The Original Mad Man

AMC's wildly popular series Mad Men made a spectacular return with its fifth season debut this week. Apparently, Don Draper’s antediluvian approach to media and marketing (and toward life in general) has captured the American public’s imagination.  The payoff for making it through what many found to be an inordinate number of commercial interruptions during the show's second hour was heavy doses of unbridled sex (with a Chex-Mix twist), sexism with a hint of misogyny and a kinder-gentler Don Draper - a guy who proclaims that the client is always right (at least paying clients are).

Arguably the original Mad Man was not immersed in 1960’s Big Apple Go-Go culture. Over a century ago, Campbell-Ewald Advertising Agency Vice-President and native Philadelphian E. St. Elmo Lewis developed what is often referred to as the AIDA (Awareness, Interest, Desire, and Action) Marketing Model to provide insurance industry clients with greater insight into the basis for consumer buying decisions.

In modern media and marketing terms, Lewis’ model is now known as the Purchase Funnel.

The concept of associating the “funnel” model with the AIDA concept was first advanced in 1924 by (Investment Bankers Association of America) author William W. Townsend in his book Bond Salesmanship.

More recently, the introduction of disruptive new technology has driven massive modifications in consumer purchase patterns. Most buying decisions today are based on our use of the Internet as a “utility” - first for purposes of research and often ultimately for fulfillment.

The Lewis / Townsend model is still a useful guide for marketing campaigns targeting the distinctly defined stages of the consumer’s path from awareness to purchase. Even in the rush to redirect marketing dollars toward social media, the Purchase Funnel continues to be widely deployed as the basis for developing successful customer relationship management (CRM) programs. AdAge on line has some insightful analysis.

Consider the irrefutable fact that there is no discernible barrier to entry for an endless stream of competition in the digital media universe. All it takes is a unique user friendly experience for a virtually unheard of start-up to dethrone a market leader (think MySpace and Facebook or Google versus Yahoo). The rapid proliferation of Internet utility service companies targeting consumers is creating huge marketing challenges - not the least of which involve privacy concerns and audience fragmentation issues.

So, how does a business most effectively cut through the clutter to ensure success at the critical initial Awareness Stage in the Purchase Funnel?

Research and experience dictate designing a marketing plan involving both digital and legacy media components. Put simply: the so-called legacy media (broadcast in particular) still represent the most cost effective way to fill the Purchase Funnel hopper with an abundant source of highly-motivated customer prospects (sales leads).

The inimitable capability to reach huge numbers of demographically-specific targeted audiences make radio and television perfectly suited to facilitate the commencement of an engagement process that results in the successful conversion of highly qualified leads into customers.

Digital media services are bought based on impressions and CPM; broadcast efficiencies are determined on the basis of GRP's and CPP. A business’ revenue grows exponentially to its marketing and promotion investment strategy. All are inextricably and measurably interrelated by simple math.

What are your thoughts?

Prescience is critical to finding the Open Ice before your competition does.  It also help to possess thorough knowledge of any rules governing conduct on the field of play. 

As unpredictable as Washington Lawmakers are, it safe to assume that at least two of the 3 branches of government will react to crisis with legislative fixes capable of exacerbating the situation.

Against the backdrop of a chaotic primary season and a long holiday recess, Congress is back at work doing what it does best.  Are you ready?

SOPA Opera

With backing from major American media companies (Coalition Against Counterfeiting and Piracy), the House Judiciary Committee held a series of mark-up sessions this week on the Stop Online Piracy Act (SOPA). The Bill and its Senate counterpart – the Protect IP Act (PIPA) - propose to allow the Justice Department to seek a court order requiring U.S. search engines to scrub certain results from the sites, among other anti piracy measures.  The debate has been framed as a battle over First Amendment Rights between “old” media and crowd-sourced “new” media content providers (like Google, Wikipedia and AskMe.com).  The Obama Administration has signaled a willingness to veto, if necessary.  

House Speaker John Boehner (R., Ohio) told reporters that the piracy legislation wasn't set to come up for a vote anytime soon because "it's pretty clear to many of us that there's a lack of consensus at this point." PIPA has been stalled in the Senate since May but is expected to be on the floor next Tuesday for a procedural vote.

Given the opposing players' stubborn unwillingness to embrace compromise, incumbent politicians are likely to benefit from the lobbyists largess in the way of campaign cash this election year.

Exit Options

Media and Entertainment investments carry inherent risk - not the least of which is getting "trapped" in an over leveraged deal facing both cyclical and secular challenges.  Ask Bain, TH Lee, Crestview Partners, et al.

Increasing opportunities for timely exits is one of the simplest means of mitigating risk, encouraging investment and achieving employment growth. 

Some market watchers predict an uptick in tech and Internet companies IPO’s this year, fueled by the Facebook-effect and potential regulatory changes. Most analysts expect VC-backed IPOs to outpace those from PE-backed firms, considering forecasts for continued volatility.

However, a bill (S1933) introduced late last year by US Sens. Charles Schumer (D, N.Y.) and Pat Toomey (R., Pa.) might jump start renewed interest in the IPO market. The Reopening American Capital Markets to Emerging Growth Companies Act of 2011 seeks to ease the onerous burdens currently imposed on small company IPO’s by Dodd-Frank and the Volcker Rule.

A Crowded Playing Field?

Worried about competition from stand-alone, user-customizable streaming audio services?  SiriusXM CEO Mel Karmazin declares " advantage:  satellite and broadcast radio".  It's all about "no barrier to entry". 

In his Citi Entertainment, Media and Telecommunications Conference key note address, SiriusXM CEO Mel Karmazin somewhat dismissively asserted that starting a streaming audio music service that can be personalized by each user would be a fairly simple proposition for his company (or any other).


Music royalty payments for stand-alone streaming audio services have represented a big headwind on profit margins - far more so than for AM, FM or satellite radio - even for Pandora, the beneficiary of a relatively favorable pay for play royalty deal.  It takes a million plays on Pandora for artists to receive $1,000 in fees.

Signs of increasing friction over royalty payments are beginning to appear anew as core artists like Jay-Z, Coldplay, the Black Keys, and a slew of indie artists and labels publicly resist digital distribution channels like Spotify, MOG and Slacker.  Fast Company reports on questions of business model viability.

The South Park Effect?


Do people actually act on their privacy concerns?

Data from over 37,000 respondents was analyzed by Forrester Research. Forty-four percent of those surveyed said they had not completed an online transaction because of something they read in the company’s terms of use or privacy policy. That’s up from 38 percent in 2008.

Are Matt Stone and Trey Parker much more sacrilegiously influential than anyone ever imagined?

Skate On!

Gratuitous 2012 Predictions

Happy New Year!

Now, I kind of hope that the Mayans were wrong about it being all over this coming December.  

And since I don't know anyone who has actually ever exchanged thoughts with a Mayan, I'm not convinced that its a great idea to make short term plans that accommodate the end of days scenario.


That said, entrepreneurs and their investors do in fact look to the tea leaves (as interpreted by folks far more intelligent than your humble correspondent) for some guidance in plotting strategies to profit handsomely by reecommending emerging business trends. 

So, in an effort to remain relevent with those that choose to follow my musings, here are a few of the more intriguing predictions for 2012 that I’ve come across:

Choose your "-ism" (Opt or Pess)


A group comprised equally of 500 VC’s and VC-Backed CEO’s shared their 2012 predictions on funding, exits, the economy and politics in a survey (Venture View 2012) mounted by the National Venture Capital Association and Dow Jones Venture Source.

Will 2012 be the Year of the Enterprise Software Startup?

The early commercialization of social applications and platforms, big data management and analytics, and business intelligence began a trend in 2011.

A marked decline in the number of employees being issued company-owned BlackBerries has been attributed to RIM’s widely disruptive services outages. Fortune 500 employers appear poised to embrace the “bring your own device to work” concept. But there is precious little enterprise software (i.e. order processing, accounting and customer relationship management applications) currently available for SmartPhone users.

While the CIO community’s faith in the cloud took a hit last year with days-long outages at Amazon and other cloud-based behemoths, Aaron Levie, CEO and co-founder of Box.net admits to still having his head in the cloud.  In his New Year’s Day TechCrunch post Levie envisions cloud-based solutions taking the decidedly boring enterprise software category mainstream.


Forget Tablets – 2012  The Year of the UltraBook?

Last May Intel launched the Ultrabook initiative (the Xeon E5 processor) supporting slimmer laptops that offer longer battery life and faster boot-ups-rivaling the MacBook Air and the iPad.

At least 30 new UltraBooks are set to debut at the 2012 CES (Consumer Electronics Show) in Las Vegas later this month.

Information Week has a preview.
UltraBook News has a few early reviews.

Caveat Emptor: The tech journals are already speculating that Intel will introduce a newer, faster Xeon processor (code name: Ivy Bridge) this spring.


Don’t Fence Me In!


Geofencing SmartPhone apps create a digital perimeter around a location -- which could be a building, school or an entire city -- that enables merchants or others to keep tabs on mobile phone users who cross an electronic boundary. Some apps focus on personal security – others allow marketers to push “location-sensitive” ads to SmartPhoneMercury News.

Shivering ICE's Timbers?


Was Radio Luxembourg the legendary 60's “pirate ship” for “rock-starved” Brits the inspiration for the son of a Cuban Immigrant?

Max Marty’s Blueseed (likely a pun) aims to address the visa dilemma for foreign entrepreneurs with Silicon Valley aspirations. SilconValley.com has details

Your eMail Address as Currency

In advance of its much anticipated Initial Public Offering, Facebook entered into a settlement agreement with the Federal Trade Commission that bars the company from being deceptive about how it uses customers’ personal information, and Facebook is now required to get permission from customers before changing how personal information is shared.


Some estimates indicate the IPO value of the company will approach $100 billion.

By any standards, that’s a whole lot of money.


It was all made possible by the 800 million Facebook users who unwittingly shared their personal information without their explicit consent—all of whom have played a crucial role to make this marvelous payday for Mark Zuckerberg, his investors and his employees.

So, where’s your cut?

As the New York Times reported, even younger users are abandoning Facebook amid concerns over privacy and information overload. Does this evidence the beginnings of a Wall of Resistance to data mining? Or is an entrepreneurial play developing for those with the vision to skate for the open ice.

Monetizing the Value of Your Personal Data

Upward of $2 billion a year is spent on third-party data about individuals in the U.S., according to a Forrester report. Erosion of personal privacy ranks second only to fear over the financial crisis deepening, according to a McCann Worldgroup global study on consumer concerns.

And, while the vast majority of those surveyed indicated they perceived major benefits associated with sharing data with businesses online, many consumers appear to be beginning to realize just how much value to businesses is associated with their personal data.

A slew of new internet startups including (DC-based) Personal and Singly (Locker Project), are betting that personal "data lockers" designed to be the digital equivalent of a bank with security infrastructure in place can offer consumers considerably more leverage in realizing fair value for agreeing to share. The market convergence of cconsumer demand and government regulation could ultimately even compel existing data vendors, like Experian, to adopt the data locker model in order to remain competitive.

 
 
 
 
Best wishes to you and yours for a peaceful, festive and healthy holiday.
 
Paul

Darwin's Digital EcoSystem

Strap on your skates! 
What exactly is that unique quality that separates brands that fall to digital evolution from those that excel?  The ability of visionary leaders to recognize the need for change who then blaze a path toward renewed relevance among a new generation of consumers?

Survival of the Fittest?

Charles Darwin "adapted" this phrase (actually coined by British philosopher and sociologist Herbert Spencer) for use in later editions of The Origin of Species to refer to his Theory of Evolution..

"Fittest" is often misunderstood to refer to the physical sense - as in indomitable. 

Survival of the Most Adaptable would be a more accurate rendering of Darwin's theory.

Digital Darwinism

The demise of once formidable brands like Circuit City, Borders Books, Wherehouse, Tower Records, Pontiac, Saturn, and Palm serve as painful examples of companies that fail to accurately read technological tea leaves.

A Thanksgiving Day Washington Post article defined Digital Darwinism as the evolution of consumer behavior when society and technology evolve faster than some companies’ ability to adapt.

The brands that survive this latest era of cyclical and secular disruption will be those that are best able to evolve through Adaptive Innovation, making for the open ice before the competition is any wiser.

Ketchup on their Face?

And you thought you had post-Thanksgiving ajita?

That pre-TDay Heinz FaceBook only line extension launch hit a few speeds bumps early in the game. But the consumer packaged goods (CPG) giant managed to make lemonade anyway, according to Clickz.

Anybody try this stuff yet?
 
 
In Memorium
 

Outside the world of high-finance, Ted Forstmann was perhaps best known for dating Diana Spencer for a time, and more recently reality show hostess Padma Lakshmi.


Forrstmann was regarded as a philanthropist and a pioneer of the leveraged buyout through Forstmann Little & Co , the private equity firm he co-founded.. Dr. Pepper, Gulfstream Aerospace and Citadel Broadcasting are notable in this respect. He was also chairman and CEO of global sports and entertainment company IMG.

Forstmann passed away on Sunday November 21st at the age of 71.

Condolences to family and friends.

Dawn of the Post App Era

“Skate where the puck's going, not where it's been".


In the book “Total Gretsky”, author Bob McKenzie credits The Great One’s father, Walter with this sage advice. The ability to quickly find the open ice is critical to this type of strategic thinking. Successful entrepreneurs and their ivestors are expert at this.

Dawn of the Post-App Era?

When it comes to mobile investing, seasoned VC’s are thinking tools and platforms, not the next Angry Birds.

Last month during the Annual Silicon Valley App Conference, Jay Jamison a venture partner at BlueRun Ventures indicated how hard it is to zero in on the right investment by opining “I think the bar is raising”.

Jamison says he looks hard for tools and platforms that support the development and deployment of applications.

Somewhere out there Steve Jobs has a Cheshire Cat Grin on his face.

Jobs stubbornly insisted that the widely-used Flash technology wasn’t good enough for the iPhone and iPad, and instead favored the newer HTML5 standard, which is iOS, Android, RIM and MS Mobile compatible.

And HTML5 allows web developers to deliver a better SmartPhone experience than an app . . . without an app. Check your current browser’s (SmartPhone or Desktop) HTML5 supportability rating here.  You may be shocked.

Gone in a Flash?

ZD Net reports (Flash is dead. Long live HTML5) that “Adobe’s love affair with its Flash format has come to an end.” The report goes on to note that Microsoft is bailing on its Flash competitor Silverlight.

Will this result in a huge boost in rates of adoption (market penetration) for HTML5?

One camp argues a slow path to adoption primarily because the HTML5 standards are still in the development stage. The WC3 Working Group estimates final recommendations on standards will be issued in 2014.

But Elevations Partners’ incredibly tech savvy co-Founder and Director Roger McNamee has already made a bee-line for the open ice.  Watch his recent presentation at a Paley Center for Media Conference from FORA TV .

Unlocking Value

A Line Extension Roll Out in the New Media Eco-System


An insanely great concept or product virtually sells itself. It is something so extraordinary that critical masses of people are anxious to be first to spread the word to peers they want to impress..

And all that is necessary is for the originator is to get the concept or product into the hands of a select group of opinion-leaders who are likely to care.

If your product or concept is exceptional, constant social networking - interactive hype – all the new media stuff the “experts” tell you is absolutely necessary really isn’t. Because most everyone who matters (even my octogenarian uncle) is already connected, everybody's online; there are now more cell phones than people in the United States. If an idea or a product is “insanely great”, the public will rush to spread the word for you.

The guy whose last name was the same as what this country needs more of got it!

Brand building is an “S-L-O-W” process.

Everything with enduring worth develops slowly.

Now, I can’t tell you if HJ Heinz has developed an insanely great product-line extension, but their marketing strategy has already proven buzz-worthy.


On November 14th the company will roll-out Heinz Tomato Ketchup Blended with Balsamic Vinegar - but only on Facebook.

It costs markedly more than the high-fructose original and you pay $2 for shipping. But you can bet there are a bunch of budget foodies out there who lust for a sample…. The “anticipation” is palpable. To them, this exotic product blend represents a self-satiating luxury on the cheap that represents an early adopters’ “status” acquisition. Conceivably, Heinz has come up with a formula to market a product that “fans” will love so much that they will be anxious to recommend it to like-minded “friends”.

This is a great example of “Adaptive Innovation” in an effort to elevate a line extension to insanely great status.   This is not a product endorsement, but a tip of the hat to an innovative approach to marketing an otherwise conventional business decision.