7 promises on giving presentations

I helped put together a presentation today for work. The final result was great, but looking back I think we could have improved it if we had followed some simple rules.

Following are some promises I made to myself for when I’m doing presentations in the future:

1. Never, ever talk for more than 40 minutes
2. Have a simple, clear story to tell
3. Maintain the integrity of the story’s structure at all costs
4. Illustrate each point of the story with 1-2 examples, never more than 3
5. Don’t use stock photography backdrops unless they are awesome (no smiling toddlers or people holding hands)
6. Remove any slide that has even the slightest possibility of losing your audience – be ruthless
7. Don’t include any quotes that you can’t read in one breath
8. Once the slides are complete, rehearse the full presentation at least twice

Giving really slick presentations is a worthy goal. Definitely a skill I want to develop myself – although in a world where people watch TED talks during their lunch break, the bar has been set rather high!

Measuring ROI of social media

Great presentation from Egg Co about measuring ROI of social media: http://www.slideshare.net/yongfook/social-media-roi

The slidedeck is very well put together and quite concise so I would recommend checking it out. Here’s a quick summary:

1. the qualitative benefits of obvious (e.g. building trust, loyalty, brand awareness), these are seen as hard to measure
2. to measure ROI on social media, need to move past conventional metrics for succcess
3. figure out simple, commercial success metrics (”what is success in this context?”), e.g. “reduction in support costs”, “number of new things we discovered about customers that we never knew before”, my favourite is “number of minutes a day we are nice to customers”
4. set campaign goals based on these, “your return is successfully meeting or exceeding these goals”
5. implement campaign, drop the stuff does doesn’t achieve the goals. repeat.

Really simple stuff, but I think it is very important for us to focus on when talking with clients about social media. Obviously social media is a really hot topic right now, but I get the sense that a lot of agencies are focusing too much on the novelty factor and not enough on creating measurable business value for clients.

(I stumbled across this courtesy of We are social’s blog, which is definitely worth subscribing to)

Useful stats and quotes

Courtesy of Futurelab. Some great stats and quotes that might be useful:

• In 1965, 80% of 18-49 year olds in the US could be reached with three 60-second TV spots. In 2002, it required 117 prime-time commercials to do the same. (Jim Stengel, Global Marketing Officer, Proctor & Gamble)
• People with DVRs watch 12% more TV, yet 90% of them adskip (Big Six study)
• 85% of Chinese stop watching TV during commercial breaks (McKinsey)
• 80% of CEOs believe their brand providers a superior customer experience, 8% of their customers agree (Bain)
• Consumers are beginning in a very real sense to own our brands and participate in their creation… We need to begin to learn to let go” A.G. Lafley, CEO and Chairman of Proctor & Gamble
• Word of mouth is 7x more effective than newspaper advertising, 5x stronger than a personal sales pitch, and 2x as effective as radio advertising (Marketing Science Institute, 2006)
• “If you don’t like change, you’re going to like irrelevance even less” General Eric Shinseki, Chief of Staff, US Army

Amazing creative from O&M Paris

I saw a great quote today: “People who live near train lines find ways to adjust to the noise… Consumers have begun to treat encroaching advertising just like those trains.” This is exactly how I feel about advertising as a consumer. I’ve done everything I can to block unsolicited advertising from my life.

Here’s another quote I really like: “If you talked to people the way advertising talked to people, they’d punch you in the face”. Advertisers need to find news ways to get through to consumers by creating stuff that people actually a) like or b) find useful.

So it is really refreshing when people try something different. Ogilvy & Mather Paris made these amazing ads for Scrabble. They certainly worked on me and they are getting a great response online – not to mention lots of free media time

Headline mystery

I just spotted the headline “Co-workers to split jackpot of $216 million” on CNN.  I immediately figured the story must be about former Merrill Lynch execs, but it is actually about a bunch of real people that won a different kind of lottery.

How Iceland turned itself into a hedge fund and then bankrupted itself

In another brilliant article from Michael Lewis, we learn how Iceland went from being a tiny backwater to being an economic superstar and then back to being a tiny backwater, all in the space of about 3 years.  (Wall Street on the Tundra, Vanity Fair April 2009)

Essentially the whole of Iceland’s population got caught up in the fastest growing financial bubble in history.  In the end the bubble contracted even more quickly than it grew, leaving Iceland with foreign debts amounting 850% of their GDP.

Global financial ambition turned out to have a downside. When their three brand-new global-size banks collapsed, last October, Iceland’s 300,000 citizens found that they bore some kind of responsibility for $100 billion of banking losses—which works out to roughly $330,000 for every Icelandic man, woman, and child.

The massive amounts of money the Icelandic banks borrowed from overseas sent the whole country on both domestic and international shopping sprees.  The domestic spending drove asset prices through the roof; the international spending left Icelandic banks with a huge portfolio of badly considered LBOs.

Of course very little of the banks’ profits came from actual banking.  The profits largely came from marking up their speculative investments, both domestic and international:

Yet another hedge-fund manager explained Icelandic banking to me this way: You have a dog, and I have a cat. We agree that they are each worth a billion dollars. You sell me the dog for a billion, and I sell you the cat for a billion. Now we are no longer pet owners, but Icelandic banks, with a billion dollars in new assets. 

Ultimately all three of Iceland’s banks went bust, their currency has been suspended from trading in order to prevent further collapse, and the country is at risk of falling into complete social disorder.

Making sense of the current economic predicament

Portfolio’s December 2008 issue ran an exceptionally good article by Michael Lewis (of Liar’s Poker) fame. It reviews how Wall Street has changed over the past two decades, as well as looking at some of the fascinating detail around the more recent outbreaks of insanity.

After reading Lewis’s article I am struck by how obvious the impending disaster must have been to those closely involved in the financial markets. All of the information required to figure it out was publicly available, and widely distributed by the press, banks and ratings agencies. But almost no one actually figured it out.

Malcolm Gladwell talks about this in Open Secrets, a very well thought out essay on the collapse of Enron. As Gladwell argues, everyone involved knew how Enron was doing its accounting. Much of it was publicly disclosed by Enron itself. The fact that Enron – supposedly one of the most successful companies in the world – wasn’t making economic profits should have been clear from the fact that it paid no income tax in two of the last three years before its bankruptcy. But no one really analysed this information and what it meant. Why?

My theory stands – that the fundamental problem is the perverse incentives that the system gives to all of its participants for ignoring the obvious problems with that they are doing. The part of Lewis’s article that nearly made me fell off my chair was this:

He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number.  “They were just assuming home prices would keep going up,” Eisman says.

Clearly the inmates were running the asylum. The ratings agencies were making far more money rating CDOs than municipal bonds, so it wasn’t in their interest to ever allow for the possibility that an overall fall in real estate prices was possible. Arthur Anderson was raking in $100MM / year in consulting fees for Enron so of course they let their audit findings be compromised by their client.

 

Earlier today I was thinking about investments. I question investing in real estate – staking your financial future on a single highly-leveraged, completely undiversified, illiquid asset doesn’t sit well with me. Some people have done very well out it, but mostly their success comes from relying on low interest rates and successfully timing their entry and exit from speculative property bubbles – neither of which are a sure thing.

In recent times I’ve also started questioning whether investing in securities markets (i.e. common stocks) is any better, and Lewis confirmed my fears. Success in this game is defined by things that cannot be understood by mere mortals.

Even in a boom market, the system is no longer setup to profit shareholders – it is setup to provide capital that the executives of public corporations can then steal (“issue options”) or transfer to their golfing buddies (investment bankers, management consultants, ratings agencies, corporate lawyers etc). Lewis makes the point that changing the investment banks from partnerships to public corporations has served no purpose except to transfer risk from the partners to shareholders.

Investors also face previously unimaginable systemic risk. Once described as “weapons of financial mass destruction” by Warren Buffett, derivatives have created an incredibly complex global web of counterparty relationships. As recent events have proven, this dramatically increases the impact of a single party’s default.

Moreover many of these derivatives are very poorly understood even by those whose job it is to sell them and manage their risk. The worst of these – such as the synthetic CDOs which are essentially derivatives of other derivatives – have brought the global financial system to its knees. Do you know anyone who can really explain what a synthetic CDO is, how it works, and what legitimate economic purpose it serves? Most investment bankers can’t seem to, and certainly their chief executives didn’t understand the risks their CDO positions exposed them to. I suspect the local councils who foolishly bought these things and now face bankruptcy are going to fare pretty well in the lawsuits they’ve already filed against Lehman, claiming the products were sold to them as simple low-risk fixed-interest securities rather than the bewildering time-bombs that they turned out to be.

Fixing U.S. banks without nationalising them

Some of McKinsey’s clever people are putting forward an interesting approach for the U.S. government to fix their banks’ toxic asset problem without completely nationalising them (A better way to fix the banks, McKinsey Quarterly Feb 2009).

Their approach would setup a discounted market pricing situation for bad assets.  This would allow the government to take $1.5 trillion in these assets off bank balance sheets while ending up with only a 36% equity stake in the industry.  $1.5 trillion is – as they say – real money and one would hope enough to restore some confidence on Wall Street.

No one thinks the government owning one third of the U.S. banking system is a great result, but it is a lot better than complete nationalisation.    And 36% is going to be a lot easier for the government to offload back on to the market later on than 100%.

Interesting articles

From ‘Verbage – The Repulican war on words’ in The New Yorker comes this wonderful Palin quote: “I do take issue with some of the principle there with that redistribution of wealth principle that seems to be espoused by you.”.  For a party that is so eager to make English their national language, the Republicans do treat it rather unkindly.

If you want to understand why the global financial system is in crisis but lack the requisite comprehension of obscure derivatives, ‘Wall Street Lays Another Egg‘ in November’s Vanity Fair is an excellent place to start.  The New Yorker also provides a fascinating, lucid account of U.S Federal Reserve Chairman Ben Bernanke’s attempts to control the chaos on Wall St.

Microsites can be good

At the advertising agency I work for, we spend a fair bit of time talking about microsites and whether they are good, bad, or diabolical.  Someone recently sent around a very good article that I think generally gets it right.

Microsites are one of the things in life that have to be extremely good, otherwise its not worth doing them at all.  But I think they are an interesting medium for advertising if they are based on a really clever idea and executed really well, like this site: http://nolaf.org/