Consumers Willing to Drive More than an Hour for Their Best Deal

38% of U.S. auto buyers are willing to drive more than an hour for their best deal, highlighting the importance of aggressive advertising by dealers. The Fall 2009 Ad-ology Media Influence on Consumer Choice survey also found online media is now more influential than social or traditional media on auto purchasing/leasing decisions.

Manufacturer Web sites influenced nearly half of recent purchasers. Search results and online video were also influential, and nearly twice as many males as females reported influence from online video. Traditional media is still influential for automotive sales. Newspaper was the most influential traditional media overall, particularly so for older demographics, Asians, and African Americans.

Social media had the most effect on buyers under the age of 54, females, and higher-income consumers. Auto purchasers who use Twitter say social networks influenced their purchase more than users of other social networks.

“The growing influence of online media has created the opportunity for price-sensitive consumers to shop beyond their own backyard,” said C. Lee Smith, president and CEO of Ad-ology Research. “Dealerships must promote themselves consistently because they have more competition than might be readily apparent,” Smith said.

Other key findings from the survey:

• 63% of consumers contacted more than one dealer during the decision-making process.
• Nearly 16% of U.S. consumers intend to purchase a new or used vehicle within the next year.
• After the vehicles themselves, the topics most researched online by auto purchasers were: Trade-in values, auto insurance, and gas mileage.
• Television was the most influential traditional media for 25- to 34-year-old auto buyers.
• Blackberry and iPhone users were more than twice as likely than other mobile phone users to have their auto purchase influenced by support of a cause or charity.

“New Contact Information”

How many emails with this as the subject line have you gotten lately? I seem to be getting about two a day. Everyone is moving around. In a good number of cases it is people who were laid off finally finding new employment. This is a good sign even while the unemployment numbers remain high.

In other cases it is folks who aren’t doing much at their current job and they see the writing on the wall and look for something better, or at least different. Another category are folks that were on their own for a long time and suddenly join or rejoin a larger business. That is either because things were so great they needed more support, or more commonly so horrible they had no choice but to “find a job.”

This is no more true than in the world I live on dominated by PIPEs, reverse mergers and other alternatives to traditional IPOs. Lawyers, hedge fund guys, investment bankers and on moving around like crazy. This shifting of the deck chairs has some interesting consequences, and it has seemed to strengthen those able to hire and put at great risk those that don’t.

For me? I did recently rename my firm and expand its capabilities after a separation with several partners whose successful business created a number of potential conflicts with mine. But I’m still here in the firm I founded in 1996 and business is definitely picking up. What will the future bring? As always I have not the answer. To those moving, congrats and good luck! Sometimes change is good. Hopefully most of the time..

Economy to Impact Two-Thirds of Families this Holiday Season

Retailers are about to embark on the holiday season of the serious bargain hunter. According to NRF’s 2009 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, U.S. consumers plan to spend an average of $682.74 on holiday-related shopping, a 3.2 percent drop from last year’s $705.01.

It comes as no surprise that the economy was an overriding theme throughout this year’s survey. Two-thirds of Americans (65.3%) say the economy will affect their holiday plans this year, with the majority of these consumers saying they’re adjusting by simply spending less (84.2%). People will also be shopping for sales more often (55.0%), using more coupons (41.7%) and putting up last year’s decorations (34.0%). Many Americans will also make changes in gift-giving, planning to buy more practical gifts (36.0%), buying a joint gift for kids or parents (17.3%), and making more gifts (16.7%). Additionally, more than one-fourth of Americans (28.6%) say the economy is forcing them to travel less or not at all for the holidays.

“While last holiday season was filled with chaotic confusion, adjusting to uncertainty has now become routine for many Americans,” said NRF President and CEO Tracy Mullin. “This holiday season will be a bit of a dance between retailers and shoppers, with each group feeling the other out to understand how things have changed and how they must adapt.”

Americans’ eagle-eye on bargain hunting is adjusting the priorities of many shoppers. According to the survey, more than half of holiday shoppers say that sales and price discounts (43.3%) or everyday low prices (12.7%) will be the most important factor when deciding where to shop. Factors like selection (21.0%), quality (11.8%), convenience (4.9%) and customer service (4.4%) declined from last year.

Not surprisingly, the majority of holiday shoppers (70.1%) will purchase from discounters this year, though more than half (55.8%) will also shop at department stores. Grocery stores (45.0%), the Internet (42.4%), clothing stores (33.8%) and electronics stores (31.8%) will also be popular destinations. In addition, one in ten holiday shoppers (11.4%) will buy gifts or other holiday-related merchandise at thrift stores or resale shops.

Retailers are compensating for soft sales this holiday season by cutting back on inventory. According to NRF’s Port Tracker report, released in September, traffic to the nation’s ports has scaled back to levels not seen since 2003.

“In anticipation of weak demand, many retailers scaled back on inventory levels to prevent unplanned markdowns at the end of the season,” said NRF President and CEO Tracy Mullin. “Once the most popular items are gone, retailers won’t have anywhere to get them, so if there was ever a holiday season to buy early, this is it.”

Whether they’re shopping to get the best selection or trying to stretch out spending over a longer period of time, many holiday shoppers are starting early. According to the survey, 39 percent of Americans will begin their holiday shopping before Halloween, which is comparable to previous years.

As in previous years, three-fourths of Americans’ holiday budget will be spent on gifts. While spending on family members will decline by a slight two percent ($387.06 in ’09 vs. $395.15 in ’08), gifts for friends ($66.77 vs. $80.13) and co-workers ($19.26 vs. $22.63) will see double-digit drops. Americans also plan to spend about five percent less ($34.81 vs. $36.88) on “other” gifts for people like babysitters, teachers and clergy.

Candy and food spending may be one bright spot this year, with the average person planning to spend $10 more in that category than last year ($90.26 in 2009 vs. $80.28 in 2008). Spending on other non-gift categories like decorations ($40.75 in ’09 vs. $43.45 in ’08), greeting cards and postage ($26.77 vs. $27.39), and flowers ($17.05 vs. $19.10) is expected to drop.

“While the economic climate has shown some improvement from last holiday season, retailers are not out of the woods yet,” said Phil Rist, Executive Vice President, Strategic Initiatives, BIGresearch. “With a variety of factors still up in the air, including uncertainty over job security, many Americans just aren’t buying into the talk of recovery.”

Though Americans were less inclined to purchase gift cards last season, the popular gifts retain their spot at the top of the list among gift recipients. According to the survey, 55.2 percent of adults would like to receive a gift card this holiday season, with clothing (48.8%), books and DVDs (48.6%) and electronics (33.2%) among other popular choices.

NRF continues to expect holiday sales to decline 1.0 percent to $437.6 billion.

16% of the Economy

That’s what health care costs represent. Early in the debate about the dramatic changes being considered, Pres. Obama changed the title from “health care reform” to “health insurance reform.” I guess he didn’t want to suggest that doctors weren’t properly caring for their patients, and thought by villifying the insurance companies America would get behind him.

This has not really happened. Mostly because people cannot support something they just don’t understand. Multiple bills are flying all aroud. The latest one from Sen. Reid, which he hopes to pass including the so-called “public option,” is not even available until the Congressional Budget Office tells us what the cost will be, after which the Senate leaders probably will say the CBO was wrong. Forget that during the Bush Administration they constantly relied on the CBO to bash the then President’s plans.

I don’t know how I feel about all this. But I do know I’d like to have some time to have smart people outside of politics look at the proposed bill and tell us objectively what it contains, and, more importantly, what the implications are of what it contains. Insuring uninsured children is a good idea. Getting coverage regardless of your history is a good idea. Penalties if you refuse to buy health insurance? Not so sure. Obama says, well, we require everyone to have auto insurance, why not this? My response: you can choose not to have a car. And I am very, very concerned about the cost. I am also very, very concerned about the slippery slope it might put us on to full on socialized medicine, which in the past Obama says he supports (the so-called “single payor system”).

But I can’t really say anything until we see the whole enchilada. What do you think?

Online Retailers to Emphasize Free Shipping, Social Media this Holiday Season

The economy is not only impacting shoppers, it’s affecting online retailers, too. According to results of Shop.org’s eHoliday Study shoppers will see changes in retail marketing and promotions this holiday season in response to economic uncertainty.

With an understanding that many of today’s shoppers use Facebook and Twitter regularly, and because these tools are more cost-effective than traditional advertising, 47.1 percent of retailers surveyed will be increasing their use of social media this holiday season. More than half of retailers said they have added or improved their Facebook page (60.3%) and Twitter pages (58.7%) this year, while two-thirds (65.6%) have added or enhanced blogs and RSS feeds. In addition, to provide consumers with an extra incentive to start shopping, one-third of retailers (34.3%) say they will offer holiday deals earlier this year.

As another sign of the times, free shipping offers will abound this holiday season. Four out of five online retailers (79.4%) will offer free shipping with conditions at some point during the holiday season, while more than half (57.4%) also plan to offer free shipping without conditions. More than one-third (35.7%) said their budgets for free shipping are higher than last year, and nearly as many (30.0%) said free shipping offers will start earlier than a year ago.

“Retailers know that times are tough so they have created promotions and incentives to help Americans save money this holiday season,” said Scott Silverman, Executive Director of Shop.org. “From free shipping to Facebook, online retailers are combining new initiatives with tried-and-true tactics to make their companies stand out.”

Online retailers are also compensating for the economy by making operational changes to help them protect their profits. According to the survey, 41.4 percent of retailers have scaled back on inventory levels and 22.9 percent have hired fewer people in their stores.

While online growth is expected to slow this holiday season, it remains a bright spot in retail. According to the survey, 45.8 percent of online retailers expect their holiday sales to increase at least 15 percent over last year, while one-third (33.9%) expect sales to grow up to 14 percent. As a testament to the economy and the maturity of online retail, just one in five online retailers (20.3%) expects sales to be flat or decline.

In addition to a strong focus on sales and free shipping, many online retailers have revamped their websites this holiday season to make it easier for people to shop. According to the survey, many retailers have added or revamped their sites’ shopping cart (45.2%), search capabilities (44.3%), suggested items (42.9%), customer ratings and reviews (40.6%), and featured sale pages (37.1%).

Largely due to the convenience of the web, more than one-fourth of online shoppers (26.7%) said they plan to spend a larger portion of their holiday budget online this year. Reasons behind why people will spend more online range from the ability to shop at all hours of the day (41.9%) to shoppers feeling it is easier to compare prices (34.0%) to Americans’ insatiable appetite for free shipping (33.1%). Others said they will spend more online because it’s simply more convenient for them (32.4%), they don’t want to fight crowds in stores (24.9%) or because it’s easier to find items (16.7%).

The small percentage of people (5.7%) who plan to spend less of their holiday budget online said that they’ll pull back due to expensive shipping charges (22.8%), because they like to see or handle items before they buy (12.5%) or because they prefer a store experience (10.8%). A fraction of shoppers said they hesitated to shop online due to concerns about security (1.1%), credit card theft (0.6%), privacy (0.1%) or concerns about retailers tracking online activity (0.1%).

“In a year where every penny counts, many people will start their holiday shopping online to find deals, search customer reviews to select products, and get gift ideas,” said Phil Rist, Executive Vice President, Strategic Initiatives, BIGresearch. “The benefits of online shopping far outweigh the drawbacks, as far as most shoppers are concerned.”

With online retailers diversifying payment options, customers have more ways than ever to pay for holiday gifts. According to the survey, two-thirds of shoppers (67.3%) will use a credit card for some online purchases this holiday season, though one-third will also use a debit card (35.6%) and PayPal (33.9%) for purchases. In addition, 11.5 percent of shoppers plan to use a gift card or gift certificate to pay for holiday items online this year.

Can’t Resist Talking About Balloon Boy

Anyone who has a communication device in the US now knows about Richard and Mayumi Heene, who claimed that their 6-year old son had accidentally climbed into a makeshift balloon that Richard had built and it was floating away out of control and they don’t know what to do. The kid hid in a box in the garage attic, which was why they claimed they thought he had left. So of course when the balloon finally landed and first responders assiduously ripped the thing apart, there was no kid. For 90 minutes a helicopter followed the balloon by video, and the whole country stopped what they were doing (including at the New York Stock Exchange!) and watched in the hope that disaster would not befall the youngster.

So a few days ago Mayumi admitted it was all a hoax after the kid said on a TV interview that “we did it for a show.” She said they did it to make themselves more marketable for reality TV shows. They had already been on the TV show “Wife Swap” several times. I’ve heard they pay about $30,000 each time a family is on there. Do it enough and you can make a living at it!

So what are the economic issues surrounding this? First, the desperation that leads a family in these tough times to pull such a crazy stunt. Second, the instantaneous nature of the ability to deliver breaking news is indeed both extraordinary and risky. In the old days we would not have heard anything about this until it was over. Not sure if that is good or bad. Third is the dramatic growth in our TV world of these reality shows. They are very inexpensive to make, and it seems that, especially now, the only thing that makes us feel good is seeing people even worse off than we are, or some sort of romantic happy ending to feel good about. There remain a number of quality network TV shows, but it’s gone down for sure. This morning I watched an old rerun of the classic “Hogan’s Heroes.” I’d rather watch that all day than the balloon family anytime.

About that Crackberry…

Website Above the Law reported that a partner at law firm Quinn Emanuel Urquhart Oliver & Hedges chided a young associate by emailing the whole firm that associates should be checking their Blackberries once an hour unless they are sleeping or in a tunnel. Apparently the unfortunate new lawyer didn’t see an email from the partner just before he left the office asking him to stay to take care of a project.

When I started law practice way back in the 1980s, there was no Internet, no email, and the fax was this very new machine. I had a PC at home but it wasn’t hooked up to anything. Don’t get me started on how much of a pain it was just to get a distribution of drafts of documents out to a team of lawyers on a transaction which can now be done with one click of a mouse. When we left the office, we left. Of course the phone was there at home, but we all had answering machines, and I know a number of my colleagues would simply screen calls so that a call from the firm could be ignored while the associates claim to be out or unavailable.

Nowadays, getting deals done is more about brainpower than manpower, which helps make a boutique firm like mine much more competitive with the big boys. But with instantaneous communication of course comes cost. I recently turned off the vibration on my Blackberry that went off when each email came through. I check it often, but I will check it when I check it. Unfortunately young associates in law firms don’t have that luxury. Our 24/7 world gives us many conveniences, but that old idea of private time or small escapes is pretty much gone.

Gen Y Say Investing Is Fun!

Generation Y’s attitude toward investing is such a sharp departure from preceding generations that these new investors are changing perceptions of investing. A new survey commissioned by online investing firm Scottrade shows that young investors (born 1983-1991, ages 18-26) are the most likely to manage their own investments and to describe investing as “fun and interesting.”  Further, the idea of investing being fun is increasingly gaining traction within the generation – 35 percent of Gen Y invests because they find it enjoyable, up from 27 percent last year.

“Across the board, Generation Y is proving to be radically different from other generations in how they manage their finances,” said Chris Moloney, Scottrade’s chief marketing officer and executive director of customer intelligence. “Older generations see investing as more of an obligation or necessity, but Gen Y truly finds it fun. This attitude explains Gen Y’s pronounced trend toward being the generation that is the most involved in managing their own investments.”

In line with findings from past surveys, Gen Y leads the generations in managing their investments, with almost 40 percent making all of their investment decisions on their own. However, this year’s survey shows that Gen Y is by far the generation leader in taking new actions to aggressively manage its investments.

“Gen Y is blazing a path of financial proactivity,” Moloney said. “In the wake of the past year’s economic setbacks, many investors across all generations are taking new measures to more actively manage their investments, but when given a list of new activities, Gen Y leads in eight out of nine actions. The economic climate has made this a generation of enthusiastic, involved investors even more inclined to act. They are much more optimistic and active than other generations.”

Q: Given the state of the economy, which of the following are you doing now that you weren’t doing before? Select all that apply.

Action		Gen YAges 18-26		Gen XAges 27-42		BoomersAges 43-64		SeniorsAges 65+
Managing my own investments		24%		12%		11%		7%
Ensuring accounts are diversified		15		17		18		17
Doing my own investment research		31		17		12		5
Doing more research prior to making an investment		37		22		18		11
Checking my account more frequently		50		27		30		28
I’ve learned more about how the economy works		33		20		16		14
I’ve learned more about investing		28		20		16		10
I’m more familiar with my own personal financial situation		34		26		26		29
I’m taking advantage of good deals on investments		23		9		14		13

Bullish, Yet Cautious

In addition to being more active in managing their investments than older generations, Gen Y’s attitude toward the economic environment is also the most bullish. More Gen Yers (24 percent) increased their 401(k) and/or IRA contributions in the last year than any other generation, and they are by far the most likely to plan to invest more money in the coming year.

Q: Which of the following best describes your investment plan for the next 12 months?

Action		Gen YAges 18-26		Gen XAges 27-42		BoomersAges 43-64		SeniorsAges 65+
I plan to invest additional money		60%		43%		34%		17%
I plan to decrease the money I have invested		6		10		6		9
I plan to keep my investments at about the same level		34		47		60		73

Gen Y was also the most confident that it would recoup its losses quickly, with half of investors expecting to recover fully in less than two years. Forty percent believe that their portfolios will be up this year versus last year. For other generations, that number was 28 percent or lower.

“Despite their enthusiasm to invest, and their bullishness about the economy and their personal recoveries, Gen Yers are surprisingly conservative investors,” Moloney said. “Their youth and optimism don’t translate into recklessness or risk.”

More than any other generation, Gen Y says that they are being more cautious and conservative with their investments due to concerns about the economic climate (36 percent for Gen Y; 29 percent or lower for other generations).

“Part of being cautious is doing due diligence before investing,” Moloney said. “As the do-it-yourself investing leader, Gen Y is used to doing their homework. They are perpetually attached to the Internet and use it constantly for financial research. They lead the generations in rating online research as the most important resource for investing information.”

Moving Toward Mobile Investing

As iPhones and other smart phones increasingly become convenient conduits for information, technology-savvy Gen Y is quickly embracing them as tools to support their growing desire to stay connected to their financial lives. While fewer than one-third (31 percent) of overall investors own a mobile phone or other device that they use to access the Internet, more than half (56 percent) of Gen Y investors do.

Of those Gen Yers who access the Internet with a mobile device, one quarter use it to get stock quotes, and 16 percent use it to buy or sell securities. In fact, 35 percent of these Gen Y mobile users make half or more of their trades on a mobile device.

“When you see a Gen Yer on their iPhone, they’re not all on Facebook or Twitter; many are checking stocks or investments while on the go,” Moloney said. “Generation Y is a sizable generation. By some estimates, they number almost as many as the Boomer generation. And as the number of Gen Yers who become investors grows, so will their influence on the investing landscape. Gen Y represents a total sea change.”

“Our focus on customer service helps us stay in touch with our customers from all generations by making sure we offer the appropriate resources and tools they can use to effectively manage their investments,” Moloney said. “We listen to our customers and continually work to deliver the new technology and service tools that they want as well as the information and education they need.”

Is Wall Street Evil?

Pres. Obama is in New York right now for a couple of fundraisers. Last night in front of an audience that included some folks in the world of finance, he chided them to join him in his effort to implement financial industry reform rather than fight his efforts to do so, as many have been doing.

Ever since the first bailouts of Wall Street firms with billions of dollars in loans, the world of finance has been in the sights of the Obama administration. The alleged greed of these folks is a big part of what caused all the problems we are now facing, in particular with regard to predatory lending practices convincing people to buy houses with mortgages they could not afford whose interest rates reset to much higher levels. Ignore that it all started with the Clinton administration’s effort to dramatically lower the lending standards at Fannie and Freddie back in 1998, and that the Bush administration continued to support and fan this. It’s just this idea that everyone should have a home went a little too far.

But yes, some people took advantage. Yes some lenders were predatory. But does this mean that the head of Goldman Sachs shouldn’t have a nice pay package? It’s a bit of a stretch I think. There is, of course, a much broader question of executive compensation in general in the US, which is dramatically higher, as a percentage of profit, than in just about any other country.

But the market forces are what they are. It takes what it takes to get great talent to join a company at a senior level. Would it be better if execs took a hit when things are bad more than they usually do? Probably. But how to fix that? The good old democratic way. If shareholders think a board is not exercising proper judgment in pay packages, it can simply throw the board out. Is that not easy? It’s not. But it can be done.

Why just pick Wall Street? Aren’t there a bunch of bad people in a lot of industries (real estate, construction, entertainment just to name a few)? But don’t those same industries have lots of good people? For most people business is about making money, and that is the core of our capitalist system. Let’s hope the regulators don’t tweak it too much.

Americans Split on Attitudes towards Ads Which Mention the Recession and Economic Troubles

As economic woes continue, advertisers have to decide how to deal with the issue of the recession. Some ignore it and find different ways to encourage people to buy in troubled economic times while others put the economic troubles front and center and mention the recession. What strategy actually works is a different issue altogether and the American consumer is mixed about that.

Just over one-quarter of Americans (27%) say advertisements which mention the economic troubles and the recession make the brand seem more manipulative while just under one-quarter (23%) say the advertisements make the brand seem more realistic. Just over one in ten (12%) say these types of advertisements are depressing and make them less likely to purchase the brand. Two in five Americans (39%), however, have no opinion about advertisements which mention the recession.

These are some of the findings of a new Adweek Media/ Harris Poll, survey of 2,186 U.S. adults surveyed online between September 25 and 29, 2009 by Harris Interactive.

Different groups have different attitudes on these ads

Different groups have different opinions on advertisements which mention the recession and economic troubles. Men are more likely than women to say these ads make the brand seem more manipulative (29% versus 25%) while women are more likely to believe these ads make the brand more realistic (27% versus 18%).

There are also age differences on ads which use the recession. Those aged 18-34 are more likely than those aged 55 and older to say these types of ads make the brand more realistic (27% versus 18%).

Education and household income are other differentiators on the use of the recession in advertisements. Looking at education, those with a college degree are more likely than those with a high school or less education to have an opinion at all, both believing that the ads make the brand seem more manipulative (31% versus 24%) and make the brand seem more realistic (26% versus 17%). Those who have a household income of less than $35,000 are more likely than those with an income of $75,000 or more to say the ads are depressing and make them less likely to purchase the brand (16% versus 8%). Those with a household income between $50,000 and $74,999 a year are more likely to make a brand more manipulative (32%).

So What?

Advertisers have to walk a fine line with their ads when dealing with the economic issues Americans are currently facing. Do they discuss the recession or pretend it doesn’t exist? We know there are certain tactics which work better than others for addressing the economy (mostly value propositions and luxuries for less), so when it comes to actually mentioning the recession, these tactics should be interwoven so advertisers do not seem to be manipulating the consumer or, even worse, depressing them and leading them to not purchase the brand.

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