. The pre-Google internet spoke about surfing the web…an aimless journey from one website to another. Google saw the futility and frustration of a consumer who knew that the internet provided “all of the answers”…but was disorganized. Google moved past the Yahoo’s and Microsoft’s, creating a new way to find information that delighted its users. The team also figured out a dynamic way to monetize all of this searching by offering advertisers positioning at the key intersection between need and solution. The rest is the history of the systematic draining of billions of advertising dollars away from legacy media of all kinds into the search world. Dollars once within the control of traditional agencies. Funds that were once commissionable to a wide array of agencies…now suddenly gone…never to return.

Audience movement away from legacy media platforms…meant declining circulation and viewership. Advertisers have been very democratic with their media spending. Where the consumer goes…the dollars must follow. The challenge in all of this, of course, for traditional agencies has been the relative cost of interactive media and production. Placement fees for interactive media pale in comparison to that of legacy media. The major production costs around building and executing campaigns in this new world are a fraction of their broadcast grandparents. Coupled with the financial dynamic has been a dearth of agency personnel who truly “get“ the interactive pallet of offerings. Traditional agencies continue to hear the sucking sounds of budgets leaving the legacy media world to the new suite of offerings with no solution in sight.

In light of the market conditions…we are seeing two strategies deployed. The first is that many agencies are racing to add “interactive” to their names. The hope here is that if we call our agency “DiGuido Interactive,” we will be perceived to be in the center of this phenomena. The second strategy being deployed by mega-agency holding companies is a consolidation move. Here the thought is that if we build a bigger boat…we won’t feel the pain as much. The flaw in that thinking reminds me of those who were arranging deck chairs on the Titanic. My prediction is that without dramatic change in the next 24 months…we will be witness to the a era of demise and devastation within the agency business and profitability model. In the next five years…many will not survive. When we ring in the year of 2015 only few from today will be leaders.

Change is Gonna Come
The fundamental changes in the agency model that must happen in order for your company to survive may seem radical today. Like it or not…we must deal in the real world and realize that the consumer has embraced a new communications channel and will not return to the legacy world. With each passing year, those consumers that were the stalwart of the purchasing population are dying off leaving behind them a new consumer that doesn’t look at legacy print, radio, broadcast in the same way as their ancestors. To believe that your agency will continue to pivot its strategy and business model supporting the old world is a road to ruin and death. Interactive, which was always a stepchild to your legacy media practice, must now become center stage in the DNA of your company. You must start with planning strategy, media and messaging in and around the interactive platform. Legacy media can still play a role in your overall plan…but must be relegated to a supplemental role in the overall plan.

Data to Reign Supreme
One of the benefits of the economic recession has been the rise of a new level of tracking, analytics and accountability in the media and marketing world. To think that your agency can continue to command significant fees for consulting , creative and media placement without the proof that this strategy and dollars are generating the return on investment that the client demands are foolhardy. All that you recommend must be tied directly to the proof that dollars spent are moving the needle in the desired direction for your client. Take all of those creative accolades and awards down from the shelves in your lobby. The client today and much more so in 2015 really doesn’t care about all of them. Ring the cash register. Grow sales and profits for your customer in a cost-efficient and effective manner and you will be a survivor mid decade.

Never before will there be greater demand on the need for your agency to build a robust analytics and research discipline. As we have said in the past; your customer will demand a new level of accountability. As such, your research dept must work with internal planning and creative teams to insure that all of the work being done by your company for your customer is being monitored against performance and accountability standards. Planners cannot plan without an understanding of measurability and metrics of success performance standards. Creative and messaging teams cannot create without an obsession on monitoring in terms of the relationship between creative execution and customer engagement metrics. The age of prima donna and or ego driven production will be long gone replaced by a new breed of creative type that is thrilled when his or her work generates the desired result. Just think about how many folks are standing in line to plunk down billions of dollars within search engines because it makes the cash register ring.

Small is the New Big
With smaller media placement and production fees in the new world, the agency of 2015 will have a much smaller human capital component. The challenge for the HR department of your company will be to create an organization of subject matter experts in all areas of the new media world. Clients are going to demand efficiency, optimization and accountability in their programs in the years ahead. They will no longer tolerate “junior” staff of any kind within your agency. Gone is any concept that you and your team will “learn on the customer’s dime.” Clients will demand excellence from all staff members.
The new account and media team will be asked to be experts of their subject area and more importantly students of the customer’s competitive arena. Clients will rely much more on your agency to craft new and innovative strategies based on a comprehensive understand of market dynamics. All of this means that a new commitment to being students of the marketplace is in order.

The Consumer as Creative Director
The challenge to the Creative Director and team in this new world is life changing. Gone are the print and broadcast landscapes. There are a new generation of producers and script writers everywhere encouraged by the YouTube venue. The internet generation is being bombarded by creativity from all angles. The competition for consumer attention has never been more intense. All of the past credentials are now called into question. Your agency must recruit a new breed of creative and copywriting talent. Hiring evangelicals who understand how to tap into the new platform and engage fellow consumers in meaningful and directional dialogues. This may be to some of you a group of rambunctious “kids” who didn’t go to the journalism schools and/or haven’t been schooled in any of the legacy rules about what can and/or can’t be done. This the age of “no rules.” Our own research shows that consumers are less patient about campaigns. Campaigns seem not to have the same staying power that they once did….”Where’s the beef ?” Today’s consumer grows tired quickly and bored even more so. Creative folks inside your agency need to be in a constant state of innovating and creating.

Technology Takes Center Stage
Technology has always played a tangential role in the overall mix of your agency model. While I have debated many on this topic; my passion remains strident in the belief that the real winners in 2015 will be agencies that have altered their model to not only host technology solutions of their own making. I will go further that the two worlds must collide to form an agency model that builds scalable technology platforms that provide their customers the ability to centralize all of their interactive needs within one shop. Does this mean that your agency will need to have a commitment to building and maintaining an email, search engine marketing bid management, social media monitoring digital publishing, mobile messaging deployment and analytics engines. The answer is YES. Many will scoff at such a suggestion, reasoning that there will always be others who are subject matter expert based companies in these disciplines that can be contracted when the need for the solution arises. Two basic fundamental flaws in that strategy; control and margin.

Agency 2015 needs to answer the demand of the customer for optimization and accountability in the overall marketing and media plan. Without a collection of technology platforms that can share data in real time and measure collective performance…there is no way to answer the customer effectively. Have you ever tried to get disparate technologies …much less different companies talk to each other and share collective insights for the betterment of a customer ? Virtually and literally impossible. You must own up to your technology responsibility in order to succeed.

Somewhere in the last decade we lost our way in terms of the goal of our agencies. Methinks that there have been times when we forgot that we are running a “for profit” business. Our investors and employees should demand greater revenues and profits from our company. Partnering with third party vendors for solutions dilutes our margins from step one. Surely we are not blind to the fact that the new model will demand technology investment which may be sizeable. Owning versus leasing will insure revenue and profitability stability so necessary for our company in the years ahead.

The Model Goes Global
While we are on profitability….while many have read Friedman’s tome on the World is Flat…so few have truly explored and/or leveraged the global workforce to provide greater efficiency and effectiveness in providing economical solutions for our customers. Don’t believe those who continue to throw stones at offshore strategies and employees. It will take work to build the right structure and model for certain. The alternative is reduced profits and marginalization.

Charting a New Course
Very few who occupy the leadership chair at agencies today will make the cut in 2015. The new agency CEO will be a renegade and tireless cheerleader for his company and his people. He will push his people to the limits of their creativity and innovative thinking. He or she will bring new levels to performance standards in all areas of his company. The leader will look past the Fooz ball tables and funky décor of the agency to its DNA as an agent of transformation to the agency’s client. Flair will not be lost…but there will be a heck of a lot more substance. Employees drawn to Agency 2015 will have a new sense of commitment and dedication to their customer responsibility. Will the fun atmosphere and collegial atmosphere of the agency disappear? I doubt it. A new definition of fun will be a hallmark of Agency 2015. A confidence and pride in knowing that what has been delivered truly provided the customer with the solution needed to achieve their goals.

The market has provided us chaos and turmoil. It rests on all of us to move out of our comfort zones and begin anew. Tear down the old and pursue will dramatic zeal and courage this brave new world; knowing that the doubters will be everywhere spewing the FUD that characterizes those who are the laggards in our industry.

There is no white knight coming to “save” our industry. I plan on being an exciting force in the agency world in 2015. I hope that some of you will join me.

Until then.

Al D

Among the major ripples felt from this sea change in media consumption habits is the dramatic shift of advertising dollars away from legacy media of all types to internet venues and communities. Sure… more absolute dollars are still being spent today in traditional channels such as television and direct mail… but these dollars are in steady to not-so-slow decline. That’s because marketers, who must remain media-agnostic about the allocation of their budget, have no choice but to base spending on clear and measurable ROI metrics. As this focus takes hold… the movement away from traditional media has become even more spectacular.

Let’s be clear. The dominant reason why most of the 700 magazines have gone out of business in the last 12 months is NOT that the subscribers and newsstand readers lost interest in the titles’ subject matter. The reason these magazines died… was that these same readers have found new and more interactive communities and locations that provide them the same and/or better content within the new interactive platform. In many cases this content can be customized, aggregated and delivered based on the reader’s desired frequency and interest. Magazines have died and will continue to die in print because the advertisers who once supported these publications with their ad dollars… have moved to position their ad units in these new venues and communities. Not being a fool… they reason that they must plant themselves at the intersection of content and customer. As such, they move out of print into the internet. As a publisher, when your print costs continue to rise, circulation begins to erode and advertising support declines; the end is near.

I know. I was there. At the height of my career in publishing, I found myself at the helm of Computer Shopper, the world’s largest print magazine. We routinely folio’d our monthly publication at nearly 1000 pages. We sold more advertising pages literally than any other magazine in the world for many years. The rise of the internet and comparison shopping engines undermined our core business and reader proposition. Consumers and business people could now find our content online in venues that allowed them to leverage this knowledge and actually purchase products. Truth be told, we saw this coming and created our own ecommerce engine, computershopper.com, which, in the end, served to accelerate our demise. Today, this once great magazine is gone.

Publishers Jump on the E-book Bandwagon
The recent announcement by a consortium of publishers to finally admit that there is a desperate need to remake themselves is a welcome signal. Like other announcements of late regarding partnerships between content providers, book and magazine retailers, and “e-book device” technology makers, there seems to be a mad dash to get “content” onto a digital reader. In fact… much of the talk about these devices now centers on the potential of creating “a new definition of magazine” to leverage this new delivery mechanism.

Based on our own data and feedback from several web-based retailers, e-books of all brands and types are in short supply this holiday season and, in many cases, sold out. Consumers have started embracing this new method of reading books and magazines on a pace that rivals the ipod. My sense is the real tipping point will occur when the device is priced under $150. Publishers and all content providers know that this day is coming very soon and are logically getting ready.

What I am not hearing as of yet is a clear strategy on how the new e-book delivery device is going to solve the real problem: the loss of advertising revenue. In their race to port today’s content to the new device… there is a big warning sign on the road ahead: “You folks have been here before.” When the internet rose to prominence, there was this mad dash to build websites and sell advertising on “box car” numbers… impressions. Marketers flocked to the web to “reach” eyeballs. Sure, there was advertising discussions around click through’s, etc… but the real focus was how “cheaply” an advertiser could purchase 100K impressions. All of our very valuable and costly editorial content was suddenly being hawked as a commodity. The brand that we publishers spent millions of dollars to create… the loyalty and involvement of your readership that took years to cultivate… was relegated to a spreadsheet analysis of audience reach… then, inevitably, marked down. Is it any wonder that our web-based revenues have never really come close to the levels experienced in selling print advertising?

Publishers left it to Google and other search engines to build a model that grabs content and assembles a gargantuan number of advertisers that are willing to stand in line to bid up positioning within search results of your content. Then, after billions have been drained out of our marketplace… we stand and applaud the success of the model. It is truly mind-boggling that the content providers in our world have allowed this to happen. Are we really waiting for Google to figure out the advertising model for the e-book revolution? Let’s stop obsessing about the creative and graphic challenges of porting editorial content to the 6 inch screen or about whether it should be in black and white or color. The real solution for the publishing model is all about reader engagement and analytics.

The Missing Link: Analytics
As we build out the e-book platform…it is critical that deep reader engagement analytics be resident in every device partnership. As CEO of an organization that has just built our own digital publishing solution, we made sure to incorporate both email and Google analytics reporting into the back end from the start. In order to save the publishing industry… we must not only prove that we can create new content and design for this new platform… we MUST prove that we can once again engage the reader. That “proof” lives in our ability to demonstrate that old and new readers are not only purchasing these new devices… they are actually spending time with the content in a meaningful way. Reader engagement data is essential to proving to advertisers that a new publishing platform has been created where it is more than worth their dollars to position their ads adjacent to congregation points. That e-book readers are actually flipping through their magazines on this new device and spending time with the content. We need to clearly demonstrate that “full page” digital advertising units opposite digital magazine content are getting readership and response.

The deeper we can document reader engagement in this new publishing paradigm… the better chance we have to arm the sales team of the future with the tools to establish rates and programs that are commensurate to this level of reader engagement. We have a chance to reestablish the power of quality editorial content to draw quality readers to a venue that can provide meaningful data about this intersection. We can once again prove that readers who spend time with content are more likely to not only observe advertising… in fact they are more likely to take action on those ads. When we prove all of this… the value of advertising within these editorial environments will grow in price and start a new profitable era within the publishing industry.

There is much work ahead. I, for one, don’t believe any of the book merchants selling Kindles, Nooks, etc., care a bit about reader engagement. They want to sell books into this new platform and their devices reflect that. Let us not be deluded into believing that these devices solve the publishing problem. Circulation and newsstand revenue had always been a nice revenue stream… but on-page advertising is truly where profits are made. None of the devices on the market provide the analytics necessary to win this battle.

What we don’t need today is a simple conversion of print to digital… we need a solution that provides the tools to make the case for why digital publishing is the new advertising platform for your publication and/or your company. Thus, be wary of the quick-fix digital publishing solutions being marketed by your ink-on-paper printer. Kinda like having the fox watch the hen house. Printers have the most to lose in this shift to digital e-readers. They will NEVER provide the level of tools and insight to help you win.

There is work in developing content that is engaging to the reader on this new platform. This will not be easy. We must recruit a new class of writer and designer that understands the consumption patterns of consumers and digital content. These new staffers must understand the editorial franchise, the glue that binds your publication and its readers, and be able to bring it to life in an engaging way via this new device and delivery mechanism. Your marketing dept may need to be overhauled. The new team must be focused on designing innovative ways to move your current readership to embrace the new digital content. Marketing folks need to earn their keep by understanding the inflection points amongst readers that will incent them to move to this new platform. They must also be aggressive in terms of creating new sales tools for your team to sell the reader engagement proof of this new connection. You may need to fire your head of sales and a good portion of your sales team who have made money selling box cars and reach; the folks who have presided over the systemic degradation of the advertising value of your brand. We need a new class of sellers who, armed with a deep war chest of reader engagement proofs, have the guts to sell the value of the connection between digital content, readers, and new advertising units. Professionals who will stand up to the current “negotiate everything” mentality that has gripped our industry. We need new leaders at the top that aren’t trying to wait out this current “downturn cycle.” Leaders who don’t really have the chutzpa or desire to make the hard decisions required to transform their business to leverage the new reality. The shareholders of these companies need to be quick and decisive in showing this group the door.

Despite the excitement and mania around today’s e-book releases and announcements, these devices will not solve the publishing problem. Left alone… we will watch the demise of many major legacy companies in the years ahead. The time is now to wake up and put our own house in order and get our priorities straight in order to survive. E-book technology is this generation’s newsstand and subscription delivery system—and it is exciting. But the true winners will look past distribution strategies to the place where real money can and should be made. Let’s not wait for the search engine behemoths to once again take the lead and all of the new advertising dollars. This is our only opportunity to regain the foothold on readers and advertisers that we once enjoyed.

There is some time… just not a lot to get this done.

Al D

The publishing industry should have seen what we did many years ago….the rise of the internet. I remember speeches that I gave at publishing gatherings warning folks nearly 10 years ago that this day would come. Their print readers were getting older and the new breed of subscriber and newsstand customer was looking much more to the internet as their primary source of information. I remember several times nearly being booed off the stage for having the audacity to declare that print publications would ever be in the crisis that we are facing today. In all this wreckage there is no hubris or gloating…no ‘told you so’….more an urge to correct the business model before it’s too late. Those publishing execs who are still in a state of denial about the future of the print publishing business need to retire to other career tracks. What is needed is a bold new initiative…a remaking of the publishing business.

Digital publishing is the answer to the demise of printed publications. The stodgy and legacy print folks…(printers, circulators, paper manufacturers, postal service) will continue to get on their soapbox and proclaim that it has been tried before…that digital publications “don’t work.” Frankly that’s the talk that folks who are trying to protect their butt say all the time. The real answer is that these people are afraid to embrace new thinking and put in the elbow grease required to get the digital model to work. They would rather calculate the months remaining until retirement than forge new ground and rebuild the publishing model. They would rather read more death notices and lay off more folks. They would rather think that trips to Washington to beg for “bailout’’ money is the strategy to save their venerable publications. Flawed thinking to the extreme.

Consumers have embraced the internet and interactive content at a faster rate than any other communications medium in our existence. There is no debate here. While there may be some tough board meeting and shareholder discussions ahead…there is no time to sit around believing the legacy business model will return. Today is the day to get the courage and look at the data and put your people to work on convincing readers and advertisers that digital publishing is the communications medium of 2009 and beyond.

Here is my plan to save magazines:

1. Examine your current print subscriber file – how many email addresses do you have for your print subscribers? If it is small….start today – append your postal file with email addresses. Your goal is to have 100% of your postal subscribers matched with their email addresses.
2. Work with Zeta Interactive on converting your print publication to a digital replica. This doesn’t cost a lot of money or time to do…and it is a mandatory step.
3. Take a look at your P&L and look at costs relating to editorial creation with an eye toward reducing your overall edit expense. There are many ways in which social media, user generated content, etc…can supplement more costly home grown edit.
4. Get your circulation department focused on creating promotions that drive new subscribers to subscribe to the Digital version of your product….you have boatloads of circ and promo dollars…start directing them away from print packages to digital publication promos
5. Get your marketing department ramped up to create promotional efforts that drive your current subscribers into the digital version with added content, video and sweepstakes if needed…Zeta can help here as well.
6. Through the Zeta Interactive Next Page digital publishing solution….the level of analytics available to you will be incredible. Never before has a publisher had the depth of knowledge about how a reader consumes content and advertising in a real time basis. This knowledge can drive editorial decisions and can provide your sales team with tremendous power in quantifying to advertisers the power of your brand and content with its subscribers.
7. Sales team…make the hard decision. Do you have a team that can sell this value of the relationship between your content and audience in the digital world..? If not…Fire them..and get the HR department focused on finding you people who can truly sell interactive advertising.My sense is that many of these teams merchandise the interactive assets in print packages, giving away your valuable interactive relationship with readers. That thinking needs to go bye bye.
8. Selling the power of digital advertising isn’t order taking. Publishers need to be focused , energized and passionate about the power of their brands and content relationship with digital subscribers. This is a much more intense and awake publishing industry. The idea that you print something and it has a shelf life is over. Real time timelines and demands…Real time publishing.
9. Will it be easy to recoup the advertising rates and revenues once enjoyed by the print publishing world? NO. The publishing industry has a wealth of very smart people. It’s time we directed their efforts into understanding and leveraging the new publishing medium. In time…as we get more passionate about the reporting and analytics available in this new digital publishing platform…we will be able to regain the value lost in circulation and advertising revenue.

If you do nothing…if we do nothing…

If we don’t embrace the digital publishing revolution…then there will be many more death notices.

There will be many more board meetings where angry investor groups demand answers and the heads of those who are too fearful or stuck in the old thinking to make the changes…required to build new business models.

We are a country whose legacy is a pioneering spirit. Not sure where all of that courage and spirit has gone. Time to get off our collective butts and put our backs into making the digital publishing business work. I am tired of watching good magazines die. All of us at Zeta Interactive are here to help save magazines, catalogs and direct mail….Check us out…

Al D

I have spent the bulk of my 30-year career around many of the folks that take the Acela Express over to DC. Long before there was an internet …like these folks, I had ink flowing through my veins, having worked for Parade Magazine, CTW Publications, Times Mirror and Ziff Davis Publishing. In fact, I was the publisher of the world’s largest print publication – Computer Shopper magazine (now shuttered) – which at its peak folioed a monthly issue of over 1100 printed pages! All of us, including my colleagues at the MPA and within the publishing arena, saw the internet coming. We read all the research and reports about shifts in consumer information and purchasing consumption patterns. With this research in hand – and an understanding of the paradigm shift – some embraced the new world while others continued to operate in a state of denial. Surely, the interactive channel and this new generation of consumers would never abandon legacy newspapers and magazines as their primary information source.

The cold hard truth of this issue is that all those who misread and/or chose to ignore the storm clouds of change are now dealing with the economic reality of the new marketplace in 2009. Newspaper and magazine subscriber data tells the story clearly. The average age of a print subscriber is getting older. The new generation of consumers has found credible alternative providers of relevant information on the web. The editorial pundits, icons and experts of the past are being forced to do battle with a new crop of user-generated instant content and personalities.

Social Media outlets the likes of You Tube, Facebook, Twitter, MySpace and a horde of other positions on the blogosphere are the new congregation pivots in the communications channels. There are a handful of legacy publishing titles and companies who have staked positions on the web and now are in deep diligence on ways to shift dollars and emphasis to the connection being made between interactive content and their subscriber.

The most profound impact of this decade-long shift in media consumption patterns comes through the perfect storm of economic conditions, shrinking advertising budgets and an intense focus on return on investment analytics and accountability. The days of running schedules to gain awareness for products are over. Today marketers are faced with financial ultimatums. Use your dollars in the most cost effective and efficient manner possible to grow sales and profits or be shown the door.

Media companies have not spent nearly the amount of time required to position their outlets as key components in an integrated strategy that drives sales and profits. As such, the marketing community has embraced the interactive world where it seems that ALL is measureable and accountable. As the population of interactive evangelists grows with each passing month, the percentage of dollars allocated in this new channel grows exponentially.

Why travel to Washington, DC? Why hold hearings? Has anyone measured the impact that search engines like Google, Yahoo and MSN have made in terms of taking advertising dollars out of our economy? In the pre-Google world, such investigation would happen through consultation with our legacy newspapers and magazines. Today, billions of inquiries no longer reside there and with the shift in traffic and interest, literally billions of ad dollars have been sapped from legacy media – never to return. Is anyone really contemplating the breakup of Google, Yahoo or MSN? Should we forbid the global consumer from utilizing a tool or service that has trumped an entire industry? I think not.

There are no solutions that make any sense coming from Washington, DC. The train left the station a long time ago. It is best that our publishing leaders return to their offices and begin thinking in earnest about ways to catch up to the new world of digital publishing. Time to get their circulation departments focused on attracting new readers who will embrace the new delivery platform. Time to get their editorial teams out of the legacy world and into writing for the new media consumption patterns. It is past time to hire new salespeople who can position the connection being made on the internet between a leading brand, the content and the reader as the most powerful and valuable connection available in the market today.

It’s also time for a bunch of folks to leave. This is not a phase that we are going through. The shift in media consumption and advertising focus is here to stay. If you don’t want to build the new business model in this new world, it’s time to leave. At last check, the folks in Washington have a bunch of stuff on their plates right now. Any thought that an influx of cash or a couple of dozen hearings is going to change the direction of the new world is misguided. Those who haven’t changed had better do so yesterday. Not much time left.

In all of the days that led up to the ouster of Wagoner and the assignment of Fritz Henderson, did anyone inside this organization ever wonder… did anyone ever put pencil to paper and do the math? We are spending $3 billion dollars in raising awareness amongst the universe of prospective customers who are in the market to purchase cars and trucks…what’s our return on that multi-billion dollar investment? Did anyone in Detroit realize that General Motors didn’t really have a brand awareness problem? Their problem from a sales standpoint was that folks that were in market to buy cars… didn’t prefer their makes, models and brands. Geez…I know that the finance folks in many other organizations would have been asking that ROI question long before the budget got to $3 billion dollars. What happened ? Were the finance guys all on vacation?

I remember on one of my trips to Detroit… hearing from several senior execs inside of one of the major automakers… a very telling statistic. 70% of folks who will buy or lease a new car this year…have already purchased that brand of car from the automaker. Really? The “Brooklyn” in me wondered why automakers would spend as much of their marketing dollars in broadcast anything when over two-thirds of their prospective customers had already understood their brand and, in fact, had acted on their knowledge and purchased a car. Surely…there would be no need to spend a significant amount of those billions of dollars against a horde of the already converted. Now the math even makes less sense. If there are only 30% of active buyers in play…heck…let’s be generous… if there are 50% of buyers who are undecided….then our marketing dollars should be delivered against that core group of prospects.

If Barack Obama….OK let’s be serious…If Fritz Henderson would give me an audience, here is what I would tell him. In March of 2008 GM told the world that it would spend half of its $3B in marketing and advertising dollars online. Bravo. In recent weeks…GM looking for ways to be more efficient…announced that they would cut their total advertising budget by $800 million. With the events of recent days…I totally understand why. Job one for Fritz and the president….build the size of your customer database. Get out to your dealers and launch a major initiative to build one central profile database that houses all customer information; make, model, brand, vin #, postal address, email address. My experience in Detroit has shown me that automakers have very small email lists today. That must change immediately. Armed with a robust customer database, GM can be incredibly efficient in delivering new car information, new model upgrades, service messages via state of the art, creative and targeted email communication initiatives. Cost-per-contacts are measured in dollars per thousand contacts. The cost efficiency is simply too powerful to overlook any longer.

Research study after study… continues to document that the US car buyer is using the internet more than ever today to learn about and shop for automobiles. There is little doubt that the current generation continues to move more of their research, entertainment, community and commerce activity to online communication. It makes total fiscal and marketing sense for GM to become the world’s most proficient database marketing operation. Think of the amount of money that can be saved when that new Camaro is released this year…and GM delivers its new product introduction to its core list of sports car purchasers who are nearing the end of their lease and or who have purchased their most recent GM automobile three years ago. A splashy email campaign featuring a series of triggered flash based walkthroughs of this new “transformer.” This is only the start of a new GM who wants to build meaningful electronic dialogues with its current customer base in an effort to inform and respond in a more targeted way to their ever changing opinions and preferences.

Do I believe that there is a role in maintaining broadcast based messaging as part of a new car roll-out? Definitely yes. Is there a role for television, radio and print advertising? No doubt. But automotive marketing needs to pivot off of a deep understanding of customer profile. Exhaustive profile databases need to be built. Email addresses for all customers need to be appended. An intensive focus on building breakthrough email creative campaign executions is a must. While the new leadership is focused on cutting costs, closing plants, reforming production lines and dealing with unions, let’s not miss the opportunity to transform the entire marketing effort at GM and elsewhere.