TV Ads – Too Many?

We are in the business of providing the material that prevents the commercials from all slamming together . . . that’s what we are doing here. That’s what we are doing on the West Wing set. We gotta deliver them twelve minutes of stuff to separate the Chevy commercials.

— Lawrence O’Donnell, Jr. Executive Producer of the The West Wing. Quoted in an NPR interview, January 2006.

I counted forty-two ads in last week’s episode of Lost. And that does not include any that aired before the show started or after the credits started to roll. Just forty-two ads in five breaks squeezed between six seven-minute segments of content. There were almost nineteen minutes of ads in a sixty-two minute time slot. That’s almost 30% of the air time dedicated to noise from advertisers.

Marketers and media moguls wonder why the ad-supported model is dying. I am saturated. My brain is full. Each ad flashes what seems like an endless stream of sub-second images in front of me. Yes, I have a TiVo, and the 30-second skip, and I fast forward through most of the ads. But I am tired of the noise that is attacking my senses.

On a related note, we canceled our cable today. We kept basic cable service in case we want to watch a presidential speech or catch the occasional episode of The Daily Show. I am sure that the advertisers wont miss me. I wasn’t buying any of their stuff anyway. I am looking forward to spend more time with my Kindle.


Secret of Amazon’s Success

We don’t have one big advantage so we have to weave a rope of many small advantages.

— Jeff Bezos


Growth

Growth for the sake of growth is the ideology of the cancer cell.

– Edward Abbey

Perhaps it is my natural temperament to do things deliberately and with purpose (after all, it is the tortoise who wins the race). Maybe it is my persistent skepticism. Quite possibly it is an outgrowth of my intuitive personality type (INTJ). Whatever the reason, I have always been resistant to Wall Street’s incessant demand for growth from public companies.

I have an MBA. I know that investors demand growth because growth drives the stock price up. And investors want the stock price to go up. Q.E.D. But at what price? And over what time horizon?

Yesterday’s announcement of the Pfizer / Wyeth merger reminded me of the long odds such marriages have at success. Depending on who you read, anywhere from 50 – 80 % of mergers fail – destroying vast amounts of shareholder value in the process. Why pursue such a risky strategy?

I am in the process of launching a web-based career management site and if my nascent little company ever reaches the size that we have shareholders, we will continue to drive growth organically and sustainably. We will pay dividends to share the wealth. We will stop growing when doing so means preserving the long term viability of our enterprise.

I have my suspicions as to why “growth at all costs” is so prevalent. Wall street and the board rooms of corporate America seemed to be fueled by transaction fees and bonuses. Filtering the behavior of corporate executives through these simple lenses reveals that short-term vision can be blinded to long-term implications. In any case, they would do well to behave less like a cancer cell and more like a redwood tree.

Citi is hiring! . . . or NOT

They're hiring?

Citigroup announced today that they are revising their plans to downsize their workforce. The new plan is to lay off 53,000 employees, or 20% of their workforce.

Driving home to Chapel Hill from Greensboro earlier this week, I noticed this sign on the Citi office building. I wish they would get their story straight.

Consumers Go On Strike

As the economy continues to sour, consumers have gone on strike. For the past few months, I have been contemplating the following economic and social trends that seem to explain why.

Rising productivity is what enables companies to increase employee’s pay. Increases in pay result in the overall rise in our standard of living. However, in the last decade, this relationship between productivity and rising employee pay seems to have been fractured.

Instead, the benefits from rising productivity over the last decade have been channeled primarily to executives. Their incomes and bonuses have continued to rise to unprecedented levels. Unfortunately, someone forgot to tell the masses that they were not included. Accustomed to general increases in standards of living and inspired by the rising wealth of the top earners, the majority of consumers mortgaged their homes and leveraged their credit cards to maintain an upward trend in standards of living. We borrowed to keep up with the Jones’s and maintain the illusion that we were making progress.

Enter the economic collapse of 2008.

Consumers have stopped spending. How could they do otherwise? Their credit cards are tapped and their mortgage options have evaporated. The pundits and the economists are pleading with consumers to resume spending but where is the disposal income supposed to come from?

It seems to me that the consumers are on strike. I can’t say that I blame them.

What’s wrong with online advertising

When the news broke today that a crane had fallen in New York City I immediately went to the web in search of video footage. CNN was my first stop. As expected, they had a video clip at the top of the page.

The next two minutes were a stunning realization of all that is wrong with the current attempts to monetize online video. The clip was 75 seconds long. In order to watch the clip I had to endure a 30 second pre-roll advertisement . . . for VIAGRA!

I am a woman in my late 40’s who has no need or interest in Viagra. The length of the ad was nearly 1/2 as long as the length of the news clip and I had absolutely no interest in the product. What a waste of my time.

I used to pay CNN an annual subscription to access their online content without advertising. What a pity that they discontinued this service. I would rather pay a few dollars a year for their service then waste precious time and have my brain cluttered with useless advertisements.

David Byrne On The Music Business

David Byrne has an excellent article on the music business over at Wired. He offers this brilliant insight into music business today:

What is called the music business today, however, is not the business of producing music. At some point it became the business of selling CDs in plastic cases, and that business will soon be over. But that’s not bad news for music, and it’s certainly not bad news for musicians. Indeed, with all the ways to reach an audience, there have never been more opportunities for artists.

A very good read.

FedEx Trumps UPS

Fed ExA few years ago Book of Joe inspired me to open a personal FedEx account. His logic was impeccable and extremely practical. Since then I have shipped numerous packages enabled by the wonderful tools on my account at the FedEx web site. Some of the outstanding features include:

A few weeks ago we moved to Chapel Hill, North Carolina. We now live a stone’s throw from a UPS Store so when I had a few packages to ship recently I decided to give the competitor a try. I logged on to UPS.com and created an account. Within minutes I had created three entries in my address book and printed three shipping labels.

I dropped the packages at the nearby UPS Store and declined a receipt. I mean, why bother with a paper record right? I assumed I could just go home and track the shipping status via my online account, where I had created the shipments!

Imagine my surprise when I logged onto my UPS.com account later that evening and could find no record of my shipments. The UPS online system has no tools to keep track of history. My packages are gone and I have no idea what the tracking numbers are. I guess I will call my family tomorrow and see if they arrived.

I am sure that the UPS shipping tools for corporate customers have all the history and tracking that one could want. But for a personal account, my money is with FedEx.

Contracts, Contracts, Everywhere

200710081320Long term contracts and petty fees are everwhere.

When we moved to Princeton last year we signed up for Poland Springs water delivery. (Poland Springs is owned by that bottled water juggernaut, Nestle Waters.) They offered an inflexible monthly service plan of 4 bottles per month for $32.96, which was the best deal in their array of undesirable options. You can skip a delivery, but not a payment.

When the first bill arrived I was surprised to find a $2.00 fee for an Oil Surcharge. What? This is nothing more than a price hike disguised as a fee, hiding behind rising fuel prices. They are in the delivery business. Fuel charges are integral to their cost of doing business and should therefore be integrated into the price.

My biggest disappointment came when I set out to cancel the service due to a pending move to North Carolina. I knew I had signed a contract for their flat rate service but I remembered it as being a one year commitment. Imagine my surprise to discover that I had, in fact, signed a two-year contract and was now facing a $50 cancellation fee. With our move date rapidly approaching, I paid the fee . . . and said goodbye to Nestle Waters.

The cell phone industry introduced us to contracts with the rationalization that they were subsidizing the price of the phone. Our “commitment” helped them ensure that they recovered the cost of the phone. Now that we let them in the door, the industry is charging contracts everywhere. AT&T requires a two year contract with the iPhone despite the fact that there is no subsidy for the hardware. T-Mobile required a one-year contract extensions just to upgrade my handset to a Blackberry. No thank you.

Contracts have a modicum of acceptability if the company incurs set-up costs, such as when the cable guy has to come out to your house to set up your cable box. But Poland Springs had no startup costs with my service plan. They delivered four bottles of water to my house once a month for a cost of $8.74 a bottle (or $1.75 / gallon). The entire delivery too mere minutes each month. It seems to me that they should be able to make a profit on each delivery, beginning with the first one.

I guess I have learned my lesson with bottled water. There has been a lot of buzz in the news lately about the potential hazards of plastic bottles leaching their chemicals into their contents. (Check out the great Smart Plastics pdf at the The Institute for Agriculture and Trade Policy). Time to get a water filter.

Mortgage Debacle

Gretchen Morgensen has written an insightful article in the Sunday Business Section of the New York Times. After the heartbreaking introduction of a homeowner in New Jersey who would like more than anything to keep her home, Gretchen offers the following insight:

Lenders, government officials and loan servicers, who take in borrowers’ monthly mortgage payments, contend that troubled borrowers everywhere are being helped to stay in their homes by those overseeing their loans. But neither data nor anecdotal evidence supports this view. A recent survey of 16 top subprime loan servicers by Moody’s Investors Service found that for the first six months of 2007, an average of only 1 percent of loans experiencing an interest rate adjustment, or reset, had been modified.

A few minutes of logical thought would lead one to assume that lowering the interest rate of troubled loans so that the homeowner can continue to make payments and keep the house would be the best result for all concerned. The holder of the mystical “collateralized debt obligation” would continue to receive an income stream (albeit slightly reduced), the loan servicing agency would continue to skim fees for processing the loan and tax payments and the homeowner would get to keep his / her house.

But alas, the world does not operate according to my logical expectations. Later in the article, Gretchen explains,

. . . on the billions of dollars worth of mortgage loans that have been sold to investors in the last few years, it is not the banks or lenders like Countrywide that are hit with big losses when homes go into foreclosure. It is the sea of faceless investors who own pieces of these trusts. Also, under the trusts’ pooling and servicing agreements, Countrywide and other servicers typically recoup any costs they cover in the foreclosure process, such as legal and appraisal fees.

The foreclosure process is a profit opportunity for servicers and lenders, but there is very little oversight of the fees imposed.

Now it all makes sense. The profit for the “loan originator” is not in the loan, but in the transaction. Any transaction.

Something is broken here.