Counting Consumers: Consumer Reports

If anyone is looking for more evidence that The Futures Company might be right in predicting a dramatic shift in consumer conscience and confidence in 2010, the newest Consumer Reports survey seems to support a portion of it. Consumers are spending slightly less and are less willing to take on debt during the holidays.

Highlights From Consumer Reports Survey

• Consumers traded in unique finds and specialty stores for mass merchandisers (41 percent), online retailers (39 percent) and department stores (21 percent). The primary reason given was bargain hunting.

• Consumers are increasingly using cash as a primary form of payment (76 percent), with debit cards (51 percent) and credit cards (48 percent) falling by a wide margin.

• Consumers who are using charge cards intend to charge less ($636 vs. $723 in 2007), and plan to pay off any debt faster than previous holiday seasons. Last year, 61 percent had paid off holiday credit card debt by January; only 27 percent carried that debt beyond March. And 13.5 million Americans still carry 2008 holiday debt.

• Consumers are planning to purchase 15 gifts, with women out-spending men 16 to 13. Most of these gifts are classified as practical.

• Consumers are planning to shop between Christmas and the new year, with almost half taking advantage of post-holiday sales (81 percent) or purchasing gifts for themselves they did not receive (69 percent).

Overall, consumers planned to spend less on gifts. While spending plans are down, the holiday season has been welcomed by retailers. The Retail Index, which is a component that measures purchases made in November, rose 24 percent at the start of holiday shopping. This is despite consumer sentiment being low, as few have experienced financial improvement during the last six months.

What retailers and advertisers might glean from holiday shopping patterns is that consumers are focused on making smarter purchases, less willing to take on debt, and more likely to respond to common sense-driven marketing messages over affluence-driven purchases. Almost 80 percent also relied on social media for recommendations from friends and family and to find better deals, even if they made their purchases off line.

Revitalizing Teams: Five Steps To Success

Steve Tobak, a marketing and strategy consultant based in Silicon Valley, published a five-step process for turning around demoralized, underperforming groups.

His timing is right. The holidays provide a great opportunity for a psychological reset, with the first two weeks of the new year being the best time to establish a new direction, assuming executives doesn't derail the team by looking back at 2009.

Tobak's 5-Step Process For Turning Around Groups.

• Understand how it got that way.
• Pick your leaders, and add new hires.
• Rebuild reputation with executives.
• Set challenges with realistic goals.
• Demonstrate value to the company.

Enhancing The 5-Step Process For Revitalizing Groups.

Tobak estimates that his process will take a year or two, which seems to be far, far too long for modern companies and organizations. Most of the world, nowadays, needs measurable results in 180 days and demonstrated traction inside of 90. It's achievable, with some modifications to the process.

• Situation Analysis. Tobak is right that you have to have some understanding of how you got there. The strongest part of his post includes five of the most common reasons.

• Establish A Strategy. Before picking any leaders, set a new purpose for the group. What is it that the group is about and how does that fit within the company? It's especially important to set the strategy before picking leaders because individual positions within the renewed group might be different depending on that strategy.

• Establish The Tactics. Determine the baseline for work that needs to be done (and prioritize it) within the strategy. This will help you pinpoint where you can maximize individual team members in ways you may have never considered before. Then, and only then, if there are any holes, consider new hires with specific skill sets to fill them (but only after the next step).

• Set Challenges With Goals. Except, rather than simply setting them, it's more worthwhile to host a team meeting after priming key individuals within the group. Although you can have a frame work, it's important to let the team set those goals — not the mandatories, but rather what would constitute overachievement.* By the way, I suggest doing this step prior to adding new hires so the original team can own it.

• Demonstrate Accountability. I don't really believe you can "rebuild" a group's reputation. Reputation is an outcome. You "rebuild" the group's ability to achieve goals and reputation will follow. You can set the stage internally, with regular team meetings to report on individual progress. (You might want to meet with specific people before the group reporting, ensuring they have met mandatories and/or are ready to explain "why" they have not with feasible 30-day solutions.

*I flagged this point because in working with nonprofit organizations, political campaign teams, and even small- to medium-sized companies, I've found setting two bars can make a big difference. The first bar is a mandatory goal; the second bar is an overachievement goal.

The reason is simple. Having a second reachable overachievement goal ensures the group won't stop producing after meeting any minimums. In every group where I've established two bars, 90 percent tend to shoot for the higher goal, and the remaining 10 percent meet mandatories but don't feel pressured or demoralized for only reaching the first bar.

For example, oversimplified, if someone in charge of programs has a mandatory goal of hosting two programs in 180 days, the overachievement goal might be to host three, with the third being the one that they have the most flexibility to produce. Special projects like that, which are really an extension of goals, are often seen as an incentive as much as a goal.

Again, Tobak does have a strong start with his 5-step process. My enhancements will help make it move faster.

Other than that, there is only one more thing I might adapt. Any time I have the opportunity, I discourage companies from creating environments where different departments have to vie for limited resources. It's counter productive and demonstrates a lack of leadership.

Sure, I appreciate that many companies are run in this fashion. But that is the point, isn't it? It tends to show, much like it probably showed in the group before you decided to turn it around.

Influencing Nothing: Social Media Influencers

There is seldom a week that goes by without at least one early social media adopter advising companies to target "influencers."

And every time I read such advice, I cannot help thinking that for the best intentions, some of them are missing the point. In attempting to transplant the media influence concept onto social media, they drift further and further away from the truth.

Individuals as "influencers?" Not really. It seems much more likely that real influence is a function of authority, credibility, and ideas than anyone who happens to enjoy some temporary position of popularity based on comment counts, follower counts, or any other algorithmic measure.

Authority. Whether they are "popular" or not, people in authority have influence. The owner of a social network, for example, can order the change of any number features, leaving members to weigh any changes against the value of their connections on the network. Sure, some people might gripe, but their "influence" is confined to the length of membership.

Or, if you prefer an offline example, the President's approval rating has dipped below 50 percent but he still has significant influence in this country and a somewhat diminished influence in the world. His predecessors have much less influence after leaving office, naturally. The same can be said for authors, who tend to be as good as their last book once the buzz dies.

Credibility. The primary reason the media became influential is because they remained objective and largely unbiased, which is a fundamental criteria in being credible. Journalists pursued the truth, with their influence only waning in the last decade in favor of affirmation-slanted journalism, advertiser pandering, and tabloid sensationalism.

With social media, credibility might be established with authority, but credibility will dictate whether or not they will retain any influence once they leave a group. Pander too much to "friends" or tactical "followers" or attempt to profit off those relationships and the crowd that followed certain people at the last expo will be gathered around someone else. (We've all seen it.)

Ideas. Establishing credibility is long-term investment in new ideas or the ability to draw new perspectives on old ideas. While there is always healthy discussion on whether or not content is king, it certainly is a commodity that separates real influence from perceived popularity or a temporary association. Ideas build credibility.

For example, some people are followed because they are popular or were recommended by someone else. Other people are followed by smaller crowds because they consistently add value. But on any given day, someone with great ideas related to a specific subject will surge ahead for a variable amount of time.

Where does this leave the influence brokers?

Considering that none of the above is trackable beyond maintaining real time insight, it leaves them on a path to nowhere. In some cases, in terms of social media, several influential adopters have already fallen by the wayside as their authority drifted away with the loss of a position, their credibility was crushed by making some questionable choices, or their ideas didn't measure up beyond a flash in the pan.

The real takeaway here is that individuals aren't influencers at all, but rather the actions that some individuals take have influence within very specific spheres that do not necessarily cross over into other spheres. And not surprisingly, the most credible communicators know it.

David Armano frequently reminds people that a surge in popularity doesn't always mean quality. Jay Ehret has enough insight to know people and companies ought not bend to consumers and keywords for want of traffic. Geoff Livingston took time out from his travels to include a line about people who are "legends in their mind." Shel Hotlz recently cautioned companies that catering to consumers can fragment a brand much like a "Yes Man" eventually destroys his own credibility. And Valeria Maltoni purposely made it a point to avoid sensationalized topics that help boost popularity. The list goes on.

The other list, those who preach influence as the key to the equation, goes on too. I thought of including links to them as well, but don't want anyone to mistake one bad idea as indicative of them being bad people. They're not. They are instead stuck much closer to the middle of their social media thought process.

Suffice to say that the best of them know they don't influence me or anyone else, but sometimes they have an idea that might influence me and everyone else. And the most mistaken think they and others have influence over people indefinitely and across almost any subject.

Making Sacrifices: Critical For Entrepreneurs?

There seems to be an entrepreneurial paradox being framed up by Jason Cohen, founder of Smart Bear Software, and Tim Berry, founder of Palo Alto Software. And they are not the first to do it.

Cohen suggests maximizing your chance for success means sacrificing health and family. Berry suggests that success can be achieved by a measured approach, which could save you from an early grave.

The paradox is a classic Aesop's story about the tortoise and the hare with a few modifications to capture the spirit of modern entrepreneurs. Let exhaustion supplant arrogance as the hare's potential undoing, and then take away any guarantees that the tortoise will cross some mythical finish line. Life, unlike the fable, doesn't come equipped with one.

The hare forgets that success cannot be measured by scarcity.

If you have to sacrifice health and family to achieve some arbitrary measure of success, then you aren't successful. As Berry rightly points out, placing work before life doesn't guarantee you'll cross the finish line. And even if you do reach some imaginary line, there is a good chance that you won't have as much time to enjoy it.

Chances might even be that you'll only work harder to protect it. Or maybe, you'll realize that other measures might taste sweeter as Arthur Miller explored in the character of Willy Loman. Or maybe, your own sense of self-worth might produce some conviction that somehow you have to sacrifice work in order to rebalance your life after reaching some unknown destination.

The tortoise is sometimes resigned to enjoying leftovers.

Where Berry is a bit off the mark is that his plan requires a heavy dose of self-discipline. Having met plenty of would-be entrepreneurs, authors, and inventors, most don't have it. And yet, most of his fundamentals and fine tuning requires it. Rarely do people understand they usually end up in the place they are in because of decisions made three months prior.

Of course, there is also no guarantee that the apple, let alone the worm, will be there when you arrive at any destination. So sometimes being someplace first is paramount to success as Dennis Yu, CEO of BlitzLocal, offered up as advice to small business owners. In some cases, you don't even have to be the best, just first.

Would you rather be the tortoise or the hare?

The answer is much like two sides of the same coin. The hare might get there first, but there is an equal propensity for more mishaps along the way and a dilemma that "self-sacrifice" sometimes carries an interest rate much steeper than one might expect. The tortoise might be inclined to stop and smell the flowers at the expense of finding only crumbs at the next crossroad of opportunity. So which is it?

The question is a trap, of course. Choosing heads or tails neglects the obvious. All coins have three sides, and the one you want has the thinnest edge of all. It denies choices always carry duality.

Modern entrepreneurs (and marketers for that matter) are best served when they can muster enough self-discipline to follow Berry's model but augment it with Cohen's passion and tenacity at precisely the right times. Or, in sticking with the metaphor of a modified race based on Aesop, the best entrepreneurs are marathon runners with enough reserve to sprint at the right moments.

As Copywrite, Ink. enters its third decade (founded in 1991), I've run the company at both speeds only to find I didn't like either. So, I eventually settled on the edge. You have to make your own road rather than choose on the one less traveled while keeping in mind that the journey is ten times more important than the finish line, given finish lines don't exist.

Looking For Market Share: Verizon

In 2006, beginning with a boost from rumors of the iPhone, AT&T accomplished something few would have thought possible. It captured market share in a field that was once dominated by Verizon.

Everyone knows the primary reason. The iPhone was the only smart phone capable of turning the tables on the cellular selection process: Whereas most people chose a carrier and then a phone, Apple and AT&T convinced people to buy an iPhone regardless of the carrier.

Today, the iPhone commands about 23 percent of the market share, which undoubtedly keeps AT&T in the lead position as a carrier. The effect on Verizon has been profound.

After grossly underestimating the impact of the iPhone and serving up a series of distress campaigns, Verizon has finally decided to draw a line in the sand and set its sights on clawing its way back to the top.

In 2009, Verizon invested heavily in a multi-front comparative attack against its competitors that now rounds out three of the top ten most expensive attack campaigns this year: $100 million to introduce Fios against Comcast (unrelated to the AT&T spat); and $100 million to introduce the Droid as its weapon of choice against AT&T.

Framing Up The Verizon vs. AT&T Smackdown

Saving the Comcast battle for another time, the two-prong iPhone/AT&T attack seems to be working but not in the way Verizon anticipated.

While it has gained ground, it has yet to recapture significant market share away from AT&T. It is also a long, long way from generating profit on smart phone sales given that Verizon spends about $100 per $199 Droid for advertising and offered customers a $100 rebates.

In terms of awareness, Verizon's attack against AT&T and AT&T's counterattack have generated brand awareness for both companies, with Verizon eking out a slight lead.

In terms of market share, the Droid seems to be capturing people who decidedly wanted iPhone features without (less so) the Apple brand and/or (more so) AT&T service. Still, in the third quarter, AT&T signed up 2 million new subscribers; Verizon signed up 1.2 million new subscribers.

In term of public relations, Verizon clearly comes out on top despite consistently fudging facts. What is interesting is that AT&T has a better network, but public perception consistently positions AT&T as an inferior network. (Here is the truth that was buried beneath the bad publicity generated by an ill-advised lawsuit against Verizon).

In terms of marketing, AT&T seems to be relying too heavily on its ability to be exclusive iPhone carrier. If the contract ends in 2010 or 2012, AT&T will be forced to find new solutions ... unless it can reverse its partly undeserved image. (While most consumer reviews place AT&T second in terms of dropped calls, people talk about it as if its last. It's not.)

When you add it all up, AT&T will be in a real fight next year to retain what began as Verizon's unwillingness to meet Apple's initial conditions to be an exclusive carrier. While AT&T previously held a better marketing strategy and still holds the superior market share, it has yet to communicate tangible consumer benefits in terms that resonate with the public.

*Comparison chart by Gigaom.

Predicting Trends: Ad Agencies Brace For 2010

Earlier this month, David Poltrack, chief research officer for CBS, predicted broadcast advertising revenue will increase 5 percent next year. Poltrack made the case that with the exception to some cable networks and NBC paying too much attention to overnight ratings, an increase in broadcast ad buys is good news for agencies.

While this might be good news for advertising agencies, Martin Sorrell, CEO of WPP Group, isn't as excited about incremental improvements. Like Sorrell, several holding company CEOs are pointing to extreme client cost-cutting as the main reason they expect flat organic growth in 2010. Most predict broadcast ad spending to increase less than one percent. Sorell himself said that an economic recovery is the only thing that will reverse the trend.

"I don't understand this degree of optimism. Basically, things are less worse than they were," he summed last week.

So which is it?

Brian Morrissey, writing for Adweek, presented an interesting perspective that finds the balance between marginal growth and no growth for advertising agencies. It might not be the economy. It might be a fundamental shift in the kind of agencies winning accounts.

"Yet the general expectation is that the number of these jobs will increase, particularly as digital initiatives become core not only as marketing channels, but as internal drivers of innovation," he wrote, citing Ameriprise, which was won over in a review that included Publicis & Hal Riney, as an example.

Whether or not you believe digital agencies can take the lead over traditional shops is less important than pinpointing what is happening in traditional shops today. By in large, many are missing a piece of the puzzle for 2010. It's not the economy. It's everything else.

The truth about "traditional" advertising agencies in 2010.

The moniker alone is one challenge. If advertising agencies get stuck with the label that they are traditional, they may be dead in the water within five years. Successful agencies, by their nature, have never been "traditional," a term that now applies to an overemphasis on big budget broadcast creative and ad buys. Unfortunately, that focus will not likely pay the rent next year.

Worse for "traditional" agencies attempting to wait out the economy will be the perfect storm. Despite being well-suited to move into social media, most have been lax in the uptake of the low cost counterpart. The result is three-fold beyond the moniker: agencies have adopted hiring freezes, demoralizing their creative teams; budgets are shifting toward digital, reducing mainstream budgets; and the lack of movement to understand the space at a slower pace than public relations has helped fuel their primary competition, which is generating increased revenue that will allow them to steal away "traditional" talent.

If you need more evidence, think back to the Forrester Research survey that found of 100 global interactive marketers, only 23 percent believed their "traditional brand agency" is capable of planning and managing interactive marketing activities; 46 percent did not believe they were capable. Where the Forrester Research study stops, however, is in adding the economic pressures of marketers over the last two years.

Unlike when advertising agencies were slow to pick up Websites as a viable marketing channel but then recovered by buying up Website design companies, many agencies are struggling too much this time around to repeat the process. So unless Sorrell and other holding company CEOs adjust their thinking beyond the economy, it seems likely digital agencies really will be in a better position to steal seasoned creatives, capture traditional accounts, and reshape the field.