Over the past year, I’ve been excited and energized by the work we’ve done at our company with our traditional magazine franchises. We’ve expanded the digital footprint, re-assessed our workflows, innovated with new marketing products and generally held together our talented teams while teaching them new skills.
The results? Revenue was down more than 45% in the year.
We’re not alone. 2009 was a very bad year for magazines. Here’s the final numbers from PIB, the industry tracking service, for consumer magazines. I’ll share the business-to-business magazine data when it gets released.
I’ve been catching up today on a few things that I wasn’t able to get to last week. (The week was spent focusing on internal company business.)
I was particularly struck by the juxtaposition of the following chart. The topic: Household income and consumer values.
The first chart shows conventional wisdom: Household incomes have stagnated for the better part of the last 15 years.
There’s an important trend buried in the numbers: Households are getting smaller. Since household income tracks income for the entire household, the data understates the median income per household member.
Both trend lines capture the downward wage pressure experiences during the last decade. And, the household size series has certainly increased during the Recession, as more households are forced to combine because of economic pressure.
But the consumer experience of the past decade was that households had more purchasing power relative to the size of the household. The long-term demographic trend suggests that the household size number is going to continue to decline. The result is that more American’s need to earn enough to support themselves, not a broader support group.
Framing that observation is the values that people have in relationship to wealth, career and class. Pew Research Center has done interesting work on quantifying the way the people want to spend time and how they think about wealth and money. People who are in the broad middle generally value their career, have mixed feelings about the importance of wealth and know that the rich are not much different than them, just luckier.
When asked what is most important to them, people in the middle say that they highly value their free time to pursue their passions and interests — their family, a hobby, a vocation.
Work is a path to being able to experience life, not the path to life itself, for most people. As the demographic trend creates more, smaller households, we’ll see a continued emphasis on life as experience. This, incidentally, is a key characteristic of Generation Y. That cohort is only going to get older and more influential.
The highlights of the holiday season are being presented in dribs and drabs. Earning seasons will tell us a lot. The consumer was clearly trying to generate energy in fits and starts. Spending was still tamped down.
But within the story about overall spending, there’s another significant trend: More and more buying went online.
The table to the right from eMarketer shows the change in retail e-commerce during the holiday season from 2008 to 2009. The figures suggest that a significant portion of consumers are incorporating their e-commerce behaviors into a multi-channel shopping strategy.
My experience reflects that. On December 20th or so, my wife and I went online and ordered about 80% of what we needed for our five kids for Christmas. The few days before Christmas, we shopped locally to get a couple of bigger gifts and to fill around the edges. I’d estimate that 75% of our Holiday shopping happened online and in the last week of the season.
The traditional metrics of Holiday tracking, which get huge coverage in the news, don’t capture this real economic activity.
I’ve been doing some family research this past year, trying to uncover my mother’s father’s heritage. One of the most powerful tools has been the online editions of the U.S. Census from the late 19th and early 20th Century. Looking at these forms closely, you’re able to piece together the mosaic of a person’s life. The research has been rich and engaging.
In 2083 (when the 2010 Census is scheduled to be released to the public), my great-great-grandchild won’t be able to pull the same richness of information from the Census. This year, the form has been reduced to 10 questions. Here it is.
Search the blogosphere and you’ll find a lot of discussion about the Census, the political process of generating the form and assorted levels of disappointment about how little information there is.
I’m struck by a different angle: We’re seduced by the easy digitization of identity and history. For any of us living a digital life, we’ve got a remarkable chronicle of the current time. But almost none of it is tangible, like the old, wrinkled photos my mother had of her father in Arkansas in the early 1900′s. Those five or six artifacts helped to organize the parameters of a rich dive into the archives.
We’re living a kind of constant state of Jung’s collective unconscious, where we all share awareness through the stream, molding perception, archetype and reality. But we’ve consigned our archives to the stream as well, up in the cloud, or in fragile digital bits. In 100 years, what will be know about today will depend on the ability of institutions and individuals to archive this new storage format. I’m skeptical.
Here’s an underlying issue for a consumer-driven economy: a change in demographics will reduce the volume of consumer spending.
From Nielsen’s research blog:
CPG Spending Declines
As population growth slows in the U.S., so will spending on consumer products. Household size will decline across the board, the largest families will be smaller and a large share of the population will live in one or two person households. Nielsen projections demonstrate that households closest to the poverty line will gain in share at the expense of all other households, but especially those in the middle and upper middle classes, who will shrink the share the most. The impacts of these two trends means that after 2020, Nielsen projections show per household spending on packaged goods will begin to fall. The current recession is already impacting spending in the short-term. Growth will be very hard to come by both now and in the coming decades.
So, while the global population will continue to grow, the U.S. population will slow, and households with children under 18 will drop to 30% of all households by 2020.
Another data point supporting the assertion that the economy that we had for the last 20 years isn’t the right economy for the next 20 years. Consumer consumption is not only experiencing a short-term change, but is manifesting a trend that will continue over the long term.
“If necessity knows no law, then neither does power”
I’ve been musing over the state of our national discourse a lot recently.
The stakes of our socioeconomic quandary feel very stark. Mountains of debt and millions of unemployed putting pressure on a systems of goods, services and production that looks like what philosophers call a self-contained system, which only functions with internal logic and is easily proved fallible by external logic.
So, common sense says that smart people would be working together with an acknowledgment of what the biggest priorities are in order to create a new approach, right?
Wrong. Instead, we appear to be in the midst of one of the most cynical periods in modern political and economic history. Break the world down into three groups: Vox Politic, Vox Populi and Vox Media. The way people are feeling, the way politicians are acting and the way that the media is interpreting is creating more alienation, disaffection and confusion that ever before.
Paul Krugman today in the Times had a very balanced column suggesting that the issues facing the Obama administration don’t have to do with scope, as popularly suggested, but with faulty policy. Whether you agree with him or not, the column attempts to move the dialogue to issues and solutions away from ad hominen attacks of ability and motivation.
I witnessed another discourse recently that reinforced my sense that concern about the partisan bias of the media and the political forum is removing some of the partisan intensity of private conversations.
Here’s a sample of a Facebook dialogue between two former high school classmates. A bit of background: I went to an all-boys Catholic boarding school in Rhode Island run by Benedictine Monks. My dad was a teacher there. The kids at the school were smart, were taught with intellectual rigor and came from all over. For such a small school, the alumni body has remarkable diversity of interests, views and life choices. This dialogue is between two men who represents what on the surface would appear to be highly divergent choices about life, the role of money, the role of culture and the importance of political discourse.
Call them Frick & Frack. I encourage you to read through the dialogue. What I find interesting is how resonant each argument is. How polarized these arguments appear in public discourse. And, how aligned both contributors are by their concern and interest.
Frick: Might this cover be implying that Barack is not only incompetent but also living in la-la land? The proof is in in the pudding and, according most credible, unbiased and objective takes on reality, not tainted by ideology or emotion, Obama has failed miserably on all the crucial counts: the economy, Iran, health care a…
Frack: Question the received opinion. As you are no doubt aware, Obama has also had to contend with some of the most difficult challenges any recent president has faced. A near meltdown of the housing market. Bankruptcy of the auto companies. A quagmire in Afghanistan. Possible meltdown of the Chinese economy. Historically speaking, a year is far too soon to make a reasoned assessment.
Frick: … failed so far… with more than 3 million jobs lost in the last year alone, an Iran that, without Israeli intervention, will soon be a nuclear power and unparalleled deficit (borrowing) spending that puts us, literally, at the mercy of China, Obama has put policies in place that point America in a downward direction instead of up, back in the … See Moreblue and in a more powerful position. It’s possible that Obama can still right the ship and turn things around, but right now the smart money says the economy is in for a double dip and that a new wave of foreclosures could very well be right around the corner. If that occurs, or if there is another successful terrorist attack on the mainland, Obama will be a one term President and his place, right alongside Jimmy, will be a foregone conclusion. I hope, for all of our sakes, that time and history prove me wrong. I would much rather have a robust economy and no more innocent life lost at the hands of Islamic extremist.
Frack: What do you expect him to do? Adopt the Ron Paul solution to all our woes and print a 10 trillion dollar banknote, hand it to the Chinese, and say “Here. Debt paid. Now go to hell”? Complex problems take time-consuming consensus building to solve. Obama has smarts that Carter didn’t have. Give him a chance, bwah, and your fondest hopes may come true, even if later rather than sooner.
Frick: That’s pretty much what he has done. He took a deficit that Bush was responsible for and, instead of trying to turn things around, turned to the Chinese and compounded Bush’s folly by borrowing far, by far, more than Bush or any other US President for that matter. It’s not a question of me giving him a chance that will determine his success. It’s a question of the policies he has put in place and, so far, I don’t see any policies that offer, in a fundamental, core or pivotal way, any reason to believe there is hope or positive change in the air. What I see is old style Chicago politics with corruption, back room deals and bribery being the coin of the realm. He’s proving to be the biggest flim-flam man of all time by promising us one thing and delivering something altogether different. What happened to being above board, transparent and bi-partisan? The country is more divided now than it was just a year ago and more is done behind closed doors than under any administration in recent memory.
Frack: I just hate to see him fail, and feel that attacks on his policies are more partisan in nature than not.
Frick: You may be right, and I may be being partisan without knowing it, but I believe, above all and even more, that I am giving and have given him a fair chance. So far the results haven’t been good and, when you get past the double talk, spin and mumbo jumbo, there is no reason to think they are going to get much better anytime soon. Key economic indicators in housing, commercial real estate and the general economy don’t look good. Further, evidence that a bubble, due to cheap money and overvalued assets, may be what has pumped up the markets thus far. Again, I hope I am wrong. Believe me, I have nothing to gain and everything to lose of there is a double dip in the economy or if there is another successful terrorist attack in the US. My family was fortunate enough and lucky enough to weather the last storm. I’m not sure more government is the answer. I’m concerned for my families ability to withstand any more inclement weather.
Frack: Yah, the financial DEW line was talking of a double dip as far back as April of ’08. And it could happen. I just hope the prognosticators are correct about commercial real estate not being quite as over-extended as housing.
Frack: What irks me most is people making pre-judgments so they can be first in line to say I told you so. I’m more interested in full-spectrum analyses which offer an array of probabilities right up to sigma 10.
Frick: Yeah, but don’t you have to wait until the game is all but over for that? At that point you won’t be able to have any hand in the outcome and will just have to live with what is rather than squeal like a pig and, hopefully, at least get a little oil while holding on to your ankles for dear life.
Frack: Heh. If you got some sharp boys on your staff, you can do the spadework, pile up your Fuck You money, and not spend your golden years working at Aardvark Body Rub Studios, scrounging for chump change and slapping hot oil on the backs of men who look and smell like Ferlin Husky.
Me: Ok. This was alarmingly smart and civilized. Must be the product of a rigorous Benedictine education. Can’t figure which point of view is right. The mess we’re in has been building for 15 years, when the borrowing capacity of consumers and businesses was reached and the only was to boost consumption and spur growth was to lower the cost of money and increase leverage. Bingo: you get bubbles. Obama has no choice but to play the hand he’s dealt. So, the option is to keep a fundamentally corrupt financial system on life support by providing a federal subsidy. That’s all fine, and while it’s unfortunate, the outsized compensation of the players in finance is a non-central issue.
What is central is what else to do. The one thing that has to happen is job creation — at any short-term cost, provided that the jobs are sustainable. The second thing is that the cost structure of social well-being (health and entitlement) needs to be lowered, so as to reduce the drain on the economy and create more resources for new development.
So, the measure of Obama is whether he is helping to stimulate activty that addresses our two biggest domestic priorities, and whether he is communicating in a clear and consistent fashion what we are doing, why it matters and what our expectation is about the results.
He’s doing miserably on the second front.
On the first front he’s put a ton of stuff in motion, but appears too willing to dilute key elements, sacrificing principal to expedience.
I don’t know that any of us know enough about what’s going on behind closed doors to know whether he’s gotuch choice but to comprise. The country is in a pretty tight spot. But we can confidently say that he’s providing none of the clarity and perspective that the country needs from him.
Frack: Throw the rascals out. ALL of them. The lobbyists first and foremost. (Like that will ever happen….)
Frick: Hey Dan, Thanks for coming in, summing it up, giving an overview and tying a ribbon on it. It’s good to know we made some sense even if none of us are quite sure what’s coming down the road.
Me: I wouldn’t call it a bow! Just thinking out loud. And Frack, we’ve tried throwing assorted clusters of the rascals out a few times over the past 25 years. It’s like Zombie-fluid: the idealists turn rascally once they are exposed. I’m wondering where the better idea is.
Frack: 25 years? “Throw the Rascals out” goes back to 1828! And you’re right; reformers tend to take on the attributes of the machine they work inside of. Because by the time they make it to the top, they’ve internalized the ethics of their profession–or lack thereof.
It strikes me that if necessity knows no law, than neither does power.
- Analytical argument support focusing ad resources on 1 media to stand out. (via BrandingBlog) http://bit.ly/4nmZQj 09:25:32
- Prelim unemployment numbers shows some easing in the labor market. via Calculated Risk http://bit.ly/4IPNdC 09:25:15
- The final figures on foreclosures in 2009 (via Calculated Risk) http://bit.ly/6rXrrX 09:24:59
- Small businesses are a big casualty in the recession. some numbers. (via Clusterstock) http://bit.ly/8khYxI 09:24:44
- All the people who are going to be
fat are fat, experts say. (Count me in.) http://bit.ly/5YEN76 09:24:31
- Greg at DigitalTonto jas a mist read of 5 developments that will keep advertising relevant. http://bit.ly/61Cm4V 09:23:59
- RT @Gennefer Lego's new website and short film are brilliant. A brand built on cultivating imagination. Powerful stuff. http://bit.ly/0Lo 08:56:21
- Not a positive psychology fan, but this is a good post on passion amd personal harmony http://bit.ly/6YDuP6 08:56:06
- RT @juntajoe This week we had projects come in from India, Russia and New Jersey. Everyone is looking for content experts I guess. 08:55:45
- The NY Times does an old-media take on what going on on Twitter re: #teamconan http://bit.ly/5C4aXA 08:55:26
- RT @carol_phillips Interested in Gen Y Research? Follow @truinsight @pewresearch @Ypulse 08:55:07
- RT @Richard_Florida "Financial Crisis Permanently Lowers US GDP," Chart from Mark Zandi via theatlantic.com http://tinyurl.com/yjemtyx 08:54:51
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