McCormick Place Loses its Luster

Has all the grumbling about Chicago’s vaunted McCormick Place as America’s premier tradeshow venue finally reached critical mass?

For years, corporate exhibitors have groused about government-controlled, money-losing McCormick Place. Stories abound of exhibitors being forced to spend hundreds of dollars for services as mundane as plugging in a piece of machinery, or being charged $1,000 to hang a sign from the ceiling, because of onerous union rules governing “who does this” and “who can’t do that.” It’s been a constant refrain of complaining I’ve heard at every tradeshow I’ve attended at McCormick Place, dating back some 20 years.

Despite all of the criticism about McCormick Place’s high costs and lack of user-friendly service, it remains the largest convention complex in America, with over 2.5 million square feet of exhibit space. But attendance has been declining pretty dramatically, from ~3.0 million in 2001 to ~2.3 million in 2008. While the figures haven’t been released yet for 2009, it’s widely expected that show traffic will be reported as down another 20%.

As the current economic recession has put the most severe strains yet on the tradeshow business, it seems that a rebellion against McCormick Place is in now full swing. According to a recent article in The Wall Street Journal, “a gradual drop-off in business … has turned into a rout as a string of high-profile shows have pulled out.” The deserters include a triennial plastics show (~75.000 attendees), as well as the Healthcare Information & Management Systems Society’s annual conference (~27,500 attendees).

But isn’t tradeshow attendance off in other convention centers as well? Well … yes. But clearly not as much. In truth, tradeshow attendance has been under pressure at a “macro” level ever since 9/11, and an important reason beyond the issue of terrorism is technological innovation and the ability for people to interact through video-conferencing and for companies to demo their equipment and services via the Internet and other forms of digital communication.

Tradeshows were once the only way to gather a community together, but now there are other options. One school of thought holds that large tradeshows are now less effective than small, targeted conferences that provide heightened ability for attendees to interact with one another on a more intimate basis. Some events no longer charge attendees … but they make sure to “vet” them carefully to ensure that the show sponsors who are underwriting the costs are reaching prospects with important degrees of influence or buying authority.

On top of these “macro” trends, the current economic downturn just makes McCormick Place look more and more like a loser when it comes to the tradeshow game. Compared to Chicago’s three most significant competing tradeshow locales – Atlanta, Las Vegas and Orlando – the cost of many items from electricians (union labor) to foodservice (greasy spoon-quality coffee at Starbucks® prices) to hotel accommodations (room fees and surtaxes that won’t quit) ranges two times to eight times higher in Chicago. And in today’s business climate when every cost is scrutinized closely, none of this looks very cost-effective to the corporate bean-counters.

True, Chicago is more centrally located for travel from both coasts: Who wants to take a five hour flight from New York to Las Vegas or from California to Orlando to attend a meeting?

[On the other hand, no one can honestly say that the weather in Chicago is preferable to sunny Florida or Nevada!]

So it would seem that Chicago’s worthy tradeshow competitors have achieved the upper hand now. I just returned from two national shows this past week – the International Air Conditioning, Heating & Refrigeration Expo and the International Poultry Expo. Where were they held? Orlando and Atlanta – the same cities which are attracting McCormick Place’s erstwhile customers.

Mathematicians and the Meltdown

I can’t wait for the release of The Quants, a new book by Wall Street Journal reporter Scott Patterson about the role of so-called “quant funds” in the financial near-meltdown in September 2008, to be published on February 2. The weekend edition of The Wall Street Journal printed excerpts from the book, a powerful indictment of the mathematicians and computer whizzes who “nearly destroyed Wall Street.”

According to Patterson, “quants” was a name given to “traders and financial engineers who used brain-twisting math and super-powered computers to pluck billions in fleeting dollars out of the market.” In a major departure from traditional trading – evaluating individual companies’ management, performance and competitive positions – the quants used mathematical formulae to wager on which stocks will rise or fall.

Because of breakthroughs in the application of mathematics to financial markets – some of them so novel so as to have won their discoverers Nobel Prize awards — quant funds had quickly come to dominate Wall Street, with most of them piling up profits day after day. (To the senior brass at the investment houses, who likely knew little if anything about how these funds operated except that they made a lot of money, a hands-off policy seemed just the thing.)

And just as in so many other fields, technology elevated the “nerds” to the position of “stars” – with commensurately stratospheric compensation.

Unfortunately, in September 2008 the quant funds could not anticipate the effect of the collapse of the housing market bubble. In fact, this development turned the mathematical formulae of the quant funds on their head: What should have declined, rising … and what should be going up, dropping.

Patterson’s book promises to go into the details of just how things spun out of control, as seen through the eyes of key Wall Street managers such as the piano-playing, songwriting Peter Muller, founder of Morgan Stanley’s Process Driven Trading (PDT) quant fund, and Cliff Asness, formerly of Goldman Sachs and leader of the Applied Quantitative Research (AGR) quant fund.

In addition to presenting all the facts and all the drama, I’m hoping that Patterson will offer a few observations on how we can avoid a debacle like this from happening again in the future.

Another key question is whether any of the proposed regulations being debated in Congress will address the practices of quant funds – or is it all too complicated for anyone to figure out?

If that’s so, it’s pretty scary.

The Latest Read on e-Readers

The e-reader phenomenon continues to grow. In fact, sales of e-readers have turned out to be one of the brightest spots in the consumer electronics segment during the 2009 holiday season.

And 2010 is starting out with a bevy of new e-reader product introductions from a half-dozen different manufacturers.

“Way back” in August 2008, research firm iSupply released projections for e-readers that anticipated 3.5 million units to be sold worldwide in 2009. That was up dramatically from 1.1 million units sold in 2008 – almost all of them Kindle or Sony e-readers.

Those projections were considered highly optimistic by some observers. But now that the year has passed, it’s looking like the prediction was on the low side; iSupply’s revised sales figures for 2009 are closer to 5 million units. And Forrester Research estimates that 2009 e-reader sales in the U.S. were very strong, with ~30% of the sales occurring during the holiday season in November and December.

In fact, Amazon has reported that its Kindle e-reader emerged as the most-gifted item ever from its web site.

Now, hard on the heals of the recent Nook e-reader introduction by Barnes & Noble comes news from the International Consumer Electronics Show (CES) of a host of new entrants in the e-reader game. Ranging in price from under $200 to nearly $800, each new entrant is aimed at meeting the needs of different target groups – from those wanting business news to people who wish to read full-length books. Not surprisingly, many of the new enhancements are centered on making the e-reader experience as “easy on the eyes” as possible.

Among the more interesting introductions at CES:

Que (made by Plastic Logic), which incorporates advanced polymer technology to create a shatter-proof screen.

Skiff (Hearst Corporation), which offers a store for digital newspaper/magazine subscriptions.

eDGe (from Entourage Systems), which provides two screens that fold up like a book. (One offers color display and the other a b/w display for newspaper reading.)

Not to be left on the sidelines, the granddaddy in this business – Amazon – is introducing an international version of the Kindle DX. Amazon now offers both larger- and smaller-sized Kindle units in prices ranging from $250 to $500.

With all of these new options in e-readers, what’s in store for 2010 volume? Observers are now predicting that unit sales will be twice as many as in 2009 … which certainly qualifies e-readers as the latest “rage” in the consumer electronics world.

The “Greening” of Corporate America: Fact or Fad?

Considering the cold winter season we’re having – not to mention the equally cold economic and business environment – it’s not hard to imagine that the “corporate green” trend, so popular and prevalent only a year or two ago, might have stalled out in a major way.

Add to this the recent flap over climate change data fudging by some over-enthusiastic scientists, and it seems the perfect recipe for “corporate green” being a movement that’s on the wane.

But a just-completed market research study on “green” marketing provides interesting clues that this might not be the case. A group of U.S. commercial/industrial firms was surveyed for MediaBuyerPlanner, an arm of Watershed Publishing, to determine the extent of green marketing that is occurring. Among the key findings:

• ~70% of the firms surveyed consider themselves to be “somewhat green” or “very green” … but they suspect that customers think of them as less green than they actually are. Perhaps related to this concern, ~80% of the respondents expect to spend more on green marketing in the future – and that percentage approaches 90% among the manufacturers contained in the survey sample.

• For those who currently feature “green” marketing themes in their promotional efforts, the most popular media for that is using the web (~74% of respondents), followed by print promotion (~50%) and direct marketing (~40%).

• More than half of the companies reported that they are taking concrete steps to become “greener” in their operations. The most popular actions are conserving energy in their operations (~60%) and changing products to reflect greener characteristics, such as altering product ingredients, packaging, or intended uses (~54%).

And here’s another interesting survey finding: Quite a few respondents believe their green marketing efforts are more effective than their normal marketing efforts. (One third of them felt this way, compared to just 7% who felt regular marketing activities are more effective than their green messaging. The remaining 60% have not observed a measurable differentiation and/or did not feel knowledgeable enough to make a judgment.)

The survey also found that the commitment senior management makes to sustainability and other green principles in the form of specific actions is what comes first … followed later by “green” marketing efforts. In other words, there is a lower incidence of companies creating green marketing campaigns just out of a desire to appear “green.”

This suggests that green marketing depends first on company management buying into the ideological principals of environmentalism.

Certainly, the “soft economy” as well as the controversy of “soft science” could be acting as a damper on the potency of green messaging. But this field research suggests that “corporate green” continues to be a trend as opposed to just a passing fad … and that its significance as a marketing platform for companies will grow stronger in the coming years.

Plunging Headlong into the Next Digital Decade

Looking back over the past ten years, so much has happened in the world of digital communications, it’s almost impossible to remember the “bad old days” of slow-loading web pages and clunky Internet interfaces.

And yet, that was the norm for many web users at the beginning of the decade.

So what’s in store for the upcoming decade? When you consider that a 120-minute movie file can be downloaded about as quickly as a single web page these days, how could data processing and download times get any faster than they are already?

Certainly, if the world continues with transistor-based computer chip designs, there’s very little room for further improvement. That’s because today’s chips continue to be based on the original 1958 Shockley transistor design – except that they contain many more transistors along with circuits that have been engineered smaller and smaller — down practically to the size of an atom.

We can’t get much smaller than that without a radical new design platform. And now, along comes “quantum computing” which goes well beyond the traditional binary system of using ones and zeros in information processing. The betting is that so-called “qubits” – quantum processor units – will become the new design paradigm in the 2010s that will dramatically increase processor speed and power once again.

[An alarming side effect of quantum processing, however, is the possibility that computers will become so much more powerful that current methods of encryption will become obsolete. Clearly, new ways of protecting information will need to be developed along with the new speed and capabilities.]

In tandem with the new advancements in data processing power and speed, industry prognosticators such as Wired magazine’s chief editor Chris Anderson are predicting that bandwidth and storage will become virtually free and unlimited in the coming decade. As a result, it’s highly likely that the decade will be one of much greater collaboration between people in “peer to peer” creation and sharing of information and media, online and in real-time. Think Facebook on steroids.

“Mag Drag 2009”: Year-End Update

Earlier this year, I reported on the sorry state of print magazine publishing as illustrated by the spate of closures reported up to that time.

Now that we’re wrapping up 2009, we can see the full scope of the damage. MediaFinder has tallied up more than 370 magazine titles that have folded over the course of the year. And the number is closer to 450 if you also include magazines that ceased to publish in print form and went to an all-digital format.

Interestingly, magazine closure stats for 2009 were actually a bit lower than in 2008 and 2007. But this year saw the demise of some pretty important titles. Among the more noteworthy casualties were:

 Country Home
 Editor & Publisher
 Gourmet Magazine
 Hallmark Magazine
 Modern Bride
 Nickelodeon
 Portfolio
 Teen
 The Advocate
 Vibe

As we move into 2010, will these trends continue, or will magazine closures level off? It’s too soon to say, but some prognosticators are forecasting a slight uptick in print magazine advertising revenues, so perhaps the worst is behind us.

But coming off of a disastrous 18-month period when print advertising revenues have tanked 25%, 30% or more, it’s hard to see how some magazines can continue to survive at the new, depressed revenue levels which will likely be a fact of life going forward.

And what about newspapers? For them, 2009 was even more depressing, with a record number of bankruptcies filed including the companies that own the Chicago Tribune, Philadelphia Inquirer, Chicago Sun-Times, Minneapolis Star/Tribune and a number of other iconic newspaper brands. At the end of the year, though, some firms had managed to resolve their bankruptcy proceedings thanks to cash infusions, labor concessions, or selling out to new owners.

Finally, PBS Gets on the Nielsen Bandwagon

It took three or four decades, but the PBS network has finally signed up for full Nielsen demographic ratings for its TV programs. Now, for the first time, marketers will be able to access and review full demo data on who’s watching what on the Public Broadcasting System – information that has been crucial in making decisions on where best to promote products on broadcast TV.

And it’s about time. For far too long, advertisers could rely only on educated guesswork to weigh the effectiveness of promoting their products and services on PBS’s leading programming fare.

Of course, PBS doesn’t present advertising the same way as do other networks, because it’s ostensibly commercial-free programming. But even though PBS is a commercial-free broadcasting service, in recent years it has offered sponsorship deals with major advertisers in the form of comprehensive messaging that is broadcast before and after the shows air.

Indeed, veteran watchers of PBS programming have noticed more extensive promo messages that have gotten awfully close to out-and-out commercials – even though they aren’t ads in the “traditional” sense.

And up until now, PBS has not officially released any extensive form of demographic data, making promotional efforts more of “crap shoot” for advertisers than anything else.

But now PBS has signed up with Nielsen for full demos. The new rating service began on PBS with the Ken Burns series on national parks earlier in the year. According to Nielsen, that documentary scored an overall household average audience rating of 3.5, with an average of 5.5 million viewers tuned in per episode. And the internals provided some interesting clues as to the age, income and educational characteristics of viewers — older, more affluent, and better educated.

Which programs are on tap for Nielsen demo ratings going forward? PBS staples, of course – Masterpiece Theater, Antiques Roadshow, NOVA, Nature and Frontline. They’ll all have weekly demographic rating information, along with several of PBS’s famed kids programs including Sesame Street and Sid The Science Kid.

What’s a little ironic about the latest news is that, after all these years, PBS has finally gotten on the Nielsen bandwagon … just at a time when when broadcast TV audience stats are mattering less and less. The ever-growing non-TV alternatives provided by the Internet have seen to that. And coupled with that, the overall audience for PBS programming has been shrinking.

Otto von Habsburg at 97: A Link to the Past … and the Future

Four-year-old Otto von Habsburg, flanked by his parents, at the time of his father’s coronation as Emperor of Austria and King of Hungary (1916).

This past month, Otto von Habsburg celebrated his 97th birthday. As the eldest son of the last emperor of the Austro-Hungarian Empire, he is a link with history – the heir apparent to one of Europe’s most powerful dynasties that ruled Central Europe for more than 650 years.

Otto’s life was borne amid conflict. He was just a small boy of four when his father Karl ascended the throne of Europe’s third largest country, right in the middle of the First World War – a conflict which was to bring about the collapse of the monarchy in 1918. Emperor Karl died just a few short years later, making Otto the titular head of the impoverished family, which was forced to live “on the run” in Switzerland and Spain.

Throughout his years of schooling, Otto was tutored in the fiendishly difficult Hungarian language. This was deemed important because Otto’s father had never relinquished his claim to the throne of Hungary — and because Hungary was still technically a monarchy, ruled as regent by Admiral Miklós Horthy, once supreme commander of the Austro-Hungarian navy.

But soon thereafter came the destruction of Second World War and the spread of communism throughout most of the lands of the old empire. At this point, it seemed almost inevitable that Otto would be destined to become “just another” ex-royal personage, whiling away his days in carefree locations like Monte-Carlo, St. Tropez or the Aegean Isles.

But here is where Otto played his hand differently – and in the process became an important player on the international stage and an advocate for a new European political order. Renouncing any claims to the throne, he became instead an indefatigable champion of European unity. An ardent anticommunist, Otto believed the key to Europe’s future was to strive for common interests and common ground. He stood for election to the European Parliament and was an early member of that body, eventually serving for 20 years.

Otto von HabsburgHe also became an important historian and lecturer, traveling the world and speaking with audiences everywhere. I remember hearing Otto von Habsburg give a speech at St. Catherine’s College in St. Paul, MN in 1972, when I was a student in high school. The predictions Otto made in that speech were uncanny in their accuracy. He forecast almost to the exact year the fall of communism (1990), and he also warned about Europe’s smoldering powder-keg (the breakup of Yugoslavia into squabbling mini-states).

And when the Iron Curtain finally did come down in the early 1990s, Otto offered up his services to the new post-communist governments in the land of his forefathers. Subsequently, he played a significant role as a kind of unofficial cultural and social ambassador for several countries, most notably Slovenia, Croatia and Hungary. The prestige of the Habsburg name and its ties to a proud history provided added “cachet” to the early efforts of the post-communist governments to establish meaningful economic and business ties with the West. (Otto’s fluency in the Hungarian language, thanks to all the many hours of tutoring when he was a boy, turned out to be quite handy in a wholly unexpected yet very welcome way.)

Today, at age 97, Otto von Habsburg is still very much with us. He has slowed down a bit, but still shuttles regularly between his home in Bavaria and “his” cities of Budapest, Vienna and Zagreb. From the vantage point of history – where we can now see how the “brave new world” of the 20th Century brought forth more than its share of human misery along with all of the political innovation – the virtues of the “old order” have become easier to recognize.

Certainly, that is the case in the lands of the old Austro-Hungarian Empire, where Otto, “the man who would be king,” has not only been declared an official citizen of several countries, but is also respected by people all across the political spectrum. In the end, not a bad legacy at all.

So here’s a hearty toast to Otto von Habsburg: 97 years young and a true citizen of the world.

Are younger Americans turning their backs on manufacturing careers?

What are the attitudes of young Americans toward pursuing manufacturing as a career? A recent field research project gives us some clues – and the results don’t paint a very pretty picture.

The national survey was sponsored by the Fabricators & Manufacturers Association, International and was administered to ~500 teenage respondents. The poll found that a majority of teenagers (~52%) have little or no interest in a manufacturing career and another 21% are ambivalent, leaving only around one quarter showing any interest at all in considering manufacturing as a career path.

When asked why a career in manufacturing is not attractive to them, the top four reasons cited by respondents were:

 Prefer to have a professional career: 61%
 Prefer a job with better pay: 17%
 Wish to have better career growth than manufacturing would provide: 15%
 Don’t want to do the physical work: 14%

Perhaps we shouldn’t be surprised by these results, because manufacturing has never had quite the cachet of a professional career. But with the number of people graduating from college these days with no meaningful job prospects, it’s a bit ironic that teens still consider the traditional college degree/professional career launch pad as the better way to go.

Indeed, there are a good many misconceptions about “dirty” manufacturing work activities that are completely at odds with the reality. In fact, many manufacturing personnel work with the most advanced, sophisticated equipment and systems that require the kind of high-tech computer skills young people love to apply! And advanced technologies like robotics are to be found in manufacturing more than in any other industry.

Here are several other sobering findings from the FMAI survey:

 Six in ten teens have never toured a factory – or even stepped inside any kind of manufacturing facility – in their life.

 Only about one-quarter of teens have ever enrolled in an industrial arts or shop class.

 ~85% of teens spend two hours or less in any given week “working with their hands” on projects such as models or woodworking (30% spend no time at all on such pursuits during the week).

Here’s a thought: Could kids’ ambivalence about manufacturing be influenced by what’s perceived as “cool” in the career world?

TV programs, when they deal with the working world at all, aggrandize the careers of lawyers, doctors and law enforcement officers … or big business tycoons à la Donald Trump. Many school administrators tend to focus on only one “honorable” education trajectory for students – the traditional university degree.

Certainly in today’s economy, manufacturing jobs are being hammered just as much as employment is in many other industries. But despite the current situation, I think it’s possible more parents would support the idea of their children pursuing a manufacturing career – or a career in trades like welding or electrical – if the pursuit these types of careers received a little more moral support from the wider society.

How are things clicking in Internet marketing at the moment?

What’s happening with clickthrough behaviors on online ads these days? According to comScore, Inc., a digital market intelligence and measurement firm, activity today versus 2007 reveals that ~50% fewer people are clicking on Internet ads now compared to then. In fact, fewer than 10% of all Internet users accounts for ~85% of all ad clicks.

This may call to mind the old adage: “When a tree falls in the forest, does it make a sound … and does anybody know?”

On the other hand, it’s good to remember that banner advertising can have branding value. In fact, comScore research also shows that one in five users who click on an ad go on to conduct a search about the advertiser … and one in three visit the brand’s own web site.

Unfortunately, determining just how effective online advertising is can be a challenge to measure – reflective to some degree of the “bad old days” of print advertising. One reason for the difficulty is because of evolving consumer behaviors regarding “cookies.” When consumers delete tracking cookies from their computer, they’re counted as a “new customer” when returning to the site. Interestingly, comScore’s latest data find that nearly one-third of web users delete cookies – many as often as five times per month. And with the steady stream of news items warning of “Big Brother”-type information harvesting, it’s hardly a surprise that cookie deletion has grown by ~20% since 2007.

What’s the implication? Not accounting for cookie deletion can lead to an overstatement of unique visitors, reach and frequency – by about 2.5 times. (Relying on IP addresses doesn’t solve the issue either, because the typical computer in the U.S. has a multiple number of IP addresses.)

Of course, these hurdles don’t mean that an attempt to measure the effectiveness of online advertising is an exercise in futility. Just as in print advertising, there are clues marketers can hone in on that point to whether an online advertising campaign is a success. And prudent companies will discount web traffic statistics by a certain degree in order to paint a more realistic picture … not to mention incorporating conversion tracking triggered by specific actions on the web site such as a purchase, a customer query, or registering to download an informational document.