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PUBLICATIONS FINANCIAL FIRMS (New This Month) |
AUTOMOTIVE Chrysler Motors MCorp. General Motors Mercedes-Benz NA Mercedes-Benz MUSA Mitsubishi Motor MSales Nissan North MAmerica Volkswagen of MAmerica TECHNOLOGY ENTERTAINMENT GOVERNMENT/NGO CONSUMER PRODUCTS
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Hello there, world. Everything is great here in corporate America. Couldn't be better. Sales are up. Profits are up. The prospects for long term, double-digit growth couldn't be better. Did we mention that everything was great and getting better every minute? Now if all of you out there in Advertising Land just keep repeating the above to yourselves at least once an hour you will experience a sense of euphoria and well-being that should last until the electric company turns off the lights in your office and you finally notice you're the last person to leave. For the rest of you, here is a tale guaranteed to scare the bejeesus out of you well in advance of any Halloween ghost story. It goes a little something like this. Ever since anybody can remember, corporate America has been dependent upon advertising (and its wicked step mother, marketing) to stimulate the sales that lead to long-term growth, although nobody has ever really been able to tie the two together. It was basically taken on faith that if you advertise, you grow the business. But what do you think would happen if one day business ceased to grow? What would that mean to those of us in advertising? What would it mean to you? Well, the time to ponder that question is finally at hand. In a recent study released by the Harvard Business Review, it was determined that only 10% of publicly traded companies experienced double-digit growth between 1990 and 2000. And when you strip away the voodoo accounting methods of the Enron era, the dubious valuations of the merger and acquisitions craze, and the bottle rocket economics of new product innovation, the numbers get even more scary. "But this is 2006," you are probably saying. "Things must be looking up?" Well consider this, Sparky. Enron got caught. Their accounting firm, Arthur Anderson & Company went down in flames. The Feds stepped in to straightjacket corporate accounting. And the M&A craze? Repeat after me. ANTI-TRUST TURNS GREED TO DUST. ANTI-TRUST TURNS GREED TO DUST. That leaves new product innovation. You remember new products? Those cute little gadgets with the 75% failure rate? Oh yeah. Let's bet the farm on new product innovation. Well boys and girls, here is a unique thought. What if everybody already has all the new flavors of toothpaste they need? All the new cell phones. All the new Toyotas. What if they decide they don't want to spend 1,200 bucks a seat for version 8.5 of the software that was better back when it was 6.0? And I quote Harvard Business Review: "The hard truth is that most companies have started to run up against the limits of growth based on products alone, whether they are manufactured goods or the 'products' of a service business." Well, are we scared yet? We damn sure need to be. Can you say "market saturation" boys and girls? And don't go looking around the world for "expansion markets." That "billions of new consumers" rhetoric is a dog that won't hunt. Not when confronted with the realities of weak consumer and industrial purchasing power, inefficient distribution channels, economic and political instability and the ever-growing wall of protectionist import laws and tariffs. If you are thinking China, watch your back. They are building business skills strong enough to capture their own markets and have ours for dessert. No, I hate to be the one to burst your bubble. But the times they are a-changin'. And if the only thing keeping you up at night is winning your next Clio award then I wish you pleasant dreams. But for the rest of you, be afraid. Be very afraid. Stay tuned.
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