Media Curmudgeon

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February 26, 2009

FORTUNE Is No Friend

The current issue of FORTUNE (March 2) has a smiling Mark Zuckerberg, Facebook’s 24-year-old founder, on the cover. The business magazine obviously got a photo of Zuckerberg in a tie (a first) and with a smile on his face before he read the cover story.

But even though the Time, Inc book thought it was pimping Mark with a glossy full-page picture and mostly fawning piece, writer Jessi Hempel, completely blew it by writing:

But attempts to sell traditional online ads on Facebook and other social-networking sites have failed miserably: Banner ads can sell for as little as 15 cents per 1,000 clicks (compared with, say, $8 per 1,000 clicks for an ad on a targeted news portal such as Yahoo Auto) because marketers know that members ignore them.

Some readers of this blog may remember when Jack Webb used to say in “Dragnet,” “Just the facts, ‘mam” – something that FORTUNE’s Jessi Hempel and Assistant Managing Editor Stephanie Mehta should have remembered. Any one who knows even the slighted about online advertising knows that “15 cents per 1,000 clicks” had to be written by a complete ignoramus. Jessi meant to write 15 cents CPM (cost per thousand). CPM is nothing like the performance-based metric cost-per-click, which Google uses to price keywords in its AdWords system. If Google charged 15 cents for a 1,000 clicks its stock price would be as low as Yahoo’s (around $5.00) and its revenue would be one-one thousanth of what it is.

And to write in a magazine that purports to be credible that “attempts to sell traditional online ads on Facebook and other social-networking sites have failed miserably” flies in the face of the facts. The two leading social-networking sites will sell over $1 billion in advertising this year. MySpace is expected to do over $750 million in ad revenue in 2009 and Facebook about $250 million. Some failure. And I’m sure Zuckerberg was pleased to read that “members ignore” ads on his precious site (which is untrue to the tune of $250 million).

The assault on credibility is compounded by Editor Andy Serwer in his hyped “Editor’s Desk” column in which he praises Hempel’s and Mehta’s efforts for the cover story. (By the way, on the “Editor’s Desk” page there is a picture of Hempel and Mehta with the decidedly un-PC caption “Poster Girls” – honestly. Even an old codger like I am couldn’t make this up). Here’s what Serwer gushes:

…Stephanie “Telephony” Mehta, who now heads our tech coverage. Stephanie, who covered telcom for years here and at the Wall Street Journal, recently started up our-must read Tech Daily at fortune.com. And like Jessi (who just posted that she is “triple-checking facts”), Stephanie is a serious Facebooker.

If Jessi is “triple-checking” facts and still doesn’t know the difference between a CPM and a CPC (cost-per-click) and that advertising on social networks is improving steadily because advertisers, even some top brands, cannot resist the humongous traffic on social networks (Facebook just passed 175 million users), then the magazine has no future.

FORTUNE used to have superb, expert reporters such as Carol Loomis who could tell if Jack Welch was giving it to her straight (and Jack knew it) and who would deck Andy Serwer if he called her a “poster girl.” Carol could read and interpret a balance sheet as well as any CFO and used to do important investigative pieces. Jessi Hempel wrote an inaccurate, personality puff piece that should have been in People magazine, and you can bet Carol is sad about what has happened to a once-very-good magazine.

I’m not renewing my subscription to FORTUNE (I think I’ve been getting it out of habit) and I never go to its website, which is ugly, out of date, virtually unnavigable and is found at www.cnn.money.com. Well of course, why didn’t I think of that?

FORTUNE is no friend to Mark Zuckerberg because the writer and editors don’t understand his business, and the magazine is no friend of mine anymore because the writers and editors don’t understand his business -- not a good thing for a business magazine.

Posted by Charles Warner at 2:05 AM | Comments (0) | Print |

February 18, 2009

I Am the Media

I blog; therefore, I am the media.

In 1957, I started my media career in sales at a CBS television affiliate in Spartanburg, SC. My dream was to be president of CBS, probably the most common dream of anyone entering television sales or programming in the late 1950s. I worked in a variety of sales and sales management jobs until I became V.P. and general manager of CBS Radio Spot Sales in 1970.

To anoint my becoming a vice president, Sam Cook Digges, the president of CBS Radio, invited me to lunch in his small private dining room on the 15th floor. Sam was elegant, urbane, lit his cigarettes with a gold Dunhill lighter, had long, wavy, perfectly coiffed grey hair, and wore a gold Rolex watch on one wrist and a thick gold ID bracelet on the other. He reminded me how fortunate we were to work for the greatest company in America. “The only other company that is close to CBS is IBM,” he said. I nodded in self-satisfied agreement; it was clear I had arrived in the media firmament and was on my way to fulfilling my dream of being king of all media, president of CBS.

I screwed up and didn’t make it to becoming a king. It was good being a king in those days – lots of perks. But being king was not about the perks and the wealth and the trappings, it was about power. In those days, if you couldn’t be king and control the government and everything else, then the next best thing was to control the media, which you did either by buying it, like Rupert Murdoch; inheriting it, like Arthur Sulzberger; or becoming the president of a huge media company, like Frank Stanton of CBS.

Until the Internet revolution, it was received wisdom that the media had more power than any other institution. It could control the agenda, the government, the economy, and who became famous, popular, or jailed. To be a king of media was to be an all-powerful monarch – until the Web.

Slowly and imperceptibly to the entrenched media, the power shifted from the old-line media to the Internet. The Web created a conversation instead of a one-way broadcast. Anyone could join the conversation, not just those whose letters to the editor the gatekeepers wanted to publish. I don’t have to own or control a radio or television station to get my opinions published on the Internet, I can blog, Tweet, and publish updates on Facebook.

I am now the media, and it’s a lot less work, a lot more fun, and I have a lot more freedom to say whatever I want to say than I would have if I had become president of CBS. And I’m not going to lose my job because of not hitting my numbers in an economic crisis that is not of my making. I don’t have to be inanely balanced like corporate journalists do and give both sides regardless of the intellectual merits of either side’s arguments.

Thankfully, I’m not corporate Time Warner media; I’m independent Warner media. I can publish my biased opinions about how unbelievably poorly the dinosaur media are managed today. I can call Mel Karmazin and Barry Diller greedy, mean-spirited tyrants and Jeff Bewkes an ineffective empty suit without fear of reprisals. I can praise excellent media executives like Bob Iger of Disney, George Bodenheimer of ESPN, Dan Mason of CBS Radio, and Peter Chernin of News Corp. without worrying about being called a suck-up.

Today, thanks to the HuffingtonPost.com, JackMyers.com, and my own blog, MediaCurmudgeon.com, I am the media, and I’m grateful I didn’t become a media king.

Posted by Charles Warner at 9:33 AM | Comments (2) | Print |

ColinHanna at March 5, 2009 8:13 PM writes:

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Dana Harmon at March 3, 2009 5:43 PM writes:

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February 12, 2009

The Elephant in the TV Room

A front-page article in the February 10 issue of the Wall Street Journal detailed the disintegrating business model of local television stations. The story titled “Local TV Stations Face a Fuzzy Future” by Sam Schechner and Rebecca Dana was insightful, thoroughly researched, and well written. But there was one item that I found interesting, ironic, and indicative of a problem that television stations and networks have – the elephant in the TV room that no one talks about.

Until that disruptive wooly worm, the Internet, popped up, local TV stations effortlessly made money, but now they are struggling to figure out how to survive in the age of the Web. Audiences seem to be abandoning local TV stations’ most profitable franchises – local news. And even their networks might abandon them. Here’s what Schechner and Dana wrote:

The weakness in the local-TV market could hammer the big broadcast networks, says Randy Falco, former president and chief operating officer of the NBC Universal Television Group and now CEO of Time Warner Inc.'s AOL. Cable operators, he says, may lure networks away from some ailing stations with the promise of steady subscriber fees: "Ultimately one of [the networks] will make a break. One of them will try to make a go as a cable network."

The article’s authors interviewed people in network TV and at local stations. They quoted the pronouncements of TV network heads from their speeches at conferences. But Falco was the only source they quoted who is no longer in the TV industry; he’s CEO of AOL. Why would Schechner and Dana go to someone no longer in the business? Perhaps to get a point of view that was objective from an executive who’s no longer in a the-future-is-rosy mode all the time.

But why go to Falco? They probably interviewed randy Randy because he’s still viewed as a TV guy, even after two-and-a-half years at AOL. The TV business has changed dramatically in that time, but the two reporters probably figured that Falco must be keeping current on the TV business because he certainly hasn’t been paying attention to AOL.

I find it fascinating and ironic that Time Warner CEO Jeff Bewkes hired Falco because he was a successful TV sales guy (he ran NBC TV Network sales for years before he was upped to CEO of NBC’s Television Group) and that Falco has screwed up AOL precisely because he’s a TV sales guy and has no clue about the Internet or how to sell it, as AOL’s recent earning record proves.

I had lunch recently with the head of a PE company that owns a group of television stations, and we talked about how his group has an iron-clad rule about hiring salespeople: Never hire anyone with TV selling experience. He knew TV salespeople can’t sell their way out of a paper bag. I talked to the head of sales of a highly-trafficked, successful Web business recently, and he said he never even interviews people with TV sales experience. He knew that TV salespeople aren’t salespeople; that they are responders to RFPs and calls for avails – what we used to call package monkeys. This week I talked to the managing partner of a highly-respected media executive recruiting firm, and she said her firm had not had success placing TV salespeople in Web businesses. She knew TV salespeople were lazy and had no clue how to sell conceptually or create value; they’re commodity salespeople.

The notion that the vast majority of TV salespeople have no idea how to sell – you know, prospecting, qualifying, presenting and overcoming objections, creating value, closing, and, heaven forbid, servicing – is the elephant in the room. No one talks about it openly. Executives outside of the TV business know it, but those in the business make the fundamental attribution error so marvelously described by Nassim Nicholas Taleb in Fooled By Randomness. TV salespeople think they’re really smart because of all the billings they had. Now that the revenue is disappearing, they believe it’s all because of bad luck.

I don’t believe that TV salespeople caused the problem that’s occurring in local and network TV. The Web and the recession weren’t their fault. But TV executives and salespeople were thumping their chests for so long and touting their Titanic as unsinkable, that now I think they deserve to go down with the ship. Most smart Internet businesses do too – except for Jeff Bewkes at Time Warner who hired Randy Falco to run AOL.

Posted by Charles Warner at 12:47 AM | Comments (2) | Print |

Dana Harmon at February 16, 2009 12:47 PM writes:

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Bruce Braun at February 14, 2009 4:43 PM writes:

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February 4, 2009

AOL Blows Up Another Sales Executive

AOL fired Lynda Clarizio as president of its Platform A sales division and hired retread Greg Coleman two days before Time Warner CEO Jeff Bewkes announced that AOL’s ad revenue dropped 18 percent in 2008. Once again Time Warner and AOL top brass blow up an ad-sales exec rather than take responsibility for their own stupidity.

As Henry Blodget wrote in the Silicon Alley Insider:

In our opinion, the move is all about reversing her [Clarizio’s] decision to can AOL's experienced premium salespeople, as well as AOL's recent emphasis on ad networks. Which means that AOL has lost yet another year.

Are [CEO] Randy Falco and [COO] Ron Grant, AOL's bosses, going to be held accountable for this? Lynda was their hire, and they presumably supported her salesforce integration decisions. Now, a year later, with AOL missing its targets again, it seems Lynda will take the fall.

Of course, the logical next question is: Will Time Warner stockholders hold CEO Jeff Bewkes accountable for firing the innovative AOL CEO Jon Miller, hiring the network TV sales exec Randy Falco to replace Miller, and allowing the Internet inexperienced Falco to hire abrasive gunslinger Ron Grant?

Furthermore, it was Grant who broomed Platform A president Curt Viebranz after only five months on the job and put his pal from AOL Business Affairs days, Lynda Clarizio, in the job. Clarizio had helped engineer the AOL purchase of the low-priced, junk-selling ad network, Advertising.com. Viebranz was CEO and of the high-priced behavioral-targeting firm Tacoda, also purchased by AOL.

Platform A was the ill-conceived effort to put these two cultures together. Bitter infighting occurred between the two units that embraced conflicting sales strategies – low-priced, junk display ad inventory versus high-priced, targeted display inventory. Clarizio’s side won when Grant blew up Viebranz after a heated argument over unrealistic budget expectations in which Viebranz allegedly called Grant a “short little shit.”

Viebranz was right; the sales targets were way too high, as today’s earning announcement proved. But Clarizio apparently accepted them along with the top sales job. She may have known the sales budgets were stupidly high and that she’d get fired when they weren’t met, but decided to take a paycheck for eleven months anyway, protect her Advertising.com people, and adopt the strategy of concentrating on selling low-priced ad network inventory. What did Clarizio know? She is a lawyer and deal maker, not a seasoned sales executive.

Obviously Falco and Grant bought into Clarizio’s strategy, as Blodget indicated. But what did they know? Falco is a TV sales guy with no Internet experience and Grant is a deal maker. But they did understand corporate politics well enough to know that they could always blow up Clarizio if her strategy failed and save their hides by hiring someone who’d be dumb enough not to see the pending explosion.

Enter Greg Coleman. In 1998 he interviewed for a high-level sales executive job at AOL and was considered to be a lightweight – an empty suit. At that time, AOL gobbled up just over 50 percent of all Internet ad revenue and was hiring almost anyone with a good Rolodex who could sell or manage salespeople…but not Greg Coleman. He persisted and kept failing up (he wore nice suits) until he had one of the top sales jobs at Yahoo. At Yahoo many of his colleagues thought he was “so light he’d blow away if he didn’t have rocks in his pocket.” Yahoo finally caught on and fired him.

You’d think Falco and Grant might say to themselves, “Yahoo has been horrendously managed over the last couple of years, so how good a manager can a guy be who’s been fired by these yahoos?” Or maybe they said, “Let’s hire someone who’s dumb enough to take a job that everyone with any brains knows is like climbing on top of a burning oil storage tank.”

Remember the last scene in “White Heat?” James Cagney, marvelously playing the psychotic killer Cody Jarrett, is on top of a burning oil storage tank and screams, just before the tank blows up, “Top of the world, Ma!”

Welcome to the top of the world, Greg.

Posted by Charles Warner at 6:09 PM | Comments (0) | Print |

February 2, 2009

I Hate Walgreens' Flyers

I hate Walgreens, and you should, too. Why? Because the pharmacy firm is irresponsibly polluting the environment and killing trees by dumping piles of flyers wrapped in plastic bags on doorsteps in my neighborhood in New York City.

My wife and I live in a brownstone in the East 90s, so we are prime targets for flyer, brochure, and menu dumping because the upscale neighborhood has a concentration of high-income consumers in single-family houses that grocery chains, pharmacies, and restaurants crave.

Here’s how the flyer dumping works: A retail store (pharmacy, grocery chain, pizza- or sushi-delivery restaurant) wants to increase sales or introduce a new opening, so they print cheap flyers/brochures and hire young people who will work for below minimum wage to distribute them. I assume that the distributors get paid based on how many flyers they distribute, and don’t get paid by the hour, because if they got paid hourly wages, they would work slowly and distribute only one flyer per house.

Thus, this distribution incentive system encourages distributors to get rid of their consigned bundle of flyers as quickly and easily as possible, which, in turn, results in them dumping multiple copies at each house.

In the past two weeks we have had a bunch of four copies of the Walgreen 12-page flyer, each flyer wrapped in a thin plastic bag, dumped on our stoop. I don’t want one ugly, tree-killing flyer polluting our stoop or our house or our block, let alone four of the monstrosities. On a windy day, soon after the offensive Walgreens flyers are dumped, the block is strewn with fluttering plastic bags and loose pages of the hideous Walgreen flyer. It’s disgusting and blatantly un-green.

Therefore, I picked up the four offensive Walgreen flyers in their plastic bags that were dumped on my stoop and four others scattered on the street and took them down to the nearest Walgreens on the south side of 86th Street, just east of Lexington Avenue. I went into the store and angrily tossed the wasteful flyers in the area in front of the check-out counter, to the shock of the nearest check-out clerk.

If you’re as fed up with this hand-delivered flyer/brochure dumping as I am, then I urge you to fight back, too. If you live in a house anywhere in America where unwanted flyers, newspapers, or shoppers are dumped, I urge you to do what I did – gather up as many of these unwanted, tree-killing, polluting, wasteful flyers/brochures/newspapers and dump them back on the premises of the offending, polluting companies that distribute them.

Dump tons of them in the lobbies of newspaper or shopper offices or in front of the check-out counters of offending retailers. Fight back – fight dumping with dumping. You have nothing to lose but the mess, and you will help preserve the environment, to say nothing of the aesthetics of your neighborhood.

Posted by Charles Warner at 2:43 PM | Comments (1) | Print |

Doug at February 17, 2009 10:21 AM writes:

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