Bob Rosenbaum | The MarketFarm

Marketing, or just anti-social networking?

When I heard about the college kids who are making money by advertising products with temporary tattoos on their foreheads, I knew it wouldn’t be long before something like Wrapmail came along. As reported in Inc. magazine, Wrapmail is a service that puts an ad in every outbound e-mail sent from your place of business. Inc’s example was pretty benign: a guy who sells copiers is using the service to promote his own products on e-mails sent out by his employees. I can’t really see very much wrong with that.

But it’s not really welcome, either. And how long will it be before the matchmakers step in — paying individuals and small companies to advertise national brands in their outbound e-mails? My guess: within the next 10 minutes, if it hasnt already started.

We all know: The Internet tends toward cesspool. Every time there is an uplifting addition to the amazing things this medium can achieve, there is someone who finds a way to just as quickly coat it with a certain amount of stink. I’ve learned to live with that, even embrace and enjoy it.

Which is why I’m writing about Wrapmail (which, incidentally uses equally intrusive pop-up chat technology as soon as you open their website). I’m impressed someone thought of it. I’m also depressed someone thought of it.

And if they want to get the word out, they might consider tattooing it on someone’s forehead. Because on principle I’ll delete the e-mail I will undoubtedly receive from Wrapmail after writing this post.

More on the suing of Entrepreneur

UPDATE: Entrepreneur magazine, being sued for publishing information in its “Top 100” list of entrepreneurial companies about a CEO who was subsequently arrested and charged with running a Ponzi scheme, has now asked that the suit be dismissed.

The original suit, for $178 million by a group of 87 investors, alleged that, by printing information about the company Agape World (this was covered in more detail in my previous blog entry, Are Magazines Really That Important?), Entrepreneur magazine played a role in their making a bad investment.

Entrepreneur‘s motion for dismissal strikes me as pretty fair and on-target. I have no sympathy for investors dumb enough to bet millions of dollars on information taken from Entrepreneur magazine.

The strange thing is that’s pretty much Entrepreneur‘s defense. According to Folio:, the magazine cites New York law in stating: “A publisher is under no duty of care to its readers to ensure the accuracy of published information unless it constitutes a breach of contract, obligation, or trust, or amounts to deceit, libel or slander… A publisher, even those who maintain a paid subscription service, such as Entrepreneur, owes its readers no duty to ensure the accuracy of its publications, and thus, cannot incur liability for an allegedly inaccurate statement.”

OK, I agree that magazines make mistakes and shouldn’t be held accountable for the cost to someone who uses that information to make a business decision. But does Entrepreneur really want to be on record saying that it doesn’t need to worry whether the information it prints is accurate?

A shocker about ad budgets – and why

According to a consortium of advertising agencies, ad budgets are down this year. Who woulda thunk?

Seriously, according to B2B, a survey of 40 ICOM agency members indicated that more than half the agencies have seen client budgets drop at least 21% this year.

That seems to have translated directly to the magazine sector. The Seybold Report cites data that consumer magazine pages were down 25 percent in Q1, with a corresponding decline in “rate card revenue” (that is: it’s just a calculation) of more than 20 percent.

According to the Magazine Publishers of America, this is just more of the same; pages were down about 12 percent in 2008. And various reports put them flat or down slightly in ’07. So this isn’t just about the recession.

According to Seybold, more than half the respondents to the ICOM survey agreed with this statement: “Budget cuts and new challenges have served as catalysts for clients to come up with new ideas and experimentation to market their products.”

Again, this isn’t just about the recession. This is about businesses deciding that their marketing departments can and should play the role of publisher.

I started observing this bypass about 10 years ago, as my biggest and most sophisticated advertisers literally started publishing their own magazines. Since then, it’s become easier and less expensive; today you can become a publisher with a website, a blogger and some folks who are really good with Facebook and Twitter.

With apologies to The New Yorker

From a New York Times wire story in The Plain Dealer:

This morning, at the American Museum of Natural History, researchers will unveil a 47-million-year-old fossil they say could revolutionize the understanding of human evolution at a ceremony.

A truly epochal event.

Murdoch charges for content; Gannett closes my first paper

Rupert Murdoch is apparently tired of all the talk about how to save newspapers; now he’s taking action. According to a report in Media Buyer Planner, Murdoch is going to begin charging for content in 54 daily newspapers that he owns.

tucson_citizen It’s an action few publishers have been willing to take, but Murdoch must be tired of watching profits simply fall out of the bottom of this bottomless boat. At some point, and I guess he’s there, a publisher has to say, “The risk of doing nothing is greater than the risk of doing the wrong thing.”

The big fear has been that people don’t want to pay for online content, and that if newspapers start charging online, readers will simply evaporate. I think all of that’s true, as I’ve written before.

But if dozens of newspapers make the switch in a short period of time, it might also simply change the expectation of users who have been getting their news for free.

This very well could be the watershed moment that gives newspapers a chance at a future. And while I am generally pretty sparing in words of praise for Rupert Murdoch, it’s a credit to him that he has the courage to do this.

Meanwhile, on a note of personal disappointment for me, Gannet has folded the Tucson Citizen. It was an improbable product — an afternoon newspaper in a small city with two newspapers. The survivor, The Arizona Daily Star, is the morning paper. It’s owned by Lee Enterprises (when I was in town there, it was owned by Pulitzer) and has operated under an unusual joint operating agreement for at least the last 25 years, in which the two competitors share circulation, printing and a building.

I’m not surprised, but certainly sad to see it go. It’s the first newspaper where I worked, in 1983 as an intern in the Teaching Newspaper program of Northwestern University’s Medill School of Journalism. It’s like watching them tear down your childhood home and replacing it with a fenced-in, overgrown and rocky lot.

I suddenly miss my editor, Mike Chihak, and my friend Don Rodriguez — niegher of whom I’ve talked with in years, but who taught me a lot while I was there.

Nobody who ever worked for the Citizen could feel right about this. We were always the White Hat, the Star was the opposite. The feeling was confirmed for me the one time I had reason to step into the Star’s newsroom, on the opposite side of the building, with separate doors and an independent security system.

I don’t remember why I needed to go there, but while the Citizen newsroom was bright and cheerful with white linoleum floors, the Star newsroom looked to me like the White House War Room — with indirect lighting and a black tiled floor.

Very mature of me. I know. But it’s a vivid memory, as was my entire time at the Citizen. R.I.P.

Facebook: eyeballs, China and deja vu

Is it possible to have two deja vus at the same time? Or is that simply schizophrenia?

According to Venturebeat, Facebook is raising money to buy back stock from its employees. It hopes to borrow $150 million to buy back 15 million shares at $10 each. These shares have been given to employees of the private company over the past few years, and those employees have the right to sell up to 20% of their holdings, according to the article.

And now that the market for IPOs is so rotten, this is apparently the only way the company can help them cash in anytime soon.

That’s where the first case of deja vu comes in. Just 10 years ago, during the first Internet boom, people couldn’t cash in quickly enough on their foundation-free stock. Yes, Facebook has an astounding number of users, but I’m not so sure about its business plan. The company will undoubtedly go public some day, but I simply don’t believe it’s monetizable to the same extent as Amazon, eBay and Google.

Facebook really has only one asset: a bigazillion eyeballs. Which is impressive in itself, and there ought to be a way to make money from it. But with ad markets drying up and Facebook’s genuine incompetence when it comes to figuring out how to let businesses participate in a way justifies their spending money, I don’t know what the company is going to do to pay back this next $150 million that it borrows — let alone the previous $460 million it’s raised, according to PaidContent.org.

Facebook is undoubtedly an 800-pound gorilla in the white-hot social networking arena. But there were scores of 800-pound gorillas a decade ago, whose names I can no longer recall, that went bust because they couldn’t figure out how to turn eyeballs into cash.

I’m not predicting Facebook is going to go under anytime soon. In fact, I’m sure it will be around to cash in on an improved IPO market sometime next year. But if I were an employee and could get $10 a share for stock that I hadn’t paid for, I would sell as much as I was allowed at the first possible moment.

Here’s another deja vu-inducing part of the story: Facebook can’t get the money from its usual investors, so according to the reports already cited above, some portion of the money is coming from Asia. I remember when Japanese investors bought (and overpaid for) Rockefeller Center in the late ’80s. At the time, it was assumed to be a disheartening sign that U.S. economic dominance was ending.

It’s clear to me that, no matter how strong and innovative the U.S. may be, the world is becoming a more competitive place; any perception that we are falling probably has more to do with the fact that others are rising. Still, do we need to make it easy for them?

It’s always bothered me when people complain that we’re losing our mojo as a world power, but they don’t seem to make a conneciton between that observation and our willingness to let Asia — China in particular — lend us the money to finance our foreign wars and deficit spending.

If China comes to own a third or more of Facebook, do you think these people will notice? Do you think they’ll care?

How fast can one company lose customers?

According to Shelly Palmer at imediabytes, Sirius/Xm Radio lost $36 million in Q1. And that’s nothing. It lost 400,000 customers — which I’m thinking is more customers than Johnson & Johnson lost back in the 1980s when someone started putting cyanide in its Tylenol products. siriusxm_sirius I mean, 400,000 is a mid-size city. It’s a lot of customers. I’m not sure you could get rid of customers that fast if you paid telemarketers to call them up at dinner time and swear at them.

And if you’re the folks at Sirius/XM, it’s the kind of number that puts you into a full-blown panic attack. When you lose 400,00 customers in 3 months, you start asking questions like, “Are we doing the right thing here?” and “WTF?”

My personal experience is that I had been a subscriber for 2 years when I got a note from Sirius/XM in February siriusxm_xm warning me that I would no longer be able to access programming for free on my computer unless I paid for the full year in advance right away.

It annoyed me, and I immediately assumed it was a cash-grab. But I bought the 12-month subscription because I thought it was important to me. Two weeks later I lost my job, and a week after that, in an effort to cut all unnecessary costs — and because I was irritated at being leveraged in the first palce, I called to cancel my subscription.

Their response? The nice lady with a Punjabi accent asked if they could keep me as a customer if they reduced the annual subscription rate by 50%. Now I was really mad, realizing that all along I’d been paying twice what they were willing to take. I told her no.

A month later, I got a direct-mail piece asking me to come back at 4.99 a month for six months — 38% of the original price. I suppose this was supposed to entice me. But it made me feel even more stupid for having paid $12.99 in the first place.

There’s one other thing: All along, Sirius/XM has advertised that it’s commercial-free radio, which should be worth paying for. But it’s not true. If you listen to any syndicated programming that’s re-broadcast via satellite, you’ll get the same amount of commercial time as you would on commercial radio.

And if you listen to their original programming — some of which is really pretty good — you still get advertising. And it’s the most irritating kind: low-budget stuff for whole-body cleanses and businesses that you can run from home without any skills or experience required.

I originally bought my XM subscription because I didn’t want to be my own DJ; I’d rather have someone else do it for me. But these are hard times, you know. Worst times since the Great Depression. So now, when I get in my car, I plug in my i-pod or put in an old CD. I still don’t want to be my own DJ. But I’m guessing that 399,999 other people agree with me that it’s not all that bad a job.

Quote of the day

From Richard Mitchele, who just won a contest from Sailing Anarchy (without a doubt the best blog, forum and e-newsletter on earth devoted to racing sailboats). His prize was a ride-along on the Puma entrant in the Volvo Ocean Race during the closed-course races sailed in Boston as part of the round-the-world race’s only North American stopover.

“You could have knocked me over with a feather when I found out that I’d won the contest on SA. I was kind of thinking maybe I’d score a T-shirt or some other Puma swag. It was as if Jessica Alba called to say that the restraining order had been lifted, that she and Uma Thurman had talked it over and wanted to give my idea a try.”

What B2B advertisers really want from media

I’m not an advertiser, but I’ve spent the last 10 years selling to them.

I think my first day selling was the last day of the golden age in B2B media — back when magazine people spent all day bending over to pick up money, and then marveled at how hard they were working.

On my second day the balance tipped; customers by-and-large stopped looking for reasons to advertise, and started looking for reasons not to advertise. This has been documented and discussed. What’s missing from the discussion is why industrial advertisers might actually want the trade media to fail.

Start with the assumption that as much as buying marketing, these advertisers were buying security.They followed a simple formula, perfect for the engineering mindset that drives these companies. It was this: Advertising with trade media is the only reliable way to reach a targeted audience. So by doing whatever the competition does you will achieve similar results.

Feeling aggressive? Spend a little more and you’ll do a little better. There were few variables, like the strength of your creative, and the novelty of your logo-ed novelties. It was neat and simple and let companies get back to the business of making stuff — which was their true DNA.

Then came the Internet, which replaced measurement by lead-generation with measurement by click-throughs and unique visits. It put a premium on speed and courage; and it created so many variables that there was no longer assurance you could match your competitors’ results by matching their spend.

Suddenly, buying print meant spending a lot of money without getting any security.

That would be enough for marketers to resent the media. But there’s another piece.

The traditional media model is sponsorship: Media creates content, which advertisers sponsor to reach a targeted audience. As friend and former boss Teri Mollison now at F&W Media, likes to say, this is the “We talk, you listen” model of marketing.

The Internet? That’s more like, “No, you listen.”

This is an uncomfortable thing in industry, where blunt and scratchy feedback didn’t always have to be tolerated. Nonetheless, it emphasizes how little feedback print really offers. That’s troublesome because of print’s other historical value proposition: distributing product information.

What good is that function in the Internet era if the information takes a a month to get out; doesn’t provide a lot of feedback compared to emerging alternatives; and inevitably gets filtered by a team of trade press editors.

It’s not news that cuts in ad spending have been offset by increased expenditures by industrial marketers on videos, articles, e-books, blogs and other original content. The Internet empowers them to do something the trade press won’t: get information to the market quickly, with no strings attached, and without a filter. There’s no begging, no pitching, no sending of gifts (which never really works, by the way), no threats to the publisher. The media’s old customers like being able to do their own media work. They don’t want to give up the flexibility and the freedom. They don’t want to see the power move back to the edtors.

Media companies are suffering terribly in this recession, but I’m not sure if many of them really understand why. It’s not just because there are too may other choices. It’s because industrial marketers aren’t interested in their survival.

Are magazines really that important?

Folio:, a trade magazine for the publishing industry, reports that Entrepreneur magazine is being sued for $178 million by a group of 87 investors who claim the magazine promoted a business that turned out to be a giant Ponzi scheme. (Here’s the article.)

ent-mag-cover-may-08 In the suit, they claim the magazine “deliberately, willfully and recklessly failed to exercise due diligence in publishing information” about Agape World, according to the Folio: article. That information was contained in a May 2008 ranking of the “Hot 100” fast-growth businesses. Agape World was ranked 73rd, but early this year its owner was arrested and charged with mail fraud to the tune of $375 million+. The company has been retroactively removed from the Hot 100 list.

This sounds to me like a bunch of crybaby investors looking for someone to blame because they didn’t do their due diligence. And I have little sympathy for them. The investors, according to the article, are also going to sue Dunn & Bradstreet, which apparently provided some of the information Entrepreneur used.

But it also peels back the blanket on one of publishing’s most worrisome and quietly kept problems. Magazine people claim that, despite the advertising/revenue crisis they currently face, they will remain viable over the long-run because their content is so important to readers.

For instance, here’s what Gordon Hughes, president of American Business Media (trade magazine association) said just a few weeks ago, in another Folio: article about the 26% declinein ad sales in 2009’s Q1: “What our industry does, and has always done, is provide information that makes business better and stronger. We will come through this period as a stronger industry, a more creative industry, and maybe even a more dedicated industry.”

He should have included the word “smaller.” Because the great good that he claims the industry performs is more exception than rule.

Take Entrepreneur‘s example. Its Hot 100 list is repurposed information from public databases. OK, somebody has to crunch the data. And I’m not saying there isn’t any original reporting; but even the magazine’s CEO says there isn’t a lot.

Here’s what Entrepreneur‘s COE Peter Shea told Folio: “Given the limited information provided about each company, it was certainly not Entrepreneur’s intention to evaluate or predict a specific company’s investment potential nor expectation that anyone would rely on such information to make investment decisions.”

What a terrible position: In order to defend his product against this lawsuit, he has to make the case that the content is really just trivia.

I don’t mean to condemn all magazines. Many do fine work, which I read and admire. But most of what passes for such is a little bit of data and a lot of promotion. For every magazine that is earning its way by producing content that readers really won’t live without, there are probably dozens that face a real comeuppance.

Advertisers are dropping out of magazines to create their own content, and magazines must finally (they’ve been talking about it for years) get readers to pay a larger share of the actual cost to produce the information they provide. As they do, many will face a truth they probably already know: Their content isn’t all that important.