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October 30, 2003

Thursday, October 30, 2003. Job

Thursday, October 30, 2003. Job Applicants Submitting SAT Scores Is Dead Wrong.
A story in the Tuesday, October 28, Wall Street Journal with the headline "More Employers Ask Job Seekers For SAT Scores" really pissed me off. Not the story, which was well written by reporter Kemba J. Dunham in the typical humanizing Wall Street Journal style. Dunham told the story of Donna Chan, a 23-year-old Wagner College graduate who, "Since Ms. Chan started looking for an entry-level job in financial services more than a year ago, she has repeatedly stumbled over a common requirement for many of these positions: a combined SAT score of at least 1300 out of a maximum of 1600." The story goes on to tell about Ms. Chan's SAT scores and her 3.9 grade-point average and her difficulty in finding a job with a less than 1300 SAT score.

Dunham goes on to write, "A number of ads placed by recruiters and staffing firms set clear SAT goals. Consider this recent ad on HotJobs.com for an entry-level, investment banking position: 'Minimum expectations include and overall score of 1350 on the SAT's...You will be required to provide official scores and transcripts, so please do not respond if you do not meet the aforementioned requirements.'"

Purely coincidentally, I received the following e-mail on 10/29 from a colleague of mine at the University of Missouri School of Journalism, where I hold an endowed chair and teach online courses: "The graduate faculty senate is currently considering a proposal that would allow schools to determine whether entering graduate students would be required to take the GRE. Currently, all grad students are required to take this test; it is a campus-wide requirement, first instituted campus-wide in 1969.

Several programs, for example music, have indicated that the test is of little to no help to them in deciding who to admit. Others, like business, rely more heavily on tests that focus specifically on that discipline.

Current evidence indicates that the GRE has many of the same problems as the SAT--in other words, results appear to be biased against women and people of color. Suzanne Ortega sits on the national GRE board and can provide more information on this portion of the debate."

When I was on the Graduate Admissions Committee of the Journalism School, we did a study that covered many years and found that there was absolutely no correlation between GRE scores and performance (grades) and success in the rigorous and selective Journalism School graduate program. Some selective colleges, including some Ivy League colleges, have recently announced that they would no longer require SAT or ACT scores. If students take these tests, then they could include their scores, but the scores would not necessarily be looked at or considered. Obviously, these colleges had discovered what we at the Journalism School had discovered, that GRE and SAT scores meant little and were clearly discriminatory against minorities and women.

I'm not exactly sure why the SATs and GREs discriminate against women--maybe it's the math section of the test--because I know for absolute certainty that women, in general, are much smarter than men, especially in the area of emotional intelligence, which Daniel Goleman in his brilliant books Emotional Intelligence, Working With Emotional Intelligence and Primal Leadership claims accounts for about 80 percent of success in business. People smarts is what counts in business, not test smarts.

I think what is happening is that HR Departments and HR professionals, who have taken over the function of recruiting and hiring in many companies are pulling the standard HR trick of covering their asses. They recruit people and advise on hiring people based on not making a mistake rather than on hiring based on strengths. If someone doesn't work out, they can always say, "It's not our fault, we required 1300 SAT scores." If you have ever dealt with bureaucratic HR departments, you know that nothing is ever their fault. Some companies are even stupid enough to let the HR people do the actual hiring. Next thing you know, they'll be running the company. But in a sense they are running companies' futures by their restrictive, exclusionary, and moronic recruiting practices at a time when most companies pontificate about the importance of diversity and of promoting women.

Any company that says it wants diversity and to give equal opportunities to women and that requires applicants to submit SAT scores is hypocritical at best and probably mendacious. Such companies are passing up potential superstars like Bob Pittman who never went to college and, therefore, didn't take the SATs. If you did an analysis of superstar business people, artists, teachers, politicians, and clergy who didn't go to college or had less than 1300 on their SATs, it would probably look like a Vanity Fair cover of the nation's elite success stories (if they could get a picture of 100,000 people on the cover).

The only thing the IQ tests, SATs, and GREs test is a person's ability to take those tests. The tests don't measure intelligence, emotional intelligence, or, most important, motivation. There is no adequate paper-and-pencil test for motivation. The best way to assess intelligence, emotional intelligence, and motivation, is in a personal interview conducted by an experienced interviewer. And by an experienced interviewer, I mean someone who is an expert in the field (the hiring supervisor, not HR), who has conducted hundreds of interviews, and has seen the on-the-job performance of those interviewed and hired. If you are interested in learning more about how to interview people, go to my Web site, in "Papers by Charles Warner" link, and read the "Hiring Workbook" and view the presentation "How to Hire the Best People."

Finally, if you work for a company that requires SAT scores from job applicants, point out their hypocrisy. If you're looking for a job in a company that requires them, punish that company by not applying--it doesn't deserve you.

Posted by Charles Warner at 10:57 AM | Comments (0) | Print |

October 26, 2003

Sunday, October 26. Age

Sunday, October 26. Age Is My Friend.
When I was ten years old, I remember that I desperately wanted to be older--16 so I could drive a car. And then when I got 16, I wanted to be older--18 so I could drink legally. Way back when I was that age, the legal drinking age was 18. Then, when I got to in my late 30s and 40s, my attitude changed and I wanted to be younger. All my good friends, Russ Barry, Neil Derrough, Bill Grimes, John Lack, and Bob Pittman were from four to 21 years younger. I felt like an old man.

But while I watched the World Series this last week I was reminded that age is my friend. Jack McKeon is 72 and he did a brilliant job of guiding his young Florida Marlins team to a World Series win. I am about a year younger than McKeon and was proud that somebody even older than I am was still working and was at his peak. In a story in the Tuesday, October 21, New York Times titled "McKeon Still Open for Business, at 72," there was a takeout headline that read, "Treating major league players as if they're his kids, and it motivates them." The story told how McKeon loved his players, encouraged them, and convinced them that they were winners. But like the wise parent he is, his love was tough love--love mixed with discipline. McKeon knew what was best for his team, and the players listened to him and played magnificently for him because of love and respect for his wisdom.

Contrast McKeon's management style to that of Grady Little, the Red Sox manager who left his pitcher, Pedro Martinez, in the final game of the Yankee-RedSox playoff series when the spoiled Pedro said he wanted to stay in the game. Grady had spoiled Pedro and didn't want Pedro to be angry with him. He wanted to be loved. Little is 20 years younger than McKeon. Perhaps he needs 20 years more experience to know that it is more important to be respected than loved, to give his players tough love and discipline, and not to be their friend, but their parent who knows best.

A quote in the Times story from one of the Marlins players read, "He doesn't baby any of us," Beckett said. "He treats us like we're his kids. He treats us like--when we are not doing what we are supposed to do, he treats us like we're being punished. That motivates some of us." It obviously moitvated Josh Beckett, the 23-year-old pitcher, with only three days rest, who threw a magnificent five-hit shutout against the high-paid and old, tired Yankees.

I think that's a good model for managers--treat those who work for you like your kids. Love them. encourage them, but discipline them and don't spoil them. Set high standards for them and expect that they will live up to them--accept no less than their best effort, and you're likely to get it.

Also, this weekend Dick Vermeil will lead his undefeated Kansas City Chiefs against the Buffalo Bills. Vermeil is following the same plans that allowed him win an National Football Conference title in Philadelphia, to win a Super Bowl in St. Louis, and to become the only NFL coach ever to lead three teams to 6-0 starts. His Chiefs are now 7-0 after defeating the Raiders last week. Vermeil is a young 67.

I also hope this is a lesson to top management--don't write off the old guys. Their wisdom makes up for not being hip, for not wearing cool outfits, or for not looking young. Maybe this will start a trend--hire the best person for the job, regardless of age.

Posted by Charles Warner at 4:54 PM | Comments (0) | Print |

October 24, 2003

Friday, October 24. Selling For

Friday, October 24. Selling For Share Is Wrong.
Yesterday I finished Chapter One of my book, Media Sales Management, which is a companion text to Media Selling. When Media Sales Management is finished in December, I will put it on the Media Selling Web site and it can be downloaded free. Chapter One is titled "Sales Strategy" and it recommends six strategies for media sales departments:
1. Sell solutions to advertising problems
2. Reinforce the value of advertising and of your medium
3. Create value for your product
4. Become the preferred supplier
5. Innovate
6. Help the competition get rich

One of the potential traps to avoid in crafting a sales strategy is selling for share, or to try to get the biggest share of business on each order by whatever means, usually by dropping rates. I explain in detail why selling for share is a disastrous strategy in a section in the chapter, which is also available on my Web site in a paper titled "Sell for Rate in Television." The paper's reasoning is based on game theory and shows why selling for share leads to internecine price wars.

Two news stories this week reminded me of the importance for media sales organizations to adopt the six strategies above and of not selling for share. The first news story was a column by Jon Friedman on CBS Marketplace titled "Magazines' Problems Are Growing." Friedman writes: "If some of the nation's best-known magazines decided to report on the recently concluded American Magazine Conference in southern California, their covers might have summed up the State of Publishing this way: Business Week: Can this industry be saved? Wired: Out of breath. Forbes: Publish AND Perish. Maxim: Dude, it's over! Time would show a photograph of a magazine rack and declare on its cover: An industry that needs fixing. Then, alongside Time, Newsweek would show a photo of a magazine rack and declare on its cover: An industry that needs fixing." Friedman reports that the magazine industry is in sad shape. Problems, problems, problems. An industry that needs fixing.

Friedman also writes, "But there is a corollary theme running through the conference, too, and it was far more troubling and threatening to the industry than a rundown of its plethora of woes: A noticeable absence of new ideas and solutions." I wonder if the magazine industry's declining revenue could also have something to do with the fact that magazines don't go after television dollars effectively and are notorious for negative selling against each other. As Erwin Ephron pointed out in an article in Advertising Age titled "Mags Take On TV," the typical magazine sales pitch is "Buy Conde Nast not Hearst." It isn't "Buy print not TV." And to make sure buyers buy their magazine instead of a competitor's, magazine salespeople discount their rates and sell for share. This practice leads to price wars and less revenue.

Instead of the ruinous strategy of selling negatively and selling for share, according to Friedman's report from the American Magazine Conference, a much more productive strategy would be to innovate. Magazines' primary sales strategies should be to: 1) sell solutions to advertising problems, 2) reinforce the value of their medium (especially against television), 3) create value for their product, 4) become the preferred supplier (by providing detailed information about their readers), 5) innovate, and 6) help their competitors get rich (by getting advertisers to switch dollars from television into magazines-- to increase the size of the pie rather than lowering rates knife-fighting for a bigger slice of a pie that is getting smaller every year).

So, the magazine industry had better look in the mirror for the culprit that caused its decline. Start innovating, reinforcing the value of its medium, and learning how to create value, not discount, its magazines.

The other news story that reminded me of the importance of having the right sales strategy and not selling for share was one in the Wall Street Journal titled "Viacom Results Show How Ads Migrate to Cable-TV Networks," that reported on Viacom's third quarter 2003 financial results. Viacom President Mel Karmazin said that scatter pricing was up slightly, which indicated that advertisers are gradually warming to cable and that cable's share of ad dollars would gradually increase to reflect cable's growing share of viewers. Karmazin described Viacom's cable networks (MTV, VH1, Comedy Central, e.g.) as the company's "crown jewel," and this from the president of a company that owns the CBS Television Network. He's admitting that CBS and network television are clearly on the decline. Karmazin also noted the third quarter weakness with Viacom's radio division (Infinity Radio), which "has been performing poorly," according the WSJ story. The story went on to read, "In the spring, Mr. Karmazin shook up the senior management team at the division, after publicly criticizing its performance."

Why did Infinity Radio perform poorly? Because radio rates are not raising fast enough to keep up with inflation. For several years after the FCC deregulated radio and allowed companies to own an unlimited number of radio stations and up to eight radio stations in one market (large markets), radio revenue grew in double digits every year. By owning six or eight stations in a market the large radio conglomerates like Clear Channel and Infinity (the two largest in terms of revenue), could reduce competitive rate pressure and, thus, raise rates. But rates can go only so high before advertisers defect to other media, especially local cable, that offers them similar rates plus pictures. Karmazin's radio management team pressured their stations more and more to sell for share to meet aggressive Viacom growth targets. As stations became obsessed with selling for share, rates began to drop dramatically as the economy slowed down and the total radio ad pie grew smaller.

Infinity's new senior management team is setting outrageously high budgets for the coming year and is screaming at sales managers to sell for share. Yes, Karmazin and his clones are screamers. So, will these big budgets be met by lowering rates to get higher shares? No. Will heads roll in the lower ranks when these budgets are not met because of a bad sales strategy dictated by corporate? Yes. Top managers never fire themselves because of a bad strategy they dictate, they blame the victims of their dictates and fire lower managers.

Infinity Radio stations, and, in fact, all radio stations should utilize the same six sales strategies that I recommended to magazines and should read the paper "Sell for Rate in Television" (it applies equally to radio and magazines) and send the paper to corporate management. Another thing that radio and magazines can do to carry out the strategy of creating value for their product is to craft a meaningful value proposition ("buy us because we're cheaper" is not a viable value proposition).

From the "Sales Strategy" chapter in Media Sales Management, here is an excellent value proposition for a radio or television station or a magazine:

"We are committed to partnering with our advertisers (and their agencies) by providing innovative solutions for connecting them to our audience in a way that delivers advertiser-defined results and that jointly builds both of our brands."

By creating value based on a value proposition like this one, media outlets won't have to lower their rates to sell for share and could grow their medium's advertising pie and help their competitors and themselves get rich.

Posted by Charles Warner at 5:00 PM | Comments (0) | Print |

October 19, 2003

Sunday, October 19, 2003. Salespeople

Sunday, October 19, 2003. Salespeople Beware.
Last week, a story ran in the Wall Street Journal with the headline "Seeking Growth, Google Acts Like an Ad Agency." The article stated, "Without identifying itself, the popular online search engine posts pitches next to relevant content on Web pages where is has lined up space in advance. It's part of an ad-placement service Google began offering to online pubishers and advertisers earlier this year and now is rapidly expanding." The next paragraph read, "It's a big step beyond Google's traditional business of selling ads pegged directly to search results. 'Google in effect is serving as an online medi-buying agency,' says Scott Epstein, a consumer marketing consultant in Silicon Valley. 'It's a potential threat to the ad networks, the online media-buying agencies, and to some extent it takes fees away from general online advertising agencies.'"

True and scary enough, but Mylene Mangalindan, who's byline appears on the article, which, by the way, is very good, missed an even bigger point, in my view. Let's look further into the article: "Google traditionally has made money selling ads that appear next to search results and on various parts of the Google site. The company is on track to generate about $800 million in revenue this year, according to people familiar with the situation, because advertisers love its ability to target a narrow audience. Google now boasts 150,000 advertisers, up from 100,000 in March."

And then, three paragraphs down, this paragraph appeared: "Google uses an auction system of selling key words and placements to the highest-bidding advertiser--much as it auctions off the nicest spots on search results through its own Web site, though 'relevance,' or the click-through rate of the ad, is also factored into placement. " And later, "Goolge says its ad-placement program is especially attractive to smaller advertisers that are a big part of its base. It really 'democratizes the Web,' says Susan Wojcicki, Google's director of product management. 'Small advertisers 'dont need and ad agency,' she says. 'They can do it themselves. Their ad is being shown immediately on a site.'"

One hundred and fifty thousand advertisers! Think how big an issue of the Wall Street Journal would be if it contained 150,000 advertisers. It would be as thick as a phone book. Think how many salespeople would be required to sell and service 150,000 active advertisers. In most national media such as network television, cable, and magazines, a salesperson is lucky to have 20 active accounts running at any one time, and which would keep two or three support people (planners, assistants, coordinators, production, and traffic people) very busy. So to handle 150,000 advertisers, it would take 7,500 salespeople, 25% more than the entire estimated workforce of NBC before it bought Vevendi.

Eight hundred million dollars of advertising revenue! That' s lot coming from zero several years ago and is almost as big as Yahoo's, which recently reported $356.8 million in quarterly revenue and bigger than the new ad revenue of the once-dominant AOL. When AOL had its big years and did over $2 billion in ad revenue, its sales division (Interactive Marketing) had about 500 people in the entire division and bragged, rightfully so, that it had over 3,000 advertisers. Eighty percent of AOL's revenue came from about 10% of its advertisers. The majority of the 2,700 smaller advertisers were sold by the Inside Sales force that sold over the phone. At one time the Inside Sales force numbered more than 20 hard-working telephone salespeople. With these numbers in mind, it is almost inconceivable for a company to have 150,000 advertisers. How does Google do it? With a disruptive technology.

Disruptive technologies were first described by Clayton Christensen in his book, The Innovator's Dilemma. The Internet was a disruptive technology that many businesses did not see coming and they stuck to their old business models, to their eventual regret. Google's desruptive technology for auctioning ad space is based on eBay's disruptive auction technology, and could not only put ad agences out of business, as Mylene Mangalindan suggests, but also put advertising salespeople out of business.

When I recommended to AOL Interactive Marketing when I was a VP there from 1998 to 2002, that it install auction software on its informational Web site, MediaSpace, now cutely called the Ad Visor, and sell small banners and search results, the idea was pooh-poohed, "Don't be silly," I was told, "we'll always need salespeople." Really? Well, Google is using auction software to sell $800 million in search results and contextual advertising.

AOL, Yahoo, ABC, CBS, NBC, Time, Vogue, Clear Channel radio stations, and any company that sells advertising should look into this disruptive online auction technology that allows advertisers to bid for ad space, thus eliminating not only agencies but also salespeople; it could revolutionize the industry. But they probably won't, because ad agencies wouldn't like it and it could put an estimated 125,000 media salespeople out of work. It reminds me of the story of when Bill Gates wanted to buy Encyclopedia Britannica to put the content on a CD called Encarta. The then-CEO of Encyclopedia Britannica told Gates he wouldn't think of selling the company and its content because it would put 25,000 Encyclopedia Britannica salespeople worldwide out of work--they made a living on commissions from selling over a dozen leather-bound volumes for around $1,500--and he is reported to have told Gates, "Our sales force is our most valuable asset." Really? Well, Gates bought another, less prestigious encyclopdia company, issued Encarata, and put 25,000 salespeople and Encyclopedia Brittanica out of business.

More than one business has been blindsided by the advent of the Internet, and we have just begun to scratch the surface of revolutionary changes in business models that this disruptive techology called the Internet will create.

Posted by Charles Warner at 2:50 PM | Comments (0) | Print |

Saturday, October 18, 2003.

Saturday, October 18, 2003. Don't Baby Babies.
As every angry, disheartened Red Sox fan knows, Grady Little should have taken Pedro Martinez out of the game in the eighth inning of the seventh game of the ALCS playoffs against the Yankees. Martinez, who many consider to be the best pitcher in baseball and a certain Hall of Famer when he retires, had pitched a superb game until the eighth inning. In the eighth Martinez gave up three straight hits and Jorge Posada was up. Grady Little, the Red Sox manager, went to mound to take Martinez out of the game, which was the right managerial decision. But Martinez talked his manager out it. Posada hit a double to tie the game, which the Yankees went on to win in 11 innings with Aaron Boone’s dramatic walk-off home run that ended the Red Sox’s dream of going to the World Series.

Martinez is a superstar who has been given the “Ming vase treatment��? (the Boston Globe’s Bob Ryan’s phrase) for the last three years. Pedro doesn’t like to come out of games and make the perp walk to the dugout; it hurts his pride. Pedro Martinez is a self-absorbed prima donna who cares more about himself than about his team. Does Pedro remind you of self-absorbed movie stars, popular television news anchors and reporters, or superstar salespeople? It should, because they all have a lot in common, as do managers who kowtow to selfish stars and allow them to make poor decisions that hurt a business.

I was fortunate enough to have Bob Pittman as my program director at WPEZ-FM in Pittsburgh, WMAQ-AM and WKQX-FM in Chicago, and WNBC-AM (now WFAN-FM) in New York in the middle 1970s. I have done some research since then and can make a strong case that Bob was the best, most successful program director in history—he won big in four different formats. Bob used to coach his DJ s continuously and insist on strict adherence to the format. One thing he used to preach is that the station, not the DJs, was the star. We fired self-absorbed on-air personalities who thought they were more important than the station. Don Imus was one of them.

Self-absorbed, spoiled people are often very insecure and learn from childhood how to throw tantrums to get what they want, how to threaten walk outs (or sit-downs) to get their way, and how to blackmail others to feed their all-consuming need for love. Not any kind of love will do for these approval gluttons, but they want unconditional love. They will often push their managers (or their parents) to the limits to reassure themselves that they are loved. They’ll break a rule and are forgiven. They’ll break a bigger rule or steal something and are forgiven. They’ll keep pushing the limits to be reassured that they are loved. There is never enough love, never enough forgiveness; they always want more. If you don’t nip this kind of behavior in the bud, your life as a manager (or a parent) will be hell—a series of Pedro-like selfish manipulations and capitulations.

I have seen too many sales departments in which sales managers knuckle under to superstar, prima donna salespeople and let them get away with murder. Some sales managers give superstars different rules from other salespeople (like Pedro had different rules). Having different rules is unfair and is bad management. Once a manager allows superstars, or anyone, to usurp good decision-making, that manager will be held hostage by the tantrum throwers and manipulators, and is no longer managing, but letting the inmates run the asylum. This type of manager often would rather be loved than be successful. So, if you’re a manager (or a parent), the next time someone throws a tantrum or tries to hold you as an emotional hostage in an attempt to get you not to make what you know is the right decision, think of Grady Little letting the prima donna Martinez talk him out of lifting him from the game. Grady Little will probably be fired and should be, as you should be if you wimp out in a similar situation.

Posted by Charles Warner at 1:03 AM | Comments (0) | Print |

October 16, 2003

Thursday, October 16, 2003. Sour

Thursday, October 16, 2003. Sour Grapes.
Jim Goodmon, chief of executive of Capitol Broadcasting Co. and I have something in common. In a front-page story in the Wall Street Journal on Wednesday, October 15, in a story titled "Behind Media-Ownership Fight, An Old Power Struggle Rages," Goodmon was reported to have said in a Senate hearing on media concentration, when he found himself sitting next to Mel Karmazin, "I need to suggest that I basically do not agree with anything that Mr. Karmazin said." Jim Goodmon and I have that in common.

Mr. Goodmon, the WSJ reports, has become "one of the most vocal combatants in the fierce battle over media ownership..." He is fighting the FCC rule allowing media conglomerates to own TV stations that reach 45% of America's population, up from the current cap of 35%, although CBS and FOX have waivers and own stations that reach 39% of the population. Goodmon is described as a third-generation owner who started working at his family-owned WRAL-TV, a CBS affiliate, when he was 13. He is now a prominent businessman whose company owns the champion Durham Bulls minor league baseball team (yes, the one the movie was about), and "he's leading one of Durham's most significant urban-renewal projects." WRAL-TV "prides itself on being the most local of local enterprises. The station employees over 100 staffers in its news department, a large number for the market it covers, and runs documentaries on subjects such as North Carolina's fishing industry and the moving of the Cape Hatteras lighthouse. All of this pays off: WRAL's local news beats its NBC-owned and ABC-owned competitors in evening and late-night local news broadcasts."

Also, Goodmon doesn't clear all of CBS's network programs. WRAL-TV pre-empted the show "Cupid" because Goodmon felt it "demeaned the instituion of marriage" and that his community wouldn't approve of it. When CBS chairman Les Moonves was asked about Mr. Goodmon, the Wall Steet Journal reported that Mr. Moonves was not happy with WRAL-TV and later called Mr. Goodmon a "rabble rouser" in WSJ's interview with him for the story.

When I was a VP at CBS in the late '60s and early '70s, the CBS-owned television stations were number one in all of their seven markets except Philadelphia. The stations took great pride in the quality of their news, in serving the community, and in editorializing on issues of public importance. But that was when William S. Paley was still alive and actively (and mentally) involved in CBS. Since then, the CBS-owned television stations have steadily gone downhill in the ratings, cut back on community service, and no longer editorialize ( to my knowledge). The slide was parcipitated when Larry Tisch, a notorious bottom-feeder and a non-broadcaster, bought CBS and has continued under Mel Karmazin's watch. Also during Karmazin's watch, some of the CBS-owned TV stations crookedly tried to shoehorn in more commercials with the infamous Time Machine that sped up network programming illegally.

Jim Goodmon of WRAL-TV has proven he knows how to run a television station and serve the community. CBS has proven it doesn't know how to run TV stations or serve its communities. "Pinwheel Bill" Paley must be spinning in his grave. I think he'd approve of Mr. Goodmon's television station. I know I do, and I'm disgusted with Moonves for calling this superb broadcaster a rabble rouser. Sounds like sour grapes to me.

Posted by Charles Warner at 5:24 PM | Comments (0) | Print |

October 15, 2003

Wednesday, Ocotober 15. Stupid

Wednesday, Ocotober 15. Stupid CNN Ad.
You can learn a lot or be confused by reading a newspaper and its ads. I was reading my Wall Street Journal today as I was watching the Yankees-Red Sox game and all the car commercials, and I was struck by a story, the placement of an ad next to the story, and a CNN ad on the page.

The story was titled "Ad Spenders Loosen Purse Strings," and told how "on the eve of the Association of National Advertisers annual gathering, some of the country's biggest ad spenders say the economy is improving and that they are opening their purse strings." The story was accompanied by a table titled "The Deepest Pockets" and showed the spending of the top 10 advertisers. General Motors topped the list with $1.27 billion in the first half of 2003, up 10.5%. Bumped right up next to the story was an ad for a book titled The End of Detroit. The ad's headline read, "A Hard-Hitting Look at Detroit's Decline." Three headlined selling points for the book detailed the car industry's mistakes: greed, inconsistency, and short-sighted ideas. It probably could have included, "Spent too much on advertising, especially television advertising."

I was confused by the CNN ad on the bottom of the page. Here's how the headline read: "CNN is the the best way to reach your consumers UNLESS they don't own or lease a car, have a cell phone, computer, prescription, travel regularly, or invest in the market. In which case, they probably don't have a TV and are most likely not in the market for whatever it is you're selling." The slug at the bottom was "CNN, 'The most trusted name in news,'" and underneath the line, "CNN/HLN: Number one in reach across all major consumer categories."

Do me a favor, read the above copy closely. Does this copy make any sense to you? Am I missing something? Who wrote this ad? Who at CNN approved it? Is any media planner going to change a media plan based on this ad? Is any advertiser going to switch advertising from Fox News to CNN because of this ad?

I suspect there is a conspiracy. Agencies write confusing, awful newspaper ads that will get no results so advertisers will not spend money in newspapers but allow the agencies to spend the money in television and on expensive commercials on which they make a lot (an awful lot) more money than on producing newspaper ads.

If newspapers ever hope to get any vulnerable television money, they had better make sure that the advertising they run is effective, not confusing. They ought to call on agency creative people and help them create better ads. Maybe have award programs, contests, and, perhaps, give away TiVos.

Posted by Charles Warner at 11:41 PM | Comments (0) | Print |

Wednesday, October 15, 2003. TV

Wednesday, October 15, 2003. TV Ads Don't Sell Cars.
Is this a great week, or what? Baseball on Fox is killing all other networks with playoff baseball, almost doubling "Monday Night Football's" ratings. Americans are falling back in love with Major League Baseball and dreaming of a Cubs-Red Sox World Series. While all this diamond excitement was capturing America's attention, there were several media stories that were not as dramatic, but were equally as indicative of some media history-altering trends.

My first blog was about what I thought was a tipping point in the erosion of television advertising revenue, especially network television. The headline in a story this October 13, 2003, in Advertising Age read, "Study: TV Ads Don't Sell Cars.". The story goes on to report that "TV advertising has a low impact on consumers' car buying decisions..." according to a marketing study by Cap Gemini Ernst & Young. The study found that only 17% of the respondents said that TV influenced their decision to buy a car. Ads on Internet search engines influenced 26% of consumers, 48% were influenced by direct-mail offers from their dealer, and 71% said they were most influenced by word of mouth. The next sentence in the story was another straw on the tipping scale against TV: "We think manufacturers and their dealers are wasting money on broad-based TV advertising instead of a direct-marketing approach...maybe they should re-evaluate the media mix."

In attempt to be balanced, the Advertising Age story quoted several advertising executives who defended television. So what else is new? They don't make anywhere as much money buying search terms or sponsored links on Google as they do on $400,000 TV commercial extravaganzas. Plus, few big agencies know how to buy search, all they know is reach and frequency and TV-centric planning and buying metrics, and they are uncomfortable with the open bidding process for most keywords and sponsored links.

A story right next to the above story on the online editon of Advertising Age had this headline: "Internet Search Engine Advertising Shows Major Gains." The story, in part, read, "The category, currently dominated by Google and Overture Services, has grown nearly 50% to $1.6 billion..." The story goes on to relate how advertisers are generating 30-40% return on what they buy.

Another story this week in the New York Times, "Giveaway of TiVos Aims to Sow Doubts About TV," tells about a contest the Magazine Publisher's Association held: "TiVo recording devices, which let viewers skip commercials, were first prizes in the Magazines Make a Difference sweepstakes, sponsored by the (Magazine Publishers Association). Five first-prize winners were annnounced last week; they also received free lifetime TiVo service." The sweepstakes was open to agency and advertiser personnel. A cute promotion to show how PVRs are eroding the effectiveness of TV commercials.

Slowly but surely, stories like those above will begin to erode advertisers' confidence in television. The big winners will be Interactive, magazines, and radio, but not immediately. It will take several more years and concerted, coordinated efforts by all of those media and their advertising associations to make a dent in TV advertising revenue, they should strike now--hard.

Posted by Charles Warner at 10:49 PM | Comments (0) | Print |

October 13, 2003

Monday, October 13, 2003.

Monday, October 13, 2003. Tit for Tat.
Pedro Martinez committed an unforgivable baseball sin--he threw at an opposing batter's head on Saturday October 11, in a play-off game against the Yankees. The next inning, Roger Clemens threw two pitches outside to Boston slugger Manny Ramirez and then came in high, not high and tight, high. Ramiriez, obviously frightened to be facing the hard-throwing Clemens and fearing retaliation, ducked the pitch unnecessarily and then moved toward the mound threatening Clemens with his bat. In the mele the followed Yankee bench coach Don Zimmer, infuriated by Martinez's headhunting pitch, went after the Red Sox pitcher and Martinez threw the 72-year-old Zimmer to the ground by grabbing onto Zimmer's head and throwing him down on his face. Unnecessary roughness.

The Yankee-Red Sox game was cancelled on Sunday because of rain and on Monday I was listening to my favorite radio station, 1050 ESPN Radio in New York. Michael Kay, the Yankee television announcer and ESPN radio local talk-show host (10:00 am-1:00 pm weekdays), spent three hours talking about the Saturday game. Kay has a good perspective because he's not only a very bright, very opinionated, very knowledgeable baseball expert, he's a Yankee insider and, thus, has great insight into the Yankees and how the players and management feel. Michael Kay used some statistics from the past season to put some perspective on Pedro's beanball. He said that during the 2003 season Red Sox pitchers had hit Yankee batters 50 times but that the Yankee pitchers had hit only 23 Red Sox (I think these were the numbers, if not 50 and 23, it may have been 51 and 23, but I'm close). The point is that Pedro Martinez threw a beanball because he knew the Yankees couldn't retaliate against him (in the American League a designated hitter bats for the pitcher) and, because of past tendencies, wouldn't retaliate against one of his teammates. No consequences. No tit for tat.

The efficacy of the tit-for-tat strategy was developed by scientists at the Rand Corporation in the 1950s who were studying game theory and its applications to the cold war with Russia. By repeatedly playing a game called the Prisoner's Dilemma, these scientists realized that the only way to get a rival in a game to cooperate and not get greedy (or out of control) was to match their tactics with similar tactics. You build a nuclear submarine, we'll build one. If you build 10 ICBM missiles, we'll build 10. If you hit one of our players, we'll hit one of yours.

In negotiating, as I point out in Chapter 12, Negotiating and Closing, in Media Selling, tit-for-tat is the best tactic to use against a highly competitive, screaming, bullying negotiator. Retaliate, scream, and bully right back. You've got let them know there are consequences to their unacceptable behavior and that you will not be cowed, that you will not appease them. As we all know, bullies underneath are insecure cowards who use bullying tactics in an attempt to get an advantage because they don't have confidence in their own ability to win in a fair fight. In fact, bullies are bullies because the last thing they want is a fair fight. When a competitor makes a cowardly move (lowering prices suddenly to gain share, for example), you must retaliate. One way to retaliate is to lower prices even more, heavily promote the lower price, and steal every piece of business they have. Another way to retaliate in a medium like TV or radio, which have inelastic supply (a fixed amount of inventory), is to let a low-balling rival take all the low-rate business available and sell out at low rates, then you can sell out a much higher rates. And, by the way, make sure the CEO of the rival's company knows how much higher your rates were and what a big mistake the rival's sales management made by selling out at rates that were way too low. There are many ways to retaliate.

Baseball and media selling are very competitive games and in both you can't let bullies and greedy rivals get away with bullying you. If you give in to bullies, you will continue to be cowed and will lose.

Posted by Charles Warner at 5:16 PM | Comments (0) | Print |

October 8, 2003

Wednesday, October 8, 2003. Proving

Wednesday, October 8, 2003. Proving Ads Work.
I was biting my nails on Monday night as I watched Derek Lowe of the Boston Red Sox throw a 1-2 pitch to Terrence Long of the Oakland As with the bases loaded in the ninth inning and Boston ahead by one run. It was the deciding game of the five-game American League Championship Series and Long took a called third strike without swinging and allowed Boston to win the game and the series. Long is going to have a long winter, because there's an old saw in baseball that if you're going down, always go down swinging, and Long was severly criticized by the sports pundits (and probably his teammates) for not at least trying to hit a great pitch by Lowe.

I worry about television. As much as I criticize network TV salespeople for being lazy and arrogant, and as much as I believe that network television is on an irreversible downhill slope of audience and, thus, ad revenue decline, I believe that television is the most effective advertising medium and that network television will go down without swinging (perhaps because of arrogance and laziness). What can network television, and to some extent, local television do to keep advertising dollars in the medium?

In the October 6 issue of TelevisionWeek in a column titlied "Shifting Ad Accountability to Media," Joe Mandese writes: "For the first time in a quarter of a century, the ad industry is planning to alter its basic model for measuring the effectiveness of advertising, including media buys." The article goes on to detail how advertisers want to make sure that consumers are attentive, persuaded, and responsive to their advertising messages. "In other words, instead of just being held to a standard of Nielsen ratings, TV outlets may soon find they need to demonstrate how well they contributed to an advertiser's sales."

A new type of research that can connect the dots between advertsing exposure and sales will be very expensive, and the big question is who will pay for it. Agencies don't pay much for Nielsen research now, and they will expect TV networks and stations to continue to foot the bill for effectiveness research. Naturally, the networks will balk at spending more money because, as Erwin Ephron said at the Advertising Research Foundation workshop where this new type of proof-of-performance research was discussed, "The old model tended to be TV-centric" and that television shaped the entire thinking of modern-day media planning and buying and that other media had to be retrofitted into a television context, including how they are measured (audience exposure ratings) and how they are planned (reach and frequency). "By shifting to new proof-of-performance research, including attention, persuasion, and sales, the importance of national television outlets and their share of national advertising budget could wane over time," according to Ephron.

The good news for the television industry is that while network TV might suffer, local TV will likely benefit from this type of research. Also, as advertisers shift to a Return on Investment (ROI) planning and evaluation model, television will have to justify its rate increases based on increased sales, not increased demand. I believe that TV is effective and that proof-of-performance research will show it to be so. Therefore, I believe that the TV industry should support this type of research--it is a way to keep swinging.

A proof-of-performance model would help television, Interactive, and newspapers, but might hurt magazines and radio. As a former radio guy, this worries me, but the upside is that radio stations will have to rethink their programming model. Well, that's another story...and another blog or two.

Posted by Charles Warner at 12:21 PM | Comments (0) | Print |

October 5, 2003

Sunday, October 5, 2003. Magazines:

Sunday, October 5, 2003. Magazines: Stop Killing Each Other Off.
I accompanied my wife to church today. The music was unlistenable, the sermon unintelligible, and the service uninspiring. Why did I go? First and foremost, because I love my wife. But second, because I'm a coward. OK, I'll admit it, in the far reaches, thirty layers down in my mind, I say to myself, "I don't believe in the hereafter, but just on the slight--everso slight--possiblility that there is a God and a hereafter that God controls, I'd better not take a chance." Hypocritical, wimpy? Yes. But as I was thinking about my ambivalence, it reminded me of the way advertising agencies think about network television.

Agencies know deep down that TV's audiences are declining and prices are rising, they know cable, magazines, radio, and Interactive can give them more reach for their money, especially when mixed with television, but they are afraid of not using TV because their clients might get upset. Clients know they have reached diminishing marginal utility with TV. According to a Spring 2001 Media Metrics study, people spend about 50% of their media time with television, about 30% with radio, 11% with the Internet, 5% with newspapers, and 3% of their media time with magazines. Yet large national advertisers spend (notice I don't say invest) a disproportionately large percentage ( 80%) of their dollars in television--a bad investment. They invest about 4.5% in magazines which seems appropriate. But radio (about 8%) and Interactive (about 2%) got a disproportionately low share of advertising dollars in 2002 (according to Robert Coen), even though radio and Interactive CPMs are much lower than television (or magazines or newspapers).

Too many large national advertisers are ambivalent; they are holding on to their television religion and are afraid to take a chance that it is no longer relevant or applicable to their needs or to the currrent media reality. However, deep down they have serious doubts about the effectiveness of the money they spend in television. Local advertisers are switching their money to cable, and, according to recent news accounts, some national advertisers are not fulfilling their upfront commitments. Network television might be in trouble.

In Saturday's (October 4, 2003) New York Times Business Section, in Company News, the following item appeared: "HEWLETT-PACKARD MAKES OFFER TO SUN CUSTOMERS - Hewlett-Packard reached out yesterday to customers of Sun Microsystems, offering them $25,000 in free services to switch to Hewlett-Packard computers that run the Linux operating system. Sun has had nine straight quarters of falling revenue and has lost market share to rivals amid tough pricing for large computer servers. " Sounds like H-P is kicking its competitor when it's down. Nasty? No, it's sound competitive strategy to attack a weak rival. Cable, magazines, radio, and Interactive ought to get together with a joint cross-platform pitch and go after television as it is weakening.

Now is the time to stop internecine intra-industry competition. Magazines kill each other to compete for the small, and dwindling, magazine advertsing pie (see Erwin Ephron's column titled "Mags can take on TV" in the 9/22/2003 issue of Advertsing Age, which is not available as of this date, 10/5/03, online). Ephron writes that magazine salespeople tell buyers not to buy "that other stupid magazine, buy mine" (my quote, not Erwin's), when they should be trying switch dollars not away from other magazines but away from television. Radio stations and networks sell in the same, destructive way, and Interactive is not making a big, concerted effort to go after TV. All of these media should stop shooting at each other and shoot at television--it's too big and too vulnerable a target not to.

Posted by Charles Warner at 3:07 PM | Comments (0) | Print |

October 2, 2003

Thursday, October 2, 2003. My

Thursday, October 2, 2003. My First Blog.
This is my first entry. If you are curious as to how I get off writing about media sales, go to my Web site (which I think is cool and full of lots of great information) www.charleswarner.us and check out my biography or for an even longer and more boring read, my curriculum vitae.

I am in the process of writing Media Sales Management, which is a companion text to Media Selling. Media Selling will be published in November, and you can order it now by going to the publisher's Web site. Media Sales Management will available for downloading free on the Media Selling Web site, www.mediaselling.us, which will be up in December. As I was doing research for the second chapter, titled "Sales Strategy," of the sales management book, I ran across a couple of news stories that brought home to me that the business of media selling might have reached a tipping point.

The first story was about Mel Karmazin lowering his forecasts for Viacom due to the continued slowdown in local advertising revenue, as detailed in Diane Mermigas's column in Television Week. The second story, the tipping point, I believe, was in Television Week in a story titled "TV Execs Irked by Late Ad Changes." The takeout headline was "This year it's very, very late. The new season has already started. There seems to be a lack of respect for how the rules work." What this unnamed senior cable ad sales executive was whining about was that some network upfront buyers were not fulfilling their commitments on upfront buys. For example, Unilver cut back its upfront buy by 29%, it was reported.

Upfront buys are not orders but holds, which in the past have been as good as orders. It was considered a breech of faith not to make good on a hold. But for years networks screwed over buyers by overestimating ratings to keep prices up and then giving less desirable fourth quarter make goods. But, generally, there was a nice conspiracy going between networks and major buying agencies. It went something like this, "you pay me an increased CPM every year, while pretending to be outraged at the increase, and I'll guarantee your impressions and give you favorable positions."

Network television is profitable for an agency to buy. An agency negotiator can spend $75 million in a couple of negotiating sessions, but to buy that much radio, it would take a media department a dozen people and take weeks; therefore, agencies want to buy network TV. But a majority of viewers have moved to cable and because cable has so much inventory in those 500 + channels, the prices (CPMs) for cable are kept low. Clearly cable is a much better buy. Smart buyers are beginning to break the conspiracy and are thinking about their clients for a change--get more television for less money. Buyers are saying to television sales departments to work harder and start delivering more value.

Both concepts are anathema to network television salespeople--they are lazy and arrogant. A friend of mine who has to deal with them says, "They are order-takers. They wait for the phone to ring."

By canceling part of their upfront buys this year, some buyers have had the courage to say that the emperor has no clothes, and he wants to charge more for less and less.

I believe that this might be a tipping point -- a small event that will throw the light of reality on the value of network TV and the way it is bought and sold. I think cross-platform selling will start to take off soon as a result of some of this enlightenment.

If you want to learn more about buying and planning television and all media, go to Erwin Ephron's marvelous Web site.

Posted by Charles Warner at 4:44 PM | Comments (0) | Print |