463 Thinks they are funny

http://463.blogs.com/the_463/2007/12/463-turns-three.html#more

Tom Galvin, Sean Garrett and Jim Hock of 463 show there may be a career outside public policy waiting for them. Sadly it won't likely pay very much.

The markets only work in the long term

Ask any financial advisor and they'll always tell you to invest in the long term. Well, my guess is that investors in marketing services group, Chime, are hoping that this advice is correct. Chime put out a very positive trading update today, only to see it's share price drop nearly 9%. Lord Bell's quote read: "Our trading performance is very strong, our new business pipeline is very strong and our prospects look very good". Could he have been more positive? My guess is that right now Chime is wishing it hadn't said anything. Now some will argue that it released this on a day when the markets were down but in truth Chime's share price is already off nearly 40% from its peak earlier in the year. What would appear to be the case is that the markets have long memories and they remember what happened during the last recession and they are taking any opportunity they can to get out of media stocks, especially those with an advertising component. Of course we aren't in a recession and Chime is certainly sounding pretty bullish about its prospects. But it would seem that even a business with as much marketing intelligence as Chime can't manage perceptions around its stock price in a climate like this. Indeed the lesson from this would appear to be - say as little as possible and don't expect anyone to hear any of the positive news as they are only listening for bad news.

7 out 10 People say they want measurement

I've been digging around for articles on measurement in PR as I still believe it is an area that needs greater attention. In so doing I came across a paper by Chris Cartwright, MD of Harvard in the UK who carried out a survey on the subject. The paper is pretty good and certainly worth a quick read, though I should warn you it's even drier than this blog. The one thing that really caught my eye was the opening statement: "While 7 out of 10 PR practitioners agree that PR evaluation is an important part of their role..." I had to read this several times because I was stunned. What this says is that 30% or nearly one in three DON'T think measurement is important. Again I'm truly amazed by this. I can understand some people may not want to be measured because they're not doing a good job but to check a survey box that that says you don't think it is important perhaps explains why measurement is still so low on the agenda. I'd love the various PR institutions to take this subject on. I'd love the major brands to make it a top priority. But it would seem that until the three people out of every ten that don't see measurement as important are persuaded to think again then not much will happen.

Here's the link to Chris's article: http://www.chime.plc.uk/downloads/PR-Evaluation-Survey-Chris-Cartwright-Harvard-Nov07.pdf

Apple pays price of success

F Secure got some good PR today with the FT running a big piece on the front of its Companies & Markets section on how Apple is increasingly becoming a target for computer hackers. The story which quotes an F Secure security researcher, is based on research the company announced via a press release earlier in the week.

PR aside, the news here is that Apple is no longer immune to the malware that has plagued the PC community for years. It seems the dramatic increase in the number of Macs being sold (sales have roughly doubled from a year ago) has caught the attention of the hackers. If this trend continues, Apple will likely have to ramp up its efforts to promote the secure nature of its architecture and the efforts it takes to make the OS more secure over time. For a brand that is so consumer focused this level of technical message may be awkward to handle. At the end of the day though, it is a problem born out of success and therefore one I assume they'd prefer to have.

You Tube Score Update

A few months ago I used YouTube as a measurment tool to see how major brands scored. I ran this simple test again today. The results show that most brands are increasing their presence on YouTube at quite a significant rate. Here's the scorecard:

Brand Number of clips then ....Number Now
Disney 224,000 ....275,000
Google 97,000 ....169,000 <-- big jump
Yahoo! 81,100 ....123,000 <-- big jump
Apple 74,200 ....123,000 <-- big jump
Microsoft 44,700 ....69,500
Coca Cola 34,400 ....42,600
Toyota 33,400 ....42000
Nokia 27,700 ....30,900
McDonalds 22,000 ....29,900
GE 15,000 ....26,100 <-- big % jump
WalMart 10,600 ....16,700 <-- big % jump
Starbucks 7,200 ....8,530<--relatively small rise
Intel 6,280 ....10,200 <-- overtook Starbucks

40 under 40

I was pleased to read that our very own Clive Armitage, the CEO at Bite, made the PR Week 40 under 40. The list makes interesting reading. Out of the 40, 23 are from agencies - does this mean you are more likely to be successful in PR at an agency or just that PR Week has a better chance of hearing about you when you work at an agency? The fact that did surprise me in this list was that only 13 are women. In an industry that seems dominated by women that seems to go against the obvious logic. Sadly what it seems to suggest is that while women make up the majority of people in the industry, men still seem to have control of most of the top jobs. Anyway, congratulations to all of you that made the list and especially you Clive.

PS I need to have a word with PR Week about the photo they used as it's about 10 years old!

Dell believes in the Da Vinci code.

So the news is now out that WPP is to create a dedicated agency for advertising, PR etc which is code named Da Vinci for Dell. It's a bold move for the business and one that will likely have its share of successes and failures. The biggest challenge is clearly going to come on the talent front. Perhaps not so much at the beginning when it's all 'new' but down the track when the client is past the honeymoon phase and the real work has begun. It will be then that the new agency will have to sell people on the benefits of only working on one piece of business. Star talent will not want to feel like a contractor that's for sure. What is certain is that this move will be watched by others to see what can be learned.

Flogs and Slogs

This week we introduced the first annual report that is also a blog. I'll be honest when we had the idea a few months ago I was rather surprised nobody had done it before and felt sure that by the time we launched someone would have done it. Well, unless our Google searches are wrong, they didn't and we were the first. I don't think our blog is the greatest blog on the planet but I do think it will be the start of something. I'm pretty sure that in a year or so thousands of companies will be opening up their annual reports in this way. It makes a lot of sense when you think about it. Today lots of investors go to chat rooms and so on to get their insight. This approach allows them to have a direct access and it allows the company to take part in the debate. Now of course in many parts of the world there are still limits on what a CEO or CFO that is blogging can say but the success of may executive blogs such the one by Sun CEO, Jonathan Schwartz make it clear that people like the idea of an open door policy to communication.

As for my headline to this piece the question is what you call an annual report that is also a blog. The two listed, flog (financial blog) and slog (shareholder blog) are the most common suggestions to date.

Outsourced Agencies - Good or Bad?

One of the major tech companies is currently looking to put all of its marketing with one agency. It has currently asked two of the large agency groups to create an agency that will be dedicated to its business and handle all aspects of marketing from online advertising to research to PR. On paper the tech firm stands to do well out of this as the two agency giants tussle to offer the best value and brains. But to my way of thinking there are several issues that should concern a firm when they go down this path:

1. When you outsource all your marketing to one firm you are effectively signing them up for a VERY long time as switching is going to be even harder. So you had better be really sure you like the key people involved AND that that they will stay around.
2. The savings on the bigger pieces of the pie like advertising will likely be substantial but for the smaller pieces of the puzzle, lower cost will only mean lesser talent.
3. It will be tough to get people to work at this dedicated firm without throwing a lot of money at them (which seems to defeat the aim of the exercise). People who want to work at agencies typically do so because they want broad experience not to effectively work in house by having only one client.
4. One of the advantages of having an agency is that they work on other clients and are continually coming up with new thinking and new opportunities. These would likely dry up in a one agency scenario.
5. Integrated marketing has been around for ages and yet hardly anyone does it. Even those that do tend to have big areas where they make exceptions on the agency front. There has to be a reason why this approach hasn't been adopted by all the major corporations around the world...

Now I know there are some who will say that I'm in no position to talk given we have a business that offer a global solution for clients. I'd argue that we only offer them PR and relevant research. We don't try and offer them the entire solution.

When this tech firm makes its decision there will likely be a lot of speculation that others will follow. My suspicion is that some will watch to see how it works but I doubt many will immediately copy it.

What to do if a recession hits

Listening to the investment community either directly or through organs such as the WSJ it is clear that they believe we could be heading for a recession in the next year. Indeed, I gather the probability of a recession is now at exactly 50%. Having gone through a recession that had no impact on tech PR and one that had a profound effect (the dot com crash), it isn't easy to see how a recession may affect the industry, especially since the roots of this one would seem to lie in a mix of high oil prices and the credit debacle. What is clear to me, however, is that PR needs to get ready for the possibility of a recession. What does this mean:

1. We need to help our clients understand the value of PR versus other disciplines. This means we have to jump on measurement in a big way if it hasn't already happened. The facts on the effectiveness of PR are very persuasive but without them...

2. Anticipate your clients demands - what do you think your client would want to do if sales slowed? who are their biggest customers and how can you help them protect the customer base? What kinds of bad news may they have to deal with and how can you help them through that?

3. Avoid taking on clients that are likely to be hit hard in a recession. I noticed an advert for Net Jets in the WSJ today and my first thought was: "well there's a market that will get awfully hard if there's a recession."

4. Expect clients to consolidate their spend. Right now larger companies tend to spread their PR across firms to access the best skills for the job. If there's a recession they may well look to streamline the number of agencies in a bid to save money. Asking yourself if your firm would likely win or lose from such a change is probably a good thing to do now.

5. Don't take on new office space you won't need. During the last recession a lot of PR firms got into trouble because they had expensive offices they had hoped to grow into. Indeed I know of two fifty person PR businesses that effectively went bust because their leases ran to over $1m. Of course taking expensive office space is a silly move at the best of times but imagine having to lay people off because of a glamorous reception area and you will soon opt for the humbler option.

6. Conserve your cash. People based businesses, like most, are often run on overdrafts but when recessions do hit they can become cash strapped very quickly. Agencies need to make sure they have a good handle on how their cashflow could change if revenues were to fall back. A good CFO will be able to model this quite easily and should be able to guide agency heads.

7. Remember your people. When recessions hit agencies can often focus too much on the client and forget that without good people clients will walk. This doesn't mean that agencies should lavish money on their people that they don't have. What it does mean is that they should think about what makes people stay at a firm apart from money. Career develoment, skills, the working environment, their colleagues - these are things that matter to people in any economic climate so don't lose sight of them when an economy changes.

OK - off the top of my head this is my list. Hopefully it is a list we don't need but in truth some of it is just common sense and should be how we run agencies anyway. Right?

Have the clocks changed?

The clocks change twice a year and these days your computer and your phone automatically make the switch. Well, most of the time they do. My Apple iMac at home and my IBM notebook at the office both seemed to know that this year in the US the clocks don't change 'till next weekend. For some reason however, my cell phone and my work phone have already decided to turn the hands back an hour. This is truly annoying when it comes to my cell phone as it happens to be a Treo on the ATandT network (for some reason btw Blogger won't let me use the 'and' symbol). This means it also carries my calendar. So when I check my calendar on my phone most of my meetings are all in the wrong place. When my phone made the switch on Sunday I assumed it was a Treo problem but my wife's Blackberry, which is also on ATandT, did the same. My assumption is therefore that ATandT goofed up. You would think that by now someone at ATandT would have noticed and corrected it. Unfortunately what seems to have happened is that when they did notice they had a meeting that presumably went like this: "we messed up on the clocks going back Carl." "I know Bob but only by a week." "Oh well, let's just leave it then, most people have watches anyway."

How things change...

http://www.siliconbeat.com/entries/2006/04/18/facebook_raises_25_million_says_never_intended_to_sell.html

My guess is these VCs look super smart right now...

The PE tech stock chasm

Tech has been back for a while now. Tech IPOs and M&A activity has been back at boom levels but contrary to the theory that a high tide rises all boats, it would seem that the improved attitude of Wall Street to the tech industry has benefited some more than others. Of course you would expect that given each company is different but there appears to be a chasm that some tech stocks can't cross in terms of the PE ratios. If you look at the major tech firms such as Microsoft, Oracle, IBM, HP, Intel and Cisco they all have PE ratios that go from 16 to 27. Indeed you can find a LOT of firms in the tech sector with this kind of rating. However, there is another large group that seems to have broken from the pack and have ratings a full twenty points higher, or more! Apple is at 47, Google at 53 and then there's Amazon at a staggering 104 and VM Ware at a head scratching 242. What differentiates these groups would appear to be a mixture of perceived management strength and of course growth potential. The markets clearly believe we will all buy another 'i something' from Apple, search like crazy for things on Google, do our holiday shopping on Amazon and get all our computers to all use VM Ware's virtualization technology (yes that last example doesn't sound terribly exciting I know). So why do they believe Apple and Google are a better bet than IBM and Cisco? Is it because they view the likes of IBM and Cisco as old school tech? I think there is some truth here and it's a challenge for these guys which is why if you look at most of the big tech firms with the lower ratings you will see they have all been reinventing their business models. IBM, Microsoft, Cisco and Intel all have huge investments in manufacturing and development efforts in places such as India and China. These investments help reduce their cost base which should improve their earnings. But these changes also allow them to look at how products get to market. If you make the kinds of changes these businesses have then you get the chance to rethink everything when it comes to the way you design and manufacturer your products. It is almost like starting again in some ways as you have masses of new brains getting involved. My hunch is that in the next few years you will see the fruits of these changes not just in the costs of the company but in innovation levels. Maybe by then the chasm will have narrowed and maybe the likes of Google will have jumped back across. In the meantime the big tech firms on the lower PEs do face a communications challenge as they try and show that the businesses they are running today bear no resemblance to the ones they ran just a few years ago (which is true) AND that this change is very good news indeed.

The high price of Tech

When I blogged on the importance of Facebook the other day I have to admit I would have struggled to put a $15Bn valuation on the business. That said, Microsoft has effectively done that today making both the purchase of MySpace by News Corp for $580m and Google's acquisition of YouTube for $1.65Bn look like bargains. It will be fascinating to see what this deal does to the Facebook express train. With this amount of cash they can presumably go global and invest in their platform at a pretty aggressive rate. It will also allow the senior executives to get on with running the company instead of having to go through any rounds of VC funding. That said, it is pretty clear that they'd have had no problem raising money via that route if they'd wanted.

What I find more interesting is that Microsoft took such a small stake. It is pretty clear that they simply wanted to block Google rather than get executive control at this stage. Of course beyond the stock deal there is the ad rights portion. This is where the deal starts to make a lot of sense. The deal effectively gives them the rights to one of the biggest online properties on the planet and for that reason alone you can see why the valuation makes sense.

We have seen Tech valuations rebound quite dramatically this year. We had the VM Ware IPO which has been an amazing success story and now we have this deal. It certainly seems like the investment banks are keen to recoup the losses the banks have made in the mortgage business by some bold tech investments. It will be interesting to see which tech property can outdo these deals. One things for sure - someone will!

Gen F

OK I have to confess when Facebook started to emerge as a hot social networking site earlier this year I couldn't help but wonder what all the fuss was about. Even when I had it explained to me that Facebook was really more of a platform for all manner of applications I still tended to smile politely and ignore the commentary. When people sent me a message via Facebook it annoyed me - most of my friends on Facebook have my email address so why don't they just use that I moaned. In the past few weeks though I have been exposed to the generation that made Facebook what it is. This generation doesn't use Facebook, they live it. If they eat something good they share that morsel with their communities, if they get stuck in an airport they write it on their wall and so on. Photos are posted at an alarming pace and YouTube videos are shared like my grandmother used to share sweets (she was very generous btw). Facebook has also become their messaging palace. Put this together and it is clear that for this generation Facebook has become their online home. If I were Google I'd be a bit scared by this. My generation has got used to Google. We go there and we search. We don't do much else with Google though. The Gen Fs do a LOT more with Facebook and they spend hours there. Who's to say they can't create a search engine with Facebook user recommendations helping guide the results of that search? Indeed there really is no Google app they couldn't offer through Facebook. To use an analogy, Facebook could be the equivalent of a major TV Network, making Google a bit like TV Guide. This game is FAR from over but the community around Facebook is growing by the day and it is spending a LOT of its day there. For the oldies like me it may feel like a passing fad but if the Gen F people I've met are anything to go by, Facebook is here to stay and could well be the one to surpass Google as the dominant player on the Internet.

BTW - using my YouTube metric, Facebook is now above Intel and just behind Starbucks in the number of clips.

AP Style?

US PR people are encouraged to learn to write in AP style. Hopefully that doesn't include the headlines if this AP news story that just appeared is anything to go by:

Being delays first flight for 787

By ELIZABETH M. GILLESPIE, AP Business Writer 8 minutes ago

SEATTLE - Boeing Co. will not begin test flights of its new 787 jetliner until mid-November or mid-December, months later than originally planned, because it's taking longer than anticipated to get the first plane ready, the company said Wednesday.

YouTube provides brand scorecard

The popularity of YouTube is undeniable. This promoted me to see if it could be used to rank major brands. While highly unscientific in some ways and slightly unreliable in others, I used the search engine in YouTube to see which major brands got the most clips when you search by their name.

The results were:

Brand Number of clips
Disney 224,000 <--- I guess they ought to have a lot of content!
Google 97,000 <--- they own YouTube...
Yahoo! 81,100
Apple 74,200
Microsoft 44,700
Coca Cola 34,400
Toyota 33,400
Nokia 27,700
McDonalds 22,000
GE 15,000
WalMart 10,600
Starbucks 7,200
Intel 6,280

Now this research took about 5 minutes and as you can probably tell was based on a list of brand names I pulled form an old Fortune article plus a few names I threw in. It wouldn't be hard to do some more detailed research using the YouTube site and search engine to get a sense of how many clips are appearing each day by brand etc. As it stands I can't find a way of seeing which brand has the most number of clips associated other than by trial and error. Perhaps YouTube could issue a press release with that data?

Anyway, for those people looking to help big brands with their marketing, it seems YouTube provides a pretty simple way to score companies. There are of course some difficulties and these relate largely to the way the search engines work. For example if you put in 'Ford' as a search topic you will get a lot of clips that have nothing to do with Ford Motor Company showing up. Conversely if you put in Ford Motor Company it will only list those clips where people took the trouble to tag the clip with the full name. So YouTube is far from perfect but once again we do at least have another quick and cost effective measurement tool available.

Just for fun I also checked to see what the numbers were like for the bigger PR firms. The results were:

Text 100 312
Edelman 295
Hill & Knowlton 18
BM 8
Weber Shandwick 4
Fleishman Hillard 2
Ketchum 2

As you can see, the PR agencies have some way to go to catch the big brands....

Wikipedia Scanner designed to create PR nightmares

Last night on NPR's Future Tense they interviewed, Virgil Griffith, the creator of WikiScanner, a tool that shows who made what edits to entries in Wikipedia. When asked why he created it he said he did it to create PR nightmares for companies that were using wikipedia as a disinformation tool. Indeed on his own blog he says he created the tool to: "To create a fireworks display of public relations disasters for all the world to sit back, and enjoy." This is a man who is clearly annoyed to see that some companies are attempting to hide behind the anymous posting policy on wikipedia and distort entries relating to their business. An example he used in the interview was of soft drinks manufacturers removing mentions that these drinks were harmful to your health. I think it's great that he has created this tool as I think it will help clean up wikipedia. Having lived through the nightmare of getting my own business listed on wikipedia I do worry that it will make people less likely to contribute though. When I listed Next Fifteen it created a host of comments about my independence and therefore the entry's credibility. In truth I never tried to hide my identity and the edits I made were to make sure it was factually accurate and that it met the criteria the 'wiki police', as I call them, were telling me the piece had to meet.

I have to say though that if wikipedia has been so abused by big companies, I am surprised that a 'PR firestorm' or two hasn't already started. Or is it simply that nobody has yet really used the tool in anger? Either way I guess from here on in PROs had better be aware that their entries are being watched. Of course I guess they could always make entries using a computer at an internet cafe given the tool relies on the IP address of the computer making the entry. No PRO is clever enough to do that of course.

What is wrong with books?

The Associateed Press released a AP-Ipsos Poll yesterday that shows that one in four Americans didn't read a single book last year. Nont one. Not even a Harry Potter book. Curiously, book sales are flat despite the fact that the AP-Ipsos Poll suggests that more and more Americans are finding other ways of spending their time reading books. This suggests that the ones that are reading are actually reading more books. Also shown in the poll is a bunch of data that you would likely expect. Out of Women that read they tend to average nine books a year versus men who read a mere five (it doesn't say who reads the more interesting stuff ;). So it would seem that we now need to add the death of the traditional book to the slow painful death of the newspaper...

If you want to read the details of the Poll click the link below. It has all sorts of interesting facts. For example of the books that were read the most popular were the Bible and other religious texts at 64%, whereas business books got a mere 4%.

http://www.ipsos-na.com/news/client/act_dsp_pdf.cfm?name=mr070821-4topline.pdf&id=3613

Clean conscience

Like many people in California I drive to and from work. In truth there is little choice unless you want to embark on a public transport system that would take twice the time and cost pretty much the same amount. I am due to change my car in a few months and have been getting my mind around the idea of buying a Toyota Prius. For the record I can’t say I like these cars very much. I fall in to the group that thinks they are relatively ugly. However, as someone that believes we need to do our part for the environment, a Prius seems the best bet. That said, when you look at the cost of a Prius, which is after all a pretty basic car, you realize that you are paying about a $10,000 premium to drive a car that is more eco friendly. As someone who typically owns a car for about three years that isn’t too bad when spread over the cars life - or is it? I’ve been looking at TerraPass.com which, like CarbonNeutral.com in the UK, gives you a chance to buy carbon credits for all the nasty emissions your life produces. For example, you can pay about $200 and that will apparently make your home carbon neutral for a year, a similar sum would handle emissions from most people’s annual air travel. When it comes to cars the TerraPass site estimated the cost of clearing out my emissions to be $50 a year for my current vehicle or $30 a year for a Prius. You can see where this is going can’t you? So for $150 I could make up for my car’s emissions during its time in my hands. Put another way if I bought a slightly more attractive car that actually cost less than the Prius but wasn’t as eco friendly I could use the saving to buy a massive amount of carbon credits. Indeed I’d likely have enough credits for all the people that read this article. So what do I do? Should I buy the Prius and feel good about it’s eco stats or get something cheaper and buy each of you a carbon credit?