State of the Media

Cadence's take on social media

I spent sometime chatting with Jim Price and Dan Holden who are managing the social media program at Cadence Design.  Cadence has  been involved in social media and networking longer than any other EDA company, starting with the online version of CDNLive, and one of the more experimental, including their relationship with Xuropa.  I have to give them kudos for their willingness to explore as well as make a place for traditional journalists in their efforts.  I'll let you listen to this edited version of the conversation (it was 30 minutes long) and will be making some comments in a few days.

Cadence social media

There is gold in them thar hills

The biggest question I hear now is "Can you make money off of media?"  That question isn't just about social media, but all kinds of media.  For traditional media, most people are leaning toward a "no" answer, even though many people are still trying.  For new media (blogs, social networks, podcasting) most lean toward "no" but with a question mark because they are hoping they are wrong.  they think they might be able to, but they can't figure it out.

Speaking from personal experience now (experience over the past 6 years since I got into this, I've decided upon a definite "yes" for both.  There is a "however" attached to it.

Media can be a profit center, but only when you change your definition of what a profit center is.  There was a time when revenues were directly attributed to media investment (primarily advertising) But there was never a direct correlation.  The more you invested in media, the greater your revenues grew.  That seemed to be a direct enough correlation for any company.  Then the internet came along and people believed that it would be able to give that direct correlation that everyone really wanted.  Well, not everyone.  Just bean counters and engineers.  And what's more, investing in internet media was going to be a lot cheaper than print or broadcast.

Well, the last part was definitely true.  It was cheaper.  And because it was cheaper, companies started investing in internet media while dropping their overall investment in media in general.  The result was that revenues started to drop and when the companies started using the wonderful measurement tools the internet promised them, they could not find the direct correlation between revenue and media investment.  So they cut their budgets even more.  And revenue dried up even faster.

The media industry went into recession long before the rest of the world and it started when they began telling customers that they could give them the detailed information and connection they needed with the most important customers that would raise revenues.  They were wrong and they shot themselves in the foot, ankle, kneecap and hip in the process.  They may never recover.

Unless they, and all the rest of us decide to relearn what media does for the bottom line:

It engineers opinion in the marketplace of ideas.

The keys in that phrase, that has been around for more than 100 years, are "opinion" and "ideas."  Neither of those two phrases are concrete.  They are abstract, wibbly wobbly balls of concept.  For some people they can be very clear, for many others they cannot.  But both are incredibly powerful tools for driving success, and they are influenced more by emotion than intellect.  You can't really measure it.  You can't really control it.  It's not science.  It's art.  And that makes bean counters and engineers very nervous and wary.

As I said, I've been kicking around the world of social media for about 6 years.  I sat back and stared at it for two years before that.  About three years ago I started sharing what I had figured out about social media with friends and colleagues.  Something really strange started happening for some of them who decided to take what I was saying bout it to heart.

They started to make money.  They got better jobs.  Their companies started turning around.  They started hiring employees.  Then one of them finally came to me and said, "Lou, you really should be charging for this kind of information."

Physician, heal thyself.

For the next few weeks I'm going to start sharing some things that I've discovered in the past few years.  It will be enough to get you interested, but not enough to get you to the other side.  I've decided to stop giving away what I know.  I now have a couple of clients who are actually paying me to share this information, and you may be hearing about them in the coming months.  

It can be done.  You can make money off of media investment.

It's a start...

    Just finished  the launch of a social media program for a public company in the electronics sector and it was a great experience.  We had a packed room with about 50 people live and around another 10-20 on line around the US.  Got a few pointed questions and answered pointedly with several stepping up and say they want to learn more... even in marketing!

    That's an important statement.  In 2007 Time magazine reported a study that 55 percent of technology customers used social media to decide what to buy but only 34 percent of marketers in technology companies were using social media to reach their customer base.  Last week, PR Week put out a study showing that decisions makers are only increasing  their dependence on social media, yet marketers in tech are at best, still holding at 34 percent.  In fact, the survey showed on 6 percent of companies using social media are incorporating input from customers on social media into customer service efforts.  So when marketers step up to adopt social media in an electronics company, that's big news.

    I'm particularly encouraged.  This was the first of several projects I'm planning to help companies create effective social media efforts, all of them with companies that might be considered in financial distress or, in the least, with very little market visibility.  The marketing chief of the company I just started with said he thinks we are entering a period where sociologists and communication experts will be doing important studies on the effect of social media on the economy and business that will be rewriting how business is done on our world.  In a couple of years, certain segments of the electronics industry will have new leadership and it looks like social media will have a real impact on who those leaders will be.

    Like I've said before.  It is a brave new world...

The view from the boys in the press room

I did a boatload of podcast interviews with EDA companies at DAC in July and on my last day I got together with Dylan McGrath and Nic Mokhoff of EE Times regarding the issue of how the industry is communicating with its customer base. I think it’s interesting to note that while Dylan kinda agrees with me that he doesn’t see the evidence that engineers get all the information they need by talking to each other amd getting it off press releases, Nic generally agrees that engineers can get all the information they need off the web now, and will be able to do it even better in the future. What that means for traditional media, they aren’t sure. Note: The sound level on this is a bit wonky because my computer was trying to balance my big mouth with Nic’s soft basso. You’ll probably have to turn up the sound to hear Nic.

Learning to communicate better

It's been one of those really intense weeks.  So to save some time, I decided to do an podcast on this issue, rather than write it up.

My activity in European startups looking for funding brought me into contact with Irish entrepreneur Anton Mannering in 2008 and we had a pretty good connection at the time.  He popped up again this week with a new venture in New York called, The Audience Conference.  Considering I was talking earlier this week about how engineering-based companies need to learn how to communicate better with their audience, I thought the reconnect with Anton was providential.  Here's the interview.

Proctor and Gamble Raises the stakes in advertising

New Media Age reported that in the UK Proctor and Gamble is going to start paying publications based on how well people respond to advertising and promotional efforts.  It's called "pay for engagement" as opposed to pay for clicks or visits.  If a reader plays a game, downloads information, signs up for newsletters, they get paid for it.

This is a very new approach and some publications are balking, but it makes a lot of sense to me.  The real value of any media now is not that it reaches a lot of people, but that people respond in a positive manner by engaging with the sponsor.  This plays well into the social media world, especially when you offer materials that can be downloaded for later review, including podcasts.

Something to think about.

Advertising needs a hand

Guy Kawasaki did a post in Open Forum this week on "Is Advertising is Dead" reporting on a panel of advertising experts from Facebook, Yahoo and Microsoft.  The purpose of the panel was to discuss the benefits and pitfalls of using advertising to support a web-based business.  There were some good points, but like every other discussion I have seen on advertising it missed an important point:  How do you make it work?

Advertising does not create sales.  It improves them, but  it doesn't create them.  It reinforces opinions and impressions that have already been established.  For advertising to work, the initial sale has to have been already made; the first impression established.  The panel got close tot he subject with the statement: The key starting point is great content. When you have great content, you’re more likely to attract audiences, and audiences are what advertisers are looking for."  

The content is what establishes opinion and creates the initial openness to a sale, but that content has to have at least the appearance of objectivity to do its job.  If the content in the online publication is obviously biased in favor of a particular vendor, it doesn't meet the definition of "great content" that the panel says you have to have.

This is the key component missing from social media programs in corporate America and what needs to be addressed before they will become valuable to the market.

And the answer is... again ... marketing

Couple days ago I asked for some help in figuring out the DAC numbers and one of my readers let me to an article by Kevin Morris at the FPGA Journal about the same thing, but getting into the discrepancies with much more depth.  Answered all of my questions (thanks Kevin) and like I thought, it took an engineer.

But far into the article, Kevin said something very insightful:

"EDA has ignored the majority of electronic designers in the world - who are not doing ASIC/SoC design. Probably 95% or more of the people designing electronic systems in the world today are not designing ASICs, but are instead using FPGAs and commodity processors on custom circuit boards. With a few exceptions - EDA has not invested heavily in serving this 95%, but has instead put the bulk of their development resources into supporting the high-flying 5% doing nanometer IC design."

He was making the point that if trade shows and conferences like DAC, DVCon, DATE, etc. are going to survive they have to go beyond their comfort zones and expand their customer base.  There is only one problem:  You have to invest in marketing -- real marketing -- to be able to do that.

Companies in the electronic design automation, embedded hw/sw, and fabless semiconductor industries just don't do that.  "We know who our customers are, we don't need marketing."  That's been the attitude for the past decade.  The smaller companies used to ride on the coattails of the major players marketing budgets in the 1990 until the latter smartened up and cut their advertising and trade show expenditures, which killed the media for the industries.  But because the smaller companies follow whatever the large companies do, they started cutting back on investment in marketing too.  

So now all of the companies know all of the players in their traditional but rapidly dwindling market, but they lack the resources, understanding and skill to find new markets.  There are zero marketing-driven companies in those industries.  They barely are sales driven.  What they are is engineering-driven. 

And that's why the trade shows are foundering.  It's not the conference committee's responsibility to bring in new customers.  They are there to serve the needs of the current community.  It's the exhibitors' job to bring in fresh blood.  They just don't know how.

End of rant.  Here's the good news.

I talked with a little over a dozen companies at DAC.  That's a better than a 5 percent sample.  More than half admitted they "effed" up in marketing and are looking to increase budgets.  They are looking for real help.  Not the SOS marketing of cranking out news releases and spending 90 percent of the budget on languishing exhibitions, but real marketing with research, social media programs, surveys and long-term strategy.

The conferences are going to have to adjust.  It may mean bringing the size down and going back to hotels with conference facilities (like DVCon) or lower-cost convention halls in out of the way towns (like DATE is doing).  It's going to take time to rebuild the industry, but it sounds like some people are getting with the program.

Put the Monty Python team in charge of the economy, quick!

I missed this article in Fast Company last January.  It was about how the Monty Python crew responded to illegal uploads of their video clips.  Rather than get litigious, the up loaded their own versions in high quality, categorized and in their own channel... for free.  The upside is the effort increased DVD sales 23,000 percent.

I'll repeat that, because it bears repeating.

23,000 percent!

You want to know what the ROI of social media is?  You want to understand why giving up control is a good idea? You really need to adjust your thinking to something "completely different."

Definitions and pontifications in the blogosphere

Gabe Moretti chimed into the discussion on whether bloggers are journalists this week and made some valid statements, although I don't entirely agree with him.  Essentially he says that the only people who should get press credentials at a trade show should be people from the traditional press and that all others should be given a secondary level of access that is no more than exhibitor level.  I don't necessarily disagree with that, because the only reason I'm going to DAC to do interviews for EDA Cafe, SoC Central and New Tech Press is because I don't have to pay to get in.  I would have been happy with an exhibitor badge, but I will make use of the press pass to dig stuff up and get a quiet place to record interviews.

However, I'm not real happy with the idea of keeping a hard and fast definition for who gets a press pass.

I'm not sure Gabe realizes it, but by his definition, he should not get a press pass.  Gabe doesn't work for the traditional press any more.  His job is to promote DAC.  He gets paid to put together the DAC newsletter with the express purpose of getting more people to come to DAC as exhibitors and attendees.  I'm of the opinion, however, that Gabe does provide valuable information to the industry and is therefore a journalist.  Gabe's definition also excludes people like Richard Goering, Steve Leibson, Brian Fuller,and Mike Santarini, because they are either getting a corporate paycheck or are consulting to companies about communication strategy.  It also makes participation questionable by Paul Dempsey at EDA Tech Forum, and Ed Sperling from Extension Media (Chip Design) because both publications' content is heavily influenced by corporate sponsorship.  (That position, BTW, is not mine.  Those guys deserve to be considered journalists still).

By Gabe's definition, on the other hand, I should receive a press pass because I am not there to represent a client (I have none in EDA).  I am there looking for information to post on the various blogs I write on.  What's more, I am not being paid by anyone to cover anything at DAC.  This is all on my dime.  But I know there are a few of traditional journalists who think I should not get the recognition because I've been a PR dude in EDA for a while.

So here''s the thing about bloggers and why they should get the same access as journalists (whether you want to call them journalists is moot).  By limiting the definition to only those from the traditional press, you severely limit the number of people who might actually cover the news of the industry.  There just aren't many left, folks.  But most of the bloggers in EDA are doing exactly what traditional journalists have been doing for the past 5 years when it comes to news coverage -- rewriting company press releases.  They are just doing it from an insiders perspective if they are corporate-paid, and from a customer perspective (like Harry Gries).  That makes their input even more valuable to the traditional journalist because they don't have to ferret out sources anymore. They can get the input they need on company products from what the bloggers write about and quote them.  In essence, thanks to the blogosphere, traditional journalists don't really have to go to trade shows like DAC.  They can ignore press releases, not take meetings, just go to the technical sessions and blow off the trade show altogether.

I think it's a paradigm worth considering.  And we should all keep an open mind for the time being.