Interesting insights from Pace Lattin of vizi October 14, 2008
Posted by Mark Blei in : Uncategorized , trackbackIn an email yesterday Pace Lattin of vizi put across some of his thoughts on the economic downturn in comparison with other times when our industry has gone lean . With his permission I’m publishing’s his email and wondering what your stratagy is going to be?
I wanted to send everyone a quick note, after thinking a little bit about the economy and how it is going to affect the industry. Nothing really that deep, and perhaps you get nothing from it. However, it seemed appropriate considering all that is going on. Perhaps you don’t really care what I have to say, but perhaps you’ll find this at least interesting and send me a note back. I’d appreciate it.First of all, thank God(ess) that Vizi is in a great situation. We are a small company, with a large network – great revenues and a great hardworking team. While a lot of other companies have spent ridiculous amounts of money attempting to expand, we have been slim, kept low overhead while having constant growth each year. This past year we made a lot of changes and because of this, we keep on growing, little by little each month.
That being said, I am extremely worried about the industry and the effect that the market will have on the economy. In 2000, NextCard defaulted on paying me personally almost $1.5 Million, which affected my business at the time substantially. Now I see some of the same crazy things happening. It scares me that while agencies and some of the large networks can afford defaults, small businesses will suffer the most damage. Small business are the backbone of this country, and unfortunately the ones who are always hurt the most (No one is talking about bailing out them…)
Quickly, lets look at the automobile industry. It’s pretty much f&%#ed. There is no other way to say it – GM, Ford and Chevrolet are going to most likely default on some of their ad payments. The major television networks are probably going to get paid first. However, the agencies who are booking on “sitexyz.com” will most likely get partial or no payments. Of course, the networks, the sites will be the ones who have to pay. A small network of car enthusiast sites may find themselves out hundreds of thousands of dollars. Their publishers then don’t get paid; perhaps the guy who supports his kid on the $3,000 a month he makes on his race-car site doesn’t get paid. Please think about this before you pay off the big guys first in the next few months.
Let’s all be brutally honest – some of us are going to be slaughtered. We are going to see some major advertising networks probably go out of business, or completely change their model. Companies have been so caught up in the huge growth in the interactive advertising industry over the last few years, that they never considered that perhaps there would be an end to it. So they spent money on more and more employees, started new divisions promoting “retargeting of behavior targeting for Animal Lover SEM Clients” expecting that anything they threw out there would be sold. People spent sponsorships for Imedia and Adtech ranging into the hundreds of thousands, because it made them feel really good to see their logo on a brochure they goes to 100 media buyers. Everyone promoted new technologies that seemed to do nothing really new, but had really cool phrases attached to it so that the press would pick it up and a few stupid agency buyers who loved their parties and hot booth babes would buy media just because it came from a three letter named company.
Is there a solution? Yes. First, diversify your client base, and don’t depend on a few clients to pay their bills. Secondly, don’t depend on “technology” and cool phrases and terms to pay your bills. Focus on something that people have ignored in the last 4 years: relationships. Please read that word again: RELATIONSHIPS. Technology, new ad serving platforms, better ways to target mean nothing without RELATIONSHIPS. All these new technologies have attempted to replace relationships, and they have failed. We have been so caught up in this glut off complete bullshit that we’ve all forgotten the essential key to business that we should have learned when we started our businesses.
Relationships with your clients, your customers, your publishers, your staff, your friends will get you through the next few years. Build and concentrate on those relationships moving forward. Have meetings with everyone you know, find what is going on their life, and their business. If they are having problems, find how you can help them improve their business and pay their bills (and yours). Talk to your employees and find out what is going on their life now, if they can pay their mortgages. Discover what it means to have a drink with a client instead of just chatting over email all the time. You’ll be amazed that there are humans on the other end of the internet.
I’m going to say the most inflammatory thing that perhaps I’ve ever said: All these companies that have concentrated only on technology are going to die like flies attracted to a bug zapper. Those that have built real relationships with others in this industry are those that will survive.
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