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Even John Q. Public doesn’t believe newspapers are going to survive …

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It’s not just inside observers who are predicting the demise of the printed newspaper. The “Great American Public” seems to be well clued in to the problems of newspapers also. In fact, a poll released by Rasmussen Reports on May 12, 2009 reports that fully two thirds of adult Americans believe daily papers will disappear within the next ten years.

Even more dramatic, nearly one in five respondents think that it will happen within three years.

When two thirds of all adult Americans predict daily papers will go the way of the dinosaur within the coming decade, that’s big news. No longer is this just a discussion among industry insiders … it’s crept into the popular culture. That’s yet another big danger signal for the papers.

All of this is underscored by Rasmussen’s findings that a majority of Americans (56%) purchase a paper once per week or less — and 37% rarely or never buy a print version of their local paper.

In a possibly related development, Rasmussen’s surveys report that the credibility of newspapers and other media has declined in the public’s eyes. For example, only about one in four respondents has a favorable opinion of the New York Times. That may be a new low for a paper that likes to think of itself as America’s #1 print news source.

The most recent Newspaper Association of America’s financial figures are showing that newspapers have lost a whopping $18 billion over the past three years in their print operations. And while many papers have been counting on their online operations to counterbalance all of this red ink, total Internet revenues over the same period amounted to ~$9 billion — not nearly enough to erase the losses on the print side.

Of course, as this is 2009, the story would not be complete without government officials coming to the rescue, offering their share of interesting proposals. But how does the public feel about these efforts by politicians to save the newspapers? Nearly 40% favor federal government subsidies to keep newspapers in business … but slightly more than half feel it’s better simply to let them go out of business.

It will be interesting to see what the federal and state legislatures actually end up doing — whether it be turning newspaper companies into not-for-profit entities as Senator Ben Cardin of Maryland has suggested … or providing special business tax breaks for the industry as has been proposed by Washington’s governor Christine Gregoire.

Whatever is attempted, my prediction is that it won’t have nearly the positive effect its proponents hope for. The sweep of change in the communications arena is simply too broad and deep for that.

Loyalty? … What Loyalty?

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Godiva's newly announced customer loyalty program is a yawner.
Godiva is a late entry in the customer loyalty program sweepstakes.
Godiva Chocolatier has just announced its first-ever loyalty program for customers. It promises to ply chocoholics with all sorts of goodies — from free in-store confectionery gifts to free shipping on online orders. Anyone over age 18 is eligible to sign up with no obligation to purchase … and for those who activate their loyalty membership before June 13th, there’s even a chance to win a complimentary “chocolate party” for up to 25 friends at their nearest company-owned Godiva boutique store.

How wonderful. Now, pardon me while I stifle a big yawn.

For a program that seems pretty decent actually, how come it all sounds so predictable … so mundane? That’s because everybody’s doing it. (And Godiva is really, really late to the party.)

A recent report issued by consulting firm Colloquy contains some interesting statistics about loyalty programs. With more than 1.8 billion loyalty memberships on the books, the numbers have never been higher. (This translates to a whopping 14 loyalty program memberships per U.S. household.)

These stats underscore the fact that loyalty programs have migrated well beyond the original airline frequent flyer and hotel frequent stayer programs to encompass seemingly every corner of consumer activity today.

But according to Colloquy, fewer than 45% of all loyalty programs are actually active, in that they’ve had at least one instance of activity in the preceding 12 months. “The relative ratio of active to inactive loyalty program members suggests that more than half of all program memberships are merely names in a database,” the report states. “The implication for marketers is clear — the era of growing membership rolls just for the sake of growth is over.”

What this suggests is that companies have done a better job of signing people up for loyalty programs to begin with … but not nearly enough to keep them engaged as regular customers over time.

Could it be that the single most popular tactic — offering a one-time 15% or 20% discount on purchases as a “sign on” incentive — has attracted customers who cheerfully take advantage of the special activation offers, but have no compelling reason (or even any intention) to participate over the long haul?

If that’s the case, the loyalty is only skin deep … and the current economic conditions will likely spark even more instances of lax participation.

But what if companies tailored loyalty programs to individual customers based on their unique profile and actual purchase history? Would better customer conversion result — along wth improved ROI?

It’s more challenging to run a tailored loyalty program … and it requires more focus and attention than many marketing department personnel are willing to devote to it. Moreover, there’s no guarantee that consumers won’t simply “take advantage,” without spending any more on merchandise than they would have done without the loyalty program being offered in the first place.

But with the sorry participation rates currently being experienced with loyalty programs … it’s certainly worth a shot.

Marabel Chanin: A Symbol of a City

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Marabel Chanin, speaking to reporters outside her home in Detroit's North End in summer 2008.
Marabel Chanin, speaking to reporters outside her home in Detroit's North End in summer 2008.
One of the sadder stories to hit the television airwaves in recent days concerns Marabel Chanin, an elderly woman living alone in an urban “ghost” neighborhood. When Marabel, a single woman, moved to Detroit’s North End back in 1964, the area, adjacent the Palmer Park Golf Course, was a beautiful, established Detroit neighborhood graced by roomy, circa 1920s single-family homes and lush landscaping.

Moving forward some 45 years later, Marabel was the last person on her block of Robinwood Avenue, living in daily (and nightly) fear of break-ins, gunfire, or worse. Complaints to police went nowhere, so her phone call to the local Detroit Fox News affiliate TV station (WJBK’s Problem Solvers) was a last-ditch attempt to find a solution to her dilemma.

Marabel’s story, profiled by the station last summer, brought the issues of crime & grime, urban decay and danger down to the most personal level and struck a nerve with viewers across the Detroit viewing area. The story ended up on the Internet, where I viewed the news clip on YouTube while researching my blog entry on the city of Detroit’s decline. It was so moving, I felt compelled to contact WJBK-TV, hoping to hear a good end to the story.

Unfortunately, as was chronicled in a follow-up report by the station broadcast last week, there was no good end. In fact, Marabel passed away in her home right around Christmas and was discovered days later. And now, five months on, her body remains at the county morgue, claimed by no one. Because of severe budget shortfalls, there are no funds to bury her or the nearly 100 other unclaimed bodies that are being kept there.

A story like this is gripping enough on a purely personal level … but it is also powerful in a larger context. To what degree does someone like Ms. Chanin — a single person of middle-class means but without close relatives — bear the blame for allowing herself to become the last person living on her city block in a trashed neighborhood? Or are there also larger forces at work that overwhelm the ability of someone of modest means (and elderly as well) to figure out a solution and act on it?

It was the southern agrarian writer Andrew Lytle who wrote in an essay years ago about the potentially dehumanizing effects of urban living. Lytle believed people were meant to live in smaller communities, where folks know each other and look out for neighbors in need. He also warned against large-scale industrialization, arguing that economic downturns lead to massive unemployment and thus dislocation of workers, whereas people who work the land usually can get by in a bad economy.

Of course, Lytle did not anticipate the advent of “industrialized agriculture” and the effect that would have on small farmers. But when you consider the economic landscape in 2009 and its effects not only on Detroit but also communities like Elkhart, IN, Lytle’s essay suddently takes on a very contemporary significance.

And what of Marabel Chanin? WJBK-TV has established a fund to provide a burial ceremony for her — and to do the same with some of the others unclaimed at the morgue. Tax-deductible donations to the “Marabel Chanin & Friends” fund are being accepted c/o National City Bank/PNC (First National Bank Building, 660 Woodward Avenue, Detroit, MI 48226). Reportedly, community response has been strong.

A mobile society? Maybe not so much.

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The United States has long been known as one of the most mobile societies on earth. Throughout the history of our nation, Americans have seemingly always had a major collective case of wanderlust.

This was especially true during World War II when hundreds of thousands of servicemen and women found themselves posted to places far away from home. Getting a taste of unfamiliar and interesting locations — so different from what they knew growing up — many people elected not to return home from the war.

My father, who was stationed in Alaska during World War II and was mustered out of the Army Air Corps in San Francisco/Oakland, tells of acquaintences who opted to take a small cash payout and stayed in California, rather than accept free transport back to their homes in New York, Pittsburgh, rural Alabama or wherever.

In the 1950s and 1960s, the population growth of the Mountain and Pacific States plus plentiful manufacturing jobs throughout the Midwest sparked dramatic population migrations from South to North and from East to West. Families took annual vacation road trips of 1,000 miles or more, fueled by cheap gasoline and the brand-new Interstate highway system.

Today, things look much different. According to a just-released Rasmussen poll, 90% of respondents report that they have lived in the same state for at least the past five years. And nearly three-fourths report that they’ve lived in the same state for more than 20 years.

This news comes hard on the heels of the U.S. Census Department reporting that only ~35 million people changed where they lived from March 2007 to March 2008. The Census Bureau noted that this was the lowest number recorded since 1962 — when the United States had 120 million fewer people.

More recent stats for the comparable 2008-09 period aren’t yet available, but I suspect the numbers have declined even further. If so, it will represent a big change in one of America’s most unique and defining aspects — its mobility. I wonder … is another one of America’s trademark characteristics now becoming more a myth than reality?

What?! A Reduction in Postal Rates?

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The first class postage rate is going up again this month. But not so fast! The USPS is actually having a sale on postage as well.
The new first class postage rate is going up again this month. But not so fast! The USPS is actually having a sale on postage as well.
Death … taxes … rising U.S. postal rates. It seems all three of these things are just a given. And the USPS is getting ready to up the price mailing a first-class envelope another 2 cents, effective next week.

But hold on! Because it’s suffering from a significant decline in mail volume approaching 15%, the USPS is concurrently rolling out a special program heretofore never seen from this most politically tin-eared of government agencies. The impressively named Saturation Mail Incentive Program gives large standard mail direct marketers who increase their mailing volumes the opportunity to earn per-piece credits — discounts essentially — on their mailing activity.

The discounts themselves are rather small — ranging from 2.2 cents per nonprofit letter mailer to 4.0 cents per flat piece (catalog).

… And the “fine print” conditions as to who actually qualifies for the discounts are almost byzantine in their description.

… And the savings are for a limited time only (~1 year) beginning this month.

… And program participants must formally apply to the USPS for approval.

… And they must do so by June 11 or lose their opportunity to participate at all.

… And, and, and … Well, you get the idea.

But the fact that the postal service is actually throwing a “sale” on rates is big news in and of itself. When has this ever happened before?

Quoting the eloquent words of USPS spokesperson Michael Woods, “The Postal Service is always looking for ways to use our pricing flexibility to improve business, and the current economic climate makes that more important than ever.”

Translation: “We’ve lost a pile of business in the economic downturn, and maybe if we lower our prices, we’ll get some of it back.”

Good luck.

We’ll check back after a few months to see how things are going. Judging from the most recent financial results published this week — a quarterly loss of nearly $2 billion — we may not see much improvement. After all, the USPS has managed to make money in only one quarter out of the past eleven!

UPDATE (5/18/09) — The USPS has now finalized the program, which will now launch July 1. Details are here.

Yet Another Headache for the U.S. Auto Industry

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Several Mexican drug cartels are very active along the U.S. border.
Several Mexican drug cartels are very active along the border -- and U.S. auto parts plants are getting caught in the crossfire.
Now here’s an interesting confluence of events that at first blush seem totally unrelated to each other: the U.S. automotive industry and the Mexican drug wars. As if the auto industry didn’t have enough problems on its hands, now it’s finding itself in the crosshairs of the Mexican drug cartels’ shootout with the government in towns along the U.S. border.

Ciudad Juarez, Mexico is a factory town that happens to have its share of U.S.-owned auto supply factories, drawn to the region by cheap labor rates averaging less than $1.50 per hour. Always a tough city, Juarez has gotten a lot more dangerous in recent months. The raging violence peaked several months back with drug gangs killing six police officers in one single week before the Mexican government sent military troops in.

Civilians and foreign nationals are also at risk, it turns out. In January, a plant manager for Detroit-based auto parts manufacturer Lear Corporation was kidnapped on his way to work in Juarez, and a $1 million ransom was demanded for his release. Shortly before this drama unfolded, the firm’s local facilities were attacked by a band of gunmen armed with assault weapons; reportedly, they were after employees’ Christmas bonuses plus proceeds from the plant’s ATM machine.

Auto parts maker Delphi has also reported a number of disturbing incidents, including the attempted kidnapping of one of its female executives.

So, in addition to being faced with a blizzard of bad news on the domestic front stemming from the collapse of automotive sales, the auto parts manufacturers are encountering an entirely different set of bad conditions on the border. In response, they’re taking special precautions, including adding more security (and vetting security personnel more carefully), removing ATMs from plants, restricting local personnel travel to daylight hours only, and even going so far as to keep their CEOs away from the region entirely.

But you can only wonder how much longer things can go on like this if the Mexican government doesn’t gain the upper hand in quelling the danger and the violence — and soon. After all, there are nearly 1,000 auto parts makers in the country, ~70% of which are subsidiaries of U.S. companies. That makes it very hard for the military to patrol so many locations against the seemingly random attacks, kidnappings, and other acts of violence.

At some point, the prospects of cheap labor and low costs will run smack up against basic safety, security and peace of mind. Other Latin American countries face similar issues … so might this mean a shift of some of these operations back to the United States? Now, that would be an interesting twist!

We shall see.

Now that April 15th is behind us …

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While we’re all catching our collective breath after filing our 2008 federal and state tax returns … it’s a good time to consider the most recent findings on Americans’ tax preparation behaviors.

You might expect that a significant portion of tax filers are now using “cheap ‘n easy” computer software programs like TurboTax to complete and file their tax forms.

Well … not so fast. A just-released survey conducted by Mediamark Research & Intelligence finds that only about 20% of U.S. tax filers used software programs. Another ~13% prepared their own returns the traditional way — by hand.

But fully half of respondents relied on outside professional help from a CPA, tax preparer or national chain resource like H&R Block — despite the fact that such services cost much, much more.

Why would half of all adults who file personal federal taxes feel the need to pay a lot more for professional assistance rather than take advantage of affordable software programs? There are a number of reasons: the complexity of the federal tax code … intimidating tax forms and instructions … concern about the safety and security of computerized software programs and electronic filing … and, not least, fear of retribution from the IRS for making an error.

The fact that many of the tax returns completed by professional preparers still contain errors doesn’t seem to make much difference. Many taxpayers would rather shift the responsibility of “filling out and filing” to somebody — anybody — else.

Recruiting New Employees in a Web 2.0 World

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Facebook has overtaken MySpace and other sites to become the largest and most popular social networking choice for young and old alike. And while LinkedIn still maintains an edge over Facebook as a professional networking resource, Facebook has done a very effective job in blurring the lines between personal and professional social interaction on the web.

The latest development that proves this is the increasing popularity of company “fan” pages on Facebook. Anyone can start a fan page showcasing a company they know and love … and many employees have taken the opportunity to create pages for their own organizations. My own company, Mullin/Ashley Associates, is no exception. Currently, Facebook offers more tools for uploading interesting content such as photo galleries and video clips, along with providing a great platform for news updates, wall postings and chat.

Going further, some companies have elected to turn Facebook into their vehicle of choice to promote themselves to prospective employees. Posting videos of employees talking about their positive work experiences … including pictures of the office environment … showcasing employee events … all of this brings a company to life far more effectively than just by advertising open positions on web job boards such as Monster.com.

The beauty of using Facebook in this manner is not only that companies can make a bigger and better impression, but they can do it without having to incur any significant cost. And if it’s done particularly well, it might even result in lower costs, as fee-based recruitment ad placements can be reduced or even eliminated.

Increasingly, people are being connected through social networks, and this phenomenon will only grow in the months and years ahead. In such an environment, companies that champion “content, creativity and community” will be the winners. That goes for hiring, as well.

The Newest Wrinkle in Social Marketing: Getting Paid to Praise

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It had to happen. With the dramatic rise in the popularity and number of blogs and other social marketing sites on the web, sooner or later merchandisers would get wise to the fact that they can use them to pitch their products and services. And for just pennies on the promotional dollar.

How? By offering free merchandise or cash payments to bloggers who will then be favorably disposed to write positive reviews about new products. And with blog postings being indexed by search engines in just a few days or even a few hours, it’s an incredibly cheap way to gain positive exposure for their products and brands in cyberspace.

… Not to mention that many readers will not be wise to the authors’ tidy mercantile relationships with the companies whose products they are reviewing. This despite the efforts the Federal Trade Commission is making to update its nearly 30-year-old advertising guidelines to cover the new new-fangled techniques brought forth by the cyber revolution — tactics few could even have dreamed of just a few years ago.

How long will it be before the FTC has these new guidelines in place? Who knows? For the moment, there are no hard-and-fast rules regarding paid reviews. But there are some moves being made within the industry to provide “full disclosure” to readers. Blog entrepreneur Ted Murphy of IZEA Social Media Marketing requires his “for-hire” bloggers to insert an icon next to each product review that states: “Sponsored Post. 100% Real Opinion.”

“One hundred percent real opinion?” Does anyone seriously believe any sponsored post will be completely free of bias?

Of course, sponsored bloggers could write a negative review … and then watch as it’s the last time they ever have the opportunity to write for that supplier. Practically speaking, that’s not going to happen — and everyone knows it.

A more fundamental concern is what paid pitching is doing to the credibility of the blogosphere in general. If people find out that even one or two product reviews they read turn out to be nothing more than disguised advertising for the merchandiser, it could cripple the credibility of bloggers overall in the minds of those readers.

This whole phenomenon has the risk of turning a highly powerful consumer information resource into a caricature of itself. Those who read product reviews tend to be the more cautious – or the more suspicious – consumers among us. And so, despite providing every assurance that bloggers who are paid cash compensation or receive merchandise freebies for their posts will remain honest in their opinion … that’s not how it’s going to be received by the audience.

Advice to bloggers: If you value your credibility and your reputation, don’t accept quid pro quo compensation from companies whose products you are reviewing. Advice to consumers: As always … be careful of what you read online.

UPDATE: Two years later … and not much has changed. Here’s Honda’s latest shenanigans.

The Latest NYT Financials are Atrocious

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The latest quarterly financials have just been released by the New York Times Company … and the figures are worse than even the more pessimistic observers had forecast. Not only did the company lose nearly $75 million in the first quarter, it is also laboring under a $1.3 billion debt load. Rival newspaper The New York Post was quick to report that the Times’ cash position, net of upcoming debt maturities, is a mere $34 million.

The looming cash crunch is causing some analysts to speculate that the venerable Gray Lady is slouching towards insolvency.

Not surprisingly, the biggest cause of the financial tailspin is plummeting ad revenues. Declines in classified advertising led the pack (down ~45% compared to the same quarter last year). National advertising fell ~22% and retail advertising declined ~25%.

What’s even more startling was the weak performance of Internet advertising. Instead of growing as had been the case up to now, those revenues actually posted a decline of ~6%. This result blows a huge hole in the notion that online advertising will take up the slack in print advertising.

What’s become abundantly clear is that newspapers have yet to adjust to a world in which they no longer have a near-monopoly on the news in a city or a region. The fact is, for years newspapers were able to bankroll large editorial and administrative staffs precisely because there were few if any other ways for local or regional advertisers to reach their audience. So they were able to charge a pretty penny for advertising space and get away with it. A lucky few cities had two competing newspapers, but many have had single-paper monopolies for years. TV and radio advertising represented alternate promo options, of course, but not in the same medium.

[For those who think that the New York Times, by virtue of its reputation as one of the United States’ leading newspapers, is less a local/regional paper than a national one, they are correct — up to a point. National print advertising represents only around 45% of the paper’s advertising revenues.]

The simple fact is that people today have far more choices online for local, regional and national news – practically all of them free. At the same time, the advertisers have more options than ever before in choosing where to advertise.

So what’s next for the New York Times Company? More staff layoffs? Unpaid furloughs? Halting pension plan contributions? Perhaps all of these … plus trying to sell off other assets like the Boston Globe or the Boston Red Sox franchise.

The all-too-likely outcome: None of this will make much difference.