Matthew Schwartz of ScribeMedia, a cutting edge web video content company, recently interviewed Gene DeWitt on the subject of what the future holds for the ad media world, specifically what media and agencies can expect in the coming months.
The video, which last 25 minutes, can be found at this link. As always, your comments are welcome.
Cutting Costs Should be the Final Step in a Series of Prudent Management Initiatives
Cutting costs is not restructuring; restructuring is positioning your media agency for continued prosperity in difficult times
Get ready
for a regular series of trade headlines about media agency staff cutbacks to
reflect uncertainty about next year’s revenue expectations.
Since
payroll is the principal expense of these companies, staff cutbacks are likely
inevitable in the face of declining ad billings and income. Unfortunately this
may be the only action taken by some media agencies to shore up their figures
for next year. This will represent a huge new business opportunity for
competitors who approach restructuring in a more comprehensive disciplined manner.
Here’re some
steps to follow to convert next year’s financial dislocations into growth opportunities
for your media agency.
1. Operations
Begin by reviewing every aspect of your operations to
streamline and maximize the efficiency of every business process. Can paperwork
be replaced by systems? Are some actions duplicative; i.e., copying and faxing
insertion orders?
Note that I haven’t mentioned computers. It takes time to
move actions to IT. However, it takes very little time to insist that media
sellers who have been insisting on maintaining old-fashioned practices cease
and desist and comply with more efficient operating procedures themselves. Too
much of what goes on in today’s media companies is manual and redundant.
The bottom line. Make your agency as efficient as it can be
before considering reductions in staff.
2. Uniformity of Procedure (The Fry Manual)
Working with McDonald’s as a client some years ago, I learned
one of the secrets of their success. It’s symbolized for me by The Fry Manual, an extensive training
document and procedural guides for ensuring great french fries in every serving
at every restaurant globally. Everything was in the manual: how hot the oil
should be, how long fries could be retained for sale until they had to be
thrown out, etc.)
At DeWitt Media, we developed a “fry manual” for every step
of every procedure in the company. Spot TV buying, for example, illustrated
every action from developing projected costs for planners through to post-buy
analyses. Every form used was illustrated. Time lines and report formats were
provided. Similar documents were prepared for every department: media planning,
magazine buying, out-of-home, etc.
As a result, a new employee, whether a trainee or a veteran
from another media service, could be brought fully on stream very quickly and
operational excellence maintained at all times. Hot fries every time.
Ensuring uniformity of procedure is a way to achieve maximum
operating efficiency while maintaining a high quality of service and product.
3. Quality of Service
The primary risk in just ‘cutting back’ without a
comprehensive restructuring plan is that service will suffer and result in a
loss of clients. This is of course disastrous since it is axiomatic that it is
far easier to retain current clients than to get new client.
The probability is that advertisers will want more from than
agencies in tough times, not less. Remember, your client contacts want to keep
their jobs and if the choice is between you and them, there’s no choice.
Increasing quality of service, especially responsiveness and
face time, is not usually a task best performed by junior people. Yet ‘cutting
back’ often means replacing experienced personnel with less costly relative ‘newbies’.
It is possible that operational excellence and procedural
uniformity will impress clients with your agency’s reliability. But reassurance
and ‘hand-holding’, always important and even more essential during tough
times, requires more experienced hands.
The bottom line: Don’t downsize the quality of your service
and product in tough times. Clients will notice and go elsewhere.
(More to some in this series.
Comments are welcome)
Media Managers will need to react early to the effects of the global economic slowdown. Top priorities for '09 will be to:
·
Reduce costs
·
Reduce costs
·
Reduce costs
·
Maintain profitability
·
Gain new revenue
While it is
sometimes difficult to predict the future, there is no question in my mind that
as media agency managers pitch their 2009 budgets to holding company management
in the next few weeks, the focus will be on maintaining profitability in the face
of inevitable declines in media billings and revenues resulting from the global
economic debacle.
The
challenge of course is keeping clients and revenues stable in the face of
operating cost pressures and what will be extraordinarily intense competition
for new business. (New business for one agency=account losses for another; it’s
a zero sum game.)
Maintaining
quality of services, relationships and responsiveness in this environment will
require a skill set that is perhaps rare in the upper echelons of today’s media
shops because leaders appointed in the past few years have been more heavily
skewed toward business development flash and dash vs. the perhaps more mundane
but extraordinarily complex management operations of a modern media agency.
Many new
media managers, coming from small network departments and/or new media may not
be sufficiently knowledgeable about the activities of media buyers for other
media (print, radio, out-of-home). Will they be up to the task of fixing the
train while it’s roaring down the track?
In addition,
the odds are that pressures against agency cost cutting will increase as a
result of changes currently taking place in the overall economy. For example,
many advertisers paid very high media price inflation premiums in upfront
television buys that continue into 2009. If current ad rates decrease due to
the global economic debacle, won’t these same advertisers demand that their
media agencies renegotiate these media costs? Of course, they will and as we
all know, agencies can’t collect a second commission for doing the same job
twice.
How to
restructure a media agency and how I think the business will evolve from here
will be the subject of future postings. Meanwhile, I invite your thoughts,
comments and suggestions.
"What we have here is a failure to communicate." (click on the link about to see video clip)
Congress and the White House tried and failed to stampede the American people into accepting a opaque financial 'bail-out' plan. The failure belongs to the 'inside the beltway' folks who talk only to themselves, lobbyists and fundraisers.
The arrogant parochialism of these folks---and that includes Paulson and Bernanke---led them to believe that they could frighten the people into bowing to the greater wisdom on their elected representatives.
The problem however was that no one seemed to think it was necessary to sell this program to the populace. A bit of an oversight since email to congressional representatives was running 100 to one against the plan. It's amazing it received as many votes as it did because with this amount of support, it would seem that a vote for this bill is tantamount to a resignation from congress.
Now Henry Paulson and Ben Bernanke are I am sure extraordinarily capable folks. But neither is likely to be able to effectively persuade a broad audience of anything. Perhaps they're too smart for us but I like to think that the problem is that they live in an elitist bubble with most of the folks in D.C.
In other eras, the President would use his 'bully pulpit' or brand to endorse and build popular support for a piece of legislation. In this case, however, "W" is a stronger brand in the hotel business than in government or politics.
So, what's the solution? The primary proponents of this legislation need to sit down in a room with a top PR person---borrow a couple from the presidential campaigns---and develop a sales presentation for the bailout plan, a pitch that is persuasive, compelling and above all clear and simple. The PR/communcations folks can give each of these missionaries a role and script to play and deliver.
This may work. But given the weak communications skills of these folks, perhaps they need a spokesperson for this campaign, someone the country has a great deal of confidence in. Any nominations? Volunteers?
Total ad spend reported to be $9.2 billion, up slightly from last year, exactly as I predicted. To achieve this with lower ratings two things had to occur behind the scenes:
Driving these factors is advertiser demand for network television ad time, still the most effective and efficient national ad medium by far in spite of all of the overdone hype about new media.
Of course many people are increasing the time they spend with online media forms. But they're also still gathering around the boob tube when American Idol, Dancing with the Stars, 24, Heroes, etc., air. Are they 'DVR'ing these programs and skipping some of the ads. Sure, that's why Nielsen has instituted a form of commercial rating and the ad community has adopted a form of audience measurement called C3 that factors some of this activity into the ad buying and selling decisions.
In my experience it takes a full generation for a new media form to take solid root. That gives online another decade to grow into its final form. For now, don't count out 'legacy' media: you're still listening to radio, reading magazines and perhaps newspapers, seeing out-of-home ads, etc. That's where most of today's effective marketing action for most advertiser categories is and will be for some years to come.
Continue to experiment with the new forms but don't be bedazzled by them. To sell product today, you may need to use "yesterday's" media.
As I think back over the last four decades of TV advertising that I've experienced as an advertising professional, one thought predominates: A key aspect of the phenomenal power of the medium is that in the past even mediocre ads could effectively sell products and build brands.
We called this intrusiveness. Before the remote control, it took quite an effort for a viewer to get up and to flip the dial, standing around hoping for a better program alternative. Today of course the audience has a great deal more control over the ad exposure and is increasingly exercising it to zip by commercials or avoid them entirely.
The 'good' old days
If we could have back in the '60s, would we have zapped or zipped by
annoying "Ring around the collar" ads from Lever Brothers' Wisk or
"Iron Deficiency Anemia" spots from Geritol? You bet we would. But
those ads worked then, and they spawned a template for the ad industry,
an arrogant presumption that if the agency and client placed an ad, a
passive audience would view it no matter how irrelevant or distracting
it might be.
The medium and its underlying technology have changed dramatically over the years, but advertising has not. It seems to me that the reason for this paradox is that up to now the network sellers have not wanted to bring to the attention of the ad makers and buyers that it's the ads people are zipping by or just avoiding by migrating to other less cluttered media, not the programs.
In fact, it seems to me after this week's network upfront presentations that the networks get it. They recognize the need to focus on our collective "customers" for programs and TV ads, the viewers, their needs, wants, habits, etc. And I thought many of the program offerings -- returning and new shows -- looked quite good.
Fox moves in right direction
That's why I think that Fox's
"remote-free" idea of scheduling fewer ads in some programs is
brilliant -- although way short of what is needed and is to come which
is prescreening of ads for suitability for airing. Why put so much
effort and money into producing and airing fantastic programs only to
have a 15- or 30-second ad drive the viewer to change the channel or
migrate to a DVR or the internet? Makes no sense.
The ad agency industry needs to wake up to the fact that "the new media" are not going to save them from obsolescence; in fact, the new media options give people even more control over the ad exposure experience. More importantly, television in its broadcast and network forms remains the most effective marketing communications medium yet devised and since it is the driver of content for virtually all platforms will be around for many years to come.
Perhaps the ultimate result of integrating ads into programs will be that the ad creation process will be taken over by people who understand what viewers want: the networks and their production companies. Something has to replace the damage being caused to TV by the destructive dinosaurs we call ad agencies.
I began my last post with a story about my visit to Moscow and Beijing in early 1980. During this trip I was informed that the United States had decided to boycott the 1980 Summer Games in Moscow because of the Soviet Union's invasion of Afghanistan, My how things change over time; I read recently that the current Russian government is assisting the U.S. in transporting military supplies to support our invasion of Afghanistan.
I'd like to begin this post with a couple of quotes from Wikipedia's entry for the People's Republic of China:
"Since 1978,China's market-based economic reforms have helped lift over 400 million Chinese out of poverty, bringing down the poverty rate from 53% of population in 1981 to 8% by 2001.
China argues "that the notion of human rights should take into account a country's present level of economic development, and focus more on the people's rights to subsistence and development in poorer countries."
It seems to me that the underlying problem in the West's view of China is that we neither understand nor respect the tremendous strides that this country and its citizens have made over the past thirty years in enhancing the lives of its people.
Who are we to say that if China had offered more 'freedom' to its peoples that it would not have experienced
A stable prosperous China has brought the West a long period of economic prosperity fueled largely by hard working Chinese wage-earners and entrepreneurs.
In a country as large and diverse as China, stability is valued more highly than the right to protest. People who have seen their children grow in health, wealth and education realize that such progress requires a strong governmental infrastructure. The proof of this is in the fact that if open elections were held today the current government in China would undoubtedly win an overwhelming majority of the vote.
The Chinese people have great pride in their long heritage and their current successes. The 2008 Olympics were meant to celebrate Chinese history and modern achievements. There is no question in my mind that these Olympics would also have heralded greater comfort for the Chinese in the international community where they have not always felt welcome.
I think that the American multinational companies who are holding firm on their sponsorship of the 2008 Summer Olympics in Beijing are wise, whatever their motivations. AT&T, Coca-Cola,Visa International, McDonald’s, Johnson & Johnson, anheuser-Busch, Bank of America, Home Depot and United Parcel certainly recognize the importance of China to their businesses. Similarly, I think it's inevitable that China will ultimately recognize the alignment of its own interests with global public opinion.
I traveled from Moscow to Beijing thirty years ago in anticipation of, respectively, the 1980 Summer Olympics in Moscow and a barter program deal in which I brought footage of the 1976 Olympics for Central China Television (CCTV) to air courtesy of my client Coca-Cola.
A small group of us from McCann-Erickson Worldwide also hoped to establish business connections in China that would be the basis for an expansion of McCann into this emerging third world country which was re-establishing trade relationships with the U.S. for the first time in three decades.
Our hosts from CCPIT (Chinese Council for the Promotion of International Trade) were enthusiastic about airing the Olympics footage in primetime. However, they wondered at my request that the rights to this video be compensated for by 'sponsor' identification for my client. Rather, on the advice of some Japanese TV operators who were in China long before us Americans, they suggested that we pay two different amounts for airing the programming we were offering no cost to them:
Working through multiple interpreters, I tried repeatedly to establish a 'quid pro quo' of bartering the programming itself for the time and ads. No sale.
Then I remembered something I had learned during the flight from Moscow to Tokyo en route to Beijing. I had sat next to a Japanese gentleman who has in charge of developing the new Disney theme park in Japan. After I told him the purpose of my visit to China, he told me that there was one thing that superseded all other issues in dealing with the Chinese and that that was the issue of "face"; i.e., neither party in a negotiation could be seen to lose face as a result of an agreement.
As the representative of CCTV rejected my offer a third time, I realized that airing Coke's program for 'free' could be seen as a loss of face for the Chinese. And so, without client authorization or discussing it with anyone else, I put my career on the line and thanked our hosts for their consideration and patience and told them that I wished to offer them Coca-Cola's Olympics footage for free, at no cost in gratitude for their hospitality.
Our hosts quite rapidly accepted and equally quickly suggested that it would be in the interests of the Chinese people to know whom to thank for such programming and that therefore each airing would at no cost carry a "brought to you by Coca-Cola" announcement, exactly what we had been seeking.
Sequential Platform Scheduling may mark the beginning of a new model for the development and exploitation of primetime television programming.
Yesterday at a Newhouse School breakfast, Ken Auletta interviewed Bob Iger, President & CEO of The Walt Disney Company. Some observations based on their discussion:
Only a few weeks ago, during NBC Universal's 'Infront' meeting, Jeff Zucker, President & CEO of NBC Universal, announced a different but similar form of sequential platform scheduling in which the NBC series "Friday Night Lights" will air on
Is this sort of thing likely to dilute the ABC or NBC 'brands'? Iger says not, because people don't tune into brands, they tune into programs. This of course has been axiomatic since the early days of television.
Perhaps building entire enterprises on individual TV programs---merchandising, local versions around the globe---is the new business model for the continued development of primetime network television as a kind of gold standard for TV.
A couple of thoughts and I invite your comments on these as well as the above:
Movies are one of the classic programming genres on which television was built. Theatrical feature presentations and "Movie of the Week" franchises drove high and reliable ratings performance for all three networks for years.
Features and Made for TV movies have in recent years migrated to pay cable, DVD's and a variety of internet ventures. As a result, there may be an opportunity for at least one advertiser-supported network to produce, air and otherwise distribute a new generation of movies for television.
My Movie Network (MMN) will work with advertisers to develop titles specifically designed to reach their audiences, showcase their products and provide multiple merchandising platforms tailored the goals and desires of individual marketers.
(I'm not delusional or actually planning to launch a TV network;Check the date of this post. Seriously, I do think that the production of original movies for television is a valid and perhaps strong strategy for a TV company to pursue in the future.) What do you think?
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