State of the Media

Setting it straight

Part three of my series on marketing and media will come out Monday, but I wanted to take a moment to clarify something and Paul Miller yesterday got a good start on it when he said " It's not just about EDA."

I no longer consider myself an EDA specialist. My agency's clientele is very diverse (from solar energy to enterprise software) We only have one on-going client currrently that intersects with the EDA world but is more at home in the fabless semiconductor arena. Any work we do in EDA is strictly on a one-off project basis and only on a referral or previous relationship-basis. A big reason we don't do much work in EDA is for the very reasons I've been discussing.

But this series is not about EDA. It's about the marketing decisions technology companies are making that shrink the markets when they could be expanding. EDA is an example, not the focus. I use it as the example only because I've watched this very important industry self-destruct over the course of the past decade and its pattern is starting to play out in other important markets including fabless semiconductors, semiconductor equipment and embedded technologies. All these industries are vital to the economies of the world right now and they need to get their act together for all our sakes.

The free press is a cornerstone in democratic societies and it was invented right here in this country. We take it for granted that the media will always be there, but the fact is the free media is disappearing because of our lack of understanding. And the members of the media share in this mess. We'll be getting to them later in the series.

For now, that's my clarification. Thanks to everyone who is participating in the conversation, both on line and on my phone. The fact we are talking about this openly now gives me hope. Have a nice weekend.

Wisdom or Ignorance Part Two: Field of Dreams Marketing

(This is part two of a multi-part post on conventional wisdom, which is just a nice word for herd mentality. The opinions expressed are my own, but the are based on the insights of dozens of journalists, analysts, investors, entrepreneurs and even qualified marketers, some of whom have been quoted and interviewed on this blog. I don't expect a lot of agreement here, but I ask that before you react, just consider for a moment, that I might be right.)

The last post was aboutt how most companies, even when they know their industry is in trouble, also believe their company is doing just fine. That belief is becoming more prevalent as independent media and analyst coverage of their industry disappears.

But rather than be concerned about the lack of third-party endorsement of their market offering, most companies believe that they don't need the media to help them get market attention or validation. They believe their product, technology or service is so outstanding and innovative that they can succeed with out it. This is what I call "field of dreams" marketing (if we build it someone will buy it.) It's also the myth that if you build a better mousetrap the world will beat a path to your door.

Industry graveyards are filled with superior "mousetraps" matched with mediocre marketing. Remember the Alpha chip from DEC? For that matter, remember DEC? How about Transmeta? In parallel, the world's largest fortunes have been made off of mediocre technology matched with superior marketing. Microsoft is a perfect example (and don't tell me you've never encountered the blue screen of death.) So what's the chance that an industry characterized by buggy, hard-to-use products, targeted at limited niche partners with lousy marketing is going to succeed?

This growingly prevalent industry blindness is negatively affecting the market as a whole. in the Electronics Desing arena, analyst Gary Smith has been indicating a growing trend of semiconductor designers increasingly dependent on in-house technology to solve the big design problems and turning away from commercial products. This trend has been happening over the past decade ever since the decline of the media covering EDA.

On a larger scale, investors complain that there is not enough third-party research to adequately complete due diligence and decide where to place investments (which has also hit EDA hard.) Out of the 5,000 technology start ups launching every year in the US alone, less than half have any research coverage at all, and much of that is only a single source. The greatest threat to US industry is not outsourcing, taxation, globalization of free trade … it's lack of objective research.

You can complain about the media all you want, but we owe as much to Ben Franklin's invention of advertising-supported media as we do to Adam Smith's invention of economics and market behavior.

So we've discussed marketing ignorance and blindness. Next up: pure ego.

Conventional wisdom or prevailing ignorance. Part one

(Here we go. I've been thinking on stuff for several weeks now and have mapped out a multi-part post on conventional wisdom, which is just a nice word for herd mentality. The opinions expressed are my own, but the are based on the insights of dozens of journalists, analysts, investors, entrepreneurs and even qualified marketers, some of whom have been quoted and interviewed on this blog. I don't expect a lot of agreement here, but I ask that before you react, just consider for a moment, that I might be right.)

I was at a tradeshow recently and listened to a panel of experts talk about the state of their industry. What was entirely remarkable was that in the midst of an economic downturn; when their industry as a whole is growing slower than the rest of the economy; when Wall Street it self was calling the industry an horrible investment opportunity, these experts believed all is well in their own little section of the world.

This was not an isolated instance. Whenever I talk to someone about the state of any industry, the general belief is the industry is in trouble, but each individual states publicly that their company is doing just fine.

There are two reasons for this. First, the economy really isn't as bad as one might think. Second, people believe their own marketing. These are not mutually exclusive reasons.

The economy is not in great shape right now, but to read the media accounts we're on the verge of a sustained worldwide economic collapse. However, I've been hearing that prediction since 1970 from economists, journalists and preachers. If someone keeps saying it, eventually it's going to come true, but it's not something I would bet on. But one of the big reasons the economy is the way it is is because we don't really have much of a media left to filter out the marketing crap. All we have left is what we are telling ourselves.

At the conclusion of the panel session, through which I was consistently shaking my head in stunned unbelief, I heard several people in the audience congratulating themselves on attending such a positive event. Looking at the badges of these commentators I noticed they were all with the leading companies of the industry, and they were all marketers. These companies are congratulating themselves, as well, on completing years with between 1 and 4 percent annual revenue increases. In this same year, multiple start ups actually went bankrupt or were picked up for pennies on the dollar of investment. The market "increases" for the big companies came from, in no small measure, from the growing lack of competition in their industry.

The marketers can't see this because they have divorced themselves from the concept that they actually need third-party endorsement of their positions to know where they really are. That's why industry is cutting it's support of not only media but independent market research. Like I said yesterday, it's bad news if it doesn't line up with your world view and therefore it is not reliable.

Our economy would be much healthier if we had real analysis of the market data. At the moment, that analysis is dying a slow death from lack of support, and the closer we get to that death, the worse it is going to get for our economy. But before we get to that, we're going to look deeper into the marketing group think. Later.

Good news, bad news

Over my career I've heard people decry the preponderance of "bad news" in the media, but no where is that complaint heard loudest but in the technology industries. What is interesting, however, is no one can actually give a definition of bad news other than there was once a story that portrayed their company or technology in a bad light. In other words, it didn't exactly line up with what the CEO want the article to say.

Last week, we had a long conversation on the blog with Ry Schwark of Mentor Graphics who complained that start ups in his industry got the lion's share of the coverage in trade publications (which isn't true except in his own perception) but that too can be considered "bad news" in some circles.

This weekend, while standing in line at Safeway I picked up an issue of Newsweek with the subhead "The real media bias." The article inside stated that what the media is really biased toward is not political, but in favor of conflict. Regardless of what you believe, Newsweek makes a good point. I logged on to SFgate.com (the SF Chronicle site) and took a look at the articles on the front page and all but one had to do with some sort of conflict.

Having considered all this for the past few days I now have a good definition of what "bad news" actually is. It is conflict. Anything that states a position of perception that is contrary to what an entity in power considers correct is bad news. An industry leader (and that means anyone who doesn't call themselves a leader in the news release) is going to consider any news coverage of a competing start up as a conflicting message and therefore bad news.

Let's contrast that with what might be considered "good news." For an entity to call something good news it would have to be something that agrees with its position. But everyone else competing in that space would have to consider it either "bad news," or worse, "a puff piece."

In that definition any news that does not directly benefit an individual is either bad news or puffery.

But I'm going too set a definition of news that most journalists would agree to. "Bad news" is anything that presents a conflict, like a lawsuit or bad financials. Good news is anything that benefits the larger community, like a cure for cancer or a way to cut the cost of semiconductor design. And real news is information that someone may not have had before... regardless of anyone's marketing plans.

If we want to get back to real journalism, we have to accept that we live in a community larger than our own household.