Eric Kercheval & Associates

Unplugging From Legacy Media

2012-02-08T10:15:00.000-08:00

First, Landline Phones
The great unplugging movement has begun. The first wave started in the late 2000's when more and more people realized that most of the phone calls they were receiving on their legacy landlines at home were telemarketing calls. At the same time, most folks found that the majority of their phone time was spent on cells or smartphones. So why pay $30 -$40 (or more) per month for the landline? Alas, the landline started to become unplugged. In late 2009, it was estimated that 25% of all households were cell-phone-only (CPO). Today the CPO estimates range from 40%-50%. Traditional landline providers are leaving the business (or have begun spinning it off) in favor of wireless distribution-only. Granted, most of this landline termination has been occurring in the residential/consumer market. Most students graduating from college have never been tethered to landlines. As they enter the real world, their primary "addresses" and communication links will be their wireless phone numbers and SMS text portals. But how far off is the unplugging of corporate landlines? Theoretically, small businesses do not need landline services with a plethora of wireless and ViOP (think Skype) options available.

Second, Cable/Satellite Television
The next unplugging wave is now hitting the cable-television and satellite-service companies. With high-speed broadband now reaching 60% of all US households, video streaming is catching on in a very big way. Monthly cable bills (not including internet services) are reaching the $60-$90 range (even more with premium programming services). Consumers are now pulling the plug with increasing frequency. Roku seems to be the video streaming device of choice. About the size of a deck of cards, the device plugs into your flat-screen TV via an HDMI connection and receives your household WiFi signal. Roku offers up to 100 "channels" free of charge. These channels include popular programming options like Netflix, Hulu Plus, Amazon Plus, Crackle, BBC, PBS as well as all four major US networks. The Roku unit retails for $60-$90. Most popular TV programs can be viewed 24 hours after they air on cable or the networks. The quantity of older, archival programming available is amazing. Also, new "streaming-only" content providers are developing original programming. Netflix just announce their first original programming effort last week. Add a high-tech HD over-the-air antenna to receive local stations (UHF/VHF) and you end up with about 70% of the programming you would receive on the cable or satellite services for nominal fees!
The negative impact of video streaming on the cable and satellite providers will be huge over the coming years particularly in terms of lost ad and subscription revenue. Local television affiliate stations may slowly become superfluous as major content providers stream their programming directly to the consumer via the internet/wireless distribution channel. Social media may take on a whole new look and feel as it migrates to the HD television screen. Imagine a streaming Facebook channel. Also, marketers will establish their own streaming channels (or apps) with info commercials and original programming that feature their products. Look for new, streaming-only content providers to grow rapidly in this space. Also, as the baby-boom generation moves into living on a fixed-income during retirement, they will definitely opt for the video streaming as a low-cost alternative to expensive cable and satellite subscriptions.

Third, Broadband Internet Service
The third area of unplugging will affect landline broadband service providers selling internet connection to residential customers. The lower-cost alternative will be a broadband wireless internet connection via the newer 4G LTE wireless platform offered by Verizon, ATT, Sprint, etc. Most android-based smartphones can transmit a wireless high-speed hot spot to other devices (iPads, laptops, video, game consoles and streaming devices, etc.). At the moment, the subscription cost for such a "hot spot" smartphone feature is $30.00 per month ($10-$20 less that a landline broadband connection). The beauty of the hotspot feature is that you can take it with you, anywhere. Your internet connection is not shackled to your home. And, the hot-spot connection often is much faster than your traditional wired connection at home. Look for more broadband wireless frequencies to be sold by the US government allowing for even faster wireless connectivity. This will increase the migration (unplugging) away from traditional "wire-connected" broadband services.

What will unplugging from legacy media mean for marketing services agencies, digital/internet agencies and social media firms... in terms of revenue, strategic planning (internal and for clients) and staffing? More to come on that in the next few blogs.

© 2012 Eric Kercheval & Associates.

Eric Kercheval & Associates is an executive recruiting and mergers/acquisition advisory firm with over 20 years of providing marketing services and digital development companies with search and M&A services. Please go to our website for more information this subject and to learn more about our recruitment and M&A advisory services or email Eric Kercheval at: eric@ekassoc.com

E-book Reader vs. Digital Tablets

2012-02-02T14:28:00.000-08:00

Despite the intense press coverage of Apples explosive iPad sales, it is interesting to take note of Pew Research’s recent survey on E-book vs. Tablet Computer ownership. The survey results suggest that ownership is even fairly evenly split between the two types of devices and have experienced similar growth increases. The same survey showed that 29% owned either a digital tablet or E-book reader.

The same research study showed that E-book market share of total book sales does vary by category:

6 Ways to Recruit Top Senior-level Talent to Your Firm

2012-02-01T08:05:00.000-08:00

Your company is thinking about, or in the process, of filling a SVP, EVP or similar-level position. How the candidate during the recruitment and interview process is critically important to assuring you have the best and motivated candidates ready to accept the position on your terms. Below are six essential recommendations that Eric Kercheval & Associates suggests to their clients in order to attract and close on the best-of-class senior-level talent:

1. Clearly communicate the company’s vision, mission and goals. This information is vitally important for the candidate to hear and understand. There should be no ambiguity, fuzziness, hype or hyperbole in articulating this. Make sure all team members who are part of the interview loop or hiring decision-making process are all on message. Nothing spooks a candidate more than sensing your senior management team is not on the same page. It is surprising how often this is the case.

2. Clearly communicate the role the candidate will play in achieving the company’s, mission and goals and spell this role out in the job description. Make clear the candidate’s fit within the senior-management organizational structure. If the person is being brought in to fix problems, be up-front about what the problems are and what caused them. And be up-front about any company weaknesses or problems that the candidate will find out about within the first 30-60 days. Believe me, they certainly will!

3. Clearly communicate the expectations you have of the candidate at the three-, six-, nine- and twelve-month milestones. Also clearly communicate and outline the evaluative criteria that defines success at each milestone. If compensation incentives are attached to such milestones, clearly communicate the formula by which the incentives are derived.

4. Program into the interview process a number of feedback points when the candidate will be required to communicate/respond back to you their thoughts about the interview process, the job description, mission, goals, expectations, etc., so that you are able to evaluate the candidate’s critical/strategic thinking, listening skills and communications abilities.

5. At this level of hire, have the CEO or President of the company involved in the initial meet-and-greet process. This strongly communicates to the candidate the importance of the position.

6. Execute a well-orchestrated interview process first by providing the candidate with meeting/interview agenda and/or company info packet ahead of the interview date. When the candidate is in your offices, keep the interview process running on time. Instruct your key interviewers not to take phone calls or check email (or their handheld devices) during the interview. If possible, provide your interviewers with “key evaluative criteria” outline sheets (to guide the interview process) and a means to communicate their evaluation of the candidate back to the primary decision maker(s) promptly.

Always remember that any candidate (regardless of level) will evaluate the company and job opportunity based on how the recruitment/interview process is handled. If handled well, efficiently and professionally, the candidate will be far more inclined to seriously consider, and hopefully accept, the position on your terms. Conversely, if the process is handled poorly, the candidate will likely lose interest quickly and move on to other opportunities with your competitors.

Your recruitment and interview process should be a powerful public relations tool. Every candidate who interviews with your company, regardless of the outcome or position level, should walk away from process impressed… casting a favorable halo over your company. Let them spread the good word.

Eric Kercheval & Associates is an executive recruiting and mergers/acquisition advisory firm with over 20 years of providing marketing services and digital development companies with search and M&A services. Please go to our website for more information this subject and to learn more about our recruitment and M&A advisory services or email Eric Kercheval at: eric@ekassoc.com

The Middle East Democracy Uprising is a "Mobile Moment"

2011-03-10T13:36:00.001-08:00

The impact of mobile on U.S. and world events is significant this year. The uprising in the Middle East has been a major mobile event. Most of the social networks are being accessed through the mobile platform. Mobile will become a major part of our the U.S. economic and foreign policy. Watch how our government will react to repressive regimes (i.e. China) that restrict access to the mobile platform. As Marshall McCluhan said 44 years ago: "the message is the medium" may now need to be updated to: "mobile is the medium and the message!"

Eric Kercheval & Associates Introduces ValueScope

2011-03-10T13:33:00.001-08:00

If you and/or your ownership team are contemplating a sale anytime soon it is vitally important to know the value of the agency asset before engaging in the sale process.

ValueScope is a quick and comprehensive valuation process that not only takes into consideration the agency's past and current financial performance, but also calculates the value of the most important non-tangible assets... your people and account/client relationships. We know the current agency marketplace and what agencies are selling for. We also understand how an agency buyer thinks and values a company. For more information about ValueScope, please visit our website.

Talent Freak Out

2011-03-10T13:31:00.000-08:00

The major domos of the top three ad agency holding companies went through a well justified talent freak out on the second day of the 4A's conference this week. They lamented about the fact that the ad industry is not attracting top talent from the ground up. They seemed to have recently realized that college and graduate students do not wake up every morning with the burning desire to jump into advertising/marketing services world. Gosh, what a surprise! They admitted their recruitment efforts were abysmal. Yup! This has been true for 30 years! You would think that a "creative-driven" industry would be more creative in attracting talent. Sadly, top tier talent hardly ever considers marketing services as their first job stop out of college. So who will be available to grow into mid and senior management positions? That is the question left unanswered in the 4A's forum. Read the Ad Age Article

First Half 2010 Interactive and Digital Media M&A Transactions Have Reached Prerecession Levels

2010-09-13T08:44:00.000-07:00

Merger and acquisition activity within the marketing services industry has returned to prerecession levels, with big advertising agencies, software companies and institutional investors buying up proven winners and cherry-picking promising startups. In the first half of 2010, 564 transactions in the digital/Interactive media space were for a reported at $9.0 billion, surpassing the same period in 2009 by 68% and 117%, respectively.

Private equity is active in the sector, comprising roughly one-third of deal volume and providing attractive exit opportunities for sellers of traditional marketing services firms. Digital acquisitions continue to be sought after by full-service technology and media players. This activity is a vote in favor of the economic rebound. In the first half of this year, venture capitalists invested $11.4 billion to fund 1,646 deals (in all marketing services categories)—a 49% jump in value and a 23% increase in deal volume from the first half of 2009, according to PricewaterhouseCoopers.

While the number of deals within the marketing services space has returned to 2007 levels, the average dollar amount has not. The recent data for the first half of 2010, disclosed an average deal size of $112 million compared with the same period 2007 of $368 million. One of the most active M&A players has been agency holding company MDC Partners. Last month MDC acquired a majority interest in New York-based experiential marketing company Relevent. That deal followed on the heels of MDC's acquisitions of experiential marketing company TEAM and public relations companies Sloane & Co. and Allison & Partners The mega-holding companies have been less active.
Eric Kercheval & Associates is currently involved in two buyer-representation and two seller-representation projects. Three of these projects are expected to close by the end of the year. If making an acquisition or contemplating a sale is on your 2011 calendar, contact us yet this year for a pre-sale or acquisition planning meeting.

Is The BlackBerry Dead?

2010-07-31T10:36:00.002-07:00

Far from it. Despite recent buzz that over time, the BlackBerry brand may go the way of the Palm is overblown. As of Feb, 2010, according to ComScore/MobiLens, BlackBerry owned 42% of U.S. smartphone market share (up a share point from 2009) while Apple stood at 25% share (down a share point from 2009). The big winner is Android which as a 9% share of the market (from a previous 4% share in 2009). BlackBerry is still the solid pick for large corporations and firms.

Android Tablet?

2010-07-31T10:36:00.000-07:00

Look for Google to announce some sort of Android Tablet toward the end of the year. iPad has received all of the notice and accolades. But remember that Android is the fast growing mobile platform... with few developer restrictions and higher security features than iPad or iPhone. Our guess is that the Android Tablet will retail for between $200 and $400, will have all the features of the iPad, plus a camera and phone (iPad does not) and will run Flash. If this happens, it will be game changer.

Why Palm Failed

2010-05-01T12:50:00.000-07:00

No apps and very little marketing effort to younger audiences. Palm has always appealed to an older audience of earlier adaptors (back in the early 2000’s). This user group stuck with brand, but Palm was not successful in acquiring new, younger users. Apple, of course became the “Holy Grail” for younger users. Blackberry has also succeeded in attracting younger users as well (and they hopped on the “app wagon” early on). Will HP be able to turn Palm’s fortunes around? Maybe, but only if they start creating a serious portfolio of apps and begin aggressively promoting the device to a younger audience. But it will be an uphill battle… especially with Android picking up huge momentum. HP’s best bet is to drop the Palm brand altogether and rebrand it HP. They have big marketing dollars to build an HP smartphone brand riding on the shoulders of Palm technology.

2010: A Buyer's or Seller's Market?

2010-03-03T07:54:00.000-08:00

Social Media

2010-03-03T07:52:00.001-08:00

Social media continues to be a high demand talent area. Agencies and marketers are scrambling to find talent in this growth area. A social media "veteran" is a person with 2-3 years experience.. Professionals in this space seem very open to the idea of exploring new opportunities with other firms. New social communities like Four Square are heating this field up. Marketers are finally realizing value of participating in social media initiatives.

Smartphone Apps

2010-03-03T07:47:00.000-08:00

Smartphone applications development is the fastest growing area of the interactive/digital world. Web site browsing is rapidly migrating away from the desk and laptop PC. By the end of 2010, it is estimated at 30-35% of all web browsing will be on the smartphone. Marketers and agencies will need more specialized talent to meet this major shift in digital ecosystems. In fact, by the end of the year, most companies and agencies will give first priority in digital/interactive development and execution to the smartphone app ecosystem for their clients (over the traditional PC ecosystem). An interesting company that is leading this change is IntraApp LLC (www.intra-app.com).