Monday, December 27, 2010

The King is Dead, Long Live the King

As a new year approaches, it is important to keep things in perspective. While all the new stories seem to report on about Facebook, Twitter, Groupon and other digital media it is easy to forget that digital media will hit a total of $25.8 billion in 2010 which is still less than 20% of the $168.5 billion projected in total ad spending.

In my corporate life I was a big user of TV which is still the big dog anyway you look at it. Many of my current clients are big users of digital media but that's only because we are looking to target niches audiences or we can't afford to stake out that much of the market. TV may not be sexy or hot and it share of the market may be threatened by new media, but Red Lobster recently reported soft sales as a result of pulling back from TV and shifting spending to digital media. Be careful in developing a media and marketing plan that entails large shifts from the past mix. Balancing your marketing and media is a challenge even for the most experienced and requires some quantitative and strategic analysis.

Working with a limited budget requires sacrifice. Some of my clients have products that are largely sold on the internet with limited retail brick and mortar distribution. Consequently, the majority of our funds are spent on digital media. What we sacrifice is much exposure to the 40% of US homes that lack high speed internet access. We never had them so we're not giving up much other than opportunity to increase our revenues. Small companies often have challenges of increasing production so sacrificing part of their market potential only results in a slower penetration and sales increase.

Beware of pundits and advisors exclaiming traditional media is dead. Online media may have surpassed print in 2010 but print media is still generating $22.8 billion in ad spending. That's likely to be less in the future but customers for many products can still be acquired with print media. Print may not be right for all brands or target audiences but it is likely to have a role in many marketing plans. I recently met with a company that has a cloud solution for a wireless product with about 5000 potential customers total in the target audience. Direct mail and trade print are likely to be part of their marketing mix.

A successful competitor is one who adapts to changing conditions to keep growing a business. Following trends and over reacting to media coverage is likely to make you resemble Chicken Little.

Sunday, December 12, 2010

Uncompetitive Nations

The news is ripe with dozens of countries that are running huge deficits which basically includes just about every country banks will lend money to. I've been reading some statistics about this recently. One says that the US collects $20,000 in taxes per household and spends $30,000. Politicians get elected by creating public sector employment so it is difficult to see how this is going to be solved without a huge amount of pain. The banks in Ireland were recently bailed out and the cost of the bail out was $33,000 for every man, woman and child in the nation of 4.5 million people. Clearly a Darwinian survival of the fittest will weed out some of the less competitive nations over the next few decades. You say it can't happen? 103 of the 195 nations on Earth didn't exist in their current form 50 years ago.

Over a dozen countries emerged after the dissolution of the USSR. A good analogy was that the USSR was like a conglomerate that filed bankruptcy and all the divisions got sold off into separate companies. Going back to the Ireland situation, can a country of 4.5 million people afford many layers of government? Doesn't appear to be a competitive economy of scale working for them. Watch for whole layers of overhead to disappear in countries in the European Union and some of these nations will look more like states.