TARNISHED CROWN

Launched just before Christmas 2006, HallmarkMagazine.com provided a web platform with promising quality content directed largely to a female audience (35+). Sadly, less than three years later, Hallmark made a decision to cease publication of both print and web versions in light of “difficult economic times”.

Pulling the plug on a publication that exhibited healthy circulation growth (the print version grew from 400,000 to 800,000) coupled with a steady increase in ad pages baffles us.

Donald Hall, Jr., Hallmark’s CEO said that despite the favorable response, the privately held firm “cannot justify continued investment in the magazine at a time when we must focus our efforts and resources only on those projects that will lead to long-term profitable revenue growth”

Huh?? Read that again. The magazine doubles its growth while others slide and he doesn’t consider that a wise investment of resources? What remains is Hallmark.com, an e-commerce site selling physical cards and Hallmark trinkets.

Cards that are delivered by “snail mail”, a lopsided strategy offered to a digital audience, makes less sense than shuttering the magazine. Hallmark simply does not understand its future market. We suspect that this brick and mortar company will eventually revert back to the safety of its stores, abandoning the digital arena altogether.

From the leadership at Hallmark ….

“Into the Future” …. Back to the Past

“While the next chapter of Hallmark's history is yet to be written, as the third generation approaches the company's centennial, Hallmark is both extending the brand into new businesses and infusing already-successful product categories with innovation. Like the family leaders before them, Don and Dave Hall continue to ensure that the essential human need to connect with others is fulfilled by the products and services that Hallmark offers – whether it is greeting cards, television shows or future opportunities yet to unfold.”

JC Hall (founder) must be turning in his grave!

The Halls (CEO/Center)

PERMITS AND PERMUTATIONS

How will marketers that rely on the housing market fare in 2009 and beyond? That we are in a housing slump is an oversimplification of the severe consequences the economic tsunami we are attempting to ride out will have on the fortunes of many companies.

Home Depot, Lowes, appliance manufactures (Sears, Whirlpool, etc.), lumber producers, home furnishings (Bed, Bath and Beyond, Pier 1), construction aggregate companies producing concrete, asphalt, etc., and construction tool makers (Black & Decker) all face a pull-back in marketing and advertising dollars as housing permits take a nose-dive.

Those companies that, conversely, benefit from the downturn will likely be the real estate investment trusts. These companies own and operate apartment communities, which offer consumers an alternative to home ownership. If the number of new homes built decreases, demand for apartments and other rentals could increase as a result. Equity Residential, Archer-Smith Trust and Avalonbay Communities are a few REITs that play in that arena.

There are no wrong or right directions to take until the crisis ends. Many suggest inaction is the best action.

This headline today: “New home construction falls to annual rate of 466,000 units in January, record low” is not good news.

The chart that follows tracks housing permits before and after recession peaks (current and July 1981) for an eighteen month period. What is significant is the dramatic downward and opposite shift in housing permits for the current recession. While current indicators such as employment behave in similar patterns to other recessions, housing permits show a precipitous movement in the opposite direction.

What this anomaly suggests for the aforementioned marketers is anyone’s guess. With a certain degree of certainty, we can acknowledge a downturn in ad spending.

Click to enlarge

BACK EIGHTY YEARS TO THE FUTURE

“There came a Wednesday, October 23rd, when the market was a little shaky, weak. And whether this caused some spread of pessimism, one doesn't know. It certainly led a lot of people to think they should get out. And so, Thursday, October the 24th -- the first Black Thursday -- the market, beginning in the morning, took a terrific tumble. The market opened in an absolutely free fall and some people couldn't even get any bids for their shares and it was wild panic. And an ugly crowd gathered outside the stock exchange and it was described as making weird and threatening noises. It was, indeed, one of the worst days that had ever been seen down there."

"There was a glimmer of hope on Black Thursday...About 12:30, there was an announcement that this group of bankers would make available a very substantial sum to ease the credit stringency and support the market. And right after that, Dick Whitney made his famous walk across the floor of the New York Stock Exchange.... At 1:30 in the afternoon, at the height of the panic, he strolled across the floor and in a loud, clear voice, ordered 10,000 shares of U.S. Steel at a price considerably higher than the last bid. He then went from post to post, shouting buy orders for key stocks."

"And sure enough, this seemed to be evidence that the bankers had moved in to end the panic. And they did end it for that day. The market then stabilized and even went up."

"But Monday was not good. Apparently, people had thought about things over the weekend, over Sunday, and decided maybe they might be safer to get out. And then came the real crash, which was on Tuesday, when the market went down and down and down, without seeming limit...Morgan's bankers could no longer stem the tide. It was like trying to stop Niagara Falls. Everyone wanted to sell."

"In brokers' offices across the country, the small investors -- the tailors, the grocers, the secretaries -- stared at the moving ticker in numb silence. Hope of an easy retirement, the new home, their children's education, everything was gone."

Sound familiar? There is an eerie resemblance in this editorial quote from the November 8th 1929 edition of The World to today’s rush of the Obama administration to shore up worthless assets with future taxpayer dollars. We have yet to learn from history … yet it always repeats itself.

The photos that follow juxtapose 1929 to 2009….admittedly we are on the brink of a depression, blindly ignoring the warning signs.

NEWSPAPERS, iPODS AND .... SHOES?

At the end of this month, Google will have shut down its obligations to those marketers and publishers that opted to run with the Google Print Ads service.

While the search giant blames the economy and the spiraling downturn in print revenues, it’s no wonder that the digital baby, now a teenager, had no clear understanding of the process or the vision necessary to navigate the analog waters.

This failure was not so much a product of the environment as much as it was the hubris of a company that believes it is the savior of all things media related. The first domino has fallen as we wait for it to topple the next – Google Audio.

By no means are these actions to be taken as triggers for the demise of either print or radio. Both are strong viable media channels that are ever so slowly adapting to a digital world. That they will catch up in time to successfully morph is yet to be seen. Chances are they will as they manage to forge their business models to a new order.

Newspapers will not go away. Neither will magazines or radio. Delivery formats may change, and to think otherwise is ludicrous. Television echoed the demise of terrestrial radio as is Sirius/XM doing today. Cable did the same for the major networks. Yet all of them are still playing in the same (although more crowded) sandbox.

We are all inundated by the embarrassment of riches in the form of choice. Some of us are complaining. I, for one, like to have the freedom of choice. If I want to pick up a newspaper, ruffle through its pages and perhaps tear out an article, fine. I don’t always care to read the New York Times online, thank you. When it comes to listening habits, I often prefer the sound of my local hometown station (population 7,800) than that of a nationally syndicated, canned feed.

Riding Metro-North from Massachusetts to New York’s Grand Central the other day, a couple with a child in a stroller occupied the seats next to me. The child, who was just about to turn two, was holding an iPod in her hands, intently watching a video while manipulating the angle and ear buds. Not yet two years old!!!! Be prepared. Our children and grandchildren may soon be yearning for the iPod as new technology embedded in all manner of media, driven by eye movement replace that which is WOW! today.

Odd .. how new technology makes current technology obsolete literally overnight. But the newspaper survives.

Can an iPod fix this??