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

JUST BECAUSE . . . .

As one partial to pets, especially of the canine variety, this commercial struck home. Kudos to the creators and their agency, Smith Brothers Advertising, a feisty group based in Pittsburgh.

Director - Michael Killen, Animal
Producer - Nancy Richert, Animal
Executive Producer - Kathy Dziubek, Animal
Director of Photography - Stephen Hunter
1st A.D. - Erin Killen
Gaffer - Jeff Vandermolen
Key Grip - Terry Shirk
1st A.C. - Colin Sheehy
VTR- Nathan Voltz
Dog Trainer - Christin Bummer
Dog Consultant - Nicole Larocco, Animal Friends

Creative Director - Lindsey Smith, Smith Brothers
Creative Director - Bronson Smith, Smith Brothers
Writer- Cathy Bowen, Smith Brothers

Editor - Beth Voltz, Animal
Original Music - Rob Deaner, Market Street Sound
Animator - JIm Kreitzburg, Animal
Animator - Michael Killen, Animal
Finishing - Allan Stallard, Animal
Colorist - Jeremy Sawyer, The Syndicate
Processing - FotoKem
Camera, Lights, Grip - Dan Doyle, Light Speed
Photographer's sweep - Jay Verno StudiosFilm - Media Distributors

Link to Smith Brothers

Link to Animal Spots

LAUGHABLE PREDICTION

Everyone’s buzzing about Google’s entry into the cell phone market, pitching itself against Apple's iPhone.

Tech analysts streaming out of the woodwork predict the Android platform will capture four percent of the smartphone market-share in this fourth quarter.

Bold predictions that will go down in a “blaze of glory”, Bon Jovi style.

Initial comparisons between the platforms suggests par value. Deeper investigations, however, reveal significant drawbacks to unsuspecting G1 phone buyers.

The G1 does not offer business e-mail security, severely limiting initial expansion into the business market.

T-Moblie, the G1 carrier is a tier-four player in the market with only 31 million subscribers. Coverage is limited to urban markets and only 21 markets maintain 3G availability compared to AT&T’s 200 markets. Sorry, Governor Palin – there is no coverage in Alaska, so you won't be able to hear Russia either.

Google’s decision to go with T-Mobile defies logic …. at first glance. Taking a lesson from Apple’s launch of the second generation iPhone and the inventory problems it encountered, Google’s strategy may well be centered upon a soft launch through a limited (read handicapped) coverage carrier generating an initial trickle in sales while the giant irons out its bugs. Sales will not surge until Google moves to a first tier player, likely to be Verizon. A smart, if not brilliant, strategy.

The G1 phone’s Taiwanese manufacturer, HTC, is a relatively new brand name in the US market (although it manufactures many of the private label phones now in use) and maintains a rock-solid reputation for its products. Cher Wang, its chairwoman, has positioned the company for significant growth beyond its already stellar reputation. Look for the company to begin its branding effort here soon.

So much for the analyst’s predictions. Google will secure a fair share of the smartphone market …. but not until the third or fourth quarter of 2009.

ADVERTSING WEEK - LIFT-OFF

Having braved today's numbing traffic gridlock, with thanks to the UN General Assembly convening, I attended several morning sessions at Advertising Week .... and there appears to be a decided shift in media thinking taking place.

While the focus of most sessions was the seesawing market and the economy, there was an underlying buzz that suggested the consumer is now in control as the “ultimate integrator” according to Nick Brien, CEO of IPG’s Mediabrands. A more agency-centric view by Sarah Fay, CEO of Carat believing that as agencies become more adept at targeting, specialist services will erupt, developing strategies that are bolted together in “Frankenstein” fashion. Irwin Gotlieb, CEO at Group M, not to be left out, suggests the identification of consumer intent and the ability to act upon it is key. Finally, Andrew Robertson, CEO at BBDO Worldwide turns to the sandbox, watching how kids interact as a predictor of future media habits.

While these and other media and agency luminaries exemplify best-of-breed thinking, insisting it’s all about the consumer and the data, they are not yet themselves fully integrated with their own client’s businesses to have a real impact there.

So who’s driving the bus?

Are the agencies leaders or are they followers? Ask just about any media channel representative. While the agency insists it be included in any direct client interface (and they bristle when not included), they continue, for the most part, to mine the old mine and will continue to do so until the canary dies. The media, on the other hand, prefer to deal directly with clients simply because they can activate a strategy, moving from metrics (upon which we are all too heavily focused) to marketing outcome as a success measure.

Agency behavior must change if they are to survive in some fashion. The media channels and the data aggregators are quickly taking the wind out of the agency sails and will displace them in the short-term. Long-term, agencies run the risk of replacement if they don’t truly incorporate the process of idea integration into their tool chest.

As Wenda Harris Millard, President and Co-CEO of Martha Stewart’s media empire suggested … “The power seat will belong to those that have insight into the consumer.”

ONE DAY MORE - NOVEMBER 3, 2008

The final Broadway performance of Les Miserables was on May 18, 2003.

The video performance that follows is a brilliant execution with a unique twist that plays off the Presendential race.

Note the date on the opening credit.

Kudos to the director, JD Wlash and UltimateImprov.

A MODEST PROPOSAL - EAT THE AGENCY

I’m speechless. At an MIEG (Media Information Exchange Group) breakfast this week, Brian Reich, co-author of Media Rules!, launched into a rationale for television networks taking over the full service functions of ad agencies.

What planet did this kid come from??

The rationale and the example he uses to make his point is so far off base, it’s painful to listen to and watch him. He seizes on his need for an SUV with certain requirements that cannot be had with the information the agencies (make that the middlemen who know only half of what they should know) communicate through the media channels. SUV?? Brian, have you been reading the papers lately or watching the news? I know someone who has a bridge for sale as well.

His logic is so very twisted, it defies logic itself. It’s obvious this wunderkind has no clue. Maybe he should work for Google.

His bio states: “Brian has spent much of his life working in and around politics, including helping to direct dozens of campaigns across the country.” THAT explains it!

Frankly, I’m surprised Ad Age gave him a platform. It makes for a good laugh though.

Follow this link to the video (you must click on his thumbnail for the 9/9 clip). Comments welcome. And please don’t suggest I read his book … he obviously couldn't have written it alone.

Color commentary aside, I understand Brian is a principal at echoditto, a communications company whose work with online communities is to be applauded.