SOCIAL NETWORKS NOTWORKING ?

If you haven’t heard the news lately, Ted McConnell, general manager-interactive marketing and innovation at Procter & Gamble Co., suggested "What in heaven's name made you think you could monetize the real estate in which somebody is breaking up with their girlfriend?"

Wow! That can set the social networking gurus back a few months, if not years.

What can we make of that statement? It suggests a serious look at the channel as an intrusion by advertisers who believe that commercial messages in the midst of a conversation between friends are okay.

When marketers hijack conversations, instead of creating their own environment, it doesn’t do them any good. While MySpace, YouTube, Facebook and the like can offer a potentially valuable space to play in, an assessment of the value marketers provide, relative to the perceived intrusion (and sometimes backlash), needs to be evaluated.

One of the better examples for the use of marketer-generated content points to Johnson & Johnson’s Health Channel created for YouTube. Over the last 3-4 months J&J created sixty-four informative videos, generating over 226,000 views … all without commercial overlays. The most viewed focused on teen obesity, an animation of cardiovascular disease (likely used by doctors for illustration) and Olympic athlete profiles. Those most discussed, followed the most viewed with the addition of ADHD in kids. The videos make you feel good and, more importantly, provide a valuable service to those seeking information. I can also argue that it provides a lift in positive awareness for J&J.

Bravo J&J.

THE WINDS OF CHANGE

There is only one constant. Change.

The world at large, its people, nature, the environment and “even” the business of advertising is not insulated from it.

Change happens….sometimes for the greater good and sometimes for a humbling experience. Recent events in the financial world are forcing many of us to navigate what is amounting to a sea change…. a transformation that will affect our global economy and ultimately the fortunes of marketers, their agencies and the media channels we work with.

We are just beginning to hear. Automotive marketers will slash budgets and some will disappear entirely. GM is trading at $2.75 a share with a market cap of $1.6 billion! Banks are swallowed whole by other banks. American Express, for fear of its ability to continue in its present state has transformed itself into a holding bank.

Consumers are retreating, opting out of purchases that carry long-term liabilities. And our government will wind up spending trillions of dollars to support the very institutions that created the mess we are in today. And when those institutions cannot repay the government, guess who gets to hold the empty bag?

The Obama administration’s platform is all about change. Here are just a few of the changes that will likely affect the business of advertising during his term.

• Corporate tax deductions for advertising will be scrutinized and supported by a bill to exclude it as an expense. The Association of National Advertisers is already monitoring moves in this direction.

• As one of two countries on the planet that allow Rx advertising for new products, look towards a policy that will disallow the practice for up to 12 months, stripping billions of dollars out of the advertising pie.

• Placing the issue of privacy, personal data collection and utilization under a microscope, the effect on the ability of media channels to target ads based upon behavior will likely diminish.

• The FTC and the FCC will secure a broader power base to enforce mandates on ad guidelines and the ability for media channels to converge through consolidation.

The good news is that as the winds of change shift as well. We are part of business that is resilient and always bounces back. When tobacco advertising was legislated off the airwaves in the 80’s, panic set in for many agencies …. but they all bounced back. When the Internet bubble burst in 2000, it came back stronger. And as tough as it may sound, the best advice is to try and stay in the game.

ARE YOU SAFE?

From time to time I will be conducting a poll of the readers of this blog on topics that are timely and industry related.

Here's the first.

Our industry is facing layoffs coast to coast, especially in the automotive and financial sectors. It will likely spill over into the retail sector during the holidays.

Tell us how secure you feel in your job.

GOOGLE .... NYET!

Google’s ability to conquer all is being tested.

The recent announcement that the Yahoo! deal for the search business will not go through and the less, but not insignificant, push-back buy Russia’s FAS preventing Google from the purchase of the Begun Ad Agency for $140 million, signals an uphill climb for the search giant outside the US.

FAS Russia is an authorized federal executive power body responsible for prevention, restriction and suppression of monopolistic activity and unfair competition. It has become one of Russia’s most powerful agencies. Notwithstanding the agency’s mandate to watchdog such deals, it is also believed that Putin may have blocked the deal, recalling Sergey Brin’s comment that "Russia is Nigeria with snow, ruled by a gang of crazy cowboys."

Add to the equation that Yandex (the leading search engine in Russia) dominates the market by a wide margin and we see an emerging pattern …. One that dictates a more conservative approach tempered by a unique understanding of cultural needs and a sensitivity to the local political climate.

In northeast Asia, particularly in Korea, Google accounts for less than 3 percent of search page views, giving way to NAVER with a 74 percent market share for search.

As Google reaches out to international markets to maintain growth while, at the same time the US economy begins to stall, the giant will soon come to a crossroads. Whether forging straight ahead or taking a strategic turn to manage a maturing company, much of Google’s future growth will depend on its ability to cooperate with local governments on a global scale.

JUST DO IT . . . . VOTE!

This blog has never taken political sides .... and likely never will. This presidential election will perhaps turn out the largest number of voters in this country's history. Be part of that history. Take the time to stand in line and cast your ballot to make a difference. One vote can make a difference. Teach your children by example.

GROWING UP GOOGLE

Over the last few years, Google has experienced tremendous growth. As a result, investors rewarded the company with a rapidly growing stock price….until recently.

And, as often happens with growth stocks, Google’s stock price grew faster than earnings, with the expectation that management would deliver on investors’ rising expectations…. until recently.

The year over year growth in monthly revenue for the company has been slowing and is a sign that the brand is maturing. Google's current 31 percent rate of growth may still be the envy of many companies, even though it represents a slowdown from previous years. Google grew at 56 percent in 2007 and 73 percent in 2006.

With even slower growth expected, Google is beginning to pull back on expenses.

The “news” that Google is shrinking employee perks is indicative of the maturation process. According to an internal memo, Google is instituting slimmed-down cafeteria hours and food selection as part of an effort "to find areas where efficiency can be improved."

Very often, slowing growth can lead to an erroneous interpretation …. that the brand is in trouble. Not so. Fundamentally, maturing brands like Google cannot grow as quickly as new ones.

Expect to see further “efficiency cuts” as the brand comes down to earth, and as Q4 and Q1 2009 promise to be much weaker, settling the stock price to a mature and more responsible $280.

ON THE WRONG SIDE OF THE FENCE

The economic forecast for the nation, trickling down to the business of advertising, has many C-Level executives maneuvering to save the bottom line.

Follow this link to my commentary at MediaLifeMagazine . . . . why the collective wisdom of Wall Street's analysts is wrong.

THE UBIQUITOUS PERSUADERS

The rollercoaster ride we are on in the financial markets will soon ripple through our own industry. How it will affect each and every one of us is, at best, a guess for the moment.

Layoffs are, of course, on top of everyone’s mind. Layoffs are NOT, however, the only option in the weeks or months ahead. The cost of unemployment benefits, severance packages, re-hiring and retraining when the turn-around comes is not the wise choice to make. The disruption in your business and the potential loss of client satisfaction should be avoided.

Solution: Spread the pain. Instead of cutting jobs, cut compensation across the enterprise; cut hours or days. Many employees would welcome the opportunity to advance other interests or spend more time with families.

The best advice I can give is to hang tough and stay in the game.

The clip that follows, from the 1947 film The Hucksters, best exemplifies the importance of “staying in the game” … the concept of frequency, driving home a message. The underlying message here is for CMOs to hold firm on ad budgets or risk losing market share. Many would even argue that the best time to gain market share is in a down period. The clip is courtesy of Nick Brien, President and CEO at Mediabrands, IPGs media holding company.

The title of this post, The Ubiquitous Persuaders, was borrowed from George Parker, a Creative Consultant/Writer who has recently published his latest book, MadScam. He is currently working on his new book due in time for the Holidays …. The Ubiquitous Persuaders, a 50-year update on Vance Packard’s The Hidden Persuaders.

I HAS SPOKEN !

This past week we’ve witnessed unprecedented swings in global financial markets affecting both professional investors as well as the general public, especially those with investments in 401Ks.

It’s far from over.

General Motors is trading at 1950 prices while Ford Motors is less than $2.00 per share. The feds bailed out AIG for upwards of $120 billion while a government bailout package of $700 billion is expected to “rescue” all other failing banking firms.

Reality check. How can we expect $700 billion will cover the mounting losses yet to be announced when AIG alone accounts for $120 billion? AIG is just the beginning. GM is on the verge of bankruptcy. Wachovia is bought by Wells Fargo to avoid failure.

Where and when will it end? Let’s take a lesson from history, which often tends to repeat itself.

In the early ‘50s post-war era, the country was facing the possibility of a recession. Charles Wilson, CEO of General Motors announced “What’s good for General Motors is good for the country”. In 1953 Dwight Eisenhower appointed Wilson Secretary of defense pointing the country to a “war economy”, a semi-command type economy which is directed by corporation executives, based on military industry, and funded by state social spending …. in order to “save” the US from a depression. This defense strategy created jobs and shored up the country’s economy. The arms race ensued and the cold war era began.

With little hope that the $700 billion package will hold back the dam, we should expect and be prepared to return to a “war economy” as the domestic and global markets fail utterly like so many dominos. As a result we will see the beginnings of yet another arms race. Only this time we have many more world powers in the game as well as rogue nations threatening to enter the race as well.

The complexity of global market swings in financial markets, increased plays for sovereignty, political polarization in the US and global terrorism are creating a perfect storm of unprecedented proportions.

In the 1953 comic strip Li’l Abner, Wilson’s line was modified by Al Capp’s character, General Bullmoose, to read …. “What’s good for General Motors is good for the USA”.

Today, what’s bad for the USA seems to be bad for General Motors.

We will survive the trials we are going through, but the course we take to get through this mess will be very different from that which we are led to expect.

To borrow yet another phrase from Li’l Abner’s Mammy Yokum …. I has spoken!

GOOGLE'S MIS-DIRECTIONS

The following edit captures the essence of Google's intentions over time. With thanks to the current issue of Wired Magazine and Lore Sjoberg.

Few companies set out to do bad deeds, but most won't rule them out. Google was supposed to be different. When Josh McHugh profiled the corporation in January of 2003, it had one clear and concise rule: "Don't be evil". Ah, well, times change. CEO Erick Schmidt recently "clarified" that policy saying it was simply meant as a conversation starter. "we don't have an evil meter," he groused. Here, you can borrow ours!

Philanthropy: Creating a foundation devoted to fighting poverty, researching renewable energy, and protecting the environment. Two can play at this game Mr. Gates. Meter reading +7.1

Coddling Staff: Establishing on site day care for lil' Googlers as an employee perk. (Memo to HR: Keep eyes peels for particularly bright toddlers). Meter reading +5.3

Moral Triage: Giving Brazilian police access to private photo albums on Orkut to assist an investigation on child pornography. The lesser of two evils is still pretty lame. Meter Reading -2.4

Immaturity: Responding to Privacy International's last-placed ranking of Google with "U R BIAS!" Meter reading - 4.8

Screwing Staff: Raising the cost of on site child care to ridiculous levels in order to have the best day care on earth. $57,000 per year. Seriously, Sergey. Meter reading -6.7

Censorship: Instituting key word filters per request of the People's Republic of China. Further "clarification": Google company policies apply only within the continental US. Meter reading -8.3