IMKTG REPORT November 19 2002

al berrios IMKTG REPORT 11.19.02: Media Bias, The HR Way; more…

THIS WEEK'S CONTENTS ARE:
[1] JUST SAY IT: The State of Advertising
[2] BRANDSTRATEGY: Analysis of Yahoo!'s Strategy
[3] CONSUMERFOCUS: Media Bias
[4] MEDIA: Paying to Watch the Emmys?
[5] MANAGEMENT: The HR Way

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[1] JUST SAY IT: The State of Advertising

>> "The [Comcast/AT&T] merger would 'pose no substantial public interest harm,' said Ken Ferree, chief of the Media Bureau [for the FCC]. 'It doesn't create problems.'

Good morning execs,

I've you've been having difficulty accessing our new site, I sincerely apologize. Effective Thursday, Nov 21, we're on new servers and accessible 99.999% of the time.

COMCAST/AT&T. One out of every 4 or 5 Americans needs this new company for internet access or cable and this is OK? The FCC says that EchoStar/DirectTV is too big, but Comcast is just right? Wow. Big company rule #1: donate heavily to political campaigns and have a serious lobbying presence in Washington. Nuff said.

BAD. ENGLISH. I decided a while ago I wasn't going to make fun of ad agencies, but you know what? This recent rash of 3-words-as-3-sentences slogans is getting outta hand. Remember the days when your tag line actually had to say something about what you do? CEOs, don't let your wives, kids, or tech guys come up with your brand's definition. Sit with them, find yourself an old guy to join you, and brainstorm on the various sentences you can create using the wonderful English language.

AD-TECH. So I went to the opening day of ad-tech yesterday. Met a couple of interesting folks and came across amazing tech. I think that there may be no internet evangelists left on the advertiser side, because all I met were suppliers, not buyers. In fact, things have gotten so bad that even the industry nexus, the IAB's, new board of directors is composed entirely of suppliers. So, is the internet totally off buyers radar screens or has AOL, MSN, and Yahoo made buyers not even consider alternatives?

ISP WARS. If I see another ISP telling me that pop-ups are the scourge of mankind, and that they're going to block them for me, I'm going to strangle one of their what-passes-for-marketing-managers. OK, I get it. Your customers aren't happy with pop-ups. But you know, they're not happy paying twenty-plus bucks to log on either, can you block that? But seriously, it appears that pop-ups, telemarketers, direct spam mail, and even blatant-product-ads-within-TV-shows have become the rallying point for competitors claiming to have the better product. Sure consumers have complained, but I'm sure they've complained about poor access, crappy customer service, and over-bundling of services (creating the perception that there is no other option out there for consumers.) Why aren't you selling that in your ads?

HUMOR. Miss Cleo forgives half a billion dollars in fees

The problem with hyper-competitive tabloids

PR ain't what it used to be

Enjoy the rest.

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[2] BRANDSTRATEGY: Analysis of Yahoo!'s Strategy

They changed their management, bringing in experienced sellers (good), bought Hotjobs (good), changed their privacy policy (bad), redesigned their interface (good), charged for services (good), revamped their search business with pay-per-click deals (good), launched an enterprise business with a major ad agency as a big client (bad), and launched an ISP with SBC (bad). But the question remains, is Yahoo on track to succeed as a viable internet only venture?

BOTTOM LINE: Let's address their bad decisions: changing their privacy policy was a revenue based decision and hurt their credibility (as well as that of the IAB's who endorsed this change and proved their interest in money, not consumers.) Getting into the enterprise biz was a decision to sell their expensive content and extra server space to businesses to make money from it. My issue here is what is Yahoo doing trying to attract businesses when their true pot of gold is with average consumers? And finally, if Yahoo came to al berrios & co. with the idea to launch an ISP, right when MSN 8, AOL 8, Earthlink, and United Online are all spending to attract audiences, my first question is why do you think consumers want access to the web, their content delivered, and produced all from the same company? Yes, simpler billing is practical, but as AT&T discovered, the average consumer isn't interested in bundled service. And as we discussed last week, the majority are too irrational and short-sighted to think of the efficiencies of bundled services. And the minority who are aware of the efficiencies are also aware of their choices. Ultimately, I would advise Yahoo! to NOT have launched an ISP under their brand in this market.

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[3] CONSUMERFOCUS: Media Bias

Consumer confidence > The Media >Advertisers. The arrow on the left represents the choices consumers have in getting their news. The arrow on the right represents information used by Advertisers that they read in The Media.

Consumer confidence < The Media < Advertisers. In this case, the arrow on the right represents press releases and ads. The arrow on the left represents influence.

BOTTOM LINE: What I'm pointing out here is if consumer confidence is ultimately influenced by what The Media reports and Advertisers' decisions to spend or save money is based on consumer confidence, then if The Media always reported positively, or 100% objectively, consumer confidence would always be high, and Advertisers would always be spending. Obviously there are other factors not accounted for here, like the stock market (controlled), and The Government (variable), however, when you analyze where consumer confidence comes from (not how it's measured), you really have to re-consider it's true usefulness in helping you make strategic decisions. Before you take these numbers at face value, call me. I'll guide you through them.

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[4] MEDIA: Paying to Watch the Emmys?

You may have heard about HBO's failed bid to secure broadcast rights for the Emmys from the networks. Aside from the irony of having a network-founded organization selling out to premium cable, it also presents a very serious threat to networks: what were to happen if the Oscars or the Superbowl were on premium cable? We already see almost all sport broadcasts in the hands of cable. And MTV produces one of the most essential awards ceremonies around. So are we seeing networks losing out to cable because they can't afford to air relevant programming (instead of mass appeal programming) or because viewers are no longer interested in network content? Sure networks reach the whole country (106.7 million households according to Nielsen), but that's because it's free and any TV with a wire sticking out of it can access it. When you start charging for your content, and viewers pay, like cable, then we have a situation where viewers clearly want your product and a network threat to ban the awards means next to nothing.

BOTTOM LINE: From my research, I've found very little free data on what premium cable viewers are like. So, my firm recently completed a "Study on the Premium Cable Viewer" and we discovered that out of the top 5 shows mentioned by premium cable subscribers and non-subscribers, only one, The Simpsons, (#2) was not on HBO. ('Friends' came in at #6). This tells me that premium cable viewers are clearly conscious of the value they're paying for in their content and would watch the Emmys if aired on HBO. Obviously, there are two different business models here, however, the fact remains that having mass-audience, general interest content like awards and sports on pay-only content distributors would work and should these content distributors decided to allocate more resources to securing such content, the consumer tells al berrios & co. that the networks would lose valuable, high-income, audience members.

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[5] MANAGEMENT: The HR Way

During rough times, public companies face shareholder pressures to layoff workers. But why? Where does the perception that laying off the people that contribute knowledge to a business helps companies survive? A recent study conducted by a consulting firm reveals that there is still demand for consumer products, if companies spent more on innovation, which consumers haven't seen more of in at least 2 years. So, the perception that laying off the human capital essential for innovation isn't correct. Yes, payroll is your biggest expense. And technology helps automate almost everything. This isn't an argument for keeping redundancy, but for planning cuts in staff perpetually by assessing in depth each worker's contribution to meeting consumer demand, rather than a quick and dirty cuts that leave your firm weak for an upturn.

BOTTOM LINE: Now the question becomes, how does HR utilize consumer insights to evaluate who stays and who goes and negate shareholder concerns about excesses in payroll? Every job at your firm can be traced to the bottom line. It's not inhuman, it's preventing a marketing VP from green-lighting a party that will not translate to a sales increase for the firm. The primary reason companies engage in marketing is to increase leads 71%, followed by brand awareness 68%, and supporting sales 55%. Not in being cool. HR must be your repository for employee skills, accomplishments, and future strategic use and believe it or not, consumers can help you discover these qualities.

Disclaimer: The recommendations, commentary and opinions published herein are based on public information sometimes referenced via hyperlinks. Any similarities or likeness to any ideas or commentary from any other sources not referenced is purely coincidental. al berrios & co. cannot control any results occurring from advice obtained from this publication nor any opinion(s) conveyed by any reader of this publication.

(c) 2001-2005. All Rights Reserved. al berrios & company, inc. Published by al berrios & co. This Report may not be reproduced or redistributed in any form without written permission from al berrios & co., subject to penalty.

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