"What the customer buys and considers value is never a product. It is always utility - that is, what a product does for him." Peter Drucker

"Life is pretty simple. You do some stuff. Most fails. Some works. You do more of what works. If it works big, others quickly copy it. Then you do something else. The trick is in doing something else." - Tom Peters

"If you are not paying for it, you're not the customer; you're the product being sold." - Andrew Lewis

Today's image: Hey! by Fred Winston. Great shot. Thanks for sharing.

Welcome to September.

As we begin both the last frenetic drive to make our numbers before the 2011 clock runs out and the ritual dance that is the annual budget process, some loose ends for your consideration. As always, your thoughts are welcome.

Start playing the game thinking ahead
two moves or more

Critical thinking and serious listening continue to provide exceptional yields. Paul Drew often said planning afforded the best possible ROI. He was spot-on. Putting scenario planning and game theory to work are but two solid options. Let's begin by asking the important question...

What if?

What if transactional business died?

Spots and dots represent the single most important revenue engine of the broadcast trade but what if, without notice, transactional revenues precipitously declined?

We must ask such prescient questions.

I'm reminded of that famous speech at the 1975 NARM, The Day Radio Died delivered by the gifted Stan Cornyn, then a senior Warner Brothers executive. As it happened, Stan had asked exactly the right question at precisely the wrong time (the record industry, being in high cotton, dismissed his provocative thought experiment).

It's critical that we play ahead.

Here's a practical example deserving discussion: How are we going to optimize political in 2012 and what's our strategy for beating those numbers in 2013 without that cyclical gift? Importantly, what if political allocated to broadcast is reduced or doesn't come back at all in the 2014 midterm or the 2016 federal? Isn't this a perfect time to entertain the notion that an RAB/TvB led task force be established to work these cycles? From K Street to every campaign headquarters, PAC and all of the political consulting firms there are stories to be told, value propositions to evangelize and champion.

On the day job we were criticized some years ago for daring to ask "What if?" Specifically, when the automotive category went south we initiated conversations grounded in the brutal candor of fresh circumstance. We began asking "What if it doesn't come back? What if it does come back and the dollars are shifted, less broadcast and more other including interactive? How then do we compete?" The situation was indeed tragic. Some long established car stores, the majority perennial broadcast clients, closed forever. Time spent in scenario planning paid off. Our clients paced ahead the next two years having developed strategies to replace 60% or more of their local, zone and national auto spend (i.e., dealer, association, factory dollars). Moreover, we developed new strategies and tactics for auto to more effectively employ broadcast and in that process totally reimagined and rebooted the category.

What if your transactional business died? What exactly is your strategy for staying in business? The exercise is important. Rather than wasting time in a hypothetical "losing it all next year" discussion let's first imagine 2012 as the year transactional is off by 12%, your attrition rate doubles, your DSO adds 10 more days and you lose both your top seller and your DOS. What's your plan to deliver your numbers? Ask "What would have to happen?" for us to make our numbers given a set of specific conditions (ninjas of finance call such probabilistic conditions "assumptions"). Using worst-case scenarios can be productive if they are not simply possible but also credible.

We must embrace the simple reality that transactional is, in essence, a commodity business. As such, this segment of media spend is more likely than not to move away from personal selling and into the more efficient realm of machine trading. The strategic issue here is how do we optimize participation in this commodity trading process and at the same time develop a separate sales organization focused on selling solutions rather than numbers? How do we move from responding to an avail to working with clients in a creative collaboration to produce results? We have an urgent need to do both.

Sidebar: During my time with CBS Mel Karmazin asked me to consider putting Howard Stern on one of our Dallas stations. Howard was not cleared in the market at the time. One of my first thoughts was "What happens if the airplane goes down?" Experience had taught me that the best time to look for talent was before you needed them. Fast forward. Howard announces he's leaving and suddenly at risk are ratings at a bunch of stations and what has been estimated to be about 100 million in CBS billing. It became clear there had been no serious succession planning prior to Howard's announcement. History records this as a fire drill where people were sent into the burning buildings.

As the proverb says: The best time to plant a tree was twenty years ago. The second best time is today. Mind the wise counsel of Tom Peters "The trick is in doing something else." Let's get to work.

The major advances in civilization are processes
that all but wreck the societies in which they occur
Alfred North Whitehead

Bonus: Erik Sass provides an interesting overview of what's happening and not happening in American advertising. Winners and Losers: The Changing Media Ad Landscape, 1980 -2011, here.

Flashback: The challenges faced by music radio today simply demand the aggressive employment of innovation and creativity. N=1, August, 2004.

"You have a right to your own opinion. You do not have a right to your own facts." Daniel Patrick Moynihan

"Everyone has the right to program." Buzz Bennett

"Life is a place of service, and in that service one has to suffer a great deal that is hard to bear, but more often to experience a great deal of joy. But that joy can be real only if people look upon their life as a service, and have a definite object in life outside themselves and their personal happiness." Leo Tolstoy

Tim Manners has written a Fast Company column headed Is Google Killing Radio Advertising? "Bigger isn't always better, and this is particularly true with regard to the power of radio as an advertising medium. But advertises (sic) like Google just don't seem to understand radio's true potential" writes Manners in his opening paragraph. Three paras later he quotes a USA Today item wherein Eric Schmit (sic) is quoted as saying "Look at the time people spend listening to radio, versus the money currently being spent to advertise on radio -- it's out of whack. Radio can be much bigger." Manners responds "Well, what's out of whack is the idea that bigger is better in radio. In radio, bigger is never better because the beauty of the medium is in its intimacy. In radio, smaller is better." He goes on to tell us he is a "former local-radio announcer...During a break, I'd pick up the phone. On the line is a listener -- a total stranger -- who would speak to me as if I were the closest of friends...Radio's true power is in that kind of one-to-one communication." Then Tim delivers the goods with this insight "The commercials sandwiched between the music and my patter did not capitalize on that connection. More often than not, the ads undermined it." He ends his writing "...if Google succeeds in using the power of the internet to jam radio's airwaves with more and more irrelevant ads, it will make the medium weaker, not stronger. It will disrupt the very thing that makes radio great. It will drive yet another wedge between radio and its listeners, and make radio even less relevant as a medium for marketing tomorrow than it is today."

Disappointing and almost too clever by half. Almost. Why this magna cum laude grad of Tufts failed to achieve the highest Latin honor we may never know, however, in this writing at least, he has failed to do his homework. Mr. Manners' "local-radio announcer" credential and previous bad experience with a sales department notwithstanding the guy clearly fails to grasp the fundamentals of the business.

As it happens size does matter. The power of radio as an advertising medium is well documented. Manners obviously misses Eric's point. It's Eric, not Tim, who understands radio's true potential. Radio reaches 93% of US consumers every single week. Radio captures a single digit percentage of the US ad spend. That is out of whack but the ad game often fails to be logical, rational or even fair. Welcome to our dysfunctional family picnic and ring toss.

Manners would have us believe that "In radio, smaller is better." He's wrong. He states "bigger is never better because the beauty of the medium is in its intimacy." Again, wrong. The intimacy characteristic of radio, of audio for that matter, that unique power of one-to-one communication is not diminished as the audience gets bigger. There's a technical term for his argument - goofy.

He writes "The fact that the power of radio as an advertising medium is a function of the credibility of its on-air personalities" and then references the great Arthur Godfrey. Certainly true that personalities can be very persuasive and effective sellers but radio is more than that one trick derby winner. What Manners has done here is wrongly discount the exceptional creative work being done by shops, inde producers and station teams. Closed circuit to Tim: check out the Mercury Awards and the Radio Lions winners. Bonus hint: Radio works. Bud Light would shut down their Real Men of Genius campaign if it were not working. You can bet the Volvo on it, these are beer guys.

Manners is as loyal as Achates to the conventional hack wisdom that states when writing about radio thou shalt bash Clear Channel. He also casts Google as a co-conspirator "teaming up...to clog the airwaves with more and more commercials." Writing about any possible Clear Channel - Google cabal is so de rigueur. And so off the mark. As Drucker once taught the market happens outside the enterprise. The ultimate success or failure of Clear Channel and Google will be decided in the marketplace, a very competitive marketplace. Further, relevance is Google's oxygen. To suggest that Google would be a part of broadcasting "more and more irrelevant ads" demonstrates Manners' acute naivete. And please, let's leave those Less is More guys alone already. Now at the tender mercies of their new PE pals my guess is LIM might be taking on a whole new meaning. Being private (no Reg FD) could mean that no one hears you scream. Or maybe not but it does make a good visual.

Back to the countdown. Google, along with the other media exchanges, seek to create a new sales channel. Manners fails to offer any reasonable support for his notion that such a new sales channel will make radio weaker. Any new source of revenue, properly managed by stations, will not become another "wedge between radio and its listeners" nor will it work to make radio any less relevant as a medium for marketing. It is possible one could make exactly the opposite case and actually be closer to the coming truth. The safe bet is radio and those FM with pictures guys will successfully jump the digital divide. Stay tuned.

What Manners fails to mention is Clear Channel is but one of the many broadcasters in "alliance" with Google. My understanding is Google is now working with almost two thousand radio stations. The AdSense for audio initiative isn't new, it's over a year old now and those dMarc guys were at it for some time before that. Giving advertisers "the ability to buy radio ads online with a simple click of the mouse" seems an honorable mission but somehow not to Manners. He appears to be saying give only the listeners what they want and damn those advertisers (and underwriters). The reality is broadcasters have to keep both constituencies happy to keep the lights on and the bills paid. Success in broadcast remains a high wire act. It is certainly true, you can be riding high in April and definitely shot down in May. And let's not forget the feds either as radio remains a federally regulated endeavor.

Manners praises online-only station UltraRadio as a champion of local music and tells us it's "not unlike what radio great 'Murray the K' did back in the 1950s and 1960s" (hanging out in clubs and listening to what his audience was listening to). Good to know, thank you. Tim, here's two clues. Riff2. iChannel. Look them up. A great many local stations support their local music scene. Always have. Unsigned acts have never before been the focus of more radio attention. Moreover, there are many modern day Murray the Ks working in the trade today.

Size matters when it comes to innovation. Manners praises the size of a billionaire benefactor's wallet when it makes possible the very cool work being done at KEXP. Size can also be a good thing when today's market portfolio, the cluster, serves innovation. Kelly Kibler and J.D. Freeman are able to take a flyer on one of their Dallas Fort Worth stations because they have five other chances to win. Offering sponsorships by the hour and putting single sponsor opportunities on the market is certainly creative and the stuff of radio's early commercial days. Sidebar: As late as the 1970s my father's program was sold by the hour to advertisers including American Airlines and Budweiser (and yes, he delivered every commercial live, ad libitum).

Manners is too quick and perhaps even a bit cavalier when he gives bad odds to the life expectancy of music-oriented social-network sites ("..such dreams will die a quick death"). Never doubt the power of a great sales team or the incredible ingenuity of entrepreneurship to beat the odds. The lads at last.fm, and others, will find a way don't you worry. It's that marketplace thing again.

So, is it fair to suggest Google is killing radio advertising? As Borat would say...not so much.

Tim Manners is to be commended for making mentions of KZPS, KEXP and UltraRadio. Each deserves recognition. We can all do a better job of catching folks doing things right. He's also spot-on about one other very important thing "When radio is approached with that kind of intensity, with such extraordinary personal dedication to the interests of its audience, its ability to sell to that audience is hard to match." Closed circuit #2 to Tim: Radio is approached in that very way. It's happening today all across America. There's a lot of great radio out there. Get dialed in.

Congrats & cheers: Michael Gutkowski named COO of iVillage. David Lebow named CEO of IBS. Mary Jeanne Cavanagh promoted to Oxygen EVP Ad Sales.

Photo: Fall From Grace by Thomas Hawk. Another amazing shot. Bravo & Thank you!

"Luck, chance, and catastrophe affect business as they do all human endeavors. But luck never built a business. Prosperity and growth come only to the business that systematically finds and exploits its potential." Peter Drucker

Drucker went on to suggest three questions that will bring out the hidden potential of a business:

• What are the restraints and limitations that make the business vulnerable?
• What are the imbalances of the business?
• What are we afraid of, what do we see as a threat to this business - and how can we use it as an opportunity?

Writing this past weekend on development issues. Came across some excellent points made by the great David Oglivy. His "five characteristics which suggest...a person has the potential for rapid promotion:

1. He is ambitious.
2. He works harder than his peers - and enjoys it.
3. He has a brilliant brain - inventive and unorthodox.
4. He has an engaging personality.
5. He demonstrates respect for the creative function.

If you fail to recognize, promote and reward young people of exceptional promise, they will leave you; the loss of an exceptional man can be as damaging as the loss of an account."

Too much for too little: Now comes word the eBay cable net exchange was to charge 2% per transaction. Also hearing the platform feature set did not allow for any value added. Some cable folks are saying the exchange was just too expensive at 2%.

Best music in the history of TV: Little Steven says it doesn't get better than the music on The Sopranos. Read the Reuters/Billboard story via WaPo here.

100 million - the number of iPods Apple says it has sold. According to Nick Wingfield writing is this morning's Wall Street Journal Apple grabbed a 73.7% share of the MP3 market (US retail) in February. SanDisk was second with a 9.0% share; Microsoft picked up 2.3% of the February retail market. (data: NPD Group). Read A New Wireless Player Hopes to Challenge iPod via WSJ here (sub req).

Wired: Eric Schmidt interviewed by Fred Vogelstein via Wired here.

"How should we think about Google today?

Think of it first as an advertising system. Then as an end-user system - Google Apps. A third way to think of Google is as a giant supercomputer. And a fourth way is to think of it as a social phenomenon involving the company, the people, the brand, the mission, the values - all that kind of stuff."

"Google’s revenue and employee head count have tripled in the last two years. How do you keep from becoming too bureaucratic or too chaotic?

It’s a constant problem. We analyze this every day, and our conclusion is that the best model is still small teams running as fast as they can and tolerating a certain lack of cohesion. Attempting to provide too much order dries out the creativity. What’s needed in a properly functioning corporation is a balance between creativity and order.

But we’ve reined in certain things. For example, we don’t tolerate the kind of “Hey, I want to have my own database and have a good time” behavior that was effective for us in the past."

Bravo Eric! Well done Fred.

Congrats & cheers: Roger Ogden, Gannett Broadcasting CEO, named B&C's Broadcaster of the Year. “Good ideas can come from any level of the organization, from any source. We can’t sit back and hope and expect that’s going to happen naturally or automatically. So we’ve developed a culture in which we encourage people to participate.” Read B&C item here. Ellen Weiss named VP of News for NPR. Well deserved!

Google Maps - create your own personalized, annotated maps - very cool.