NonesNotes

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.

Happy Birthday to a Renaissance Man

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Previn in younger days
Previn in younger days
andre-previn-at-801André Previn turned 80 years old earlier this month, which gives us cause to reflect on the incredible life of this highly interesting, very creative man. In his musical life, he’s demonstrated a versatility and catholicity that surpasses even Leonard Bernstein’s reputation.

Born in Germany, raised in the United States and truly a citizen of the world, Previn has lived out his life in the European capitals of London, Paris and Berlin … and here in the U.S. in places as diverse as Hollywood and Pittsburgh. A true wunderkind, he burst onto the musical scene back in the early 1950s, recording fine jazz piano arrangements that were released on 10” RCA Victor 78-r.p.m. and LP records … then soon migrated over to MGM Studios, writing musical scores for more than a dozen Hollywood films.

I own a few of Previn’s early jazz albums. His song arrangements are little gems – each one their own special musical adventure. Listen to his rendition of Stella by Starlight, for example, and you’ll immediately understand his special way with the music.

Previn’s pop music career masked the fact that he had studied classical music at the Paris Conservatory, and in San Francisco under the tutelage of the great French conductor Pierre Monteux. By the 1960s, Previn had moved from pop back to his classical roots, issuing a series of critically acclaimed recordings with the best symphony orchestras of London. His interpretations of the symphonies of Ralph Vaughan-Williams and Sir William Walton … along with recordings of the important British choral masterworks Belshazzar’s Feast and The Rio Grande remain touchstone performances, nearly 40 years on.

In his later years, in addition to guest-conducting the world over, Previn has penned a steady stream of memorable compositions, including several concertos for his ex-wife, the celebrated violinist Anne-Sophie Mutter. Even more impressive is Previn’s foray into the world of opera. His 1998 composition A Streetcar Named Desire has received more than 20 productions – an almost unheard of feat for a contemporary opera. And today, he’s busily at work writing a new work for the Houston Grand Opera to premiere next month, based on Noel Coward’s 1938 play Still Life (later made into the movie Brief Encounter).

At age 80, André Previn shows absolutely no sign of slowing down. And why should he? Musically speaking, he still has much to say … and the arts world is richer for it.

Happy Birthday, Maestro!

Twitter: The “Next Big Thing” in Marketing Research?

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By now, it’s obvious that Twitter has become the newest darling of the social marketing world. With somewhere around ten million users today and growing exponentially (there were fewer than one million just a year ago), it’s clear that Twitter has successfully made the leap from novel curiosity to mainstream communications vehicle.

Indeed, Twitter may have worthwhile applications beyond simply the ability for people to update their status information in real time from a mobile phone, computer or online portal. In fact, Silicon Alley Insider recently ran a contest inviting readers to submit their ideas for turning Twitter into a financially viable social network.

The winning entry? An idea from Chicago communications agency Denuo recommending that Twitter charge marketers for access to opted-in users willing to field an occasional research question from brands. Twitter would also charge for dashboard access to the research analytics.

I think this idea has a good deal of merit. Instead of incurring the cost to design and deploy custom research projects, simply tap into Twitter’s existing platform and huge user base to “anonymize” the data and open it up for mining.

Of course, some people voice concern that Twitter will soon be overrun by brand-related messages and advertising. That’s actually begun to happen as certain brands “follow” twitterers ad nauseum — so much it almost constitutes a form of cyber-stalking. But by offering operating an online research panel such as this, Twitter has the potential to deliver scads of valuable, actionable data at the speed of “now.”

Like YouTube, Twitter is actually going to have to figure out a way to make some money for its investors, and soon (imagine that?). So this idea bears watching.

Another Win for the Tax Man?

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The threat of collecting sales taxes for Internet-based commerce has been rumbling in the background for years. But the latest news out of Washington may mean it’s finally coming to pass. And it’s generating its share of controversy.

A bill is expected to be introduced soon in Congress that would force Amazon, Overstock and other Internet retailers to collect sales taxes from their customers who shop online or through mail order. Co-sponsored by a Republican senator and a Democratic congressperson – which means almost certain passage – the bill would require states to inform retailers whenever there is a change in their tax code. This will have the effect of simplifying the tax collection and data reconciliation process.

State officials are understandably excited over the prospects of gaining additional sales tax revenue. And why wouldn’t they be? After all, sales tax receipts have dropped off in recent months due to a general decrease in retail activity. To them, this seems like a quick and easy way to replenish their coffers.

Plus, some brick-and-mortar retailers are surely happy about having a more level playing field. No longer will they have to compete at a disadvantage against online retailers that are saving their customers 6% or 7% sales tax on every purchase.

Of course, sales tax regulations have long been a thicket of complexity. In fact, a tidy number of sales tax collection software/service companies have sprung up over the years to help retailers make sense of it all. Not only are a myriad of different sales taxes set by individual states, but cities and other municipal entities within states can also set their own sales taxes as well.

To add even more to the potential confusion, each state has its own individual laws regarding what type of merchandise is taxable, or whether things like shipping expenses are taxable. So collecting the correct figure is often a tricky business, even for large online retailers.

As for sellers having multiple physical locations in addition to their online presence, depending on where those business locations are in relation to the online consumer’s place of residence can make for an even more complicated picture.

Are we having fun yet?

It’s no wonder online retailers intensely dislike playing the role of tax collector for the states. On the other hand, government officials absolutely love the idea that they can collect new funds without actually having to raise taxes.

And that’s what’s so interesting about this latest maneuver. No one is talking about an official change in tax law. Technically, online shoppers have always been required to keep their receipts and pay tax funds to their home state when filing the yearly state tax return. But be honest … do you know anyone who’s actually ever done that?

UPDATE (4/28/09): BusinessWeek is reporting that the particulars of the legislative bill are still being drafted. Of course, this isn’t the first time movement on a bill has been delayed in Congress. The magazine is also reporting that the bill’s passage is not a foregone conclusion … although opposition in this Congress appears to be lower than in previous ones. We shall see.

Is “Pay to Play” the Future of the Web?

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More than a few feathers were ruffled by Kodak’s announcement that the multiple millions of users of the company’s Kodak Gallery online photo-storage service may have their photos subject to deletion if they don’t begin paying an annual service charge ranging from $5 to $20.

Is this the beginning of a trend? Some web observers seem to think so. David Lazarus, in his recent Los Angeles Times business column, draws a parallel to automated teller machines that were introduced by the banking industry back in the late 1970s. At first, there were no service charges assessed when using ATMs. The banks wanted their customers to start using ATMs, thus helping to reduce the demand for more labor-intensive (read: expensive) teller stations.

Then, after a number of years of free service the banks began charging ATM service fees for out-of-network transactions and even some in-network ones. The idea was now that consumers had become comfortable with the technology and the “24/7/365” convenience of the machines, they would accept the fees without resistance.

“Why should the Internet be any different,” Mr. Lazarus asks?

I think the comparason isn’t totally apt. It’s true that there is a cost for Kodak or others to maintain the infrastructure (hardware and software) to provide archiving and other web-based services. But the fact is, those costs are not nearly as high as the “brick-and-mortar” expense of building an ATM system.

What’s more, the banks were in a stronger position to move en masse toward charging fees. After all, they operate under a government-issued charters. The barriers to entry – both regulatory and financial – are far more onerous than anything in cyberspace.

Anyone ever heard of Flickr?

And that’s the real challenge today. Who is going to be the first to jump into the fee-based waters? And will anyone else follow? Put it another way: will others follow the leader … only to find themselves drowning in a sea of new, free alternatives that spring up in response?

Just ask the newspaper industry how simple it is to successfully implement fee-based services on the web. There’s your answer as to how easy “pay to play” will be to implement.