This Internet Thing May Catch On

Cuh, who would have thought it, eh? This little wire into your house and down it comes all this fantastic information and now TV and much more.

In fact so popular has this phenomenon known as 'The Internet' become that advertising spend on it has actually overtaken spend on TV advertising. Some years ago, I attended a conference in London on the future of the web and some chap who was part of an investment group justified some of his company's hair-brain investments by saying precisely this would happen. I wonder if he survived his daft investments in web 1.0 but he was right, despite the guffaws and rude questions of the chap sitting next to me who kept whispering in my ear how he thought the speaker was talking rubbish. I noticed from his badge he worked for a TV company.


It is a fact that during this year, advertising spend has decreased, even on the internet. Companies are questioning more than ever the worth of some of this spend. As Aviva showed with their crazy decision to spend £millions on publicising a name change from Norwich Union while making people redundant, you can blow a lot of money very quickly on TV advertising. While glitzy agencies would tell you can measure the success by means other than sales growth, it would be a really tough job to understand what a campaign like that could have done for Aviva. TV advertising, in the main, is incredibly wasteful. For the millions of TVs it gets played on, the net effect is pretty low and you have to spend a lot of money to sustain the message and advert in order to get some tangible effect.


The internet has given advertising a new lease of life. You see, the trouble with the TV is that by by and large it is technically just a broadcast or stream which hits every aerial in the country regardless of if the TV is switched on or what channel they are watching. At any one time, the vast majority of people are actually watching something else while the advert is being broadcast. The other issue is that TV advertising is not very context sensitive in that an advert for a car may play after a scene where people are in a pub - yet would it not be cool if an advert for beer or wine were shown at precisely that point.


This is where online advertising scores as you can be incredibly targeted down to timing, demographics, geography, location and by the very words used to search the web. At the point you enter your search using a keyword, up will pop an advert only on your browser which is directly related to that keyword. If you search for Indian restaurants, up will pop the name of a local one. There is a simple, yet complex way of 'buying' access to a keyword for your specific needs that is governed by an auction in the ether - it's a bit like TV adverts but it is far more targeted. It can be far more powerful than that as a great deal more information about your browsing habits are stored than you may know or want. It means that adverts on places like Facebook in the future could actually be far more tailored. This is why Social Networking is so important to advertisers and why companies like Facebook and Twitter who have no revenues to speak of today are so highly valued - they contain a great deal more information about you and your online habits than many of your friends know about you. This only exaggerates the futility of TV advertising which is 'hit and miss' at best.


Related to all this is measuring results. The online advertising industry talks a great deal about Return on Investment (ROI) and can measure a great many things about your adverts and traffic to your website. The trouble is that there are many companies that can monitor a great deal of the traffic information by many different methods. There are only a few who have mastered the art of correlating data from multiple sources like Webtrends, Omniture and Google and make some sense of what is really going on by displaying the results with clear dashboards and automating reports. One such company I have found is Theorem Inc and their Data Analytics product which does precisely this. It is now available for companies to buy and use on their own premises to keep their data within their corporate firewall whereas most companies offer web-based access only.


The plethora of analytics tools mean that you can accurately measure response rates, numbers of views, where the clicks came from, time spent on your website, which pages were viewed, how often, for how long and then you can adjust and refine your marketing to maximise response and, hopefully, sales as a result. Naturally, I am simplifying what is a complex industry but when you boil it down, the internet means you can have a great deal more power over your advertising spend to get real results from all your marketing and adjust your budgets as you go, daily and by the minute if you wish. For TV, once you have paid for all that design and production work, it is just a matter of affording the right places to put the advert at vaguely the right time and, literally, hope for the best.

The internet has brought advertising into a new age. For those who doubted its viability against the sheer weight of the TV, it has now proved itself beyond all doubt. The spend statistics tell their story.

Unemployment Of A Different Kind

Last month we were told that unemployment reached 2.4m and many now speculate that it will peak some time in 2010 at around 3m or more. There are some who believe that these figures do not tell the whole story and that the real unemployed figure is as high as 6m.

Certainly, I know of a whole raft of people who do not register and so do not figure in these numbers. Many are former executives in sales, marketing and general management as well as senior sales and marketing people, who have been left by the wayside of mainstream employment. Many, if not most, have created their own limited companies or sole trading units to ply their trade as contractors, ‘guns for hire’ or interims – mostly working on short term engagements and projects with specific end points or goals to be achieved. In reality, this is what I do. You can dress it up in fancy language, have a few ‘smoke and mirrors’ but my ‘new’ career is being hired by companies to do specific jobs on a short term basis which are 100% results orientated.

In these recessionary times, there are good benefits for companies to get access at short notice to a pool of highly experienced general skills which are flexible, adaptable and highly geared to results on a short or long term basis. There are no onerous employment laws to encounter, no long term selection processes, no costly recruitment fees and the remuneration can be easily geared to results – you pay as you go, you can ‘try before you buy’ and you pay for what you get. Equally, you can end the arrangement as and when you please without fear of costly grievance procedures or compromise agreements. On the face of it, this is very flexible for companies to put the power where it is required, when it is required, without incrementing headcount or taking on long term liabilities or paying more in terms of benefits like pension contributions or private health.

For me, it has certainly been an exciting time these last 3-4 years. It took a while to get going and there was a gap in between contracts in the middle but I have managed to make a decent living out of it and I have had the satisfaction of working with a diverse set of companies, focusing on delivering on a variety of goals and have has given me the buzz of really achieving.

Take Theorem Inc (www.theoreminc.net), as an example. They are a dynamic digital marketing outsourcing company with an innovative model that had worked well for clients like Google and Digitus in the US. The CEO, Jay Kulkarni, wanted to launch his business in the UK and Europe and I worked with him to help set up that bridgehead and find highly talented people. They now have a London office serving Europe and are expanding off the back of new contracts wins in the UK and the Continent with some excellent, high profile new clients. Jay is very buoyant about the future and the partnership with me and this week we will be discussing potential ideas to expand the business through channels in Continental Europe. I am currently working with the UK manufacturer of Interactive Whiteboard solutions, Promethean Ltd (www.prometheanworld.com), and have helped them target and acquire new strategic partnerships in Europe which has directly contributed to their Southern European team having the largest quarter in their history and added more than €3m of new business in two partnerships alone in just around 16 weeks. That’s the sort of contract that really gets the adrenalin going. The last 5 weeks has seen a new relationship with anti-virus vendor, AVG (www.avg.com), get off to a great start also with 6 new major partnership potentials across Europe.

But it isn’t all rosy. One of the issues always is finding the next such client and I find that it means you burn the candle at both ends as once you have finished your day’s work with a current client you have to start work on prospecting for a new one. It means that my wife and I have not had a holiday for over two years – that’s par for the course. I find sleeping at night is not as easy as it is a constant worry as to where the next pound of revenue is coming from. My plight is the same for all those others who work the same way as I do. When we finish one contract and have a gap for the next, we do not register as unemployed – if the others are like me, I would be too proud for that and would rather pilfer my dwindling savings than become one of Gordon’s growing army, but in reality there are far more people who need the support of those payments than I do and I would rather people who really need it get access to the support than people in my position.

Would I change it? I am honestly not sure. In a way, the daily challenges are so variable and the things I can apply myself to so wide and interesting that I find the work far more stimulating than plain old employment. But I do miss several things. Camaraderie is one – I work mainly from home, on the road and am a worker of the digital age. There is an awful lot of international travel which can wear thin after a while because I get more crotchety about delays and not being able to be productive as every second counts in this kind of contractual work. If you are not delivering, you are of no use – and the old adage of ‘You are only as good as your last sale’ in this business simply does not translate – it is all about the here and now, and results.

My peace of mind and security says it would be great to be employed and have a straightforward package with all the trimmings and protection of the law. After all, I am now, like many of this growing band of flexible, contractual workers, closing in on 50 too fast for my own comfort. I know, no matter what the law says each day I am not employed as an employee going forward is likely to be another reason never to be employed directly again. As much as I would love that such prejudice does not exist against ‘more experienced’ individuals, it is the way of the world.

Some studies have shown that there are now two categories of ‘employed’ people – 1) those in full time employment as defined by the laws of employment and 2) contractors similar to me. The studies show that as time goes on, there will be greater difficulties and less protection for my types, while those currently full time employed will be effectively ‘there for life’. Also, if you are of a certain age and outside the full time employed zone, it less likely that you will ever get back in. Personally, I do have a sneaking feeling that talent will distill out in the end. If the recession has taught us one thing it is that you cannot rely on donkeys in your business and the focus on quality recruitment will come to the fore after successive years of commoditising one of the most important functions of any business – but is something I have bleated on about to companies for some time, even before the recession.

I have a suspicion also that as the markets bottom out and starts to show signs of recovery, a fast, experienced, adaptable and results-orientated workforce will be in greater demand, as it gives greater chance of ‘hitting the deck running’. I also think that companies will not easily forget the employment mistakes they have made in the past and start to think sensibly about the kinds of people they need and focus more stringently on higher quality recruitment processes rather than just getting volume and the lowest price. As always, the key priority will be skills shortages as the markets recover – we have heard it before so many times – with so many more people on the dole queue but not many possessing the kinds of skills companies require in the right geography.

This is where the growing pool of experienced, former executives can pay rich dividends. Over the past years, if there is one thing that this pool of readily available talent has proven time and again is that it can adapt to many different tasks and deliver by applying proven qualities and managerial experience. Direct technical or product or even market knowledge is of less importance if you have experienced the key problems companies have faced, applied you skills in a variety of situations and delivered for clients.

It’s why that, even though I am a born worrier, I know that I have been through a whole variety of situations including two major recessions, tremendous growth, started up several businesses and turned around an equal number across a wide variety of technologies, markets, geographies and disciplines, having managed teams and companies large and small and just myself. These are qualities, skills, values, disciplines and principles that many companies will be interested in the coming months. I still may not be able to take my holiday or sleep easy at night but at least I am confident that what I have will be in great demand.

I think a great many more in my situation should be equally as confident about the future.

Cost Savings Actions in Isolation

I read a recent snippet by an academic, Mitchell Lee Marks of the San Francisco State University, who said of the vogue policy by US CEOs in the face of the recession to enforce pay cuts rather than redundancies on staff that, 'Initially, this sounds good to people because we're all chipping in. There's a sense of loyalty. But what if you don't win the war?'

It's a great point. It was illustrated recently by US giant, FedEx, who, in December, asked senior Executives to take a 7.5% pay reduction and US based salaried workers a 5% cut in salaries. It affected 36,000 staff in all and CEO, Fred Smith, promised that it would see them through the bad times. By April, things had got worse and sure enough, FedEx let go 1,000 staff this month.

Fred Smith was dutifully trying to save jobs by avoiding making redundancies. He stripped out a good portion of the payroll cost and still it was not enough to save the jobs. In fact, Mitchell Lee Marks would argue that this actually has a bigger destabilising and demoralising effect on the company. It leaves staff with the rightful feeling, 'Why did we make that sacrifice? What did it achieve? Do management know what they are doing?' Further, studies have shown that while salary cuts are termed as short term measures, too often the money is not given back at a later date.

Cost Cutting in Isolation

It's a noble thing to join staff into the problems that business face particularly in the recession. It is also a noble thing to avoid redundancies if at all possible and asking or even forcing staff to take a pay cut is better than losing jobs.

Or is it?

The problem here is what is trying to be achieved. When executives abdicate responsibility for their actions to accountants and cost-cutters, then only numbers hold any credence. The role of the cost cutter is to 'cut the cloth to fit' and that's exactly what they do. But there is a problem here. If all that you do is cut cost and do not adjust or re-align your business then you are only risking prolonging the inevitable - either you sink or you have to make bigger cost reductions or the dreaded 'death by a thousand cuts'.

What I mean is, if you do not change the goals of your business, then all you are doing is reducing your capabilities which becomes a self-fulfilling spiral downwards in terms of the business. There is a real risk that you bring on more bad news rather than avoid it.

Aligning Your Business in a Recession

There is a risk of repeating myself from past blogs but there is a lesson to be learned even from a clever giant like FedEx of how to do things poorly.

The very first step you need to make before you make decisions on costs is to know your business thoroughly and that means to have a handle on every deal, every customer and to properly understand how your market is performing, what the salespeople are doing, what the marketing effort is achieving and where it is targeting, and how the business is set up to support it. You need to be clearly aware of what your Value Proposition is to every client in a recession and why they should buy form you.

The biggest competitor to any sale in a recession is NO DECISION and this arrives when either your Value Proposition is weak or the way you articulate it is.

There is zero point in having a salesperson selling into a batch of clients where, say, over 50% of them are struggling in the face of recession and the Value Proposition does not deliver instant impact to their business, preferably to the bottom line. Think about it - if you are asking someone to pay incrementally for something it has to have a positive and instant impact to the business.

You would not try to sell a Ferrari to person laying off staff.

The very first thing that will come out of a detailed analysis of your business is that you can instantly see if the current forecast pipeline of customers are going to buy from you or not - you will see if they are open to the Value Proposition - talk to them personally to reassure yourself. You need to understand who is buying from you and when, then clone that success in more clients who match their profile. Make sure your salespeople are ACTIVELY changing their focus away from clients you have identified will not buy and refocus their efforts on the profile you know that will.

Make sure that your marketing effort is 100% aligned to the goal of the salespeople. The PR, collateral and lead generation engines need to be targeting the customers you believe are open to your Value Proposition so that there is a ready supply of warm leads - and shut down all ancillary marketing efforts which do not support these goals.

Changing Strategy

Sometimes a recession will smack you straight in the face and your realise that the good times are over.

'What we are selling is simply not what the market wants'.

I remember back in the late 90's a company that had made a fortune on the back of detecting issues relating to the mythed 'Millennium Bug' issue of embedded dates in software. They did extremely well. But after the date changed, they simply did not have a business. It seemed pretty obvious to me but they honestly thought that major problems would still exist and their clever software would continue to sell in the same volumes. The senior executives were really surprised when it didn't.

Kudos to them. They recalled all their key executive staff from all over the globe, they shut down their marketing machines and kept a skeleton salesforce and then sat in a building and quite literally re-invented the company with a new set of products, a new set of problems they could solve and an entirely new strategy. They had accrued enough reserves to get by while they did this but then they took their new plan to their VCs and because they had delivered previously, they got more money and started again. Utilising pretty much the same people with a few attritions from those not used to having to sacrifice commissions because of no sales, they not only started sales up again but they actually became a profitably, fast growing company again.

It's an extreme example but when markets change, there is no point in trying to keep doing what you have always done if it is no longer as compelling to clients. It's why many old businesses who fail to adapt to changing markets quite literally Hit the Wall and whither or get bought, if they are lucky.

As I blogged yesterday, recessions can be rewarding in that they can force change, make people think, cause innovation and creativity and can set a business on a new, more lucrative and sustainable pathway. That takes courage and determination and what many businesses will find in such times is that their management are simply not capable of thinking that way and taking those sorts of risks.

For them, cost cutting is simply the only option - batten down the hatches, survive the storm and all will be ok.

New Recession, New Opportunities

It comes as no surprise that many clever start ups arise in the middle of a recession - Facebook, Cisco and my own client, Theorem Inc, did so. Jay Kulkarni, CEO at Theorem, will tell you that the Value Proposition he trades on was honed during a recession. His business supports online marketing and guess what, it is one of the few areas of the Hi Tech market enjoying real growth during this recession. Theorem, because they were born with a recession in mind, are thriving because their Value Proposition resonates with every major business in their market right now.

There are plenty of examples of how companies have re-invented themselves in the rocky grounds of downturns and you do not have to look for to see Apple. Here was a company stuck in a war with Microsoft and Intel and had only a clique of marketshare at around 9% for arguably the best computers in the world. But they were addressing specific needs best and not the broad market where harmony of applications and cost were the vital selling factors. Steve Jobs, on his return to the company, set a new course and looked at how the whole market for mobile media was going to change and bet everything on it. The iPod and iPhone are now almost history but Apple could not be doing better as their strategy has changed to support the whole market.

Strong Message

So the message is clear - do not cut costs just for the sake of it whether that is just switching off lights to salary cuts to jobs. Make sure you are addressing your customers and that your Value Proposition stands the test with clients before you go down that path. If nothing else, you owe it to your employees.

If you do not have the internal creativity, innovation, skills, courage or appetite to do this then it should be your management that suffers first but get help in fast. All that I blog about depends on your understanding of your customers - how and why they buy, how they have changed and their new needs - then aligning your resources to servicing these needs or to find new clients where your products and services resonate.

For those with the courage and energy to do this, cuts will be the last resort while re-aligning your strategy and resources will set you fair for the future. Further, for those with the strength to do this, there is more than enough cash in the market to support you. You just have to know where to look.