Case Blog

As we emerge from the long winter recession, once more the debate is underway about whether marketers should spend any of their budget on branding or focus entirely on lead generation. I, for one, believe that this is not an either/or decision. The best marketers, those who have created growth during this downturn, continue to rely on a marketing mix that includes both.  Amazon (AMZN) has seen dramatic growth since they introduced their Prime membership program, which included free shipping. There were many skeptics, but this innovative approach fueled their recent growth at the expense of their major competitors, Borders (BGP) and Barnes & Noble (BKS).  In the case of Amazon, they also regularly communicate by email with their large, established customer base. They also gained market share in the consumer electronics category when Circuit City committed so many missteps that they found themselves forced to declare bankruptcy and close their doors.  Once again Amazon has innovated with the Kindle 2 and has been rewarded.  Mary Claire and I each have one and love the flexibility they provide when we travel.

Apple (APPL) is another example of a company that has continued to successfully invest in branding. Apple has one of the strongest consumer brands, one that stands for innovation and style. They have taken this strong brand and turned the smartphone market on its head. Apple and AT&T (ATT), their distribution partner in the U.S., both reported strong earnings last week because of the iPhone, which continues to eclipse all of its competitors.

As B2B marketers, we need to offer our clients opportunities for both brand building and measurable lead generation opportunities. We must do this across multiple platforms, both online and offline, through opportunities like live events. I hear more and more clients asking for “thought leadership opportunities” tied to whitepapers and conferences. Those among us that are most responsive to the unique marketing needs of our client base will emerge from the downturn stronger and with increased market share. Stephen Moylan, who joined us at Asset International a short time ago as Executive Vice President of Sales & Marketing, is one of the best marketers I have had the pleasure of working with over the years. He listens to customer and client needs and is then able to respond with creative programs tailored to help them meet their specific goals. In many ways, in this weekend of the NFL draft, Stephen is my go-to guy, the person I can depend upon to make certain that our customer base is receiving the attention and creative programs they deserve.

On Saturday, the first day of the NFL draft, we drove up to Hafner Vineyard, www.hafnervineyard.com, just north of Healdsburg in Sonoma County. The Hafner family has an annual luncheon for their best customers to show their appreciation. They have 120+ people to their home, which has magnificent views out over the valley and their 1,000+ acres. They have never used the retail channel, because they found it too impersonal. They only sell to a small select group of restaurants and individuals by direct marketing. Their client base is very loyal (we have been customers since 1992, when we moved to the Bay Area) and is appreciative of the number of ways that the Hafner family has found to say thank you.  A long time ago I attended a lecture by Peter Drucker and came away with one memory, which I will paraphrase: the primary objective of a business is to create a customer. As we work our way out of this deep recession, we would all do well to celebrate and recognize the unique contributions of our customers.

Before we turn to opportunities, I need to do a mea culpa on my pick of Louisville to go all the way after they trounced Arizona. They unexpectedly ran into the Motown favorite, Tom Izzo’s Michigan State Spartans. Detroit needed some magic and the team from 90 miles away in Lansing answered the call. The idea of Louisville playing in an all-Big East final faded away and we found Michigan State facing North Carolina in the final. The Spartan dream ended quickly at the hands of Ty Lawson and Tyler Hansbrough.  Coach Roy Williams took President Obama’s call after the game, congratulating Williams and his team and also thanking him for vindicating Obama’s pick of UNC to win the tournament. I will defer to the nation’s #1 fan when next year’s brackets are released.

Turning to the Masters this past Sunday, we saw a “final within a final.” With Tiger Woods and Phil Mickelson trailing the leaders by a significant margin when the third round ended on Saturday, they were paired together for the final round on Sunday. With the crowds and the cameras following them on Sunday they found magic, with Mickelson tying a course record 30 on the front 9 and Tiger gradually bringing the leaders within reach. This was the first Act of a very enjoyable play. On the back 9 in Act II, we realized that Tiger and Phil were going to fall short, as the magic faded and they gave back several strokes and Kenny Perry had the Green Jacket within reach. Then the unthinkable happened: a very consistent golfer trying to sit on a lead bogeyed both 17 and 18 to find himself in a three-way tie. The final Act was a sudden-death play-off between Perry, Angel Cabrera and Chad Campbell. Cabrera had stayed close all day, and when Perry left the door open Cabrera was not going to be denied. He walked off with the Green Jacket and his second major championship, having won the US Open in ‘07 at Oakmont.

The media market has significant opportunities in ‘09, but they are not all obvious and they are very different than they have been in the recent past. Across the various sectors there are companies that were overleveraged, and in this advertising tsunami they do not have the cash flow to meet their debt obligations. Many of them have excellent brands and are well positioned within their sector for a rebound as the economy improves. They will need to be recapitalized, though, in order to survive. With strategic investors on the sidelines waiting for the storm to pass, the opportunity will fall, once again, to the private equity investors who have dry powder and recognize the upside potential. It will also fall to some of the lenders, who will find themselves trading their debt for equity.  This opportunity may even exist for some of the overleveraged newspaper properties that have strong brands, community support and a digital strategy for the future.

Yesterday Goldman Sachs (GS) made two important announcements. First they are going to raise capital in the public markets to be the first major financial institution to repay the TARP funds to the government. I trust that many more will follow over the next several quarters. I sense that this demonstrates that we have touched bottom and we are at the beginning of a recovery, although on any given day it does not feel that way. The financial stocks rallied on this news. Goldman Sachs also announced that they are in the process of closing a $5.5B fund to buy private equity investments at a discount in the secondary market. The GS Vintage Fund V (WSJ 4/13/09) will be the largest secondary fund raised to date. Many pension funds and endowments that need liquidity are now open to selling their positions in this asset class at a discount. Again, for the savvy investor, this is a time of opportunity.

Finally, if you go to www.assetinternational.com and click on AI’s 5000 you will find the opening pages of, “Harvard Has a Cold,” by Kristopher McDaniel. He chronicles why Harvard, earlier this year, tried to sell some of its private equity holdings in the secondary market. This is the type of in-depth, quality reporting and analysis that you will find in this digital publication when it launches in early June.