Lou Heldman on media, technology and society

Earlier this year, Forrester Research released its five year advertising forecast which found that marketers were shifting substantial advertising dollars out of traditional media and into interactive channels such as mobile marketing, display ads, search, social media and email.

Yet, marketers who rely too heavily on interactive channels, at the expense of traditional channels, risk losing out on the lucrative Boomer segment that are avid multi-media consumers. In fact, unlike other age groups, Boomers consume a daily, balanced diet of media from multiple traditional and interactive sources with traditional media -- television, radio, and newspapers -- providing their daily "squares."

While the media has been focused on reporting the demise of traditional media, Boomers have largely been ignoring their prognosticators and continue to use these mediums as their "go to" sources for entertainment, news and exposure to brands.

Consider these statistics:

Television

• Boomers spend, on average, 9.5 hours a day on "screen" time activities -- e.g., television, computer, mobile phones, video games -- with the largest percentage of time spent on television.

• 77% of Boomer's daily viewing occurs between 7:30 pm and 11 pm, when they are most likely to watch The Discovery Channel, A&E, the Food Network, ESPN and Fox News.

Radio

• 76% listen to the radio -- more than any other demographic -- with half listening during morning drive-time and their programming preferences vary from oldies to country to talk shows.

Print

• Time spent on print (e.g., newspapers, magazines, books) is highest among Boomers, with younger Boomers (45-54) spending on average 30 minutes a day and older Boomers (55-65) spending up to 100 minutes a day.

• In addition to national papers, 57% read their local daily newspaper regularly and 68% read their weekly community paper.

These traditional sources provide the foundation of Boomers' awareness and knowledge of brands. They augment their daily traditional media consumption with time online, spending on average two hours a day. But unlike other age groups, Boomers -- who according to The Pew Internet and American Life Project now account for 35% of all Americans online -- use the Internet much more heavily to research and purchase products and connect with friends and family than their younger peers. Typically, traditional advertising triggered their online search.

And, Boomers are researching products and services online because their brand loyalty is up for grabs; they are not brand loyal. Refuting a popular marketing truism that older consumers become more brand loyal, a 2008 AARP/Focalyst study found that 61% of Boomers felt "it didn't pay to be brand loyal." A more recent Nielsen analysis of brand spending corroborated that finding: in March 2009, Nielsen reported that only a fifth of Boomers were more brand loyal than their younger cohorts.

 

As those who target Boomers well know, this segment offers an incredibly wealthy opportunity for marketers:

• 78 million+ members

• Estimated $10 trillion in discretionary assets - transferred to them by their dying parents and grandparents

• $2.3 trillion annual average spend on consumer goods and services

But, only if marketers shift some of their advertising dollars back to traditional media, creating an integrated media plan, to engage Boomers.

Lou says: Too many commentators paint marketing as a choice between new and old media platforms. Most consumers use a blend of media, heavy on traditional the older they are. Newspapers and local TV aren't going anywhere. Advertisers and others who ignore traditional media are hurting themselves.

AOL now has 500 full time writers and editors in the AOL newsroom, plus another 1,500 freelancers writing content across its scores of content sub-brands.

Where is AOL hiring these journalists? From the failing print world. We’ve obtained a list of hundreds of these individuals, including former journalists at BusinessWeek, New York Times, USA Today, ESPN, Washington Post, Wall Street Journal, Forbes, Consumer Reports, Condé Nast and scores of regional and national newspapers and magazines.

But the real opportunity for AOL is to grab marketshare in a relatively open field, say some people close to the company. A contingent of AOL executives are said to be pushing new CEO Tim Armstrong to build and buy scores of great online media brands.

The foundation for this strategy is already firmly in place, and has been since AOL acquired Weblogs, Inc. in 2005. Sites like Engadget, TUAW and Joystiq are all great niche brands on their own. And AOL has expanded into many other sub-brands through their MediaGlow division.

MediaGlow was unveiled a year ago. These are AOL’s content sites - music, finance, the blogs, and new sites like PoliticsDaily and Love.com. Combined, these sites bring in 76 million unique monthly visitors (Comsore, May 2009). 27 of the Technorati Top 100 blogs are owned by AOL.

The MediaGlow team wants to pick up the pieces of the dying print media business. Advertising is falling off a cliff (billions of dollars in advertising has evaporated). Combined with the high structural costs of print media (high wages, and well, printing on paper and mailing to readers) and the result is a lot of high quality talent is suddenly willing to take a job in online, even at a much lower salary.

The plan would be to build and buy scores of new brands in every monetizable niche possible. If you see a magazine at the newsstand covering a topic, AOL will have their own online brand for that topic, in blog or other format. They’ve already got the publishing platform with MediaGlow. New brands can be inserted or built at little marginal operating cost. And the talent is out there for the taking right now.

Lou says: I have to admit, I stopped paying attention to AOL long ago. I shed my membership (as did millions of others), when I no longer needed training wheels and a monthly fee to get around the Internet. Clearly, I need to take a fresh look.

A graying population, slowing birth rate and increasing ethnic diversity will change the face and buying patterns of consumers in the US and will require that marketers of the future reach a shrinking pie of older and multi-cultural demographics in more effective ways, according to an analysis from The Nielsen Company.

Though the current economic downturn is already straining marketers and retailers, Nielsen expects discretionary spending to return to moderate levels in the short term. However, the analysis shows that both the US and the developed world can expect rough times in coming years because of the way the population is changing.

Key insights from the analysis:

• Baby Boomers Will Become a Burden: Though Baby Boomers are currently a boon to the US economy, they will become more of a burden as they continue to age, retire, lose spending power and tax the social systems intended to support them. A corresponding decline in the number of new births that began in the 1970s means there won’t be enough younger consumers to balance the Boomers out.
• Disadvantaged Segments Will Grow: At the same time as the Baby Boom generation ages, birth rates remain low and household sizes decrease, the most economically-disadvantaged market segments are expected to grow, putting unprecedented pressure on per-capita spending. Nielsen estimates that between now and 2020, the US will experience very minor growth in per-household spending. After that, spending on consumer products will continue to fall through 2020 in constant dollars:

• Older Consumers Will Need Different Products: Though older consumers will lose some of their spending power, they will still be a viable segment for companies willing, able and savvy enough to market to them. In terms of demographics, by 2037, nearly one in three households will be headed by someone age 65+. Of them, nearly three-quarters will be non-Hispanic white, nearly half will be single, and the majority will be women.
• Multiculturalism Will Explode: Though households of the future are projected to be smaller, their ethnic and racial makeup will differ dramatically from today. By 2025, more than half of all families with children will be multi-cultural and less than half will be native-born non-Hispanic white. Though Hispanics will be the largest group, Asians, African and Caribbean Blacks, among others, will make up significant shares. Reaching these demographics will require marketers to develop campaigns that embrace and understand this diversity.

Competition for Shrinking Pie

Overall, an aging population, decreased spending,  higher demand for products that target older and ethnic consumers and a fragmenting mass media landscape will present a multitude of challenges for marketers, especially in terms of redefining the concept of market share and competing for a piece of a much smaller pie.

“Marketers in the US and throughout the world are not accustomed to a shrinking pie, but rather are used to thriving marketplaces with robust spending growth,” said Doug Anderson, Nielsen SVP, research & development, who wrote the analysis.

“In the near future -  and for decades to come - this growth gravy train will be off the tracks, Anderson said. “Growth will only come from increasing share against competition. The new consumer marketplace of the US will bring new relevance to the phrase ’share wars’.”

Members of the Baby-Boom generation are increasingly shifting away from traditional TV in favor of online services and entertainment, and now spend more free time online than they do watching TV, according to a study by ChangeWave Research.

The May benchmark survey of business professionals ages 45-63, focused on TV viewing habits vs. home internet usage. It found that Boomers spend an average of 12.9 hrs/week online, compared with only 11.8 hours/week watching traditional TV. It also found that many Boomers would be willing to give up their subscription TV service if they could get the same programming online.

Moreover, by a five-to-one margin Boomers are watching less traditional TV than they did a year ago. Among this group, 62% say it’s because they’re not as interested in what’s on TV these days, and another 26% say they’re spending more time surfing the web, ChangeWave said.

Boomers Unwilling to Pay for Social Networking

Though more than half of Boomers have a social networking profile  on a site such as LinkedIn (51%) or Facebook (55%) or another site, 77% of users say they would not be willing to pay a subscriber fee for social networking. Of all the services, LinkedIn is the most likely to attract paid subscribers - but only 7% say they’d be willing to pay a fee if it was no longer free.

Traditional TV vs. Alternative Programming

Among traditional TV viewers, 20% of survey respondents say they would be likely to downgrade or cancel their current TV service package in the next six months. The likelihood of canceling is highest among cable (22%) and satellite subscribers (22%), and lowest among fiber-optic TV subscribers (7%).

When asked which one paid subscription - among all media choices - they’d be most willing to give up, 44% selected TV service, which fared significantly worse than any other subscription service.

ChangeWave said that the vulnerability of TV subscription services is a direct result of the growth of internet video, which is providing a direct threat to traditional TV. More than two-thirds of Boomers (69%) say they’ve watched video content on their computer over the past 90 days and 48% say they’d be willing to pay a monthly fee for a subscription to an internet video service if it provided the same programming currently available on TV.

In terms of the top TV websites, YouTube.com (79%) is the leading online website Boomers use to watch video, followed by TV network websites (39%), Hulu.com (16%) and iTunes (11%).

Some Ads Okay

In terms of willingness to watch ads associated with internet video, the survey found, not surprisingly, Boomers clearly want to see fewer ads than they do with conventional broadcasting. However, more than two-thirds (68%) say they are willing to view at least some ads online.

About the research: The survey was conducted by polling members of the ChangeWave Alliance Research Network, a group of 20,000 business, technology and medical professionals and early-adoptesr. ChangeWave surveys this network of members weekly on a range of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports.

Lou says: This would appear to be especially bad news for everyone operating on a subscription programming model. Comcast and Time Warner are experimenting with ways to shift programming online for their subscribers; Cox is trying to get its incredibly clunky OnDemand service to work better; Netflix is offering some movies, though not nearly enough, online to its subscribers. Meanwhile, a Forrester annual survey says that time online has stopped its rapid growth. http://AdAge.com reports:

(T)his is the year web surfing leveled off at 12 hours a week after growing from less than six hours a week in 2004, according to Forrester's annual survey of more than 40,000 American consumers' self-reported media habits. The report...also indicates relative stabilization in other media channels, most notably newspaper and magazine reading.

So, let's not call Zappos a company built on social media exactly, but a company that saw social media as a platform it could leverage to bring to full fruition a unique, customer-centric culture. That's a mouthful, but a more accurate description. As Diane Hessan, CEO of Communispace, said to me: "At the end of the day, it's almost never about the technology."

In fact, if you look at Zappos' customer service approach from end to end, one of its key tools isn't Twitter -- even though hundreds of company employees use it -- but this thing called the telephone, which may rank as the original social platform. What comes through each platform is the message that the customer comes first.

Which makes sense, because Zappos has never really marketed in the way most of us perceive marketing: as messages pushed out in one direction, in the hopes that people will pay attention to them.

Using social tools, Zappos has built a mass brand, using thousands of incremental actions to achieve reach. As should always be the case, its broad use of social tools comes straight out of its culture, expressed as ten core values that include "Build Open and Honest Relationships With Communication" and "Create Fun and a Little Weirdness."

In fact, the biggest concern I've read so far about the company selling to Amazon is that it will destroy Zappos' culture. (All sides promise that it will continue to operate independently, and retain its distinctive focus.) But in reading the early comments about the deal, it's almost as though Amazon wants a bit of Zappos' social media stardust to rub off on it.

Remember that old Nike commercial where Spike Lee, in character as Mars Blackmon, says, "It's gotta be the shoes"? Well, with Zappos, it's gotta be the social.

via mediapost.com

Lou says: This is the second best commentary I've read on Amazon's $920 million acquisition of Zappos. The best was actually CEO Tony Hsieh's letter to employees. If you haven't read it, you'll find it a treat for its clarity, humor and declaration of continuing values.

This morning, the FTC's consumer protection chief David Vladeck told lawmakers that the agency is still reviewing the controversial proposal. "A material connection between a consumer promoting a product and the company that makes the product might affect the weight or credibility of the consumer endorsement, and therefore should be disclosed," he said in prepared testimony at a Senate hearing about advertising trends and consumer protection. But, he added, the subject is "difficult and complex."

Clearly, there's a difference between taking money to say nice things about a company -- such as by giving it a positive write-up or crafting a fictional testimonial -- and accepting a copy of a product in order to review it. Perhaps all critics in all media should say when they receive a product -- or movie tickets, CDs, or restaurant meals -- for free.

But bloggers and consumers have the same First Amendment right to express their opinions as newspaper critics do. And if newspaper critics aren't legally required to disclose when they receive free sample copies, there's no justification for requiring bloggers to do so.

Vladeck said today that the FTC hopes to issue final guides by the end of the year.

Lou says: As a consumer, I'd like to know what stake a reviewer has in the success of a company or product, whether the review is in print or on the Web.
As a newspaper editor and publisher, I was most uncomfortable with travel reviews from freelancers. We never knew what factors might be influencing the writer beyond their own research and experiences.
I was also skeptical of auto reviews, because even the reviewers for ethical publications usually rely on loaners from auto companies.