Archive for the Marketing Advertising PR Category

A Great Depression, Appearances to the Contrary

Posted in Marketing Advertising PR, Recession/Depression, Retail with tags , , on November 29, 2008 by John Stodder

Peggy Noonan, writing in today’s Wall Street Journal notices a mysterious phenomenon of the meltdown:

One of the weirdest, most perceptually jarring things about the economic crisis is that everything looks the same. We are told every day and in every news venue that we are in Great Depression II, that we are in a crisis, a cataclysm, a meltdown, the credit crunch from hell, that we will lose millions of jobs, and that the great abundance is over and may never return. Three great investment banks have fallen while a fourth totters, and the Dow Jones Industrial Average has fallen 31% in six months. And yet when you free yourself from media and go outside for a walk, everything looks . . . the same.

Everyone is dressed the same. Everyone looks as comfortable as they did three years ago, at the height of prosperity. The mall is still there, and people are still walking into the stores and daydreaming with half-full carts in aisle 3. Everyone’s still overweight. (An evolutionary biologist will someday write a paper positing that the reason for the obesity epidemic of the past decade is that we were storing up food like squirrels and bears, driven by an unconscious anthropomorphic knowledge that a time of great want was coming. Yes, I know it will be idiotic.) But the point is: Nothing looks different.

You don’t even need to free yourself from the media.  Just stay away from the news media and financial media.  Especially stay away from CNBC and the Wall Street Journal. You would hardly know anything unusual was happening at all.  If you’re watching football, or network prime-time offerings, or anything non-news on cable, you might get the occasional knowing topical reference, but that’s all.

The main way entertainment viewers are exposed to the economy is through advertising, and advertising hasn’t changed.  We’re still flocking to the malls, these ads tell us, and hauling back a bounty for Christmas morning.  We’re told to expect Big Savings For a Limited Time Only, but that’s nothing new.  We’ve had pre-Christmas sales routinely for years.  The results from Black Friday’s post-Thanksgiving retail sales apparently weren’t too bad. The biggest story to emerge from the official kickoff to Christmas buying suggests consumers are in a frenzy to spend.

Why isn’t the meltdown making its presence known more dramatically?  Noonan cites an unnamed economist who gives her the good news, then the bad news:

I asked an economic expert a few weeks ago if a second Great Depression would come to look at all like that, like a catastrophe, and he said no, not at all. In 1930 we had no safety net. Unemployment benefits, food stamps, welfare, an interlocking system of city, state and federal services—these things will keep it from being so bad.

But in tough times we will surely expand unemployment benefits, and welfare, and food stamps and housing assistance, which will mean more and greatly accelerated spending, which will mean bigger and steeper deficits, and higher taxes, with the one feeding on the other, which may mean an economic death spiral comparable to, say, Britain in the decades after World War II, its economy mired and held down by government control and demands. It continued more than a quarter century, until the change of economic thinking encapsulated in the phrase “the Thatcher years.” Is that what this will be?

Today’s Great Depression, Noonan says, exists “mostly in conversations between wives and husbands, in families and among friends, about selling, about digging in, about layoffs, and not taking chances, and reduced income, and fear.”  Decisions that arise from such conversations are the stuff meltdowns are made of.

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The Chicago Model for Buying Off Radicals

Posted in Barack Obama, Democratic Party, History, Marketing Advertising PR with tags , , , , on October 13, 2008 by John Stodder

This story made me laugh.

Its writer, John Kass of the Chicago Tribune, helps us understand how the lure of public money can tame even the most revolutionary impulses.  Anymore, William Ayers is no radical.  Today, he’s what they used to call a sellout.  But it’s a soft kind of selling out, the kind that allows you to keep calling yourself a progressive while living comfortably under the protection of a big-city political machine.

(T)he reason Ayers is not a big deal in Chicago has to do with the Chicago Way, and the left fork of that road that has been bought and paid for by the (Mayor Richard) Daley machine, subsidized by taxpayers who foot the bill for public relations contracts from City Hall.

The new Daley machine is much more sophisticated than his father’s. And the stereotype of knuckle-draggers and wiseguys—they’re still around, and there are jobs on the city payroll for those who work the precincts.

Yet what’s often ignored is that their university-educated cousins get city contracts to spin the news and shape the symbolism and tell out-of-town reporters that Ayers is no big deal. They won’t bite the hand that feeds them….

Marilyn Katz, Chicago PR Consultant and Ex-Radical

Marilyn Katz, Chicago PR Consultant and Ex-Radical

One friend of Obama and Ayers is former ’60s radical Marilyn Katz, now an Obama fundraiser, strategist and public relations maven. She’s often a go-to quote for reporters to knock down the Ayers-Obama story….

(D)uring the violent protests of the 1968 Democratic National Convention here, Katz was the security chief for the radical Students for a Democratic Society. She once advocated throwing studded nails in front of police cars, back in the SDS days when the group was alleged to have thrown cellophane bags full of human excrement at cops and cans of urine and golf balls impaled with nails.

How things change.

Under this Daley, her firm, MK Communications, has many city deals, and one involves public relations for the Chicago Police Department’s community policing program. From nails to contracts, the Chicago Way. Apparently, irony was not a ’60s thing.

Now, as Daley prepares to lay off more than 1,000 city workers, he’s given Katz and other public relations firms five-year contracts that could pay them as much as $5 million each for consulting, advertising and promotion.

And, folks, that’s why Barack Obama did not recoil from the “unrepentant terrorist” William Ayers.  We’re talking about two Daley Machine regulars, trusted members of the brother- and sisterhood.  Why would Ayers even stand out?  He was just another insider angling for a contract.  Yes, “another guy from the neighborhood,” but the neighborhood Obama was referring to was not a physical place, but a political citadel.

Given the impotence of the Republicans’ attacks on Obama for his ties to Ayers, maybe voters subconsciously understand this. You can’t hold it against a guy for wanting to make a buck.  Selling out obviously civilized him long before Obama crossed his path.

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Swing Voters Squared: Go for the Old

Posted in Barack Obama, John McCain, Marketing Advertising PR, Mortgage/Housing Crisis with tags , , , , on October 6, 2008 by John Stodder

Wondering why the Wall Street meltdown has produced such a decisive shift away from John McCain and toward Barack Obama?   It might not be as simple as Obama representing the party out of power.  A recent study by a market research firm paints a picture of the most critical swing voters.  It doesn’t take much imagination to see that these voters are disproportionately affected by the sharp drops in both housing and stock prices.

I just came across a story about the study in Advertising Age, writing up research conducted by Acxiom, a marketing services firm, into the elusive swing voters who end up deciding almost every presidential race. The idea was, first, to determine which states are swing states, and second, to profile the swing voters in those swing states.  Swing voters squared, you might say.

In Axciom’s view, the purple states are:

  • Washington
  • Oregon
  • Nevada
  • New Mexico
  • Colorado
  • Minnesota
  • Iowa
  • Wisconsin
  • Missouri
  • Michigan
  • Ohio
  • Pennsylvania
  • Florida
  • New Hampshire

In those states, who are the swing voters? From the Ad Age article:

Perhaps most surprising was the fact that purple voters identified themselves as more conservative than liberal and, in several categories, aligned more closely with red or Republican voters. On average, purple voters are older and either retired or nearing retirement, factors that likely cause the group to identify as more conservative, said Ray Kraus, a product manager in Acxiom’s Information Products Group. They are the group most likely to watch Fox News, in fact.

“A lot of people say this is a center, center-right kind of country,” he said, and purple voters’ conservative leanings support that theory.

You would think that’s good news for the McCain/Palin ticket.   But let’s keep digging.  Acxiom’s press release on the study goes a little deeper:

Acxiom found that the purple segments are more likely to be older than the other groups, own homes in the suburbs, and be planning for retirement. Their only nest egg tends to be an IRA, which may affect their views on Social Security. Furthermore, their spending on prescription drugs is higher than the other groups, and therefore they are more likely to be concerned about the quality and affordability of publicly financed health care.

Additionally, those in the purple segment tend to get their news from newspapers and television news programs such as Fox News and CNN. The blue segments are likely to watch CNN but also tend to watch CNBC and MSNBC. The purple segment’s affinity for Fox News supports other findings in this study that suggest they lean further to the right.

Not only are these swing voters older, they are also more likely to be married than either red or blue voters, likely to have more kids than blue voters, less affluent than blue voters but more so than red voters, and more likely than red voters to belong to a church board, fraternal order or veteran’s group.

Ad Age’s map provides more information. Worth a click.

Pondering these results, you can more easily see why the financial crisis has helped Barack Obama open up such a wide lead in the past 10 days. It’s not just a case of blaming the party out of power.   This crisis would appear to be hitting the purple voters especially hard.

Looking at the study, you see the swing voters in the swing states are those most reliant on savings and the equity in their homes for their approaching retirement.  Both nest eggs have surely taken a big hit, especially if their savings were invested in mutual funds and if their homes were recently remortgaged. One might suspect some overleveraging among these homeowners, given their high propensity for owning recreational vehicles and vacation homes.  These voters also have less time to earn it back, and less time to outwait the depressed housing and stock markets.

These voters don’t just want change.  They want economic security. They want to make sure they aren’t left out in the cold. That’s a voter who will be much more open to a Democrat’s message than a Republican’s.

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How To Explain The Treasury Deal

Posted in Barack Obama, Bush Administration, John McCain, Marketing Advertising PR, Mortgage/Housing Crisis, Wall Street with tags , , on October 1, 2008 by John Stodder

John McCain and Barack Obama agree with the CNBC analysts:  The Treasury Department plan, now commonly referred to as a “bailout,” is unpopular and thus unlikely to pass because the PR, or less pejoratively, the communications surrounding this action have been dreadful.

Too many people think about it as helping rich people survive the consequences of their own mistakes, at the expense of taxpayers for generations to come.   The plan’s advocates hear this and go apoplectic.  But shouting at Maria Bartiromo doesn’t help.

We talk about things like money in metaphors.  If the metaphors are inapt, the argument doesn’t make sense.  The term “bailout,” as McCain said this morning, is wrong.  But so is his preferred term, “rescue.”

Swap

Swap

What it really is, is a swap. I realize a swap doesn’t sound as urgent.  It sounds like a deal, like an exchange of value.  Which, in fact, it is.

Let’s say you are an investment bank.  You have securities — bundles of home loan contracts with the homes as collateral — that accountants won’t let you put any value on, because too many of the contracts were made with people who can’t pay you back.  They show up on your balance sheet as zero or worse.  They are dragging down your balance sheet.  Because of these messed-up securities no one will lend you money.

However, you and I know there is some value in those securities.  Behind each home loan contract in each bundle, there is one of these:

Under new ownership, if the deal passes

Under new ownership, if the deal passes

A house!

Plus, not all the contracts are with deadbeats.  Some subprime mortgages were sold to people who do, too, pay their bills.  Don’t tell those people that Fannie Mae and Freddie Mac didn’t know what they were doing!  They bought a house on easy initial terms, and it turned their lives around.  They make their payments on time every month.  Their debt-to-equity ratio is going great guns.

But still, the accountants say it’s all worthless, and under the current accounting rules, they really can’t say anything else.  So, as a result, no one will lend your investment bank money.  In fact, these supposedly worthless securities permeate the banking system so that banks have almost stopped lending each other money. And unless banks have some money, they can’t lend money out to others — to “Main Street” if you prefer.

You’re in a jam, but your jam is hurting other people even more.

I am the government.  I can get all the money I want. And I can’t go out of business.  I’ll be here forever, so I’m very patient.

So here’s what I’ll do.  I’ll pay you cash money for your valueless (but not worthless) securities. Not all of them. But the better ones, and enough of them so that this problem of so many banks with so many valueless securities will start to go away.

Will you get back from me all the money you paid for them?  Or the money you hoped you’d make from them? No way.  But you’ll get something, which is better than what you have now, which is nothing.

Then, duly chastened, weaker but wiser, your investment bank can go back to doing business.

Meanwhile, I’ll just wait with these securities, and I’ll sell them when their underlying value improves and/or becomes more apparent.  Basically, I’m exchanging cash you need today for securities I can sell tomorrow.

Old Glory

Old Glory

Because I’m your government, I’m not going to worry too much if it’s a good deal for me, because I actually care about your survival more than my profits.  I represent the people of America, and the people of America need credit or else we’ll have another Great Depression.  I won’t let that happen to the wonderful people of our country.

Cue the patriotic music.

Darren McGavin

Darren McGavin

But when you can’t see me, I’m rubbing my chin like Darren McGavin in “A Christmas Story,” wheeling and dealing with the guy who sells Christmas trees.  In the back of my mind, I’m thinking, “Now I own a lot of houses, in a lot of different neighborhoods.  Some of these houses aren’t worth much, some of them are worth a lot. But none of them are worth zero. I’ll probably come out okay.”

Which means taxpayers will come out okay.

What do you think?  Is this a good way to explain it?  Do you have a better way?  Have at it if you want to try.

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Analysts on CNBC: It’s A PR Problem

Posted in Congress, Marketing Advertising PR, Wall Street with tags , on September 29, 2008 by John Stodder

I’ve been watching “Closing Bell” on CNBC and the consensus among Maria Bartiromo and her panel of financial analysts is that the members of Congress who voted against the bill as if they were taking a stand on behalf of “Main Street,” don’t understand that Main Street and Wall Street are the same street.

It was said many times: It’s a PR problem.

Speaking as an ex-PR guy, I think there’s a bit of truth to what they’re saying.  The message for the past week about the bailout was, simply put, the bill had to pass to save Wall Street from a major implosion.  Even though, the general feeling seems to be that Wall Street did this to itself.

What hasn’t been stated clearly enough is the crisis isn’t about the stock market at all, which is what most people think of when they hear “Wall Street.”  It’s about the availability of credit.  Unknown and unseen to most Americans, there is an infrastructure that moves money from places where it’s stored to places where it is needed.  The main thing needed to keep the flow going is confidence on the part of the lender that the lendee will be able to pay it back.

The “mortgage rot” has severely undermined this confidence.  If I’ve got money to lend, and a borrower shows up who’s carrying portfolio full of shaky securities, as is the case today with many financial institutions, I’m faced with the reality that my borrower might go under before he gets around to paying me back. Secretary Paulson’s plan had one real goal: To make the lenders more confident in borrowers.

Another CNBC character is saying this situation might need to be resolved by the election.  If the denizens of Main Street go try to borrow money for a car, a student loan or a business expansion — or even just to make payroll — and get turned down, they’ll vote accordingly, and our leaders will then know what to do.

It is, however, not obvious who they’ll blame and for what.  The circus of blaming is just getting started.

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Little Red Camaro

Posted in Barack Obama, Marketing Advertising PR, Sarah Palin with tags on September 10, 2008 by John Stodder

The news yesterday was all about whether Barack Obama actually called Sarah Palin a “pig.”  Overlooked was another name-calling incident involving the Republican candidate for VP: Advertising Age calling Palin the GOP’s “red sports car.”

Cover of Advertising Age 9/8/08

Cover of Advertising Age 9/8/08

Ad Age borrowed the idea from Harvard Business School Dean John Quelch, who said the Palin selection was

“…a very good brand extension, one that complements the core propositions of the master brand while extending it to a new audience. … We’re still in an opinion-shaping moment. [Wednesday] night’s speech put the extension on the supermarket shelf, but it’s a little premature to … declare we’ve got a permanent new fixture in the product line.”

On the competition: “Biden was a defensive line extension. Palin is an offensive one. [She's] more of a fighting brand, whereas Biden was picked to shore up foreign-policy credentials and lend some experience.”

In an earlier interview with Newsweek, Mr. Quelch likened Obama to a Prius and McCain to a Ford F150. With this pick, he said, McCain has put a red Chevy Camaro in the garage next to his truck.

Meanwhile, the trade journal polled its readers online, asking its readers “Which presidential candidate is better for the marketing industry?”  Sixty-two percent chose Obama.

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