Archive for October, 2011
Monday, October 31st, 2011
Exhibit G
TCT readers are aware of the Herman/Chomsky “propaganda model” theory of corporate capitalist media operation. As such, they are also aware of the special importance of parallel cases for testing said explanation.
Consider then, this, the announcement that neo-fascist media star Glenn Beck will be one of the featured speakers this year at Advertising Age‘s Media Evolved Conference. The topic of this yearly professional soiree for marketing operatives is “smarter approaches to traditional media buying, the ways social media can enhance consumer engagement with content including TV, brands’ increasing opportunities to create their own media, and how to best use the proliferating platforms, channels and outlets.”
I mention this fact because Beck’s appearance at Media Evolved is far weightier evidence of the accuracy of the propaganda model than almost anything that can be gleaned from observation of broadcasts/content. It is one thing for Beck to be featured as a provider of media content. It is quite another, and far deeper, thing for him to be invited into the media planning stage.
Can you imagine the overclass shitstorm that would occur if Noam Chomsky or even David Barsamian or Amy Goodman were invited to discuss how the media are planned and run, rather than just what they broadcast? It is literally unimaginable, of course, that such would ever happen, precisely because of the certainty and intensity of the ensuing shitstorm.
In terms of evidence for judging the Herman and Chomsky model, the reality that Glenn Beck is an invitee to the most boilerplate and big-time of media planning events trumps just about anything you could think of from the media-output side of the story. Advertising Age is a 100 percent venerable, mainstream corporate capitalist enterprise, and remains a standard tool of the Fortune 500 boardroom. Its Media Evolved Conference co-sponsors include McCann Worldwide, the world’s largest advertising agency group, and a host of other major corporate marketing-servicers. Beck’s Media Evolved co-speakers are field marshals and top spies from a phalanx of big business pace-setters. Would any of these operations or personages risk their access to corporate cash by associating themselves with Chomsky, Barsamian, or Goodman? Not a chance. But Glenn Beck? He causes not a ripple. QED.
Meanwhile, for those interested in media studies, this is also more evidence of what a mistake it is to follow the convention therein of focusing first and foremost on media content and advertising, rather than media planning and corporate marketing. Important as they are, the former are mere symptoms of the latter processes, which are themselves mere symptoms of the continuing reign of corporate capital.
Thursday, October 27th, 2011
Adam Smith Has Left the Building
The rather Cardassian-looking personage at right is Robert A. “Bob” McDonald, Chairman of the Board, President, and CEO of the Procter & Gamble corporation. He was interviewed recently by Advertising Age on the topic of why P&G continues to pump out dividends to its shareholders, despite the Great Recession. The answers he gave are textbook confirmation of the profound difference between corporate and classic capitalism.
Recall that, despite the centrality of price-slashing to the ideal capitalist system described by Adam Smith, in practice, nobody hates price reductions more than capitalists. Explaining his 1892 decision to sell Edison Electric to the investment ring that was seeking to form the General Electric corporation, Thomas Alva Edison confided to The New York Times:
Recently, there has been a sharp rivalry between the [existing] companies, and prices have been cut so that there is little profit in the manufacture of electrical machinery for anybody. The consolidation of the companies will give the added advantage that a large concern has over a small one. It will give a larger working capital. It will do away with a competition that has become so sharp that the product of the factories has been worth little more than ordinary hardware… I do not know that there will be any increase in prices, but there should be an increase of 3 or 4 percent in the profits by the simple advantage of placing all of the interests under one management….I simply want to get as large dividends as possible from such stock as I hold.
Big, conglomerate, merger-forming, unregulated corporations (a.k.a., our ruling institutions today) were knowingly sought and obtained by frustrated capitalist investors precisely as a means of restricting price competition.
Within a few decades, the newly empowered investor-barons found that their success in this direction also made it possible to launch what we now know as marketing, a.k.a. studied managerial manipulation of the off-the-job behaviors of prospective customers, and to thereby further accelerate profit-making.
By diverting to marketing some of the steadily rising revenues made possible by constant price increases, big businesses could have their cake and eat it, too. People paid higher and higher prices, funding not only expanding returns on shareholder investments, but also the ever-expanding brainwashing effort on which those returns were increasingly premised. In essence, the new pricing power permitted corporate capitalists to collect a private tax and spend it on the marketing race, to the primary benefit of their owners’ portfolios.
I mention all this again because, in his Ad Age interview, Mr. McDonald confirms how the whole thing works.
“[W]e don’t signal pricing to competition, which is illegal and unethical,” says McDonald, in the mandatory pro forma nod to the prevailing agreement that a lack of old-fashioned price-fixing klatches somehow means co-respective pricing isn’t the norm.
So what do P&G managers do instead?
McDonald explains:
They make price increases, then “it takes competitors about a month or two to recognize you are pricing and about a month or two to decide to execute their price increase and then another six months to actually execute their price increase.”
In other words, they “don’t signal pricing to competition,” but they do make price changes then pay very close attention to whether competitors will co-operate on the hikes (and they usually do).
So, no (or at least not usually) secret meeting, but everybody knows how the system works, and very few ever buck it. Different process, same intent and same results:
P&G plans additional price hikes early next calendar year to recoup commodity costs and currency changes, but is about two-thirds of the way through price increases, he said.
Overall, P&G posted results in-line with analyst expectations, with organic sales up 4% to $21.9 billion and fully diluted net earnings per share up 1% to $1.03, as commodity costs continued to eat into margins despite price increases.
Under Bob’s leadership, P&G has grown sales by an average of nearly four percent per year over the past two years; core earnings per share an average of nearly seven percent; and adjusted free cash flow 106%. The Company has delivered these results despite significant economic headwinds, including slow to no growth in developed markets and rising commodity costs.
On the strength of these results, P&G has paid about $5.5 billion in dividends, returned over $6 billion to shareholders through the repurchase of P&G stock, and marked the 121st consecutive year that P&G has paid a dividend.
P.S. Bob also makes a highly interesting comment on the continuing polarization of American society:
“I don’t really see a dramatic change in consumer behavior,” Mr. McDonald said, compared to what consumers have been doing since 2008. Unemployed consumers continue to look for good value and sometimes trade down, he said. “But at the same time you’ve got people at the higher end of the economic pyramid doing extremely well and continuing to trade up.
In mainstream politics and media, it’s still a “middle-class” society. At the commanding heights of “the economic pyramid,” they know better.
Thursday, October 20th, 2011
Carbon Based Lie Forms
Robert Klara of AdWeek has a nice review of the history of diamond jewelry marketing. An extension of the timeless history of love? Not quite:
Harry Oppenheimer had a problem. It was September 1938, and with war smoldering in Europe, market prices of diamonds—a commodity that had been cornered by his father’s company, De Beers Consolidated Mines, Ltd.—were plummeting. Concluding that the company’s survival lay in penetrating the American market, Oppenheimer came to Philadelphia and looked up the N.W. Ayer & Son advertising agency. The result of the trip would be one of the most successful advertising slogans ever created.
Ayer worked the account for a decade—draping diamonds on Hollywood starlets, mostly—but struggled to find a tagline. Then in 1947, a young copywriter named Frances Gerety chanced upon a photo of two newlyweds on their honeymoon and scribbled “A Diamond Is Forever” along the bottom. De Beers adopted the tagline the following year.
Of course, kings and maharajas had made diamonds desirable for centuries. The genius of what Gerety did was to fuse together the idea of swooning, everlasting love with a sparkly rock. According to psychologist Robert Passikoff, who runs the consultancy Brand Keys, “people take certain signs of objects and imbue them with an unspoken meaning”—and thanks to De Beers, diamonds have come to be seen as a natural rarity, a precious embodiment of the marital pledge. In the early days, not all grooms (who make up 90 percent of diamond buyers) got it, and so the copy helped things along with lines like “Your engagement diamond, with noble fire, reflects the greatness of your love.”
Eventually, the dudes (who [now] drop an average of $3,200 on an engagement ring) glommed on—and they haven’t forgotten.
Behind it all, there is the usual — oligopolistic hoarding:
De Beers holds back so much supply that if all the world’s diamonds were dumped onto the market, they’d be worth less than $30 each.
Monday, October 17th, 2011
Yep, It’s a Mess: 15 Problems with Dec99
The posers and kids running the Occupy movement have now responded to their MSM critics by promulgating a 20-point (well, 21-point, actually) Declaration.
With all due gratitude for the obvious and important success of these fine people at raising the vital issues onto the radar, this Declaration is a snarl of confusion, middle-class timidity, and unimaginative dead-ends, not a clarion call to major social change. To my eye, it reveals more about the awful weight of political disunity and discombobulation since the 1960s than it does about new roads to progress.
The problems, in order of occurrence:
Preamble: Discusses structure of U.S. Government and democracy, but fails to mention the radical anti-democracy that is the Senate.
Preamble: Calls for election of a General Assembly to “set forth” a Petition of Grievances, then proceeds to set forth that very document prior to the election of the General Assembly!
Article 1: Includes unions on same footing as corporations, in a document that makes zero mention of either the right to organize unions or labor law reforms.
Article 5: Speaks of tax reform, but remains silent on the question of the mortgage interest deduction.
Article 6: For unspecified reasons, includes “means test” and “opt out” in proposed national, not-for-profit medical insurance, thus ensuring continued game-playing and obstructionism on the topic.
Article 7: Creates arbitrary (and unlikely to be used) power for the EPA and perpetuates the lie that “carbon neutral sources of power” can be found and dropped into the existing order at its present scale and in its present form, while making no mention of any specific programs of conservation or ecological reconstruction.
Article 8: Whole article reads like it was written by a bunch of seventh graders. Shows zero comprehension of the actual possibilities of and problems with government finance, and almost certainly conflicts with the later-stated goal of full-employment.
Article 9: Reproduces the notion that “job training” leads to job creation; socializes the (supposed) cost of “job training” for private sector jobs. Diverts attention from public enterprise/actual methods of job creation. Excuses private sector from scrutiny as an inherently defective engine of job-creation.
Article 10: Seems to (but actually does not) call for debt relief for college students, but makes no mention of credit-card debtors or poverty. Displays zero awareness that college remains a profoundly class-stratified phenomenon.
Article 13: Reproduces the notion that the form of schooling leads to job creation; keeps education tied to “jobs” rather than democracy; misses the fact that private sector teaching pay is worse than public sector teaching pay; makes no mention of the overall education budget, despite huge, long-standing public preference for expansion thereof. Treats loss of jobs to technology as inevitable. Again excuses private sector from scrutiny as an inherently defective source of job creation.
Article 15: Promotes China-bashing and economic warfare, rather than creation of a sustainable, publicly-managed domestic economy.
Article 16: Promotes weak, old rules, rather than calling for creation of publicly-owned banks and insurers.
Article 17: Praises “President Clinton,” an arch-enemy of economic democracy! Also appears to promise retention of the mortgage interest deduction.
Article 18: Appears to promise retention of the mortgage interest deduction.
Resolution (Article 21?): Permits the existing political duopoly to absorb and manipulate all the work of the Occupy movement. Preserves Cold War double-talk by using “corrupt corporatocracy,” rather than “capitalism.” Threatens formation of a new political party, rather than the calling of a Second Constitutional Convention. How does forming a new party within the present money-and-corporation owned system do anything but eat itself alive?
Overall: This document reeks of middle-class bias. This document makes zero specific environmental proposals, and does not mention our crisis of sustainability/capitalism. This document is anti-union.
Wednesday, October 12th, 2011
The Pepsi Generation (of Profits)
For major corporations, competition through the marketing race is the preferred alternative to the old-school price competition that was supposedly an unavoidable part of capitalism, but turned out to be both despised by actual capitalists and controllable via corporate oligopoly. Why the preference for expensive marketing efforts over unfettered Adam Smithian price cutting?
The answer? Cutting prices almost always hurts profits, while the pricing power bestowed by an organization enjoying oligopolistic market power ordinarily permits both increased brainwashing outlays and increased profits.
Exhibit A: “Higher Prices Profit Pepsico,” a report from today’s edition of Advertising Age.
PepsiCo, the world’s largest snack-food maker, posted a 4% jump in third-quarter profits, aided by price increases on snack and beverage products around the world.
“PepsiCo has been more aggressive raising prices than they have in a long time,” said Jack Russo, an analyst with Edward Jones & Co. in St. Louis, Missouri. “All the staples companies are seeing cost pressures.”
Despite its long-standing projection of a youthful, silly, fun-loving image in its numerous marketing campaigns for its various junk food products, Pepsico is about as stolid a corporate capitalist cash engine as you can find. Its board of directors includes a Rockefeller and ye olde John Sculley.
Hence, the advancing profitability of operations like Pepsico is the main reason the overclass continues to hoard cash amid the jobless “recovery.” Indeed, such is the very heart of the reason large corporations remain the clear core of the system, despite the more publicized continuing expansion of the financial sector. As a big-time investor, you can’t beat them, in boom times or bust. They continue to pump out the dough that ends up in third homes, private jets, and hedge funds.
And just how does Pepsico pull it all off financially, hiking both marketing spending and returns to shareholders?
According to Ad Age, Pepsico’s third-quarter sales were $17.6 billion. Its third-quarter 2011 cost of goods sold, the amount it had to pay for the raw materials and labor that went into making (as opposed to marketing) what it sold? $8.45 billion, less than half its sales revenue, says Ad Age. (Note: Because some of the COGS costs, of course, are marketing-mandated expenses — the costs of labels, specialized packages, etc. — this comparison actually understates the degree to which basic labor exploitation funds the whole marketing endeavor.)
And they say Karl Marx was wrong…
Sunday, October 9th, 2011
Modern Day Pavlovs
Remember our old friend Michael Schudson, who, when not calling C. Wright Mills’ magnum opus a “cliché” and lecturing journalists against adopting an “anti-commercial bias,” argues that advertising doesn’t work? One wonders if Schudson read the informative story on the elaborate production of restaurant TV ads in yesterday’s New York Times, in which producers say, “What we’re trying to do is be the modern-day Pavlovs and ring your bell with these images.”
The piece conveys more powerful evidence that advertising does indeed work. If it didn’t, why would restaurant chains fund such intricate and expensive endeavors? Schudson would have you think they are fools wasting investors’ money to justify their own jobs. If you think corporate overseers would tolerate that for a second, I’ve got a deal on a bridge for you.
The truth?
Any restaurant chain that forswears TV ads is in serious trouble.
“If you come off television, when your sales dip, it takes a long time to get them back to where they were before stopped advertising,” says Michael Branigan, vice president for marketing at Sizzler. “There are a ton of studies that show this. You lose brain share of your customers, and it is expensive to get revenues up again. If I stopped advertising, Sizzler’s revenue would be down, minimally, 10 to 15 percent for the year.”
