Dave’s Take

In yet another installation of “How Broke is Los Angeles?”, the LA city council has recently voted unanimously to outsource its e-mail system to Google. Starting on a test basis next June, all 30,000 city employees will have their e-mails delivered via a Google cloud. “The City of Los Angeles, the second largest city in the nation, made a world-class decision today to support a state-of-the-art e-mail system,” stated Councilman Tony Cardenas.

Despite the 12-0 vote, several council members questioned the stability and cost savings of such a decision. To reduce concerns, Google agreed to add a provision in the $7.25 million contract for compensation should the city’s data be lost or compromised. What that level of compensation will be was not disclosed. Archrival Microsoft lobbied hard to prevent the award, negotiating dutifully for the contract over the past twelve months – all to no avail.

Critics of the award argued the new system should be based on a Linux or UNIX open-sourced code, fearing Google will morph into a latter-day Microsoft willing to continue raising prices and curtailing code sharing. How anyone could think such skeptical thoughts about a monopolistic American company is beyond me…but then, I’m still waiting for flying cars and zero calorie ice cream.

Is this the kind of thing we want outsourced? Do we need to wonder about security breeches or targeted malware? If the LA DMV is any indicator, I don’t think the state has a clue about IT, so Google should have a low threshold in terms of improving internal communications. I just wonder what the cash-strapped city will outsource next – perhaps offshore 9-1-1 operators?

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In other tech news, a new Nielsen study shows both good news and bad news for mobile Web providers. According to the study, the audience for Web surfing via cell phone is increasing to nearly 57 million users. The bad news is that two out of three cell phone surfers are frustrated with their phone’s Web surfability.

Because of the wide use of broadband, consumers are used to having Web pages load within five seconds. Unfortunately, the average smart phone takes longer than six seconds to load page ready viewing. This has led to over 60% of cell phone users saying they would be less likely to visit slow-loading sites. Additionally, 80% of users claim they would visit Web sites more often if the process was a fast and reliable as their PC. Clearly, when it comes to timely surfing, the cell phone manufacturers have their work cut out for them.

How bad is the recession hurting local television stations? Pretty bad apparently, as evidenced by WNEM, a CBS affiliate in Saginaw, Michigan. To combat sliding sales the station decided to take a page from the region’s dying newspapers and add a previously print only feature to its programming – obituaries. That’s right, WNEM is the first TV station in the country to broadcast deceased viewers names and photos on their airwaves.

For the reasonable sum of $100, the station will run the dearly departed’s name, photo and full-length obituary during the their morning and noon news shows. The televised obits refer people to their website, http://www.obitmichigan.com, where complete information about the services, etc. are listed. Finally, an Internet tie-in that really provides added value.

The Meridith Corporation, (the station’s owners), expect to expand the concept this year by including the programming on its other stations. They firmly believe that the more stations that carry the feature, the more comfortable the public as well as funeral directors will become with the concept, leading to more earnings. With the daily death of more news dailies, the TV obit may be the way of the future. With local TV sales down on average more than 27% for 2009, you can bet that more broadcasters will be looking for other ways to cash in on the economy.

In fact, the idea for televising obituaries didn’t come from management, but from the community. “I got some phone calls and Emails from people who just said, ‘If we can’t get the obits in the newspaper every day of the week, is there anything you can do to put it on TV?’”, stated Al Blinke, WNEM’s VP/General Manager. After some initial research, the station assigned some sales staff and techies to the idea and soon it was reality.

Just how profitable televised obituaries will prove to be remains to be seen, but at least it’s a new slant for local stations. Any new revenue streams are a sight for sore eyes as far as local broadcasters go. Perhaps they could get some press for offering a free obituary to something that truly needs it – The Jay Leno Show.

The $100 million investment Microsoft put into its state-of-the-art search engine, Bing is finally beginning to pay off. According to reports, Bing revenue is up a full 15% from the same period last year. As good of news as this is to the Seattle based computer giant, it’s even better news for the entire search engine advertising business. Clients are back baby! Spending among search engine advertisers is approaching levels unseen since before our economic collapse.

Overall, search advertising spending is up 10% from the second quarter and industry experts are cautiously optimistic about fourth quarter biz. Since paid search advertising is the most immediate indicator of market spending, it appears the fourth quarter losses expected in broadcast and print will be somewhat offset by the Internet. Hey, when it comes to the sinking business that is advertising, any uptick is great news.

Lest you think Bing has bucked the odds and has overtaken the big boys in search engine advertising, better think again. While the 15% increase is indeed great news for Bing, it still lags behind Yahoo and Google by significant market share. Even with its gains, Bing only receives approximately 6% of all search engine advertising expenditures. Conversely, the latest figures show Yahoo holding steady at 17% of the market and the ginormous Google at a whopping 77%. Clearly, Bing has a long road to hoe if they ever intend to breach Google’s dominance of the market.

In a previous blog, I lamented the fact that the FCC and FTC were woefully inept at keeping proven liars off our paid airwaves. Who hasn’t viewed claims made in TV infomercials and commercials that we know is nothing short of pure, unadulterated B.S.? We don’t need to be scientists to realize most people are not going to lose 150 pounds on Jenny Craig (despite what Marie, Valerie and Coach Shula claim). We also don’t need an advanced degree to know that most drug ads are deceiving at best and outright dishonest at worst. Or that despite being good people, most men will lose some or all of the hair, eventually. No, what we need is a government agency with the competence and motivation to run these charlatans off the air. And now, thanks to new FCC guidelines, sanity may have finally arrived in the crazy town that is endorsement advertising.

Beginning December 1st, all advertising endorsements will be subject to a logical smell test – one that is obvious to everyone but the thieves. Starting then, anyone who makes a claim as to a service or product’s effectiveness will have to prove it. This is significant; because no longer will the old, “Results may vary” in 2-point used car font suffice to let the liar off the hook. Now, they must make claims that are typical for all users and not just the ones that had a million dollar reason for succeeding. Are you listening, Jared? The only consistent exemption to this law would be for humorous endorsements, which must be presented in a way that is “obvious to the viewer.” (I don’t know about you, but as far as I’m concerned, just about all of these shills are clowns).

Not only must any beneficial product claims made be proven, but all endorsers must disclose their relationship with the advertiser. I believe this clause was inserted to combat all of the bloggers and Internet “reporters” who make unchecked claims about everything from Rogaine to Yoga. Bloggers will now be forced to admit that their video games and Buffy t-shirts are freebies from their corporate pimps. This rule will also apply to endorsements given over social media sites like Twitter and Facebook. How they’ll enforce potential violations is beyond me, but I welcome the opportunity (and threat).

Crooks, er critics of the new rules claim not only are they a violation of free speech, but will be impossible to enforce uniformly. They argue thresholds have yet to be established, thereby leaving a gray area, especially in trade-outs. When does a blogger or endorser have to reveal they received the product or service for free or at a discount? Will getting a free $3 coupon trip the endorser disclosure act? Yes, there are still lots and lots of details to be worked out and that’s what the courts and public input are for. I’m just glad that I don’t have to wonder if the Ablounger really will take six inches off my waste while I sleep.

It should come as no surprise to advertising mavens or even your average Joe Blow, but fourth quarter ad sales are flat and show no real signs of improving. The recession, combined with the credit crunch and rising unemployment are poised to take a one-two punch out of holiday ad spending. Long gone are the days of limitless car ads and shopping mall campaigns.

Despite this obvious spending stalemate, some retailers and television pundits are picking up the pom-poms and are predicting the end of recessionary gift giving this year. As regular readers of my blog know, I am a big proponent of increasing ad spending in times of economic turmoil. I’ve published stats from the last recession proving those retailers who dared to promote ended up with a 4 to 5 times increase in their market share. So, I must applaud national chain stores like JCPenny, Gap Inc. and Best Buy for breaking from the pack and putting their money where their customers are. But I must completely disagree with the ridiculous self-serving cheerleading led by the master of manipulation, CNBC’s Jim Cramer.

Surely you know who Cramer is even if you don’t watch the paid programming that is CNBC. He’s the rolled-sleeve wearing, big button-punching titan of investment who was eviscerated by Comedy Central’s Jon Stewart on national TV earlier in the year for failing to predict the recession and all its glory. Jim Cramer not only missed the boat when it came to reading the impending depressionary tealeaves, but openly admitted to stock manipulation earlier in his career as a know-it-all stockbroker. Now he’s rolled out the soapbox for yet another incompetent proclamation—that holiday spending will not only recover, but actually increase this year!

This self-serving prediction is not only wrong, it’s really wrong. Believe me, I am one of the biggest hopefuls when it comes to an advertising industry turnaround. But I must succumb to the reality of 2009 and realize no amount of rah-rah chitchat is going to change the situation. There is no way in hell fourth quarter ad sales will be back to pre-recessionary levels. Don’t take my word for it, talk to any sane economist, media account rep or agency manager. For that matter, speak to your neighbors and friends. How many of them are planning on spending significantly more on holiday shopping this year as opposed to past years? Not many, if any I’ll wager.

Chris Booth, president of Publicis Group’s Starcom USA, predicts his clients, who include such big names as Hallmark and PetSmart (among others) will continue to scrutinize every ad buy. He believes last season’s trend of advertiser’s penny pinching strategies that included a shift away from expensive mediums like network TV to cable and cutting all print expenditures to continue. “(Spending) in the fourth quarter is tighter than we thought,” Booth laments.

I take no joy whatsoever in commenting on the depressed holiday ad predictions. I can’t wait for the advertising and marketing industries of America to start kicking ass again. But what I don’t need, in fact what I resent, is self-important pontificators like Jim Cramer yakking about how everything is just peachy. I guess if you talk to TV pundits, derivative stockbrokers or big bankers, everything is peachy. Unfortunately, as Michael Moore points out in his latest flick, we don’t live in their world. We just get to bail them out and then watch them on TV telling us how good everything’s going.

The L.A. Times is reporting that the Jay Leno Show’s declining numbers are not only bad for Jay, but are proving tragic for local NBC affiliates. According to the Times, Leno’s viewer numbers have fallen from a debut high of over 11 million to a tragically flat average of only 5.6 million last week. Not only is this decline a concern for NBC, but it is a bitter pill to swallow for the vast majority of the 200 local affiliate stations, some of which are at the end of their proverbial broadcasting rope.

In an earlier blog, I basically hoped for Leno’s demise because his success would mean the end of scripted dramas on network TV. (It can be produced for a fraction of a popular drama). Not surprising to me or any other of the hundreds of critics who foresaw its limited shelf-life, the shoddy talk-show product repackaged as new TV is simply living up to its capabilities. How bad are the latest ratings? Even in Jay’s hometown of Boston, the show is tanking and taking down affiliate WHDH’s late news ratings by more than 17%. That’s a huge drop to the only cash cow a local station owns—it’s news programming.

Thanks to the recession, local television stations are already facing significant income loss due to the dramatic decline in automobile and retail sales campaigns. They need a strong lead-in to help boost their late news numbers and the Jay Leno Show isn’t providing any. Despite NBC’s claim that Jay’s familiar shtick, combined with 46 weeks of original programming (twice that of scripted shows) would provide a moderate, yet consistent audience lead-in for affiliates, viewers continue to change the channel on the Chinned One.

Not only are the Peacock Network’s programming decisions keeping it in third place, but its bullying tactics in dealing with local stations is wearing thin as well. NBC has already threatened the licensing of Boston’s WHDH for asking to pull the show and replace it with reruns of syndicated shows or even local programming. Think about that—a station has lost enough confidence in a national show to threaten producing its own hour of local TV. This desperate strategy is unheard of in the recent annals of broadcast television.

Even Jay Leno himself knew that the odds of success were slim. According to industry insiders, Leno insisted on a two-year deal, fearing his mediocrity would never make it past the first three months of a normal show contract. Boy, was he prophetic or what?

Unfortunately, there seems little a local NBC affiliate can do to stop the madness. Short of praying for the quick arrival of 2011, there are few options available to them. Maybe, as a last chance, they should encourage a class-action lawsuit by viewers for fraud and incompetence. It’s a long shot, but so are the chances of any improvement in the Jay Leno Show.

In what might be the flakiest ad campaign idea ever, Kellogg’s UK cereal plants are combating “counterfeit flakes” by using lasers to burn the Kellogg’s logo onto random corn flakes, thus reminding the consumer of who’s flakes their eating. Apparently, Kelloggs is tired of losing market share to store off-brand corn flakes. Concerned that consumers are unaware of the origin of the generic flakes, Kelloggs has decided to brand their brand, so to speak.

Utilizing specialized lasers that allow a focused beam of light to create a very small darkened spot on the corn flake, Kellogg’s process burns their logo on the flakes without effecting the cereal’s taste. They are not spending the resources to etch every flake, just a few per box.

Will this branding make a difference? I sincerely doubt it. Consumers who truly care about and can afford a specific brand will buy it. Store generic brands are purchased by people who care more about saving money than supporting particular companies. Purchasers of brand products do so because they are convinced the higher price is justified by a better product. How much taste difference there is in something as bland as corn flakes is questionable at best.

Furthermore, I fail to realize how burning a logo on just a few flakes per box will enhance brand recognition. Do you scrutinize each bite of your breakfast? I think Kelloggs is missing the boat when it comes to branding the importance of their unique corn flakes. Also, I have yet to read about the burgeoning fake flake market. In other words, who really cares? I sincerely doubt the major generic product manufacturers are holding secret meetings on how to beat the laser.

At best, the laser corn flake campaign will attract some free publicity. At worst, it could spur a flurry of laser-etched logo campaigns. Do we really want to see Wonder scorched on our bread or Lays printed neatly on our chips? No and no.
If Kelloggs is serious about increasing market share in comparison to generic cereal, they might try something a tad bit more traditional–like lowering their prices.