Here come the winners in the carbon tax debate

Melbourne Herald Sun, Friday July 15, 2011

The winners have already started emerging from the carbon tax debate - and as usual, it’s the advertising agencies.

The slush funds are stirring on both sides. The Say Yes coalition already made a stir recently with their commercials featuring two of our favourite actors, Cate Blanchett (right) and Michael Caton.

Ironically they were attacked as being too rich to understand the pain we would feel. Now of course they will also suffer the pain of being too rich to attract any compensation.

The Government also has its own $12 million carbon tax campaign in production, soon to launch. Up against it is a coalition of miners and manufacturers. The Australian Trade and Industry Alliance brings together the likes of the Minerals Council of Australia and the Australian Coal Association - who have already spent $10 million to date.

Of course we already know that none of this is going to make any difference. The carbon tax is here to stay even if the opposition win the next election. On victory night Tony Abbot would announce that “Finally this cruel carbon tax is gone and dusted.” And then a week later he’ll be announcing “Australia’s exciting new carbon trading scheme...” or whatever name the spinners will invent for it.

The point being that we have to do something, to be seen to strive against the calamity coming at us, even though the reality is that we have very little real control.

Our planet is getting hotter, and there’s little we can do. Cutting emissions to 2000 levels is not a big deal - there was a hell of a lot of carbon emitted in 2000, and for that matter 1980. And I’m sure you’ve heard of London’s pea-souper smogs in the century up to 1960 - so we’re probably already too late.

However, putting a price on carbon and cutting emissions will make us feel better and we can pretend we actually have some say in the process. But unless there is some truly revolutionary technology devised in the next few years that can spectacularly slash our emissions, we’ll just be tinkering around the edges.

Interestingly, already this week we are seeing attitudes change. Geothermal companies like South Australia’s Petratherm that aims to generate electricity from volcanic rocks, or Victoria’s Greenearth Energy that promises to turn carbon dioxide into fuel, have instantly seen their share price lift its head. All this promise of a new major industry just around the corner is not mere fantasy.

Shakespeare talks of “a tide in the affairs of men” that sweeps all before it. So it is with our politicians and their pretences.

The fact is that the tow-current of world events is far far stronger than any feeble government we can elect.

The United States is going to be swamped by the tide of unbelievable debt and its blind inability to create an equitable society, as the greedy keep getting greedier. Europe is at a loss with its newest Greek tragedy and, yet again, the unwillingness to bite that bitter lead bullet.

The Chinese and Indians have taken their feet off the brakes on their downhill racers, and are hoping that whatever is at the bottom, the landing will be soft.

Here, our politicians strut the bridge of the ship of state, barking out orders, consulting their sextants, and pretending to steer.

Whereas the reality is that they are being dragged along behind, by national and global movements - economics, history, nature, the tides of events - that they have no control over whatsoever.

But there’s no point in you and I worrying ourselves silly - it were ever thus and always will be. Let’s enjoy the sparring matches, and carry on with business as usual.

ray@ebeatty.com

Put the lycra on, it’s time to Tour

Melbourne Herald Sun, Friday July 8, 2011

It’s that time of year when winter blusters us here, yet the sun shines brightly over Burgundy and the Pyrenees. And we shivering south-landers huddle at midnight around our TV sets watching a couple of hundred madmen push their bodies through some of the cruelest torture ever devised.

Yes it’s the Tour de France again. That strange hypnotic sport that can root you in your armchair for hours watching massive thighs pumping men up mountains with the camber of a skyscraper and then flying down the other side on twisting ribbons perched on a precipice.

The years that SBS has been programming this race have paid off with an annual ratings-grabber. Much more - it has definitely inspired us, with two million Australians now riding regularly. And bicycle shops have changed from dark oily side-street workshops into smart, trendy, high-street showrooms.

In the past six years the number of cyclists on our roads has increased by 15.5 per cent, reports IBISWorld research group.

But it’s more than the French inspiration that has done this. In all our cities there has been a rapid growth of cycling paths and traffic lanes. These have transformed our summer weekend mornings as daddy drake, mummy duck and line of ducklings pedal around the beaches and parks.

Things are different this time of year, though. Getting to the office on a dark wintry morning still calls for more courage than I could ever summons, but there are plenty who do it, wrapped in plastic, carrying their suit and shoes in a backpack.

They are encouraged by the constantly rising cost of fuel and cars, not to mention the ability to thread their way effortlessly through the choking traffic jams. They can even claim improvements in health and fitness - if the traffic doesn’t get them first.

This is a problem pointed out by the Queensland Centre for Accident Research. Each year some 35 cyclists are killed and 2500 seriously injured, especially those idiots who set off without lights.

The bike industry now tells a story I seem to have been repeating regularly in this column. Revenue has been down in recent years, particularly after the body blow of the global financial crisis, but is has begun to bounce right up again.

The industry is worth some $2.6 billion and this year is expected to sell 1.2 million cycles. If the figures seem a bit at odds with your perceptions, remember that there is a high end where bikes are sold for thousands of dollars each. All that carbon fibre and rare alloys.

So it’s not unusual to pay thousands for a good bicycle, as opposed to the $500 job you picked up at K-Mart last Christmas.

In fact there are more cycles sold in Australia than motor vehicles. A million cars expected in 2011 as opposed to those 1.2 million bikes.

Plus of course, what sort of a cyclist would you be without a wrapping of garish brightly-printed lycra covering you from duck-bum shaped helmet on top, to impossible-to-walk-on locking shoes at the bottom?

These cycling costumes may be all-over outdoor billboards in their advertising messages, but nobody pays you to carry their ads. In fact you can pay quite steeply for them - nearly 30 per cent of the industry’s revenue comes from clothing and accessories.

Meanwhile you face another couple of weeks of late nights watching heroes with names like Liepheimer, Schleck, and Galimzyanov. By the end of it companies like Omega Pharma-Lotto and Euskaltel - Euskadi will roll off your tongue like perfectly regular business names.

Much as I like to watch, as I huff and puff my Malvern Star to the milkbar and back, I thank heaven I don’t have to make a living this way.

ray@ebeatty.com

Morning meditation on a razor blade

Melbourne Herald Sun, Friday July 1, 2011

A mystical Hindu fakir will meditate in lotus position, sitting on a bed of sharpened nails. Personally, I do much of my meditation on the edge of a razor. Mind you, the blade is well protected by Mr Gillette’s inventiveness and it’s wielded on my chin rather than on my nether regions. But the deep state of contemplation is otherwise much the same.

It is the meditation of the shower, shampoo and shave, a half-hour of quiet, solitary time behind a closed door.

So the other morning I got thinking about you, and your business, and about your advertising and marketing. Specifically: why would you need an advertising agency?

As the cost pressures mount and the competition intensifies it's hard to justify that seemingly big-corporation luxury. Especially when it's so easy to do so much in-house.

Sure, an agency will handle the choice and placement of media, which involves knowledge and experience. But let’s face it, you could do it yourself - perhaps hire one or two extra staff, or pick up the phone for one of the excellent media services around.

No, there has to be more. There’s the marketing advice and assistance an agency offers, specialist knowledge in the advertising area. But then most medium-sized clients these days have several marketing graduates on staff who can draw up a marketing plan, and specialist information can be found from research. So that’s not it either.

In the end it comes down to one thing: the creative. The campaign that is going to stand out, the ad that is going to portray your product as never before, the phrase that will hook itself into a customer’s mind, the picture that makes your product irresistible. These are the fruits of creativity.

You can look at any publication - do it now, with this one - and you can tell the difference between the ads compiled by the client’s staff, or the commercial thrown together by the TV station, or the brochure produced by the printer - as against an ad created by a good advertising agency. There’s a professionalism, a gloss, a wit about the work of good agencies which stands head and shoulders above.

Creativity does not come easily. Many more people believe they have it than really do. The fact is that talent is not abundantly distributed. On top of this, the skills needed to produce highly polished advertising only come after many years of work and practice.

Being skilful with Photoshop places your products on the page, it does not create compelling advertising. An exchange that sounds witty in the office can be totally flat in the camera.

Of course there are the clients who would not know quality work if it grabbed them by the throat and throttled them. For such a client the ultimate and only criterion is price.

“Never mind the quality, show me the width!” they cry. Then there are those who know what they’re looking at, who appreciate creativity and artistry. Ah, these are the good clients to work for.

If you choose an agency, take a close look at the work they have done for others. Ask yourself, could these folk make a difference to me?

The work will need to increase your sales, or make your product look wonderful, or give it a truly professional edge. If the work is good enough, these criteria all follow each other. Insist on wonderful advertising - and then allow them to do it.

There, now for the after-shave and off to work.

ray@ebeatty.com

Is the sky really falling, Henny Penny?

Melbourne Herald Sun, Friday 24, 2011

I well remember reading to my little ones the tale of Henny Penny. Poor nervous chook, she feels an acorn drop on her head and starts running around crying out that "The sky is falling! The sky is falling!"

These days this is known as political rhetoric, and commonly found up on the hill in Canberra. Right now we seem to have a whole farmyard of neurotic hens.

When Four Corners revealed sickening mistreatment of Australian cattle, that raised an uproar (though mind you, a vegetarian might point out that the cattle are destined to be killed and eaten, whatever the method). Live shipments were banned.

In return, there are now dire predictions that Australia's cattle trade and its farmers are also about to die. However the research company IBISWorld quietly points out that live exports only made up six per cent of the industry revenue, and were contracting.

The real damage was done by drought and the strong dollar, and even so the industry is surging ahead with a growth forecast of 1.8 per cent per annum over the next five years. No falling skies here.

The carbon debate, of course, rouses the chorus of cockerels from dawn each day of the week. The Australian Coal Association warned that the carbon tax will cost some 4,000 mining jobs in three years. Mind you, at the same time, the Bureau of Statistics reported 8,000 job vacancies in the industry just in one month this year.

And let’s not forget that our currently-debated scheme was pitched based on suggestions made by BHP’s Marius Kloppers. After a half-year profit of $10 billion, he knows that the sky is well and truly in place, and is more interested in the long-term future of the industry – and our planet.

If you read the latest OECD report you’ll see that we came out of the economic storms with barely a ruffle. Unemployment is below five per cent, even as the mining and construction industries scream for more labour and implore the government to increase its migration quotas.

Inflation is below three percent, interest rates are stable (remember the days of double-digit mortgages?)

I can testify that our health system is one of the best in the world after a month of back problems. Weekly doctors, physios, scans and bags of medications later, if I added it all up it might have cost little more than $1000 personally. Compare that to the nose bleed I had in New York 14 years ago, that cost over $1000 for one outpatient visit.

Two months ago I wrote that never in history have we been richer, safer or more secure than this nation is today.

Now I know that I stand the likelihood of being branded a Polyanna. But let me tell you, while all the feathers and claws fly in the front sections of the newspapers, here at the back our topic is business.

We are businessmen and women talking with each other and we need to be rational, see clearly, not get panicked and flustered by all the flag-waving.

Our businesses have long lives ahead, a lot of people depend on us, we can’t afford to make daily changes of course in response to the latest squawk.

So after you have absorbed the day’s news, sit back, sip a tea, and take a clear thought about what the reality is so far, and what is likely in the future.

Make this the basis of your decisions. Don’t listen to Henny Penny, be a bit more Foxy Woxy in your perceptions.

ray@ebeatty.com

Out of the closet, steps the "pink dollar"

Melbourne Herald Sun, Friday 17 June, 2011

Living in St Kilda and shopping at Prahran Market in Commercial Road, you’d better believe that I’m aware of the “pink dollar” - which is what they call the market segment populated by gays, lesbians, bisexuals, transgenders and other exotic variations from what the missionaries would accept.

Once a taboo subject that would never have graced the pages of this paper, the fact is that changed social standards have been rapidly followed by ever-questing marketers, never slow with their arithmetic.

In America they have already calculated a $750 billion market. Apportioning it to Australia’s population, that’s still a lot of bucks.

And let’s face it these LGBTs (yes, that’s the official term in US marketing circles) have certain advantages over their more conventional brethren. Like, few or no kids, or school fees, or families to support, feed, clothe and take on holidays. So what they earn they get to keep for themselves.

I’m talking in the third person here, but if it should be second-person, read “you”, with my apologies.

A couple of years back, the Sydney Star Observer surveyed their readership and found that they had an average income of $55,234, and that 54.7 per cent were managers or professionals.

In addition, 9.9 per cent owned businesses, only 8.2 per cent had children, more than half were in a relationship and that more than half had a tertiary qualification. Sounds like a dream target market to me.

In addition, a Queensland Pride survey found that 87.3 per cent of respondents were more likely to buy from companies which they perceived to be gay and lesbian friendly. So hang out the discreet rainbow flags.

Australian gay and lesbian marketing firm Significant Others says that the gay market is a good prospect for investors.

They score highly in many areas like automotive, alcohol, financial services, health and wellbeing, and particularly travel.

The gay life favours exotic destinations. With nearly half living in Sydney and Melbourne, a break means getting up and away.

Four years ago a Roy Morgan survey found them spending nearly a billion dollars on leisure travel. With the booming dollar pushing more and more adventurous holidays, you can be sure that the figure will be higher today.

The other side of the coin, however, is a lingering prejudice. Especially in some of Australia’s good ol’ boys destinations which also happen to have glorious beaches.

Recently Sunshine Coast Destination, the tourism authority, was criticised for not taking advantage of Sydney’s Mardi Gras.

Kelly Choong, a University of the Sunshine Coast advertising lecturer who is doing his PhD on ways of marketing to subcultures like gays, said the Mardi Gras should be particularly appealing to SCD given it was the low season.

However, he feels the local tourism operators may be dragging their feet because of community reluctance to invite gays into their midst.

"I think Sunshine Coast tourism authorities should be looking at this," he said, "It doesn't seem to have a welcoming feel."

So how real a problem is prejudice? Well just this year the Advertising Standards Board ruled on a TV commercial made by Westpac, where two very obviously camp lads talk to camera about slow payers in their clothing business.

The sucked cheeks and hand-waving were pretty obvious and drew complaints that they were portrayed as stereotypes. But in return the bank claimed the commercials went down well in the gay community.

In the end the Board found that: “The men are presented in a manner which, although somewhat stereotypical, focuses on their frustration as business owners and is not negative." Case dismissed, back to the carnival.

ray@ebeatty.com

It’s not new technology, it’s a whole new world

Melbourne Herald Sun, Friday June10, 2011

This week the genius of computer marketing planted his flag on the future of human communication. No wonder ranks of cameras were there relaying the historic event around the world.

The genius, of course, is Apple's Steve Jobs, looking cadaverous but still alive after his battle with cancer. The future is The Cloud - remember three years ago when I advised you that this was a term you would do well to remember?

Well the result is iCloud - Apple's mega-computer in the sky. A vast data bank that will hold every song and picture you possess, and deliver them to you wherever you are, on whatever device you are using.

But the same technology will also manage a corporation's entire stock inventory or bookkeeping, or trade or financial activities. Variations of it have already been implemented by Google and Microsoft. Before long, business will never be the same again.

This is what frustrates me about so many of our political and business leaders. They spend their days arguing and fighting and scoring points, not realising that there is an earthquake tsunami bearing down on them that could sweep these petty issues all away.

They think the future will be much like before but with the aid of some clever machines. In fact the whole world is rapidly changing beneath their feet, at a bewildering speed.

Ask the disappearing bookshop chains or record stores. They are the canaries in the pit, the first to fall off the perch before the whole mine blows up.

You are aware, of course, that there is a big increase in the flow of information technology. But do you realise how much?

Last week IT author and columnist George Skarbek pulled up some figures during a lecture. Take a minute to contemplate them and what they could mean to us, to the world, to you.

A quarter of the people on this planet now use the internet - 1.8 billion individuals. As the developing world gallops ahead that will increase by at least a billion in a few years.

In 2007 we saw 5 exabytes of data flow through the internet every month (put simply that's 1.4 billion DVDs).

By last year this had increased to 21 exabytes a month. Pause a minute here.

Ten years ago it was calculated that the sum of all human-produced information, every word, book, note of music, frame of video, came to about 12 exabytes. And here we are nearly double that.

By 2013 this will have increased to 57 exabytes. Five times all human knowledge, every month.

We're no longer looking at some corner of the electronics industry doing interesting things. We are looking at the whole world, our whole civilisation and commerce and politics, changing. And most of us have little idea of where it is going, least of all our politicians.

For the most part the change will be benign - watch any movie you want, any time; read the newspapers on your tablet on the train; work from any corner of the earth, like you’re in the CBD.

For others it will mean their jobs will greatly change or disappear.

As a business person, it is your duty to keep abreast of these changes, don’t let events take you by surprise.

As a nation, it is up to us to prepare for the remodelled landscape ahead, so we can stay abreast of the world.

Anybody involved with information technology knows how vital this is, how important that we maximise our capacity. Every one of them knows we need - at least - the national broadband network. Including, I’ll wager, Malcolm Turnbull.


ray@ebeatty.com

Are your best people ready to quit?

Melbourne Herald Sun, June 3, 2011

Somebody said a truth to me recently: "People don't quit companies, they quit managers". Stopping to think back on my own and some friends' careers, I realised this was very true.

If you've been in the workforce ten years or more, particularly in the field of marketing, it's pretty likely you've experienced more than one boss. And perhaps have already made a jump from boat to boat.

The manager who interviewed you the first time and spoke those magic words: "You've got the job" has invested some personal capital in the decision. If you don't live up to expectations, it looks like they made a bad judgement, so they’ll try that bit harder to steer you straight.

But then one day they go elsewhere, and you find yourself unprotected. If you're lucky, the new manager likes you, supports the same footy team, you get along swimmingly together. On the other hand you may be seen as "the old guard" with no personal loyalty to them - and there’s someone waiting on the outside who has worked for them for years.

Now in these days of advanced management skills, you'd expect these blinkered attitudes to be a thing of the past. Not a bit of it.

It's over 40 years since Dr Lawrence J Peter wrote The Peter Principle. In it he stated that in a work hierarchy, an employee can expect to be promoted to a point where they reach their level of incompetence and be incapable of rising further. So then they stay where they are, and fit into a similarly incompetent management.

This is where they are given charge of a team, keen, willing to achieve - and before long manage to disillusion them. When the employee finally quits it is not because of the job, the salary, the environment or the company. It's because they have nowhere further to go, and the boss is doing their head in.

In the world of advertising, creatives are notorious for this fault. Someone is a brilliant writer, or a stunning art director, and gets elevated to creative director, perhaps even managing director. Suddenly they need a new set of skills.

The artist works from the inside, playing with ideas and generating new concepts. The manager works from the outside - setting goals, directing people, giving feedback, smoothing problems. Totally different skill sets are needed, maybe a different personality.

The same thing happens to top gun salespeople. Their ability to compete, shoot down the opposition, glorify themselves, pulls in huge amounts of business. Often promotion is a step back from the commission they were making - more than the boss.

But as a manager you can’t compete with your own staff. Showing them how inadequate they are, how much better you are at the job, is not going to win you any loyalty.

So many of the traits that made you a great sales competitor - Daniel Boone riding out and hauling back the grizzly on your back - don’t cut it when you are directing from the corner office.

You have to set goals and targets, sure. But then communicate clearly to your team.

You’ll have to let go of the secret recipes for your success, and teach them to the others. Not easy to do, give up your advantages.

Most importantly, stay awake to what’s going on - within your staff, your company, your industry. I see so many managers who sit behind closed doors (even with open planning you can keep your doors closed) and one day wonder why their best people are leaving. They never saw it coming.


ray@ebeatty.com

The Great Wall runs through Collins Street

Melbourne Herald Sun, Friday May 27, 2011

You don't have to go to Beijing to see the Great Wall of China. It flows down Collins and Pitt Streets and through the central business districts of all our cities. Whatever skyscraper you step into, you will encounter a Chinese wall.

I'm talking about a metaphor, not stones and mortar here. In our legal and accounting firms, advertising and PR agencies, the Chinese wall is as solid a structure as the one in Mongolia - or so they would have you believe.

You see, the problem is that there are too many clients and not enough suppliers. So, for example, a law firm might have a dozen companies on its books with one half suing the other half.

The firm does not want to lose any of these lucrative clients. So it crosses its heart and promises that not a word from one client will be whispered to a lawyer for the other client - they will be strictly segregated.

Records will be safely locked up away from prying eyes, the lawyers will be disciplined if they are found to be talking about more than the footy lineup at the water cooler.

It's serious business, there can be millions potentially lost through one stray comment. The Law Society lays it down thick: If there is any possibility of a conflict, the firm must appoint a compliance officer, anyone involved must be a "screened person", made to swear on a stack of Bibles and risk the wrath of ASIC should one word get out. All files must be securely locked away and policed.

Accountancy firms have similar restrictions - necessary because a firm like KPMG has 138,000 employees serving many thousands of clients around the world, and each cell in the beehive cannot know what the folks next door are doing.

Advertising agencies have solved the problem differently. The fact is, in the biggest league there are just four agencies. But how could they do business when every car manufacturer is jealous of all the others, when department stores live at daggers drawn with the competition, when every soft-drink maker wants to be the only kingpin in the agency?

Well they get round it by being lots of different agencies.

So Omnicom is really the world's biggest agency, with scores of companies headlined by BBDO, Doyle Dane Bernbach, and TBWA. In total their 70,000 employees handle 5000 clients. Lots of Chinese walls there.

Second comes the unlikely named Wire and Plastic Products Ltd. This was the holding company that Sir Martin Sorrell bought in 1985 to hold his agency acquisitions. We know it better as WPP. Its accounts are divided between 150 little shops - most of them not so small - like Ogilvy, Y&R, Dentsu, Grey and JWT. So they can handle 700 clients, neatly isolated behind their Chinese walls.

It holds PR firms too, like Hill & Knowlton and Burson-Marsteller. All in all, $66 billion in billings.

Number three is back to New York - Interpublic with 43,000 working for the likes of McCann Erickson and Lowe.

The Europeans also have their conglomerates, the biggest being Publicis. With 45,000 people it is number four. It includes the most revered names in the business: Saatchi & Saatchi and Leo Burnett.

Of course you can breach a Chinese wall the easy way - with money. The feathers flew this week when James Packer waved his wallet and hired former ALP national secretary Karl Bitar to manage his casino relations with the federal government. Could he be hoping for a peek behind the Great Wall?

ray@ebeatty.com

How will you communicate, now Microsoft has swallowed Skype?

Melbourne Herald Sun, Friday May 20, 2011

My family is widely scattered. My mum's in Italy, while there's a daughter in Berlin and a son in Shanghai. So I discovered Skype pretty early, soon after they started in 2003.

This wonderful internet phone service allowed me to talk to my kids, computer to computer, for free. At a time when the phone services were charging 50 cents a minute.

These days the service connects with 170 million users and offers teleconferencing, video calls, text messages and much more. All for free or for very low cost compared to the carriers.

But free calls don't mean no value. Last week Skype was sold to Microsoft for eight billion dollars.

This completes a remarkable world circuit. The program was devised in Tallinn, Estonia, of all unlikely places. The developers sold it after two years for $3.6 billion to eBay (not a bad return for two years' work, I remarked at the time).

But they weren't the only sharp boys around. In 2009, after eBay had lost considerable money on the deal, they happily sold two thirds of the company to venture capitalists Silver Lake and the likes of Andreessen Horowitz (remember Netscape?) for a mere $2 billion.

Now, another two years on, lay down the royal flush. Silver Lake clinched the deal for $8 billion. An even better profit for two years' work. Boy, how money flows when you're in the right place.

So what are Microsoft going to do with it? For a start, Skype came with massive losses, it has never made money. That's always a problem when you give your service away for free.

Oh sure, some of their products are paid for, like Skypeout which allows users to connect with actual land lines or mobiles anywhere in the world. But these were never enough to wipe out the huge losses. As it was, it came with $600 million debt.

Of course to Microsoft this is just peanuts when their objective is elephants.

They are aiming primarily at Google, which they see as their biggest threat. Google has been adding services at a dizzying speed. The mobile phone system Android is a direct competitor with the Windows 7 mobile phone. Google Chrome is building against Internet Explorer.

But with Skype, Microsoft can now compete with Google Video and Voice. Both sides will be hard at work building up their capacities.

The most sensible thing eBay did was to leave Skype to its own devices. Under the corporate umbrella, but without the corporate straitjacket, Skype flourished and developed its huge range of services and cloud farms.

Microsoft boss Steve Ballmer says he plans to connect Skype to Microsoft's Outlook e-mail, Xbox game console, Windows mobile phones and corporate-phone software. But will he allow his new Skype division the freedom it needs to flourish, or will it be smothered in the Redmond embrace?

At the press conference announcing Microsoft's biggest ever takeover bite, CEO Steve Ballmer went out of his way to promise that Skype will continue to support non-Microsoft platforms and operate as a separate Microsoft division.

Well will it? We can expect to see a longer-term objective with Microsoft making serious competition with the likes of Cisco, AT&T and locally, Telstra. These are much deeper waters than the Skype team has ever fished in. They are going to need all of their parent's muscle and resources to stay afloat.

Which of course leaves the question, how long can Skype continue to be free? Forever, we hope - but I don't know how much I'd bet on it. Somehow the bean counters will want to see some repayment of that eight billion bucks - and a hefty profit on top.


Blog: themarketeer-raybeatty.blogspot.com

You too can be superheroes

Melbourne Herald Sun, Friday May 13, 2011

Were you like me as a kid? Did you pretend to sleep till mum put the light out and left the room, then pull out a torch and read comics under the blankets?

And what were our favourite comics? All those amazing superheroes of course. In a corner of your room a hefty pile of well-thumbed and swapped garish magazines: Superman, Batman, Green Lantern, Spiderman. A lot of your life revolved around that little collection.

So who would have thought that all these years on you'd still be entranced by these heroes - and that they would become a multi-billion dollar business?

Every year the movies keep appearing and filling the multiplexes. Not just with teenagers and kids, either. A good few fogies go along in memory of dark and distant bedrooms.

But never mind the ten-cent comic. In the past 33 years our superheroes have pulled in $17 billion through box office windows world-wide.

The first of these mega-flicks was Superman. In 1978 Warner Brothers took the plunge and budgeted a huge $60 million to make a kids' film that had to pull the adults in as well, if it were ever to make profit.

A chunk of the budget was spent on insurance - by buying the biggest names in Hollywood like Marlon Brando, Gene Hackman, Suzannah York, Glenn Ford. In the end it cost double the budget.

But when it grossed over $300 million, suddenly it was not such a crazy business proposition and the comic books started their epic migration from print to screen.

DC Comics held sway with their Superman and Batmanfranchises, but a decade later their great rivals Marvel Comics got into the action with the movie Blade.

From there the race was on. Marvel started to dig into their catalogue, bringing us the X-Men and Spiderman series.

Many did well, others failed to even repay their expensive special-effects-heavy budgets.

But boy when these blockbusters hit, they bust the block. The biggest grosser world-wide has been Batman: The Dark Night, with Christian Bale as the good guy and our own late-lamented Heath Ledger as the Joker. That pulled in more than a billion bucks. Makes the $200 million investment look a bit less crazy.

These movies rely heavily on pulling in the early swarms of teenagers looking for holiday diversion.

This is why the new Thor opened last weekend in America to capture the Memorial Day start of the summer season, whereas here in Australia it started a month before, to catch the Easter holiday crowd.

Once again this big budget was invested in a sterling cast. Some of the least comic-book actors you can imagine like Anthony Hopkins and Natalie Portman and that most Shakespearian of directors, Kenneth Branagh.

But it wasn't such a risky decision - already it has earned eight million more than its $150 million budget, and half of that was made overseas, while the real US income has not hit yet.

Of course in this age of giants in the corporate world you can forget about the gallant little art and story company of the early Stan Lee days. Now each belongs to a huge corporation: DC with Times Warner and Marvel with Walt Disney.

Being publishing houses, the business cuts both ways. While the magazines created generations of fans weaned and familiar with the stories, the movies also promote the magazines.

Even accounting for the flops and disasters, these super-movies cost an average $73 million to make and returned an average $150 million each. Not a bad investment if you've picked the right superhero.

ray@ebeatty.com

What a hard life you live - let me slap you with The Truth

Melbourne Herald Sun, Friday May 6 2011
What would you call me if I told you that you have never been richer, or better clothed and fed, or safer from war and death, than any previous generation?

A fool? A pollyanna? No - it's the truth, and that's official.

In the media, from the morning editions to the nightly bulletins, from the mouths of politicians and commentators, come the cries of doom, death and thievery. But research guru Phil Ruthven of IBISWorld reports differently.

Are the costs of groceries making us poorer? Don't see how - we only spend seven per cent of our income on them. And less than two per cent on utilities, so much for the "soaring costs".

Our average household income has never been higher - ever. Today it's $130,000; in 1901, in today's money, it was $30,000. Even twenty years ago it was only today's equivalent of $100,000.

We live in a service economy. Where others in the world struggle to put food on the table, we spend just 25 per cent on retail - that's food, clothes, fridge and car. And we spend 11 per cent on entertainment and holidays.

Now tell me, whereabouts is the hardship we all whinge about? It's not in the figures so it must be in our heads.

Ah but what about war and struggle and terrorism? Well I don't want to sound cold-hearted here, but the problems are really small beer.

The Human Security Report is a think tank at Vancouver University. They study global conflict, and last year reported that once again wars have dwindled.

Yes there are still lots of internal, civil wars. But no grand conflicts like the First World War which killed 65 million, or the Second which killed 72 million.

I know it's small comfort if you have someone serving in Iraq or Afghanistan, but the Report states that today's conflicts kill 90 per cent less people than in the 1950s, when colonial wars were raging.

Between 1992 and 2008, the number of conflicts dropped by 40 per cent, and those they call "high-intensity conflicts", where more than 1000 deaths occur, fell by 78 per cent.

In other words there are less wars, killing less people, than at any time in world history. But how often do you read about that in the media? Well I'm trying to strike a very out-weighted balance.

Did you know that we are living in what historians call "The Long Peace"?

"It's a change of spectacular proportions," says historian Evan Luard. "Perhaps the single most striking discontinuity that the history of warfare has anywhere produced."

Sorry, but a few louts on Dandenong Station is not the same level of threat as the entire youth of the country being shipped off to the Somme or the Rhine.

At this point let me hand a medal to our business people. They have made the major impact on our wealth and prosperity. Efficiencies in production and the supply chain have pulled down the price of food.

Economies of scale have reduced the prices of manufactured durables. The growth in services - from medicine to communication to finance - have made our lives healthier and more comfortable.

And the very act of trade, the increasing dependence of every nation on every other nation, is our strongest peace weapon. We can't go to war any more - we'd be dropping bombs on our own branch offices.

So to sum up in my most diplomatic words: shaddup and quit your whingeing! Life has never been this good before.


ray@ebeatty.com

Be Bewitched by Your Advertising Agency

Melbourne Herald Sun, Friday 29,2011

Do you remember Darren in Bewitched? He worked in an advertising agency, which seemed pretty cool when I was a kid. He was incredibly versatile: sometimes writing a campaign, sometimes art directing.

Or he could be servicing the client and taking him to restaurants, or making the TV commercials and probably booking the media. Fortunately whenever he got into a pickle - frequently - he had a wife with a magic nose who could save the day.

When I got into the business, agencies still looked much like his, though there were a lot more staff to handle the various specialties.

But agencies would work with their clients in planning their marketing, preparing campaigns, running ads. They receiving much of their income as commission agents. Today nothing much has changed - and everything has changed.

For a start, they now avoid being called "advertising agencies". In fact they go to great lengths to dodge the phrase. Like Saachi & Saachi: "We're not an ad agency, we're an ideas business. We are a full service, integrated communications network."

Or J Walter Thompson: "JWT is the world's best-known marketing communications brand."

This is because they believe that businesses equate the word "agency" with that typewriter and drawing-board image of Darren's day. Whereas, today's agency is all computers, digital media is the buzz, newspapers and network TV no longer have the total dominance they once had.

I remember being advised some years ago, when I ran an agency, to change its description. "Clients think of agencies as expensive and too structured. These days they want more flexibility, and to pay less."

So I did change the description, to "Marketing Solutions". To which prospective clients replied, "Oh, does that mean you're an advertising agency?"

Yes, change your spots as often as you like, you're still the same pussycat underneath. And whatever the label, there are good ones and bad ones. You need to be able to tell the difference.

A good agency will work with you to develop a product and plan a campaign or the year's advertising budget. Because they are experienced with a lot of different clients, they should give you a different perspective, a clearer view.

Yes they do depend on commissions and service fees. However they are described or structured, it still comes down to the fact that if they can't make a profit from your account, you have no value to them, so be cautious about striking hard deals.

A good agency can help you manage your advertising and marketing day to day and probably save you the cost of a couple of extra marketing staff.

But most importantly, they should be able to bring a whole new creativity to promoting your product. It may not always be in media you fully understand, talking to a different generation. But if you know your product well, and your market, you'll know when it's right.

How to tell a good agency? You look at their presentation and think, gee that's good. I've never thought of my product in that way. They really make me want to have it.

Their creativity should do more than please you. It should excite you. Maybe even frighten you. "I know it's true but can we really say that?" And the hairs rise on the back of your neck, you feel a prickle in your spine - that's the response a great idea should arouse.

And don't worry about what they call themselves. Focus on what you want to achieve - and allow them to help you do it.

ray@ebeatty.com
Blog: themarketeer-raybeatty.blogspot.com

Sing a song of adverts

Melbourne Herald Sun, Friday April 22, 2011

Can a song glue your product to the customer's heart? Is it time to get a jingle?

Like everything in advertising, jingles are a fashion item. In the seventies and eighties you would automatically get a jingle written for your new commercial. By the nineties and noughties they had gone out of fashion and any music used would be a recently past hit song.

Now they have started to come back, though their supporters prefer to call them "short songs". But we are still not at the levels of the past.

"They've made a little bit of a comeback," said Mike Brady, "but still nothing like they used to be." Mike should know. In his time he wrote some of the best of them - I'm lucky I'm with AAMI is still being used, and Up there Cazaly resurfaces every footy season.

"They're particularly prevalent on radio," he continued, "A young man at the footy last night recognised me and started singing every jingle he knew - from Taylors Tree and Stump Removal to Call Call Carpet Call."
This is their secret. Mnemonics - their ability to stick in your mind. Paul Kancachian of Image on Line calls it "sonic branding". His company works mainly through the internet and produces a steady flow of jingles, again especially for radio - and in their case, a lot of regional radio.

"I believe they are coming back," he said. "You don't need to be in the room but as soon as the Bunnings commercial plays on TV, you see the commercial in your mind."

Composer Keith Moore blames the decline in Australian jingles on the loosening of advertising quotas. "There was nothing stopping overseas tracks being run here, but the Americans made sure their musicians stayed protected." He hasn't written a jingle in five years, now concentrating on film and TV music.

Both he and Brady point to lazy advertising creatives who just hunt out music tracks and buy up the rights, "Do you know how much they pay for these tracks? Hundreds of thousands but they don't own the song," says a frustrated Brady.

Warming to a favourite topic, he declared, "I still passionately believe that a product in a song will be remembered for decades." He then rattled off You can't beat a Sao for a snack, You ought to be congratulated, Aeroplane Jelly - as having stuck long after the campaigns finished.

He might have added some of his own like The Pride of the Fleet Will Be You and Hard Yakka. "It's an effective way to embed a product in someone's mind."

Journalist Paul Ryan once spent a boozy session with a handful of friends and picked the top ten Australian TV commercials of all times. Six of them were jingles, like the original VB ad ("Matter of fact I've got it now"), Slip Slop Slap, I like Aeroplane Jelly, Louie the Fly, Vegemite, and Life. Be In It.

You've got to admit, these definitely win the going of "sonic branding". But how much do these commercials cost to make?

All made the point that it depends on how grand the track is. If you want the Melbourne Symphony Orchestra it will cost more than one man on a synthesiser, but they start around $10,000.

Which raises a question that has been nagging my mind for the past few weeks. What on earth does La Mer (the sea) have to do with Adelaide wineries? It's a beautiful song but does it really say "Adelaide"?

ray@ebeatty.com
Blog: themarketeer-raybeatty.blogspot.com

The times ain't changin'

Melbourne Herald Sun, April 15, 2011

For years now Bob Dylan has not been shy to point out that he never set out to lead any protest movements or become the voice of his generation. He was just a rock 'n' roll singer who drifted into folk and politics because that was where the action was at the time.

The fact that little Robert Zimmerman just happened to write some of the greatest poetry of the 20th century was a by-product of his quest.

This has been happening as long as history. Shakespeare was an actor who wrote plays so that he could get work. He could knock them out and produce them in a few months, making sure he always got a part.

More recently there was another penniless actor, who wrote a script and refused to let anyone else play the lead role. That's how Sylvester Stallone got into the big time with Rocky.

The point is, as Rocky would say, as a working stiff no-one's going to do you any favours. If you want a project to succeed you have to do it yourself.

Business, like so much of our lives, is a mixture of ability, hard work, a sense of direction - and especially good luck.

The luck of meeting the right person at the right time; of being in the right place when an important decision is about to be made; of being touched by the fairy godmother and having the sense to realise it.

That can be the way to riches, like Leonard Bosack and Sandy Lerner. They both worked at Stanford University, California.

Starry-eyed newlyweds, he devised a way to connect the computers in his Computer Science lab with her Business School network. To do it he created a device that controlled the routes taken by packets of data. And the router was born.

A couple of years later the couple left to start their own company, Cisco. Which at last count was worth $40 billion. The Bosacks aren't there any more and there are disputes about the history, but I like the idea that a man invented a multi-billion dollar industry so he could tell his wife what time he'd be home for dinner.

The Nobel Prize is the world's greatest award, but it exists because of a split second when the pendulum of fate could have delivered riches - or death.

Alfred Nobel was a Norwegian chemist trying to find a way to stabilise the notoriously dangerous explosive chemical, nitroglycerine. One day a flask of it was knocked off his bench. Which should have blown him to smithereens. But when it didn't, he searched to find out why.

It turned out that sawdust on the laboratory floor absorbed the chemical and pacified it. After numerous experiments with other agents, dynamite was born and Nobel became one of the richest men of the 19th century.

Fortune's kiss still pecks at random. Less than a decade ago at San Diego, a graduate student called Jamie Link was working on a piece of silicon when it disintegrated into dust. But then she investigated the properties of this dust and found that it could still work as sensors.

Her team at the university, led by Professor Michael Sailor, have developed these into chemical detectors that can warn of hazardous chemicals such as a biological attack, or be injected into the body to detect particular genes or bacteria.

It's an invention where science has not even started to count its possible uses. But around the world thousands of labs are working on it. Before long a whole new industry could be born doing - what we can't even begin to imagine.

So don't be scared of accidents or disasters - take a close look to see if there could be the kiss of fortune behind them.


ray@ebeatty.com

Silvertops ain't so decrepit any more

Melbourne Herald Sun, Friday April 8, 2011

These days the silvertops include Paul McCartney, Mick Jagger, David Bowie, Kim Bassinger and Olivia Newton-John. They don't look so old and doddery any more.

In fact the over-55s are a powerhouse of wealth and industry and plenty of them are still pretty cool. So we all have to rethink this demographic bundle.

Roy Morgan Research have been doing just that, looking closely and doing the maths. For a start, these days nearly a third of all Australians are over 50.

The percentage has been creeping up steadily over the past few decades. As Morgan's MD Michele Levine mused, "A change like that is substantial. I like to use the analogy of a 3 or 4 degree increase in the temperature of the ocean – it matters."

Not so long ago the worrying picture was the prospect of a land of decrepit pensioners being supported by a shrinking population of young workers. But this is not what the research is discovering.

For a start two-thirds of those pensioners have their own homes, no mortgages and they don't have kids or school fees to support any more. So even though their income might be lower - $41,000 versus $73,000 per household - they get to keep it all themselves.

They were also blessed by Paul Keating. When he pushed us all into mandatory super back in 1986, he planted the seeds of today's prosperous retirees, who have 25 years' worth of built-up capital behind them.

This kitty is now worth $1.2 trillion and suddenly our oldies don't look so old any more. Added to their properties and other savings and investments they own $3 trillion, or 49% of Australia's household wealth.

Not only that, you can't get rid of them - so long as they're standing, they keep on working. Today one third of over 55s are still working. In the past this used to drop off to below 17 per cent as people retired at 65.

It's just as well, though. There is no way Australia could have sustained the strong economic growth of the past decade without the skilled workforce supplied by the wrinkleys. (Now there's an interesting word - first coined by brash, rude baby boomers, who are ironically finding it applied to themselves.)

In giving Morgans' State of the Nation talk last week, Ms Levine pointed to feminism as a key factor: "Given the dramatic changes in women's role in society, much of the growth in workforce participation has come from women."

This wealth works as an engine for the economy. Mum and Dad can afford to get themselves a new car - pay for it on the nose. And maybe a caravan for that long-promised trip around Australia.

A new kitchen or roof, get someone in to clean the house a couple of days a week, go to the hairdresser or the theatre whenever you like - these are no longer wait-and-save or take-a-loan decisions, these are just spontaneous purchases.

We now have a sizable population of people who earn a good wage, have low costs, and are backed by substantial capital and savings. That's a marketer's dream.

As a society we have to rethink what's "over the hill". To quote Ms Levine again, "I think the evidence is still in that our ageing population represents a real asset, not a burden, and there is more potential yet to be realised."

ray@ebeatty.com

The viruses you want to catch

Herald Sun Friday April 1, 2011

Never one to resist a bargain, I love keeping tabs on the viral video scene, especially seeing the clever ways it has been used as a marketing tool.

Currently the world's number one viral video of the month, is actually a six-minute commercial. I first saw it a couple of weeks ago, sent by one of my joke-buddies. (You know, those mates who keep sending you rude jokes.)

It was certainly out of his mainstream tastes - in fact it was a piece of science. The video is both a commercial and a short animated film. From Corning Glass, it's called "Day made of glass".

It's the story of a family in the future, but not too far ahead - most of the technology we recognise as already existing, but here taken to its logical development.

In a modern bedroom an alarm wakes the couple. It's in a TV screen half the size of the wall. The windows change from opaque to transparent, letting the daylight in.

Mum goes into the bathroom, as she freshens her face, the bathroom mirror also displays a TV and her Outlook diary. In the kitchen the whole benchtop is interactive glass.

On one side it's a touch-sensitive computer that's also a TV, the other half is a stove top that appears at a touch and is regulated by a finger tip.

So the commercial goes on, indoors and out, home and office, everything is interactive touch sensitive glass. It's a future we can recognise.

At last count it had 10.5 million views and growing. You'll see what I mean on YouTube.com, just type in "Corning day of glass".

Here in Australia the media always do well - if the public likes something they want to see it again and again. Like the famous screw-up on Australia's Top Model where Sarah Murdoch was fed the wrong winner and had to profusely apologise and change the result. One and a half million people liked to watch that.

A good viral publicity stunt - if you can pull it off - is the "flashmob". Invented by Bill Wasik of Harpers Magazine, it features dozens - even hundreds - of "passers-by" appearing in one public place and doing something spectacular.

Last week a flashmob appeared at Central Station, Sydney. Music played seemingly from nowhere and a boy started Irish dancing in the middle of the concourse. He was joined by a few girls and boys, then a group of adults - until there were scores of stiff-armed, leg-kicking Irish dancers watched by a rush-hour crowd brought to a halt.

You'll find it on YouTube if you search under St Patrick's Day Flashmob Sydney. The Irish Tourist Bureau organised it, with seemingly every Irish dancer in the city. But it worked - they got 660,000 views and counting.

There are a lot of examples of these viral videos and they are well worth doing. But just bear in mind the realities.

While those videos that win the jackpot run up hundreds of thousands of hits, this little newspaper gets one and a half million "hits" a day. Multiply that by every paper on the planet and you'll see that the digital era is still a long way off replacing paper and ink.

So what's the world's most popular viral video? The one that scored half a billion hits? Well it's a 17 year old Canadian schoolboy. Yes, Justin Bieber's Baby takes the popularity prize.

ray@ebeatty.com
Blog: themarketeer-raybeatty.blogspot.com

Can people's behaviour be change by advertising?

Melbourne Herald Sun, Friday March 25, 2011

Do you smoke? Drink and drive? Beat your spouse? If you don't, chances are that the reason why is due to advertising.

The past half-century have seen the emergence of "behavioural marketing" as a major media element. That is, advertising that changes our society's behaviour.

There has always been heated debate about whether advertising can be used for social purposes - is it a denial of freedom of expression or political manipulation?

But the evidence is now in: yes it does work, and it's much more effective than threats and punishment, though these can be build into the message.

The campaigns of the modern era can be dated back to 1975's "Life. Be in it", created by Phillip Adams and artist Alex Stitt, who drew the character of Norm. Looking around today we have to wonder how successful that campaign has been - no shortage of Norms and Normas on the streets.

Their follow-up work was "Slip! Slop! Slap!" against skin cancers, in 1981, another phrase we'll never forget - though not always obey.

These days social campaigns are a staple part of our nightly TV diet.

The road toll was a nightmare task, tackled by the Transport Accident Commission through Grey Advertising Melbourne in 1989, with fierce blood and guts determination. The vivid pictures of killed children and maimed passengers shocked the community. The slogan "If you drink, then drive, you're a bloody idiot" was also rudely intrusive.

But the campaigns - Grey have made over 40 commercials, most of them backed by billboards - have been taken as a model around the world. Just last year a web film "Everybody Hurts" won gold at the New York One Show.

If the proof of the pudding is in the eating, TAC gave us a feast. In 1989 the road toll was 776; in 2010 it was 287. It took a lot more than just promotion, but the advertising made some of the legal measures more acceptable.

Melbourne still leads in the field, with The Shannon Company billing itself as the "Behavioural change communications company".

CEO Bill Shannon believes that social communications can effectively steer people in new directions. In his words, "We encourage people to change their lives willingly and for good".

They have tackled difficult problems through unexpected creative approaches: "The most important reason for making the workplace safe is not at work at all." They show not the grisly factory accident, but the family waiting for Dad to come home.

Shannon's took this approach again with the pokie menace: "Think of what you're really gambling with." Not just money but losing your family.

Smoking has been the big success story. The Quit campaign has seen smoker numbers fall from 40 per cent of the population in the 1970s, to 20 per cent today. That's a lot of lives - smoking still kills 15,000 Australians a year.

AIDS is another area where behavioural marketing has played a big part. But Phillip Adams was unimpressed by 1987's "Grim Reaper" commercial which scared everyone but was off-target.

As he recalls writing in our sister paper The Australian, "The only proven mode of transmission was anal intercourse. 99.9 per cent of cases at the time."

The campaign he would have produced had one of the most memorable slogans he has ever written: "Don't come in the bum!" Somehow I missed seeing that one on the billboards.


ray@ebeatty.com

Truth in Advertising

Melbourne Herald Sun, Friday March 18, 2011

In the current movie The Adjustment Bureau, Matt Damon is a politician giving a concession speech after losing an election. Bitterly disappointed, he throws away the script and tells the truth.

How his tie was chosen after focus group research, that his "personal beliefs" were dictated by policy committees, that so much of what he had done in politics was hypocrisy.

The public's response is that he suddenly soars in the opinion polls. Could it be that truth is a new marketing direction in politics?

It certainly recalls our Prime Minister's "real Julia" speech in the last election, that arguably helped her scrape back into power.

Or take Hollywood bad boy Charlie Sheen. His recent histrionics have seen him sacked from top-rating TV show Two and a Half Men. Is his career destroyed?

Well he has organised a stage show for Detroit and Chicago called Charlie Sheen Live: My Violent Torpedo of Truth - and it sold out in hours after his announcement to his two million Twitter followers.

What's more, research by media buying agency MediaCom found 45 per cent of Australian men thought he would make a good spokesman for alcohol ads. The liquor industry was quick to disagree.

MediaCom's Paul Payne commented: "Charlie Sheen has created a new group of predominantly male followers who value his honesty and ‘real’ character shining through."

But what about honesty in marketing? Is there a place for "Truth in Advertising"?

Around the world right now there is a big debate about "Traffic light nutritional information".

"Traffic lights" is a system printed on packages of processed foods, like cereals, snacks or processed meats. And on the menus of fast food stores.

In the UK it has already become law. Foods now show a graphic on the front of the box, with four circles, indicating amount of fat, saturated fat, sugar and salt. They are coloured either green, amber or red - like traffic lights .

Next to each is a short explanation. A cereal might be low in fat and saturated fat so they would show a green or amber coloured "light". But maybe the sugar content is unacceptably high - that would signal red.

Or maybe a "sugar-free" dessert does indeed show a green-level sugar content, but bright red lights for fat and saturated fat.

It has now been recommended in Australia by the Government's National Food Labelling Review and backed by organisations like the Cancer Council and Choice.

Jane Martin of the Obesity Policy Coalition said these labels, "Are better understood by consumers with lower literacy or from lower socio-economic groups, empowering them to make healthier food choices."

Not everyone agrees. A fierce dogfight has broken out between the food manufacturers and the nutritionists.

Cancer Council Victoria research has found that that 87 per cent of Australian consumers shown the system, liked it. However 77 per cent of food manufacturers hated it.

They have been lobbying hard against the moves. They are willing to highlight a "percentage of daily dietary intake" message.

The foodies will have none of it, they found that consumers are puzzled and confused by that system.

There again, there is yet more news from the inexhaustible flow of research on the topic. Deakin University did a recent test to gauge what effect this new knowledge would have on consumer patterns.

They measured sales of on-line groceries before and after the information was provided, over a 10 week survey.

The result? Thanks for the information, said the consumers, who then continued their usual buying patterns with scarcely a pause.

I'm sure they still watch Two and a Half Men, too.


ray@ebeatty.com

Now you too can swipe credit cards

Melbourne Herald Sun, Friday March 11, 2011

My favourite columns start with the words: "Remember where you first heard this". Well this is one of those, remember where you first heard the word Square, because in the future you'll hear a lot more about it.

I'm sure you've stood impatiently at a supermarket checkout while the customer in front goes through all the credit card rigamarole for just $20 worth of purchases.

So how will you take it, at your coffee shop, when the purchase is a $3.50 latte? There again, you can take your lunch partner's credit card and swipe it for their half of the bill - paid straight into your own account.

Yes, you can be the merchant too once you have Square. Forget all the bank paraphernalia and tax file numbers, this is an attachment the size of half a matchbox with an earphone-type plug sticking out. You just plug it into your iPhone or Android mobile.

It has a slot on its side. Run a credit card through it, and enter the sum, which is credited to your account. They sign for it using the touch screen. Currently the limit is $60 but that is in the process of changing.

How is it different from a shopkeeper's merchant facility? It isn't, that's the point. Except - to join the facility, just go to their website at squareup.com and fill in the application form. A few days later the dongle will arrive, ready for use.

And that's it, no ASIO checks or interrogation by the bank manager, no joining fee, no membership fee. No bulky contraption - just your iPhone and a little plastic cube. The flat charge is 2.75 per cent of the transaction.

Ah but there's a fly in the ointment, of course. Currently it's only available for US bank accounts and can only handle a limited number of phone models. But all that is being worked on.

What's remarkable is that The Square was launched just 16 months ago. The idea first occurred to James McKelvey, a glass blower in St Louis. He lost a $3,000 sale because he did not have credit card facilities.

This set him thinking. What was so complicated about reading credit cards? Why can't you do it with a mobile phone? He took the idea to Jack Dorsey, founder of Twitter, who jumped at the idea.

With money behind it - the last whispered estimate of Twitter's worth was $10 billion - the idea did not take long to be developed. By November 2009 the first betas were being trialed.

The point is, your mobile phone is a very powerful little computer and can perform complex tasks. You swipe the card through the Square dongle. Up pops an entry screen with keyboard. Fill in the amount and any explanatory note.

With a couple more button touches the money is sent to your account and a receipt is sent to the payer's mailbox. This contains the transaction details, your name of course - and even a map showing the location where the purchase was made.

Just last month a group of girl guides had a fund-raising cookie drive. The only difference between these nine year olds and your own daughters is that they live in Silicon Valley. In fact one dad is a manager with Facebook and he heard the girls complaining that people were coming to their stall without any cash to buy the biscuits.

Well he fixed that in a day. He downloaded a Square account, sourced a dongle, plugged it into his phone - and pretty soon the girls were selling box-fulls of biscuits to their very impressed, nerdy neighbours. Watch out for a girl guide near you, soon.


ray@ebeatty.com

When the pop star is a robot

Melbourne Herald Sun, March 4, 2011

Living in St Kilda means that all sorts of cool things happen in my neighbourhood. Like last month's St Kilda Festival down at the beachfront.

I shuffled to the back of the crowd for the final act of the rock concert, pretending I was still 20-something. But before long my age showed through.

You see this act called Muscles came on stage - a man with a box the size of a portable organ. He pressed some buttons and the huge stage speakers boomed out a drum beat.

He pressed some more and a rhythmic tune played, and then he sang over the top. Nice intro, I thought, now the rest of the band will come on. But they didn't.

I moved to look into the stage flies for the silhouettes of guitarists and trumpeters. No-one there. This man was truly solo. But the kids in the crowd waved their arms and rocked to the beat and didn't seem to notice that it was one man with a barrel organ. And that was the main event.

I left wondering about all those drummers and guitarists and piano players who didn't get a gig that night because they were replaced by a robot.

Then I saw the real robots.

In Japan (as always?) they lead the way, with Hatsune Miku. She is one of the top-ranked pop stars in the country. A sexy sixteen-year-old with short skirt, long legs and two long turquoise pony tails that sway with the rhythm as she belts it out on the concert stage.

Except she isn’t real, she’s a 3-D hologram, a computer generated character from manga cartoons. Her voice and music are animations too. She sings through the Vocaloid 2 software developed by Yamaha.

The program uses the voice of a Japanese actress broken down into their basic phonics and then brings them together with controls for pitch and tone. You input your own words, and they are sung. But not like HAL from 2001 Space Odyssey, this is a “real” voice with a wide vocal range.

Check her out on YouTube and you’ll find her “39 Festival” concert where her projected 3D hologram sings and dances to an adoring live crowd of 25,000 fans, backed by a band of (thank goodness) real musicians.

Even opera isn't immune from the tide. An English company called Zero-G was one of the early developers of Vocaloid software and now sell a small library of voices. "Tonio" is their tenor (handsome stubble-chinned avatar on the box), while "Prima" has soprano voices including duets.

But Emma Matthews needn't start worrying yet. While the voices are very good and well programmed, they lack a human quality. But they always hit the top notes they are set.

There is a growing world interest in the field, with professionals like Mike Oldfield using the voices to spice up their music mixes.

As thousands of musicians, animators and programmers work on expanding and polishing the programs, you can be sure that the quality of productions will skyrocket and that the Hatsune mania will spread around the world in various guises.

In Japan her first album sold 80,000 copies and her latest was at 31,000 by the end of January - and this at a time when CD sales are supposedly dying. This one's very much alive.

When Hatsune's creators were deciding how to extend their character, some 40,000 fans signed a Facebook petition for an English language version of the pop star. It's now in the works, look out for her in your local music store.

How do you put a value on an idea?

Melbourne Herald Sun, February 25, 2011

Ask anyone who has spent a few years before the mast in advertising agencies. After the second beer the stories will start to come out: of unscrupulous clients who have ripped off their ideas.

The problem is with the way the ad business works. A client will ask three or four agencies to prepare a proposal for their new year's campaign.

The agencies then draw up their advertising plans, and produce some creative ideas that they hope will thrill the client and win the business. But by revealing your idea, you have already played your ace.

Now, I've known large companies where they have hired one agency on its marketing plans - but they really liked the other agency's creative ideas.

So then surprise surprise, the winning agency's campaign runs - and at the centre of it, your clever commercial or slogan in slightly different guise.

Was it theft or did the winning shop luck on the same idea for their presentation? You’ll never know and it’s very rarely that anyone ever sues.

In the US they are having a row over another variation on this eternal problem. Huge department store chain Sears Roebucks has called for pitches for its $500 million account. Very tasty.

However, one fly in the ointment has seen huge agencies like DDB, Leo Burnett and TBWA refuse to take part. Sears wants participants to sign an agreement relinquishing the rights to any materials or ideas they produce - whether they win the business or not.

You can hear the screams from Madison Avenue to the Bronx. "Unreasonable," says McCann Erickson's Mitch Caplan: "It's unfair for any client to expect ownership with no compensation for the agencies."

Especially considering that for a pitch of this size any agency would be spending well over $100,000 preparing it.

Pam Kaplan was Creative Director at Badjar for many years and lived through many pitches. “I found that in the last ten years we have become very upfront about this,” she recalls. “Clients would agree on a figure to pay you for a pitch.”

Veteran art director Glyn Ramsay recalled a canned fish account he once pitched for. Another agency won - but later their idea emerged, for another of the company’s products. “And they didn’t pay us for our creative. What are you going to do?”

It’s hard to take because in the long run, “That’s all we have to sell,” mused Ramsay. He believes a big agency should charge a client at least $30,000 for a creative submission.

Should advertisements be covered by copyright? “I think it’s going to go that way,” says Kaplan. “Photographers and illustrators don’t allow you to own the work - you pay for the use of it.”

So it should be with advertising, she says, “They should pay us according to how many times they want to use it.”

One of the greatest pains in the business comes when you lose the account - but they continue to run the ads you created. You see them on TV every night and know you’re not getting a cent for your idea.

Tony White of White Advertising and Beyond, is philosophical. Years ago his previous agency created “You’re lucky you’re with AAMI”. The account has long moved on - but the words are still everywhere to be seen. Millions are still being spent promoting them, but White doesn’t see a cent.

As for Sears, he would not sign their pitch contract - “But if they pay for it, then it’s a different ball game.”

Another agency head believes it comes down to professionalism. “Compensation says that the client respects and values the intellectual property agencies create.”

We all want to be respected the next morning.


ray@ebeatty.com

What’s going to happen to my bamboo Borders?

Melbourne Herald Sun, February 18, 2011.

It was such a shock this week to hear about the threat of destruction against one of my favourite habitats. Like a panda without his bamboo forest or a chimp without his jungle, how could I survive without Borders?

These wonderful shops filled with books and disks on every topic imaginable are living in the shadow of an axe. In the US they have filed for bankruptcy on yesterday.

In Australia their parent company, REDGroup Retail, also owns Angus & Robertson and is totally separate from the US. But now they too have hit the rocks, entering administration just yesterday. Not totally surprising after they posted a $43 million loss last year. Supposedly the timing is a coincidence.

Those who've lived in Britain in the past will remember the treasure houses of Foyle's in London or Blackwell's in Oxford - huge, great bookstores the likes of which have not existed in Australia since Cole's Book Arcade shut down. Then along came Borders and the big, rambling bookshop was reborn - at the Jam Factory, South Yarra in 1998.

The chain grew but more recently faltered. It was slow to react to way the wind was blowing with the online revolution. Amazon created a whole new form of book buying. Barnes & Noble were able to adapt to it. Borders, instead, gave this side of their business into the hands of Amazon. The fox is not Henny Penny’s best doorman.

In Australia it tried to push through the scrum in the e-reader revolution, with the release of the Kobo, and was price-fighting Amazon. But over the sides have gone a chief executive, managing director, and communications director in less than a year.

The market’s speed of change is dizzying. Take a look at your Yellow Pages and compare it with the five-year-old one that's still buried at the back of your cupboard. The new ones look like they've been through a slimming program with stomach clamps.

Here in Australia the online advertising market is growing by 21 per cent and is now at $2.3 billion. Pricewaterhouse Coopers, for the Interactive Advertising Bureau, found that revenue increased by $393 million, with every category rising by double digits.

This paper's boss, Rupert Murdoch, has been trying to make the online model work, jumping the difficult hurdle of getting the public to pay for news off their computers. Just this month he launched The Daily, a newspaper exclusively for the iPad. Be sure that all of the media are watching closely, hoping he can find the right formula they all need.

Personally I’ve long been an advocate of bundling online and newspaper into the one subscription package. I was pleased to see this week that in the US, one of their biggest magazines, Sports Illustrated, has taken this step. When you buy their home delivery subscription you get the web access - and vice versa, at the same price.

The other ducks and drakes we’re familiar with is mobile phones. Nokia is still the biggest but with iPhone doubling their sales last quarter - they’re now 16 million against Nokia’s 28 million units - the cool Finn is breaking into a sweat.

They think their latest alliance could be the answer, joining up with another faltering winner. A few days ago the two Steves walked hand in hand into the spotlight to plight their troth: "Together, we see the opportunity, and we have the will, the resources and the drive to succeed," said Stephen Elop of Nokia and Microsoft’s Steve Ballmer.

Microsoft will inseminate Nokia’s newest hardware with Windows 7 software, the intention being to give birth to a big, bouncing Apple squasher.

Ray Beatty

Welcome to the Super Oscar Bowl

Melbourne Herald Sun, Friday February 11,2011

February is the biggest month of the year for American television. Unlike the bulk of Americans, this week you may not have been glued to the set for the Super Bowl, after all it’s not our sport. But movies are, so it’s odds-on that you will be there at the end of the month for the Oscars.

The best way to describe the Super Bowl is like the AFL Grand Final and the Melbourne Cup all in the same stadium at once. It's the football game every red-blooded American must see wherever they might be.

Hills of Afghanistan? Base in Iraq? Upper Klondike? Lower Plenty? If you're American you know by now that the Green Bay Packers beat the Pittsburgh Steelers 31 to 25.

This gives you some idea why companies pay $3 million for just 30 seconds of advertising space on the transmission - and fight tooth and claw to get a spot in the sacred space. They get their money’s worth too - this year’s Bowl was watched by 111 million Americans.

The other fighting and clawing happens at the Oscars on February 27. This is the second biggest event on American TV and it's not so small Downunder, either.

It has the advantage of being an endless show which leaves plenty of spaces for commercials so of course the stations love it.

Once again companies spend millions producing commercials as ritzy as the gowns on the red carpet, knowing that this is a time to show off.

Both spectacles are now putting a lot of effort into reaching the younger market. As in so many other areas, getting young people to take an interest is hard work.

The hit commercial in Super Bowl was a mobile phone ad featuring Justin Bieber and Ozzie Osbourne in space suits. Don't ask me to explain, it would take too long. Suffice it to say the teenage girls screamed with pleasure.

The Academy Awards is another show with hardening arteries, the average viewer's age is now 49.5 years. So they are going all-out to pep up their image.

They've brought in a hot advertising agency, Omelet LA, for a marketing campaign. It has been running since August, using a slogan "You're Invited". No doubt echoing the dreams of many a young actor and starlet.

This year's presenters have been chosen with a younger audience in mind. Instead of popular older presenters like Billy Crystal or even Hugh Jackman, this year they have selected two young actors: Anne Hathaway and James Franco, nominated for his role in 127 Hours.

The producers are putting in some 30 cameras, from the street to the dressing rooms and everywhere in between, so young geeks can follow every swear-word and nose-pick behind the scenery.

With their laptops they will be able to jump from camera to camera - and totally destroy any celebrity’s privacy.

Naturally there is an Oscars iPhone app, and no doubt all the participants, and audience, will furiously twitter like a forest of nesting sparrows at sunset.

The problem in Australia is that all this activity happens during our daytime, but we still get 700,000 viewers in the day and another 800,000 at night. Mitchells estimate the spots at $25,000. But nothing like the $1.7 million in the States.

If you want the real Oscar suspense you’ll have to sneak looks at it on your computer, when the boss is out of the office.

ray@ebeatty.com

The scurrying feet of the streetpress media

Melbourne Herald Sun Friday February 4, 2011

We're familiar with our society having an 'Underbelly' thanks to the media's exposure of a criminal world circulating beneath our horizon. But I'm equally fascinated by the 'Underfeet' that scurry around us, and that most of us never even notice.

You see the evidence when you walk down Chapel or Brunswick Streets or go to any alternative store. Those piles of magazines and booklets stacked next to the windows or in doorways, or in racks at the café.

You should take a look inside, it's a whole new world. If you're over 25 you'll scarcely know it exists.

The magazines call themselves "streetpress". They come in all shapes and sizes and qualities. And they are free, paid for by their advertisers.

Born in the 80s out of the alternative "zines" movement, they have become increasingly polished and professional. They have art directors and journalists. And they are a good way for an aspiring reporter to get some experience and a toe-hold in the profession.

Their major source of revenue is entertainment advertising. The live-music rock 'n' roll clubs, the touring overseas stars, the big gigs and little cafes, and scores of singers and bands, a whole industry operating below the radar. These are the magazines that cater for them.

You won't see many names you recognise, this is strictly youth culture. Bands with names like The Bloody Beetroots, Social Distortion, and Trash Talk. Within it cliques are catered for: heavy metal, punk, pop, blues - every style has its groups of adherents who spend a lot of their time dashing from gig to gig, following their heroes.

Their magazines are called Beat and 3D World, Fashion Journal and Impress, Rave in Brisbane and X-Press in Perth.

They give the fans all the news of the stars and the coming events that the mainstream don't even notice. "The first cover picture for Midnight Oil was in a streetpress magazine," said Craig Treweek, publisher of Inpress. "It was three years before the mainstream press recognised them."

Many years on, the dailies are more aware and have learned a lot from the freebies. But in turn the street mags have to be ever more avant garde, otherwise what's the point?

You know those strange outfits and clothing combinations you come across in the street or among your younger relatives? The mismatched tops and tights, the garish layering, the sprawling tattoos?

Well they are following fashion trends just as defined as Dior or Chanel. They are the fashions of the counter-culture, the rebellion against classics and formality.

The irony is that the street is where Gaultier and Lacroix go to seek their new fashion inspirations. From the back streets of Paris or the tenements of Harlem they bring back the ripped t-shirts and sagging jeans, then slap a $1000 designer label on them.

You'll see all this in action in the streetpress. This month's Cherie has a spread of glamorous shots in which the model is dressed entirely in artfully-composed garbage bags and gaffer tape. I don't expect to see that at the Lord Mayor's Ball for a while yet.

"We've made incredible progress in the past 20 years," says Jaymz Clements, Editor of Beat. He credits much of the advance on the increasing sophistication – at lower costs – of publishing software.

"These days we are getting advertisers like NAB and Nissan, who once would not have come anywhere near our magazines."

But customers are customers and their money's just as good, even when it’s carried on the underfeet.

ray@ebeatty.com

Twitter and Facebook bring on the grumps

Melbourne Herald Sun, Friday January 28, 2011

Oh dear I'm going into one of my Top Gear meets Grumpy Old Men phases. A sudden loss of patience with what the rest of the world thinks of as wonderful.

It started when I read about Seven Group's new "Augmented reality phone app for Kia". It seems that with this world-shaking advertising invention: "You can stream a 3D animation of the Kia Optima from the television screen onto your mobile iPhone in order to interact with the car's features." Just point your phone at the logo on the TV screen and you'll be able to turn the car's lights on and off and change its colour or something.

I'm afraid I cannot for the life of me think of any reason why I would want to do such a thing - but then maybe I'm just not their market.

I flunked on Twitter too. I registered for it when it first came out, nearly five years ago.

After a few days of trial, the prospect of receiving the minute by minute random thoughts and banalities going on in the heads of every other being on this planet just gave me a headache.

I have enough trouble dealing with my own banalities and am quite capable of generating streams of random thoughts without any outside assistance.

Recently I thought, now time has passed, maybe I'd misjudged it and should try again. I logged on and started twiddling.

I find that my Twittersphere allows me to know that Britney Spears is shooting her new video, what Stephen Fry had for dinner last night, and an hour by hour recounting of the activities of the PM. Almost makes you sorry for our leader as she trudges from one boring meeting to the next.

I decided I was right first time, and disengaged.

I'm a little warmer to Facebook, mostly putting up family photos and events from time to time. But then I find dozens of messages there from people I hardly know - usually the less you know them the more the messages.

I think maybe I should delete them off my list of friends. But what if they found out and got offended? Oh dear, if this social media is the future of human interaction it's no easier than the old kind.

My marketing news is that Oprah has been the winner of all the TV ratings earlier this week, with 1.3 million viewers on Friday and 1.2 on Sunday.

Sorry to be a grump again but I really did sit down to watch the show, with the best intentions.

But all that American gee-whiz enthusiasm, ladies wetting themselves when Oprah walks into their shop, and Aussies at their most sycophantic barbecuing worst was just too much for me. In a spirit of patriotism I lasted an hour but that was enough before my stomach rebelled.

Don't get me wrong, I fully expect this Oprahtunity to fulfill all that it promises. Most definitely as an ad man I'd recommend my client pay the necessary millions to get the huge amount of publicity and exposure that will follow, and it will be a bargain.

Just don't ask me to watch it too.

The endangered Australian species: grocery

Melbourne Herald Sun, Friday January 21, 2011


There's an Australian species that is being constantly, relentlessly driven towards extinction, yet nobody seems to care or speak out. Even the victims themselves.

The species is the dwindling race called Australian grocery manufacturers. The people who, for two centuries, have made what we eat and what we drink and the goods we buy. And their greatest predators are our vast supermarket chains.

A recent report from IBISWorld has once again pointed to the advance of the giants Coles and Woolworths as they grind the smaller brands off their shelves.

They have now reached a point where 25 per cent of their sales are private brand. But they have a higher target. After all, in the US more than a third of the products are own label, while in Britain it has now risen to over 50 per cent.

The latest category to feel the encroachment of private brands is liquor. By now we've grown accustomed to the fact that most of our take-away booze comes from the Big Two.

What, you don't buy your beer at Woolworths or Coles? Well how about BWS or Dan Murphy's or ALH, they're all Woolies. While Liquorland, Vintage Cellars and 1st Choice are Coles. Against them is the scattering of high street wine shops and pubs. Not much of a contest, is it?

What's happening now is a private label assault inside the booze barns. Wines like Baily & Baily and Crittenden, beers like Dry Dock and Platinum Blonde; Mishka vodka and Napoleon 1875 brandy, are all Woolies.

Coles also have a string of beers and wines. IBISWorld predict that in two years the majors will own 10 per cent of the liquor they sell, in Britain it’s already 30 per cent. At a time when our winemakers are struggling to turn a profit, they will be an easy mark.

Michele Levine, Managing Director of Roy Morgan Research, believes the independent brands are running out of time: “Our data indicates the move towards stores’ own brands is a function of improved product.”

So as the plain wrap gets less plain, there is less reason to spend the extra on familiar labels. Look at the results of recent Choice taste tests. The top products in ice cream, pasta, sauce, baked beans, cheese and sliced peaches were own brands. Even Tim Tams had a fight to come out equal with Coles Surrenders.

An eleven year study by Morgans showed the shoppers who declared “I buy more store’s own products than well known brands” had risen from 25 to 38 per cent.

IBISWorld senior analyst Naren Savasailam points to just a few safe areas, so far. “Confectionery, hygiene and cosmetics - the public trust their brands more,” he said. After all who wants fake Mars Bars or Chanel?

This illustrates the importance of giving your brand a strong identity, so the others look like fakes and the customers will insist on yours.

What’s the point of keeping a diversity of brands? Well, do we need more than two species of kangaroo, or parrot? What’s the point of 100 breeds of duck?

In business, just like in nature, we should insist on variety, through a wide range of choice.