Why Obama’s Infrastructure Spending Plan Won’t Work

In 2008 the U.S. actually spent $114 billion on infrastructure, following $102 billion in 2007. Infrastructure spending over the past five years for non-defense comes to nearly $500 billion. Did that do much for jobs and the economy? Did it prevent our recession? Therefore why should we believe that Obama’s proposed $500 Billion infrastructure plan will do anymore than history already shows. If the bailout mismanagement is anything to go by, we can only anticipate more of the same, since government has no clue as to how to run business. As Amity Shlaes documents in her book "The Forgotten Man," the economy limped along under FDR's stewardship in the 1930s. Many of the era's public-works projects were undertaken for political reasons as well as economic ones. Government crowded out private initiative and neglected policies to promote the private sector. Net private investment declined at times during the 1930s. If less people are going to work, what use are more bridges and trains? Government infrastructure spending doesn’t create new jobs for very long (mostly temporary jobs), takes time to implement (approvals, planning permits etc.) and is fraught with abuse, waste and mismanagement. And by the time the money is spent, the recession will have passed. Entrepreneurs and businesses will create jobs and bring back our economy. This holds true for the other economies of the Western World; the principles are the same. We should be looking to find creative ways to encourage investment. By slashing the corporate rate tax, means a business might indeed be able to save jobs and entrepreneurs and VC’s will jump back in and invest in start-ups. This is what has fueled our growth in the past. Potentially, billions of dollars could pour back into funding start-ups. Furthermore, cut tax rates for everyone and the consumer will be back. Raising tax rates on the higher income bracket is exactly the way to prolong and deepen this recession. So why should we believe Obama’s plan of change is anything more than growing government and increasing our national debt? Post your comments here or e-mail me at businessissuestoday@gmail.com

A Permanent Shift Between Old Media and New Media

While advertising spend is generally affected by a recession, the new digital economy is surprisingly holding up. Web companies are offering cheaper and more accountable ways for local companies to advertise to a local audience. These web companies are thriving at a time when the longtime dominators of that market - newspapers, radio stations and television outlets - are reeling from the stagnating economy. The radio industry which for long time was an affordable medium for local advertising, continues a downward slide in Ad sales For the second year running, it will have experienced negative growth by tripling station revenue losses to -7 percent, according to the estimates of BIA Advisory Services. Radio’s future relies heavily on its ability to embrace new media and mobile technologies and local advertisers. CitySearch for example is an international website but it offers the ability to search locally for restaurants, theatre etc. Citysearch CEO, Jay Herrati said the local online market has been growing at 17% to 20% annually, and he expects that to increase as advertisers become more comfortable with the complexities of digital media. Local advertisers are also turning to Google Inc.'s AdSense service, which can place their text ads on Web sites that specifically cater to their target audience. The cost to advertise online can be as little as $25 per month. Budgets are spent on a pay-for-performance basis. Only when a user clicks on that Ad, is the merchant charged roughly 25 cents per click. And never before has it been so easy to track consumer behavior and recognize trends. MySpace Ads (just launched in beta) offers this minimum pricing and can target your Ads by social network groups – not exactly local advertising, but yet another way for affordable and highly targeted advertising in an increasing digital age. Traditional media companies in print and broadcast have struggled for years with the rise of the Internet. Their future is viewed as increasingly uncertain as they have been unable to renew growth prospects with revenue generated online. The economic situation could actually be creating a permanent shift between old media and new media. Under increasing pressure to cut costs, retailers and small businesses are discovering the value of the Internet as a marketing tool for reaching a highly targeted audience while closely tracking their return on investment. On average, 60% of people now check out product reviews and pricing online before making a purchase. Businesses can no longer afford to not embrace digital advertising or be a part of the new digital world. Got a specific business question? Email me at businessissuestoday@gmail.com or comment on your experience.

Google Android – G1 – Making shopping for bargains easy

The HTC G1 from T-Mobile is the first smart phone with Google's new Android mobile platform. The coolest application that’s sure to attract holiday shoppers looking for the best bargains, is the bar code scanner feature. You could be at any store, see a product you want to buy (DVD, book, anything with a UPC barcode) and in just mere seconds you can check the lowest price online or in a store nearby. The G1 turns the camera into a UPC bar code scanner. Just point it at the barcode on the product packaging or label and up pops a menu with the cheapest prices for that exact same product. Here’s the best bit; if the product is cheaper at a local store, hit another icon and Google will pop up driving directions.....all in seconds. Very cool! The G1 is currently only available on T-Mobile but sure to be a ubiquitous feature on all phones in the future. Google’s competitive advantage is of course its integrated applications, from Android to the Google search to Google maps, all working together to produce a result to a search in just seconds. That’s a combination that is tough to match on say an iPhone, which would require Apple to make some strategic deal to have access to search and mapping. Post a comment or e-mail me at businessissuestoday@gmail.com

Auto Industry - Bail Out Mania

While a Democrat-controlled Congress is trying to rationalize a new $25 billion bailout for the auto industry, at the Los Angeles auto show is a launch of a new electric car from Mercedes – the Mini ‘E’. In fact the gas version Mini has seen sales increase 30% year on year. There are clearly two auto industries in America: there’s American (Detroit) and foreign manufacturers. Could someone please rationalize why we are talking about bailing out Detroit for $25 B? For years, the American auto industry has struggled to keep up with foreign manufacturers like Toyota, Honda, Nissan, Mercedes, BMW and VW, all of whom are producing fuel efficient cars that the consumer wants to buy. These companies have managed their businesses well and are in touch with consumer wants and needs instead of foisting products on the market that consumers don’t really want. From what I remember in my Masters in Marketing, this is basic marketing theory. (We seem to have management at the helm of the Big Three who seem unaware of this.) So what went wrong? The Big Three have been in decline for years due to mismanagement, an inability to control unions and as a consequence, labor costs that are far higher than their competitors. The Big Three pay out an average of $30/hour more than their competitors, including pension and health care costs for hundreds of thousands of retirees, guaranteeing nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. Furthermore, they have shifted production of certain models to Mexico and Ottowa. Again, why are American taxpayers bailing them out? The Big Three Auto CEO’s quite frankly need to be fired, not bailed out. Yes we feel for the thousands of workers, but this is not the way to help them. What happens when the $25 B runs out? You guessed it. Layoffs! Why, because no one wants to buy their cars. There are many creative things we can do to stimulate job growth and assist people willing to re-train or re-locate. Indeed, just imagine how many start-up companies could be formed with a fund of $25 B. How about 10,000 companies funded by start-up loans of $2.5 M with restrictions and help with retraining and locating to depressed areas? Yeah some will fail, but what if it gives birth to a few more Googles? The Government would actually make money and create a lot of jobs with a trickle effect into the local economies. I'm not necessarily advocating this, but it is an interesting idea of what could be done. Taxpayers should not be footing the bill for what is clearly a temporary fix. In all my years as a consultant to start-up firms, no company gets funded without a sound and solid business model (post dot com bust). The Big Three have not presented a new sound and workable business model. They do not deserve a bail out and we need a Congress that actually has some experience in business rather than public policies and welfare programs. At least they should be consulting with business savvy people. A Bail out won’t work this time because it didn’t in the economic downturn in the 1980’s when the British struggling auto industry was also making cars the public did not want. Margaret Thatcher threw $11 B at British Leyland and couldn’t save it, nor the British car industry. What makes anyone think this time it’s different? We need to allow the Big Three to re-structure as many companies do under Chapter 11 Bankruptcy. And if we end up with the Big Two, so be it! It’s time for Washington to wake up. President elect Obama needs real business expertise around him, as it’s going to be a long tough ride over the next few years. Post your opinion or email me at businessissuestoday@gmail.com

How Do You Measure the Success of a Campaign?

With a plethora of affordable options open to marketers these days, there is certainly no excuse to cut all marketing activities. And it has never been easier to measure the effectiveness and track customer responses. Here are some basic guidelines: 1. Set some guidelines What are you hoping to achieve once a potential customer lands on your page? Obviously the desired end result is a transaction, but capturing some participation also has a value in terms of future offers and communications, and even brand building. This is establishing a Success Metric so remember to have a call to action such as registering for future offers. 2. What’s it worth to you? There’s always a cost involved in converting a visitor to a sale. Set some realistic expectations and budgets i.e. what is the action worth to you? 3. Gathering data and trends Google Analytics is an excellent tool providing significant angles to slice and dice the tracking data. However, don’t forget the powerful use of a promotion code in tracking exactly what your prospect does and when. Try and conduct your tests one at a time to fully understand what works and what doesn’t. Multiple and simultaneous promotions create confusion in terms of analysis thus loosing the opportunity to establish some key metrics. 4. Don’t get overwhelmed Today, there is so much data that one can get paralyzed. You can measure everything down to the individual, but ask yourself if it’s necessary. Start by obtaining an overall picture and monitoring the changes to be able to spot a trend. Getting the whole picture will enable you to hone in and refine later. 5. The new digital era marketing is not so different 'Test and measure' used to be the mantra of good marketers. It just used to take a lot longer with direct mail and cost significantly more. With today’s web marketing opportunities, never has it been easier to try, test, learn, adjust and change in days instead of months. In a down economy, expect to react to changes; monitor your market, know your customer because their buying patterns also change much more than in good times. To stay ahead of the competition you must hone in on these minor changes and create campaigns accordingly. Got a comment, post here or email me at businessissuestoday@gmail.com

Obama’s Use of Technology in the Digital Age

There has been much speculation over the last week over who will be President Obama’s CTO. Eric Schmidt, CEO of Google has declined the position. In the meantime, thousands of people are continuing to use Barack Obama’s website to suggest and vote on ideas on various issues including the CTO position. • The campaign has more than 10 million e-mail addresses. This was the first election campaign to successfully use the benefits of technology: cost-effectiveness, scalability, instantaneous communications, interactivity and personalization. The Internet has provided a way of engaging directly with an audience in a personal and interactive way, unlike traditional media in previous campaigns. More importantly, President Elect Obama is acutely aware of how best to engage the younger voters who obtain more information online than from TV. • Engaging a co-founder of Facebook was a smart move Initially Barack Obama’s campaign sought advice from the Internet pioneer and Netscape founder Marc Andreessen, the man who created the first web browser. Then he attracted Chris Hughes, 24, one of four founders of Facebook to leave his company in early 2007 to work in Chicago on Obama's new-media campaign. The use of social networks has revolutionized the Web as a political tool in both raising funds and organizing and mobilizing hundreds of thousands of supporters. During the election, the Obama campaign uploaded 1,800 videos, five times as many as the McCain camp. Obama also made active use of Twitter, a popular networking tool that lets users send short text messages, or 'tweets', to users' mobile phones. Users could upload their personal contacts to the site and send group e-mails to get out the vote. Or they could download a script and based on their address, get a calling list for their neighborhood. Users could also link to about 18 separate social networks. It was not about the technology but using it as a tool to connect emotionally to people, to create groups and communities. Communications was simple and yet personal. Anyone registering on Obama’s site, purchasing from the online store or donating to the campaign, received e-mails. Just after Obama’s acceptance speech, those same registered supporters received a thank you message in email and text format. Future political candidates cannot afford not to incorporate the use of the Web, social networks and mobile texting technology to connect and communicate with potential voters. • The new President will continue to utilize the Web in a new age of democracy “Obama aides and allies are preparing a major expansion of the White House communications operation, enabling them to reach out directly to the supporters they have collected over 21 months without having to go through the mainstream media," The WashingtonPost. Businesses can learn much from our new President. From small business to big business to entrepreneurial start-up, a digital marketing strategy can help you connect with your current customers and prospects. In a tight economy, there’s simply no excuse to not engage and start building a relationship. Got a question: post a comment or e-mail me at businessissues@gmail.com

Time to Repeal Sarbanes-Oxley?

This hastily passed Act post Enron has done nothing to prevent such collapses recurring and certainly has had no positive effect on the current economic situation. It is essentially just a massive tax on compliance at the worst possible time. • The average company will now take 12 years before it can successfully issue an initial public offering (IPO) (up from 5 years pre-Sarbanes-Oxley) because they do not have enough capital to cover the estimated $4.36 million hidden tax in yearly compliance costs. It’s time for Congress to at least review this legislation. In the last five years, far fewer tech companies have made it to IPO or even been considered for an IPO in the U.S. markets. Furthermore, start-ups can't wait 12 years for an IPO; entrepreneurs could have created three companies in that time frame! As a result, the U.S. has become less competitive and many small companies have listed on the London markets. How is that good for America, especially in these times? • “In 2005, a report by the London Stock Exchange cited that about 38 percent of the international companies surveyed said they had considered issuing securities in the United States. Of those, 90 percent said the onerous demands of the new Sarbanes-Oxley corporate governance law had made London listing more attractive.” Tech firms in particular are not being encouraged to expand here in the U.S. where we now desperately need job creation. The tech industry is one of the most important sectors in our economy. It is technology that arguably got us out of the last major downturn in the early 90’s. • In the second quarter of 2008, there were no public offerings of Silicon Valley venture capital-backed companies, a phenomenon not seen since 1978. In the third quarter there was only one. If this draconian law is not repealed, then we could see Silicon Valley’s status as a hot-bed of innovation erode and see more and more of the future invented outside of the United States, taking much needed jobs overseas. President Elect Obama campaigned on “Change.” It’s time for change of the Sarbanes-Oxley law at the most critical time in our economy. Mr President Elect Obama, this is the easiest and quickest way to create jobs! Got a comment, please post or contact me for consulting at businessissues@gmail.com