Read Our Lips

Advertising is a cost of doing business.

Tax policy is such a multifaceted thing — if it weren’t so dry and yawn-inducing, it would make a fascinating case study for the reach and scope of government. It creates and regulates the flow of revenue into the treasury, of course, but it’s arguable whether this is its most important function.

Tax policy is also a cudgel, or a spur. It encourages certain types of behavior, while discouraging others. Very often that’s entirely deliberate. There’s a proposal under discussion right now to levy a 10% tax on the use of tanning beds…not so much because those extra dollars are needed, but rather to prevent, hopefully, some number of new cases of self-inflicted melanoma.

That’s all well and good. But what about the unintended consequences of tax policy? What about tax policy that will discourage behavior that no one can argue is detrimental?

Like buying American.

Separate committees in both the House and Senate are currently discussing overhauls to the U.S. tax code. Both committees, it’s been reported, are considering what we think is a drastic and ill-advised step: reclassifying marketing and advertising costs so that they will no longer be treated as normal, deductible business expenses.

Clearly, we have skin in this game. And clearly, we can argue that designating advertising as anything other than a necessary cost of doing business is simply inaccurate.

Instead, we’ll make this point: Tax policy is indeed a cudgel, and it does indeed alter behaviors. It’s an easily proven fact that when taxes are levied on a particular activity, then fewer people will engage in that activity.

By taxing advertising expenditures, the federal government will ensure that less advertising takes place. That distresses us (no surprise there) but it’s our contention that it should distress you, too. Why? Because the vast majority of advertising dollars are spent locally — local businesses working with local agencies, print shops, and production facilities, to place ads with local newspapers and broadcasters. Even on a national level this principle holds true. When American companies market to American consumers, most if not all of their expenditures stay within our borders.

For more than a century, since the birth of the federal tax code, advertising has been treated precisely like what it is: a wholly legitimate operating expense, necessary for finding and keeping customers. The industry that’s grown up around that need has become an engine of American economic advancement, and a thriving source of American jobs.

The proposed change to the tax code, the alteration of the advertising-expense deduction, will change all that, very much for the worse. We oppose it as strongly as our finite voices and human frailties will allow. We’re saying so to our senators and congressmen, and to anyone who’ll listen, really. We’re making the same case we’ve just made to you. We think it’s a convincing one.

If we’re right about that, then all that’s left is to ask this simple question: Are you with us?

The C4

1. The tax code is a mind boggler. No doubt it’s in need of an overhaul. But the sections governing advertising expenses, classifying them as deductible business costs, are right on point, we think.
   
2. It ain’t broke, but the government is trying to fix it. Both the House and Senate are considering changing or even eliminating that deduction. It is our stance that not only would this result in an unfair tax on a legitimate operating cost, it would also cause irreparable harm to an important American economic sector.
3. Marketing and advertising creates jobs and spurs growth — locally, regionally, and nationally. “Buy American,” they tell us. Well, when you buy advertising, that’s exactly what you’re doing.
4. How on earth can they justify attacking that? Make no mistake, a tax on advertising will mean less advertising, and that means an economic hit, right here at home. It’s wrong, it’s folly, and it needs to be stopped. We’re trying our best to stop it, and we sincerely hope you’ll join us.

Washington Post Acquired By Amazon’s Jeff Bezos

Medias merge.

Jeff Bezos, CEO and founder of internet-commerce giant Amazon.com, has entered into a purchase agreement with the Washington Post Company to take control of their 136-year-old flagship newspaper, The Washington Post. The paper, famous for its Watergate-era truth-to-power journalism, went for a reported $250 million, or a little less than 1% of Bezos’s net worth.

Although the Post has long been considered one of the nation’s premier dailies, on a rarefied par with the New York Times, it’s not immune from the modern perils plaguing all traditional newspapers.

Declining ad revenue and a shrinking readership base is the new — or maybe not so new — norm for these institutions. Even the Post, which boasts a vibrant digital presence, has suffered earnings shortfalls in each of the last six years. Although the Graham family, which has owned the paper for four generations, gave no previous hint that the Post was for sale, no one should really be surprised by this turn of events. Newspaper sales are also the new normal, because for many of them, their only hope of survival is new management.

At first glance, it might seem that the big story here is the marriage of a venerable media company, with one of its upstart online heirs. And maybe there’s something to that — ad revenue, after all, isn’t just the Post’s bread and butter, it’s also the mainstay of many a Dot Com. That’s not true for Amazon, though, which is a straightforward product retailer (once operated, by the way, from Jeff Bezos’s Seattle garage). No, it seems that the only real connection between the Post and Amazon is their mutual purveyance of the printed word.

It’s important to remember, though, that the NASDAQ-traded corporation Amazon.com didn’t buy the Post. Jeff Bezos did. When the sale is finalized, probably in October, he’ll be the paper’s sole proprietor.

And that, we think, is the story. “Billionaire buys paper” — it’s not a new story. Just a few days before Bezos made his move, John Henry, owner of the Red Sox, bought the Boston Globe. In both cases, the newly minted publishers publicly affirmed their commitment to ongoing journalistic integrity, and to a “hands-off” editorial policy.

Newspapers are in trouble. They’re vital to communities, but as profit centers they’re sorely lacking. It just may be that the stewardship of benevolent billionaires, who let journalists be journalists and for whom ad revenue isn’t so important, could be exactly what saves them.

The C4

1. Jeff Bezos founded Amazon.com in 1994. Legend has it he wrote the business plan as he was driving from New York to his new home in Seattle. A little unsafe, yet still inspiring.
    
2. He turned that little online bookselling concern into one of the most valuable, recognizable, and enduring online brands. Jeff Bezos helps define twenty-first-century entrepreneurship.
    
3. So maybe we shouldn’t have been as shocked as we were when the Graham family announced on August 5 that they were selling the Washington Post to Mr. Bezos. 
    
4. What comes next is entirely up to him. He might dismantle the newsroom and sell the fixtures. He might turn it into an editorial cheer-section for all things Amazon. Or he could reach into those deep pockets and create a journalistic legacy, independent of meddling and financial worries, that will go on serving the readers of the Washington Post. We think we know which way he’s leaning. We sincerely hope we’re right.

When Ads Go Bad

Don't make your customers hate you.

Just like many professionals, we like reading about our profession. We read the advertising trade publications to get the buzz of what’s going on inside our industry. And we read the popular press to see how we’re viewed from the outside.

Unfortunately, that’s not always exactly uplifting. In fact, very often such stories are about some hair-raising errors in judgment, and usually end with a variant of this sentence: “The ad was pulled from circulation, and the company apologized to all who were offended.”

When an ad goes bad there’s usually plenty of blame to go around. The client gave the creative team some rough parameters (or maybe even specific parameters), the creatives spit-balled some ideas, one was chosen and fleshed out, and the client signed off on it. Sometime thereafter an ad was unleashed upon the world.

That creative team should very much fall on its sword, though, if the ad was badly targeted, poorly communicated, or was somehow actually offensive. Even if it completely followed the client’s directives, it’s the agency’s job to make sure it does what it’s supposed to: drive awareness, position against competitive offerings, pre-qualify potential new customers and precondition targets for the selling process. It’s the agency’s job to foresee any backlash, any counterproductive scenario, and when necessary to put the brakes on. 

So when a bad ad is released, it’s the agency’s fault. Period.

This is always the case, even when the ad’s relative “badness” is a matter of conjecture. Take this example from earlier this summer. McDonald’s in Singapore ran a print ad for McNuggets, declaring that “Today’s PSI (Peak Sauce Index) is deliciously high.” The problem? In Singapore, as well as throughout English-speaking East Asia, PSI is universally recognized as the Pollutant Standards Index. And the week the ad ran, Singapore’s PSI was at a record high, leading to widespread illness and misery.

The ad was pulled, and McDonald’s apologized to all who were offended.

There were no moral shocks here, no stereotyping or offensive language. Just a bit of cultural thoughtlessness. That was enough, though, to make the ad completely counterproductive.

An advertisement sent out unto the world must follow the basic tenet of marketing: Know thy customers. Know what appeals to them, and just as importantly, know what turns them off. If there’s the slimmest chance an ad might bruise their sensibilities, or cause them to think unpleasant thoughts, then that ad should never see the light of day.

Of course you know your customers. But you should be able to rely on your agency to make sure your advertising is right for those customers. The agency should value your results far more than their own creative prowess. They might create stunning ads, but if those ads create backlash, they’re hurting you — not helping you.

The C4

1. When we see our industry in the popular press, it’s a little like seeing a train wreck. We know it’s gonna be bad, but we can’t seem to look away. When the popular press writes about advertising, nine out of ten times they’re writing about advertising gone awry.
2. Advertising goes awry because someone, somewhere in the process, didn’t give due respect to the audience’s sensibilities.
3. When that happens, it’s the agency’s fault. Always.
4. Know your customers. And make sure your agency knows them, too. A good agency never stops learning about their clients’ customers, and they craft marketing material that appeals directly to those folks. They know the cultural, political, and sociological hot-buttons to avoid. They’re creatively gifted, to be sure, but they know that creativity counts for less than zero if their clients end up publicly apologizing for their work.

“It's Not Us With The Problem”

“It's you.”

It’s always a bit suspect when pros discourage amateurs from trying their hand. Doesn’t matter what their true motive is, it always appears as if they’re trying to seal off the sandbox they think of as their own.

So we know that’s the risk we take when we try to warn off DIY marketers. We know we look like we have a petulance problem.

But hand on heart, to the amateur advertisers we say this: It’s not us with the problem, it’s you.

Okay, well, perhaps “potential problem” might be more generous. Every business owner who eschews professional marketing help in favor of shot-in-the-dark efforts might potentially hit the bulls-eye every time.

Conversely, there’s that potential for alienating customers. For opening up a can of I-wish-I-hadn’t-done-that.

Marketing designers, account specialists, writers, and the rest of our gang get into this field because we’re good at it — and we get results. Our clients are good at what they do, too, and have the sense to let everyone stick to the jobs they’re best at. We wouldn’t try to run their shops, and we’d heartily object if they tried to run ours.

Marketing looks easy from the outside. That’s all. Looks easy to slap some words with images, to shoot 30 seconds of video, so that’s exactly what these would-be pro-ams do.

You know this because you’ve seen examples. And you knew immediately what you were looking at. Some become internet-famous for their stumbling attempts, and for video that comes off looking like self-parody.

And in all fairness, some resonate with the buying public. Some reap profits. These are the ones that achieve real pro-am status: amateur players getting pro results.

We won’t say amateur efforts never pay off, but we’re sanguine in saying they never pay off with consistency. That’s the difference our pro standing brings — we’re consistently on target, consistently playing our best game. It’s born of experience and of a devoted fascination with the intersecting alchemy of design and persuasion. Of commerce and content.

We’re not hiding any rulebooks from the amateurs, because this is a business without rules. The closest thing we have to rules, we break constantly…or rather, we break them precisely the number of times necessary, precisely when and where it best serves our clients. Amateurs might bend the rules or adhere to them religiously, but you have to wonder how well considered that is, and whether they’re thinking about it as strategically as we would.

Print, broadcast, internet, and billboards — there’s plenty of marketing bandwidth hereabouts, plenty of room, in other words, for a pro-am circuit. In good conscience we don’t encourage it. In terms of pure self-interest, however, we really should.

All this amateur work, to be quite frank, is making us look great.

The C4

1. More business owners try their amateur hands at marketing and advertising, than any other best-left-to-the-pros services. We can’t prove this empirically but it’s anecdotally solid. Business owners who have no problem letting their general contractors build their properties or their lawyers file their briefs, are willing to take a swing at homegrown signage, advertising, or integrated marketing.
   
2. There’s no reason some of them can’t be marketing savants. No reason some of them can’t be plain lucky. Pro-am advertising occasionally pays off.
   
3. Consistency is what we’re competing on. That and experience, confidence, and dedication.
   
4. Truth told, it’s win-win for us either way. Either the amateur yields to the pro, or he makes him shine in contrast. 

Do We Always Stand Still When We Do Nothing?

Activity does not always equal action.

What sort of challenges and tribulations were waiting for you when you showed up for work this morning? Weren’t there leftover problems from yesterday, all mixed up and merged with the new ones that cropped up overnight?

Managing that never-ending flow of issues might not be fun, but what choice do we have? Can you even imagine a world of smooth-flowing business and a lack of crises? It might sound utopian, but surely you must realize: it would be a little eerie.

Maybe even a little boring.

So this is the business model we’re stuck with: problems arise, we address them, then we await the next problem. C’est la vie. Viva la business.

But here’s one of the dangers of being the habitual problem-solvers we are: We come to think that action, any action, in the face of challenge is virtue. Action, we think, is always preferable to inaction.

It calls to mind the scene of the man searching for his keys under the light of a streetlamp. He’s fairly certain that’s not where he dropped them, but that’s where he’s searching, because that’s where the light is.

We’re in danger of acting just as irrationally when we jump to our feet, thump our chests and wave our arms in the air at the first sign of trouble. We’re driven to act, or more accurately, to react, because a leader must confront problems. That imperative can be so all-consuming that sometimes we forget to ask the most elementary leadership questions, like Is action even necessary at this point?

Action requires a plan. A plan requires fully understanding the problem and what a successful outcome looks like. Activity may make things worse. Action is better. Sometimes doing nothing helps the drama to subside so the real problem can be assessed. Never confuse activity with action.

It goes against the grain, but sometimes the best response is to do nothing. Or at least, wait until the sun comes up, and then search for the keys where they really might be.

The C4:

1. Business, like everything else, is governed by inertia. That’s great for growth and upward trajectory, but it instills a mindset. It leads us to think that activity is action, and that all our actions drive us forward.
   
   
2. No, sometimes it’s just busywork. Just the spinning of wheels. Sometimes we force ourselves to act, in response to events or sometimes in response to nothing at all, without stopping to wonder if inaction might have been the better course.
   
   
3. Your business may be in motion (of course it is) but that doesn’t mean you always have to be in motion, too. Your acumen, instincts, and best judgment might well advise you to take it slow, to be deliberative, to keep still and wait to see what happens. If that’s what your inner voice is telling you, then listen.
   
   
4. Yup, it comes down to a judgment call. You decide when to jump, and when to sit still. Sorry hoss, but that’s the gig you signed up for.