I know, audience measurement — riveting stuff. Other terms to send a bolt of excitement through your veins include “market research”, “analytics” and “audience surveys”. If this conjures images of bespectacled data scientists hunched over screens filled with graphs, spreadsheets and numbers — many numbers — then that would be fairly accurate. But if you are a publisher, advertiser, agency manager or anyone else in the broader marketing community you should force yourself to read this piece. Yes, even if you are in digital.
There are few things within the marketing and advertising business that are more central to the business we are engaged with than measurement is. Whilst the big award shows may get all the glitz and glam, and the awarded work may startle us, it is measurement around which the whole industry revolves. And ignoring the data scientists and the “media department” is a sure way for the rest of the community to foster an era where advertising is even more of a swearword than it already is.
The past year or two has seen a lot of drama and politics in the market research community. It’s also seen digital measurement coming of age and starting to extend its reach into areas formerly the domain of old media. These two winds of change have blown disarray and uncertainty into this ordinarily sedate and frumpy realm. Politics — like oil — mixes poorly with just about everything; and extremely poorly with statistics and statisticians.
(Before I go any further I should say that I am the Chair of the DMMA, the Digital Media and Marketing Association, and sit as an alternate Board member at SAARF — the South African Audience Research Foundation. I am not a numbers geek but I do have insight because of these roles.)
To put it mildly, SAARF has undergone some challenges in the past year. The broadcasters — operating under the vehicle of The National Association of Broadcasters — have resigned from SAARF, a circumstance that will eventuate at the end of 2014. Contributing the majority of funding as they do, this questions both the feasibility and legitimacy of SAARF.
In order to keep up with me you might need a short history lesson which will also serve as an object lesson in acronym usage.
In 1975 SAARF began operations with the fist ever AMPS Survey — in part the brainchild of Wally Langschmidt whose son Peter is now a prominent researcher and board member of SAARF. AMPS, the All Media and Products Survey, is what is says on the tin: a survey intended to present a view of the entire South African media consumer universe. In 2013, 25 000 individual households were surveyed, door-to-door, from mountain to sea, from township to mansion. The result is a data set that forms the basis for advertising sales in all media except digital.
Added onto SAARF over the years were RAMS, TAMS and OHMS (respectively Radio, Television and Outdoor Audience Measurement Surveys). Each employing different research methodologies, and costing many millions of rands to run, these offered media planners a deep-dive into the consumption of mass media. By using this data within an appropriate planning tool, it is possible to find the most appropriate audience for an advertising message.
SAARF has been, for most of its 38 year history, a joint industry committee (called a “JIC” in acronym land). It includes representatives from the above mentioned NAB; the PDMSA (Print Media South Africa, or Print & Digital Media South Africa as its recent, confusing rebrand would have it); MA (SA), the Marketing Association of South Africa, representing large advertisers; The ACA (Association for Communications and Advertising), the traditional ad agencies; the AMF, the Advertising Media Forum, the traditional media planners; OHMSA (Out of Home Media Association); Cinemark, the only company directly represented; and the DMMA.
This grouping of interest groups can be, as one can well imagine, something of a powder keg. While motivations are generally the same — to encourage spend on advertising, and to improve its efficacy by having it reach the right audience — competition for media spend is always just under the surface. In a time of such flux, where certain media (print, for example, and cinema) are in decline, and others (digital in particular) are on the rise, the word “frenemies” comes frequently to mind.
The unfortunate reality is that the broadcasters, after an audit of the TAMS study revealed some issues, decided to go their own way. The good news is that NAB and SAARF are hard at work agreeing a way forward that will ensure at least an industry-wide establishment survey even if the media-specific ones are run by each media association.
The DMMA, for its part, is busy tendering for a new measurement vendor (or to remain with our current provider, Effective Measure). Over the past 10 years the DMMA has established its official measurement numbers as the de facto measure of internet traffic and audience in the country.
Perhaps uniquely, the kind of digital measurement it does covers both traffic and demographic. It measures things like page impressions and unique visitors — the classic components of site traffic and analytics — by tagging member sites. It also runs a survey, which pops up from time-to-time on member sites, and has about 120 000 respondents. This gives it demographic information that can be paired with site traffic numbers.
As of last month, this data is now supplied to tools like Telmar so that media planners can finally present a single media plan that includes both traditional and digital media, like for like, at the press of a button.
However, great as this all may sound, there are some seminal moments here and significant shifts in the industry that those asleep will miss.
For starters, how SAARF reshapes itself and the establishment survey will set the industry up for, perhaps, the next 40 years. Input, thoughts, guidance and consideration is needed from as many people as possible, via industry bodies, to ensure the right decisions are made. These need to serve the interests of today’s players but also those who will be players in years to come.
Second, since everything is going digital (even billboards), figuring out how the digital industry plugs into this world is key. The spend that is moving away from print, cinema and — over time — broadcast, should be being captured by emerging media in the digital space. The fact is that, particularly in South Africa, this isn’t happening nearly fast enough. Partly because of the bewildering way in which the digital industry presents its product offering, and partly because we have both exaggerated and discounted our media inventory, media planners are wary of the digital offering.
Third, and pernicious and damaging to the local industry, is the hundreds of millions of rands flowing offshore to Facebook, Google and the like, whose clever, accessible and effective bidding systems provide a way to buy audiences with precision.
While it would be foolish to argue that South Africans shouldn’t advertise on these sites, which sit at the top of any traffic leaderboard in the country, it is equally foolish for us to sit by and let global corporations simply mop up advertising revenue from the country’s market. Many local publishers are simply resigned to this fact. We are, after all, talking about the global internet here. Who can fight Google and Facebook? But is this right? And have we really thought about how to shape our offerings to add more value than they can?
Make no mistake: the clients of the future will be fixated on measurement more than ever before. The expectation created by a medium that is infinitely measurable is infinite measurement. The tolerance for vague results or unsubstantiated arguments about “brand awareness” is already in steady decline in corporate boardrooms. The misguided obsession with Facebook likes is an obsession with needing to prove marketing success. We as an industry — digital and otherwise — need to take control of our measurement currencies and industry surveys, and we need to be in command of how we offer our audiences to our advertisers. If we don’t, someone else will.
** First Published on Memeburn 11 November 2013
This time of year is always busy for us digital folk. It’s not quite over with the Bookmarks still coming (on Nov 14) but the three big events in my schedule are now over and I have some time to catch my breath and talk about what happened. For the record if anyone wants to run a digital event in the first half of the year you have a lot more calendar space to choose from.
This blog entry is perhaps the closest thing to an actual “web log” that I have ever written, so there you have it. First time for everything.
As I wrote before Creative Week in September, the Loeries are an ever more important part of the landscape. Particularly for digital agencies whose work is now showing up all over the place, and not just in the digital categories.
This year there were a number of “firsts” in the awards. It was the first year we appointed an International Digital Jury Chair – Debbie Vandeven from VML in Kansas City. It was the first year digital was at the culmination of Saturday night’s show. And it was the first year that a digital agency (my own, Native VML) won two coveted prizes in the Integrated Award category.
The Loeries are a tough award show. Less than 15% of entrants win anything, and only 3% win Gold. That means lots of people walk away grumpy about not having won, or only having won Bronze. And it is also a popular misconception that there is a winner in every category. False. Many, many categories have no winners, either because there were no entries or because none of them met the minimum standard.
Judging is a complex process and the Loeries has the unenviable task of trying to get highly competitive agencies to give each other credit for good work. From everything I’ve heard the digital judging was fairly political again – something I need to work hard at over the next year to improve. We do ourselves a disservice as an industry by letting personal allegiances trump honest evaluation of the work.
The big winners in digital – as for the past few years – were Ogilvy Cape Town. Under the clear creative leadership of Chris Gotz and the digital leadership of Nic Wittenberg, the agency has produced exceptional work across the media spectrum. Digital was no exception with them winning three Golds (out of the 4 awarded). The other went to little agency Ikineo for a concept shop project for Loom. This was executed by one of my ex-staff, the incredible Rigard Kruger, who has since departed for Berlin to play with first world markets.
Overall the awards produced no single campaign that swept the boards. The Engen Fire Blanket turned up a fair amount, as did the above mentioned VW Street Quest.
The DMMA and Brand Council of SA (BCSA) held our first joint Loeries afterparty on Saturday night at 169 on Long. Slightly surreal with dismembered Bill Murray heads scattered around the place, we think we have started a signature event that will happen at every Loeries from now.
A lot of subsequent noise around MetropolitanRepublic and the Loeries has ensued in recent weeks. Suffice to say: the Board took a bold move which I wholly support.
The Digital Edge Live
Rarely in ones life do you get to be a part of something perfect. Even writing that sounds hyperbolic but, as those who know me will attest, I’m not easily impressed. And so when I say the Digital Edge went off perfectly you should know I mean it.
This event is part of a labour of love that I helped found about five years ago. Starting as a weekly podcast show hosted by myself and the “voice” Saul Kropman, we concocted various spin offs and brand extensions – one of which was a live show. The Digital Edge Live ran for the first time in 2010 at the Pavillion at the Waterfront in Cape Town. Perhaps its most memorable element was the live band GoodLuck who destroyed eardrums with a stadium-sized rig.
This time around we packed out the Vodacom Dome in Midrand – and when I say packed I mean we sold over 1000 tickets and something like 1200 people showed up. The team working on this were the best of the best – an incredible events company, TS&A; the Native crew who marketed, sold out and made the show happen; and our awesome line-up of speakers, including the inimitable Harper Reed and Jeremy Maggs, who chaired the debates.
When I say perfect I mean: not a speech was out of place; not a point fell flat; not a mic failed, not a musical track was played out of sequence. Even our live sketch team – a crazy exercise in adrenalin production – worked better than I could ever have imagined, and received endless praise.
All told we got over 6500 tweets at the event (sorry about that) and the kind of gushing praise heaped on rockstars and winners of Idols.
We’ll be back.
DMMA 1st Annual Publisher Conference
Not content with putting on one show in a month the week after Digital Edge was the DMMA’s first Annual Publishing Conference – a chance to think smarter about online publishing in South Africa. At two well-attended events in Joburg and Cape Town, driven by the DMMA’s Head of Publishing Tim Spira, we had the chance to hear from a wide diversity of speakers on where the online publishing industry is at, and where its going. Particular highlights for me were Melissa van Zyl from M&C Saatchi Abel on comparing digital spend to traditional; and Loren Braithwaite-Kabosha from the SACF who put up some really gory slides about SA’s telecoms pricing relative to the rest of the world.
Publishing is a tricky business. Some people make money from it but many don’t – the result of years of underpricing inventory, giving away content and unimaginative business models. I believe that the DMMA has an obligation to keep raising these questions, putting heads together, and building a united front to grow the SA industry. Too much money is either not being spent on digital, or is flowing offshore to make American businesses wealthier. I’m not sure, as Matt Buckland was suggesting at the conference, that we can put in place protectionism for the online publishing industry. But we can work together and make ourselves stronger.
Rocking the Daisies
Lastly, and leastly, I capped off this crazy month by going to Rocking the Daises near Darling in the Cape. We avoided the hell of camping in the freezing cold, teenager-infested swampland and stayed in a B&B in Darling which made us feel both old and rich. The festival was packed, overrun by brand marketing, and sporadically fabulous. My highlight was the Fever Trail Ensemble, a small electronic outfit that played to a bewildered crowd on Saturday. More than Alt-J – great but bored with their own material and the icy winds – and every other local act, these guys are creating the future of music in front of our eyes. Spectacular.
It’s going to take a lot to convince me to go back to this festival. I could dig deeper into the “I’m too old” cart but actually I would’ve been equally irritated by this kind of thing when I was 20. Too crowded, too cold, too in awe of itself. The kind of perpetually drunk and drugged young person, stumbling over their friends and themselves, is as unappealing a prospect as its possible to imagine.
Still with my recent perspective of TDE Live I can only stare in awe at the ability of the organisers to pull something of this scale off without people dying – or worse.
Whew. With a few weeks gap I am now fully rested and excited for The Bookmarks. Bring it on.
This week the Loeries will once again award excellence in advertising and creativity in South Africa. With somewhere around 3000 entries this award show stands head-and-shoulders above any other comparable show – and is one of the toughest to win at.
Like all advertising awards (or, perhaps, all industry awards) the Loeries consistently takes flak for being a self-important masturbatory affair, and an excuse for otherwise sensible adults to behave like teenagers on spring break. But this tired – and frankly anachronistic analysis – fails to understand the role that these awards play in a multi-billion rand industry.
It also misunderstands the now commonplace refrain that “advertising is dead”. This is a bit like saying “letter writing is dead”, failing to notice that something more compelling has risen from its ashes. And that’s only to the extent that there are ashes. In a country with such diversity of living standards it is many years too soon to call the undertaker on radio, newspapers and TV.
In fact, we find ourselves in a more and more complex media landscape. And, within this, a fantastically complicated advertising context. The number of touch points between businesses and their customers has grown exponentially in these digital times, and both marketers and agencies have struggled to keep pace with consumer expectations.
These expectations are not simply that I as a consumer can reach out and touch a company on my cellphone, tablet, PC, TV and – soon enough – watch, heads-up display, fridge and in my car. It is also that the appetite for, and attitude toward, advertising is in flux. Interruption marketing is less acceptable to those of us who can afford to avoid it, regardless of context. And in every context the competition for attention is at a fever pitch.
What the Loeries seeks to do, within all of this, is to highlight those that are successfully managing to stand out from the background noise. The lens is creativity but that term, too, is being semantically gentrified. What passes muster for the judges charged with choosing the winners is of our time. That means the work needs to prove out in a way that an ad ten years ago would never have been expected to.
Here’s a simple example, from the global stage. The much lauded “Dumb ways to die” piece, from Australian Metro Trains, was at once a public service announcement, a viral social media phenomenon, an iPhone game and a hit single. It charted within reach of Gangnam Style in iTunes for god’s sake.
Award shows have the effect of underlining these successes. They create shorthand for “these are the people who know how to win for your brand”. And of course they would. Both the Loeries and the Bookmarks – which I am closely involved in – adhere to procedural rigour and a selection of the best minds in the market to review the work. Including, by the way, some top international names who have no vested interest in seeing any local agency win.
So, as we head into Creative Week and the Loeries this weekend, and the Bookmarks a little over 2 months later, we should remember that for many clients, these awards create lists of agencies they might like to work with; they celebrate the power of strategic & creative thinking to build brands; and remind us that to win, you have to be in the game.
The Loeries takes place on Saturday 21st and Sunday 22nd September in Cape Town, at the end of Creative Week.
The Bookmarks takes place on 14th November in Cape Town – and you still have time to enter!
On Friday 23rd August 2013, in the evening, my grandmother died. She was 90 years old, bright and sharp and, in many ways, untouched by the passage of time. And yet within a few weeks, after some fairly brutal surgery, she deteriorated and vanished like falling stones.
Death always comes as a cautionary tale. It reminds you that none of us is invincible; that time spares nothing; and that just as sure as you are that you will be here tomorrow is the certainty that you may not be.
Death teaches us a lot about life. Life is limited. We have no idea of what comes before it or what comes after, but we do know that it is a bounded thing. And what happens within those boundaries, how we are and who we choose to be, is our great burden and responsibility.
Anyone who tells you they know more about death than its mere fact is selling a lie. Near death experiences, we know, are chemical reactions in the brain. Spiritual knowledge is nothing more than wishful thinking, or its opposite. The only point we can concede to the devout and the fearful is that we do not know. And in that not knowing is art and ritual and hope and faith.
But death also reminds us that we leave a legacy. It’s in the tears of those who loved us. It’s in our children and theirs. And it’s in all the other transient physical and emotional indentations we leave in our wake.
We also leave behind the ideas that we helped shape and give permission to, good and bad. We invent and we create. We shape the hegemony. We are the cause for effects that may only be realised in generations to come. I am an effect of my grandmother’s life. And for this she is to be thanked by each person I have loved and helped, and loathed by each person I have hurt and betrayed.
Death does not tell us how to live, though. It does not tell us to make the most of every day or to be kind or to love others in case we lose them. Or even to forgive. Because we do not know its nature we cannot use it to extract more value from our lives. We should live the in the best way we can because that will minimise our suffering, and that of others. And to minimise suffering is the greatest dominion one can have while we are in this world.
Finally, death resolves our relationships with those who are gone, but not our relationship to them. Everything that was ever to pass between my grandmother and myself has now passed. There are no more words I can share with her. I cannot apologise for my many failings as a grandson, or hear any more stories about her life and concerns. Her painful feet are a pain no more. That is all over with a steadfast permanence that is almost too much to bear.
But my relationship to her, and the fact of her life, will continue for as long as I am alive. More than a memory, she is the source from which I run. And what that means will perpetually shift, vaporously, as I live out the rest of my own lifetime.
The term “millennial” has come to mean anyone born from the early 80’s onward who has now entered the job market. Or, more simply, anyone from early to late twenties working today.
Like “Generation X” before them, the Milllennials are, apparently, differently natured to previous generations and exhibit specific characteristics that make them difficult – or at least peculiar – employees. Even that final word – employee – rubs them the wrong way. A Millennial doesn’t want to be pinned down, boxed in, indentured. They want flexible hours, rapid status and – of course – a swift route to earning big money.
Every older generation takes a relatively dim view of the younger ones. Perhaps the most marked example of this in living memory is the view that of was taken of the 60’s “hippie” generation – deadbeat, amoral and too soft. This view was held by a generation that had lived through the worst war in human history and had learned that to survive you had to be tough.
Or, in the familiar pendulum motion of these things, the hippies, all grown up, looked with horror at their children in the 80’s who grew up to be investment bankers, corporate lawyers and stock traders. Eschewing the fluffy values of their parents, this generation was defined by the economics of Thatcher and Reagan and the fearless heart that it took to live “in the shadow of the bomb”.
It is this generation now – more or less – that is encountering the so-called Millennial. This new generation is defined by something more powerful and life-altering perhaps than any phenomenon in human history: the internet, of course. It is stitching together the thoughts, ideas and lives of every person on the planet in a way that only 100 years ago Carl Jung could only metaphorically call a “collective consciousness”. Now this is tangible, measurable and omnipresent.
One thing it is worth saying is that the common dismissal – that older people always bemoan the loss of values of younger people – belies the fact that sometimes these older people are right. Hippie-thinking did promote a drug-addled, over-idealistic notion of life. Likewise the capitalistic 80’s, which conquered communism and drove the world economy to incredible heights also sowed the seeds for an economic system that almost imploded five years ago.
Both of these elder generations were right to be concerned. And we should be too. There are things about this generation that ought to give us pause – however we should remember the flipside: there are also things about this generation that are admirable and encouraging.
So, with that as preamble, here are the three characteristics of Millennials that I find particularly challenging as an employer and asa member of an older generation in an increasingly Millennial world.
It’s worth saying here that this is a typically western perspective. I’m not sure Millennials in rural Africa, or even rural South Africa, could be understood through this lens.
1. Attention Deficit
There is no doubt that attention has become a rare commodity. For people growing up since the advent of the Internet an ever increasing demand on their attention, with an ever increasing array of available targets, has created a generation in which nothing grabs their attention for very long.
There are many implications of this. Everything needs to be more compelling – in the same way that in a rich meal flavours need to be strong to compete. Subtlety stops working, except as another strategy with which to compete. And so time compresses and what would have satisfied for days or weeks or months before can only satiate for a few minutes.
This inability to stay the course has deep implications for relationships and careers. It may manifest as an addiction to excitement; or as an intolerance for boredom or continuity. In the workplace it results in a shattering of the long-term employee archetype. And in relationships friends, lovers and partners must up the ante to stay in focus.
The upside of this is that young people are less likely to remain in dead-end jobs, and in theory this should shift companies from being able to simply exploit people and pocket the profits. It has already lead to an explosion in entrepreneurship where economic conditions enable it.
2. The End of Silence
Nothing has changed our lives more than the cellphone. And nothing has changed cellphones more than connecting them to the internet. We need spend not one moment alone anymore. We are never cut off from the steady pulse of news, entertainment and social exchange. When your dinner companion heads for the restroom your phone is there to fill the gap. When the TV show you’re watching hits a dull stretch your iPad is there to ensure your mind never drifts off.
The world is thus paradoxically more silent – as people engage their phones instead of one another – and absent of mental silence as the phone pours the internet into each person’s mind with relentless efficiency.
Clearly this is in a way a corollary of the first point but it is, in itself, a profound turn of events. And it remains to be seen whether this relentless noise will lead to a greater desire for silence or an inability to tolerate it. It’s certainly not going to get any less noisy with the advent of Google Glass and similar wearable technology that will, in effect, bring the inevitable direct connection between our brains and the internet one step closer.
3. The Need for Prestige
Success is a drug we all crave, in one form or the other. But if the internet and the proliferation of entertainment and content has made us impatient with tedium, our exposure in social networks has made us crave status. And, again, the newest generation to hit the workplace comes with this heightened need for extrinsic value baked in.
This is not to say that 80’s kids lacked ambition, but there is something about the respect for earning status that has changed. Or perhaps its a belief in hard work per se that has eroded. This seems to be the result of status being earned too rapidly or too easily or too predictably in the online world. Or perhaps it is a consequence of being a part of the first generation to really live in the changed the fabric of society that social networks have produced.
Whatever the reason, Millennials have their status expectations on overdrive and this can be a challenge in a workplace created by people who are used to career advancement measured in decades, not months.
We should wonder what the world created by this generation will look like. Once those over 35 are done with it, and once today’s children are grown and ready to work, what will the then 40-somethings have forged? And will those workplaces and cultures be more accepting to the fickleness and impatience we struggle to integrate today?
There are several advantages and several disadvantages to having reached 40. The disadvantages can be summed up as “you’re just not as young as you used to be”. You get tired more easily, your body deteriorates and you have more responsibility (and, therefore, things to tie you down).
The premium advantage is you have experience. This counts for a lot in every sphere of life and there is no way to fake it or speed up the receipt of it. It comes gradually – quite literally one day at a time.
I say all this to preface the remainder of this piece because I know when I was young I was given lots of advice that I ignored because I thought I knew better. Sometimes I ignored it because it sounded like advice for someone else from someone who didn’t understand my unique circumstances. As it turns out I was right maybe 50% of the time. A lot of what people tell you when you’re young is bullshit. But the other 50% I wish I had paid more attention to.
This article will help you immeasurably if you are under 30, and will have a declining impact the further over that age you are. Beyond 40 I have no business offering advice to anyone.
So let’s start with what exactly an investment is. Everyone talks about it as though it’s a concept we should all innately understand. Many people, including me, missed the memo on this one. I had no idea what investing was about for a very long time and thus I missed many opportunities to do so. I suspect others had an advantage growing up in families with more financial wisdom and aptitude than mine. I learned it all the hard way.
So an investment is nothing more complicated than a mechanism to take what you earn directly and have it gain value indirectly. The simplest example of this is putting your money into a bank account that pays interest. Theoretically you put your money in the bank who then uses that money to make bigger investments themselves. In return for that the bank pays you interest for as long as your money is there – growing your money by a small percentage over time.
Unfortunately the easiest and most obvious places to invest your money are also the places where the odds of you actually growing it are stacked against you. The interest on a typical current account is less than growth in the actual cost of living, or “real inflation”. So instead of gaining money by putting it in the bank you are, in effect, slowly losing value.
Money is a bizarre thing when you stop and think about it. It is essentially a mechanism of transferring your time and effort for goods of various kinds. The problem is that due to complicated and bewildering economic realities the money you earned yesterday can be transferred for fewer and fewer goods going forward. This gradual decrease in the value of money means you are compelled to keep getting more and more of it to buy the same things over time.
We all know this but few of us want to accept it. And the entire capitalist system is geared toward obscuring this fact. Why? Because it’s a horrible story that once fully comprehended should shift your behaviour away from buying stuff to ensuring you are getting ahead of the increasing costs. And no business is incentivised to do that – not even investment companies who also need you to make substantially less than you could in order for them to turn a profit.
There is nothing sinister going on here. Economically businesses have to make profits so that shareholders are happy. Shareholders would do other things with their money if the businesses they were invested in stopped making enough of a return.
So…it stands to follow that the best way to make money then is to own a successful business, right?
We’ll come back to that in a moment. But first…
1. Investment Strategy #5: Investing in Your Career
Because a lot of young people work for me I see them making a lot of career and fiscal mistakes. Most young people are motivated by their ability to increase their monthly salary as quickly as possible. Usually this is not because they are implementing one of the above investment strategies but because they want better cars, houses, clothes and gadgets.
The market is hungry for young talent and so escalating up the earnings ladder is eminently possible in your twenties. The incentive to change jobs, each time with a 15-20% increase, is thus strong.
The immediate gain, however, comes at a price which few people appreciate. Change is a setback. And many things only come with time and experience. If you change jobs annually and half of every year is spent learning the ropes in a new company, only half of every year will actually see you making progress in your career. This means that your early salary gains will, over time, be eroded by your relative lack of depth of knowledge and experience.
I’m not suggesting people should stay in jobs where they are being underpaid or exploited. But there is a bizarre contradiction in continually moving jobs for increasing money. In truth you are worth less over time because you are losing ground relative to people who are staying with it, facing the challenging and deepening their abilities. Eventually this catches up with you and you will look back over a career of lost opportunity rather than rapid income growth.
Often the most senior people (and therefore top earners) in any business are those who have been there a long time, know the business well and are in a position to make the greatest impact when they are handed the responsibility.
Take out: always be sure your career is advancing. You’re getting smarter, better, more experienced and better skilled over time. Make short-term sacrifices for longer term gain.
2. Investment Strategy #2: Your Own Company
Business ownership offers three direct ways to earn income over and above your salary. This is crucial: as a salary-earner, even at the top of your game, you have a fatal flaw. One day you will stop working and your salary will cease. If you’re healthy you could live for between 20 and 40 more years with no salary. Imagine that for a moment and see if that doesn’t freeze your blood.
- Gives you a direct share in the profits of the business – known as dividends, these are literally the dividing of business profits among the owners;
- Let’s you benefit from the labour of others: each salary earner, in a good business, creates more income than they cost in overheads. This surplus is the profit that the business generates and can be distributed as bonuses, dividends or higher salaries for shareholders;
- Gives you the opportunity to sell one day – to someone who believes your business can go on making good profits. This allows you to sell the product of your investment for a lump sum well in excess of what you earn from a monthly salary.
Needless to say: owning your own business isn’t for everyone. In fact, the minority of businesses that are started succeed. And few succeed to the level where they are distributing great dividends or are able to be sold for a lot of money. So I am not advocating going out and starting a business unless you’re confident you have a great product, a way of selling it and the wherewithal to manage an organisation required to keep that up.
Most of us will end up as employees. And that’s ok. But make no mistake: the real, real money is being made by those who own a stake in their own futures.
Take out: If you can start a successful business, you should. It’s about the hardest thing you can do but if you succeed there is nothing else like it.
3. Investment Strategy #2: Passive Income
Passive income is, for many people, the holy grail of investments. You put your money somewhere and income starts flowing from it without you having to do anything further. Interest on a bank account is passive income – it’s just not sufficient for you to make any real profits. But as a starting point, and if you have no other options, it’s better to have your money growing in a bank account than wearing it in a pair of expensive jeans that are worth nearly nothing the moment you purchase them.
Everyone should get some form of passive income as early in your life as possible. All that is required is a sufficient saving against your monthly expenses every month so that you have some spare money to invest. How much you can save depends on your individual circumstances, but if you have a reasonable middle-class job you can save.
There are many different kinds of passive income sources. The ideal kind shows capital growth as well as ongoing income. A great example of this is owning a rental property. Over time, and once you’ve paid enough of the place off, the overall value of the asset increases and you earn rent from it each month. If you’re smart the rent can pay the bond and eventually you have a (mostly) passive source of income. (I say mostly because property does bring some expenses and effort).
Another passive source of income is owning shares in someone else’s company (private or public). Here your money is being used by someone else to run their business. You are tethered to their success but if they do succeed you go on the ride with them.
Lastly, and most simply, you can invest money into a unit trust fund or long-term investment vehicle which returns both dividends/interest as well as long-term growth of your initial investment.
Take out: always be on the lookup for passive income opportunities. It may take a few tries but it is easier to crack this than it may initially seem.
4. Investment Strategy #3: Capital Growth
Capital Growth is differentiated from passive income in that the return comes much later and, usually, with a lot less tax. Again a lot of people are exposed to capital growth in the increasing value of their properties. The problem here is that unless you downscale you will be moving this capital from one property to the next for most of your life.
Other forms of capital assets include investments such as fine art, wine or long-term investment funds such as a property fund.
As with passive income it is easy to find something that will gain in value over a long period and put some of your money into it. Property is, once again, the easiest option but certainly not the only one. The benefit of youth is that you can take time to learn and grow your assets slowly as you do. You may know nothing about art or property now, but in 10 years you could be an informed investor.
Take out: a part of every investment plan should include appreciating assets. A car is not an appreciating asset.
5. Investment Strategy #4: Insurance-type investments
The world is full of sneaky insurance salesmen who want to make a commission on selling you an insurance product. Many of these products are fundamentally ok: a retirement annuity, for example, or a provident fund, are forced investments that pay you a lump sum when you’re older. There is nothing wrong with that.
Others – like disability cover – are more classical insurance products that make life less risky by ensuring you an income if something bad happens to you and you can’t work.
The problem is that the insurance guy wants you to be over-insured so that he can get his commission from all your monthly insurance bills. Buying life insurance, for example, in your twenties is insane unless you have a partner or children who will need the money if you die.
Even a retirement annuity needs to be carefully thought through. If you can invest your own money more wisely than the fund manager (who is going to charge you for his efforts) then its possible to build a retirement plan without one of these vehicles.
It is good to know, however, that there is a lump sum somewhere in your future that you can more or less depend on. It is hugely unlikely that it will be enough money for you to live on for the rest of your life so this kind of investment is a part, rather than all, of the investing you need to do.
Take out: some degree of insurance cover and structured retirement product is a good idea. It’s just not a great idea.
6. Whatever You Do, Make a Plan
This piece is just a thought starter. There is no single investment plan that suits everyone. But it does start with asking the question, as young as possible: how am I going to grow my money in my lifetime? Formulate a plan, that’s really where it begins. Earn enough to create a surplus and use that surplus to grow a source of income not directly tied to your labour.
This all sounds easier than it is. Or maybe it doesn’t sound easy at all which, in point of fact, is the truth. But while you have youth on your side – and therefore many years for investments to slowly grow – it’s time to start planning.
Today I thought I’d jot down some of my learnings from the past fifteen or so years of running smallish to biggish businesses. I sincerely believe that many of these are lessons you can only learn from experience – and that if you have your own business you probably have to make these mistakes yourself before you can learn them. But nonetheless I’d characterise these as: the things I’d wish I’d known 15 years ago.
1. Medium is Beautiful
Good businesses grow. They have to for two key reasons: first, they have to keep pace with the increasing costs (and thus threats to profits) in the economy; and second they have to remain competitive for work and skills.
Unfortunately this often means they grow in staff size and costs at the same time. The phrase “victim of your own success” is never more true than in a services business where the more you succeed the more work you win, the more people you need to do it, the bigger the office space required etc. Wrapped up in that “etc” is a lot of other expensive shit.
My contention is that the perfect size for any business is 50 people or less. In other words, the number of people you can fit into one large room. At this size you barely need any systems or processes, you know everyone well (and they all know each other), and weak people are obvious and quickly pushed out.
This is tough because the need to grow puts pressure on small businesses to get bigger – and at first it seems like doubling a recipe. Twice the sugar, twice the flour and you have a bigger cake. But there are exponential complexities that emerge from growth that make this a terrible analogy.
We have solved some of this challenge by breaking our business down into semi-autonomous units. There may well be other, better ideas out there but I’ll say it again: find a way to keep it small. Or at least medium.
2. Great People are (Really) Hard to Find
This may sound obvious but I’m not sure most business owners understand just how hard it is to find a truly great person to join their company. So most of us settle for finding “people with potential” which is usually code for someone who doesn’t fit ideally but who we hope eventually will.
Sadly, I bring the news that you cannot turn someone “ok” into someone “great”. And “great” is not an absolute measure of someone’s worth in the world – most people are great at something – but it’s a measure of their fit with you, your other people, your business’s goals, your customers, your style of working etc. Another “etc” packed to capacity.
We all spend a long time, with many errors, choosing a life partner – wife, husband et al. And of course that is a critical choice in all of our lives. But it’s worth considering that the people we work with can be people we spend even more time with, under even more stressful conditions, than those we’re married to. Would you marry someone after one date? Because that’s often what happens: one great interview and off you go.
In South Africa “firing” someone is tough. The process often also triggers a fight or flight response from an employee which makes them cling even harder, despite it being worse for them than simply moving on. And so hiring ought to be a much bigger deal than many of us make it.
Suffice to say if you own a company you will only rarely hire truly great people, people who fit perfectly. And if you’re finding them faster than this you’re making hiring errors that will ultimately drop the standard of your business.
3. Service is a Verb
Ok, well it is actually a verb so this is no great revelation. But if there’s one truth I wish I could hardwire into every employee, vendor and member of the human race, it’s that you have to work at doing great service. And, if you’ll forgive that bad grammar, this is something most people screw up. And it’s not hard to understand why. It’s extremely hard.
Great service has, at its core, the ability to empathise. And empathy requires that we step out of our own perspective and judgements and look at things from another’s point of view. And this is an unnatural ability that has to be practised and refined. Our natural inclination is to be defensive, self-interested and to win our side of an argument. These are sure fire ways to break any relationship, no less so one with a customer.
I say “natural” but actually different countries and cultures have different relationships with both empathy and service. South Africans, in my estimation, are particularly unwilling to see the other’s point of view in a service context. Perhaps someone can offer a psycho-historical explanation for this but to me it seems an obvious fact. It is far too easy to provoke us into annoyance in situations where we are supposed to be servicing.
The ability to service well is a selling point for any business at any time. Great service becomes legendary and poor service is instantly viral.
It is profoundly difficult to get everyone in a big organisation (refer to point 1) to offer great service to its customers, particularly since many people simply do not find any inherent value in providing it. Most people want to be right and want to win. Great service requires that you let the other person be right and that you not only lose, but that you love losing for the sake of the relationship. And if you bristled at that last comment you have some small idea of why great service is hard.
4. Everything has a Solution
There is no such thing as an unsolvable problem in business. Or in human relationships. In metaphysics, maybe. But business and relationship problems, whilst they may be “wicked problems” (http://en.wikipedia.org/wiki/Wicked_problem), can be overcome. What they demand, though, is not logic or talent but perseverance and patience. They require a steady heart that is willing to return to the problem again and again, trying multiple strategies, and which, despite repeated failures, is never entirely drained of the energy to return. There are times where it’s not worth it, of course. The return on all that time investment may just not justify it. And being able to tell when it’s economically sensible to get the hell out is another important life skill. But I do know that if you return to something enough times with continual hope you will eventually find your way through it. At least in business and other human endeavours. Metaphysics not so much.
Remaining hopeful – which is another way of saying this – is terribly difficult. Hopelessness is another natural human response to repeated defeat. But whilst you may think what lies ahead is even more defeat, most things do eventually yield. Which is why the winner is often not the smartest or fastest but the one with the best pacing.
Life can be hard.
Thanks to Sarah Blake for putting me onto the literature on “wicked problems”.
Due to the evil and stupid nature of digital rights, South Africans (and many other countries) cannot easily enjoy the revolution that streaming media has brought into the world. Many of us believe that “video on demand” is something for the future when (a) bandwidth is better and (b) the content owners, networks, TV stations and everyone else in that alphabet soup can come to an arrangement where they still earn money.
As a result most people turn to piracy as a way of simulating video on demand. Pirating content is a trivial matter with services like Bittorrent, but it has the drawback of being illegal. Even if thisdoesn’t bother you there is a level of inconvenience that makes this unattractive compared with just driving to the DVD store.
Streaming media is a whole different story. Imagine having instant access to thousands of films, series and albums playable instantly and legally for less than R150 a month (excluding Internet bandwidth costs obviously).
Well, you can.
What Exactly is Streaming Media?
The easiest way to understand what streaming media is, is to realise you already know. YouTube is a great example of “video on demand”. Granted it’s usually short video clips of someone’s cat, but if you’ve watched YouTube you’ve experienced video on demand.
Another simple example is an in-flight entertainment system. Surf through a list of available movies, press play and the film is played instantly from the movie server on board the plane.
The truth is that there are many, many video and music streaming services available online today. They offer an almost unlimited supply of music and filmed entertainment at a small subscription fee over the internet.
Step 1: Masking Your Point of Origin
Most streaming services block access to themselves from outside licensed territories based on your IP address. An IP address is your computer or network’s identifier on the global internet. Because of the structure of the numbering system it is possible for a remote server to figure out which country you are in and only grant access if you’re in a country in which they are allowed to serve content.
Generally this is how streaming providers have managed to negotiate the right to offer streaming content. Since rights ownership is madly complicated and differs country by country, even for the same exact piece of content, many providers just haven’t bothered to try and negotiate them in every country on earth.
Fortunately IP addresses can easily be masked or spoofed. In essence, all you need is a way to tell a remote server that you are actually in the US or UK rather than in South Africa and it’s “open sesame”.
Unblock US (www.unblock-us.com) is my preferred way of doing this. At $4.95 per month it’s an incredibly simple system that requires a one-time setup and thereafter gives you access to many online streaming sites.
Step 2: Subscribing
Once you’ve got your Unblock US account setup the next step is to sign up for the streaming service of your choice.
Some, like BBC iPlayer, are free. Some, like Spotify, are ad-supported. Some, like Netflix, charge a monthly subscription ($8.95 for Netflix).
Some, like Amazon Prime, only accept US credit cards. There is no simple workaround for that one that I’m aware of. So for now those services remain out of our reach.
For Netflix simply go to the Netflix site and sign up using your normal SA credit card. Thereafter you can watch Netflix on your computer, iPad, Apple Tv or any other Netflix-capable device (The PS3, I believe, has a Netflix app too).
Step 3: Watching on your TV
My personal solution to watching Netflix on my TV is an Apple TV. This cheap (R1000 approx.) device has a built-in Netflix app provided you sign-on with a US iTunes account. It has a remote control and turns on and off very quickly.
The alternative is to connect a laptop or PC to your TV and either watch in a browser or via another third-party app that is Netflix-ready (like XBMC). In this instance there are many iPad and iPhone apps which you can use as a remote control.
There are ways to connect an iPad directly to your TV and play off the Netflix app, or (as I said above) to use a PS3, Xbox or other console or set-top box which have Netflix capabilities.
Step 4: How much Bandwidth do I need?
A typical US episode of a series (around 42 minutes) is around 200 – 300Mb of data at a reasonable quality. Double that if you want it in HD. Netflix is very smart about dropping quality if it detects congestion on your line but this can degrade to the point that it becomes annoying.
The basic spec is a 2Mb ADSL internet link with uncapped bandwidth if you want to watch every day. You could get by with a 20Gb package (about 100 episodes or 50 movies a month – very roughly).
What’s the Catch?
Simply put: there is none.
Netflix has slightly older shows and films so you can’t get the latest Dexter on it (although you can get their own commissioned series like Arrested Development and House of Cards).
Apart from that it’s a simple, cheap and awesome way to consume media.
Is this illegal?
That’s a difficult question to answer. There is no legislation that says you have to be honest about your IP address. And this level of protection is so flimsy that every streaming service knows it can be exploited in this way. Technically someone is crossing a line by doing this because the streaming service has signed a contract with the rights holder to say they won’t distribute outside of the agreed territory. But this is a case of “two wrongs do make a right”. The rights holder is complying with their agreement. And you are doing nothing illegal.
More importantly you are PAYING for this content. You are not stealing anything and the content owners are earning income from you.
Will the RIAA et al catch on eventually and stop it?
Who knows. Globally the entertainment industry is losing the battle against piracy and what they term “illegal” access to their content. They may close this loophole or they may just decide to keep earning your subscription money on a “don’t ask/don’t tell” basis. Or, eventually, this whole territorial rights management disaster may just disappear.
For right now: have fun.
(Thanks to Saul Kropman who first explained to me how to do this)