Davis ThinkingUntil the late 1980s, you could clearly see the difference between the business and public sectors. Business was fast-moving, productive, and focused exclusively on profits. The public sector (government, nonprofits, foundations) was slow and unresponsive but full of people who cared about the world and its people. With the emergence of the citizen sector, all that has changed.
Some big marketers have begun shifting to value-based compensation instead of paying agencies a fee for labor hours. Value-based compensation aligns remuneration more closely with results, such as sales, share of market or brand awareness. This seems like a more reasonable way to compensate agencies, because there is no relationship between labor hours and results. It also aligns clients' and agencies' interests more closely, as both are measured by the same performance metric; however, it also compels agencies to have "skin in the game" by agreeing to forgo some upfront income for a chance at greater profits later.
Sitting in a meeting room that looks out on a frozen Baltic bay, Nokia Oyj Chief Executive Officer Olli-Pekka Kallasvuo mentions a biography he’s reading. It’s about Mauno Koivisto, the president who butted heads with his own Social Democratic Party en route to opening Finland’s 1992 bid to join the European Union.
Part of Disney's brand magic is the company's ability to turn characters into profit-producing franchises. The Pixar hit movie "Cars," featuring animated talking car characters, is no exception. Though the movie was released in 2006, "Cars" has been a smash hit ever since in terms of merchandise spin-offs. A second movie, "Cars 2," is scheduled for release in the summer of 2011.
Home Depot Inc. swung to a better-than-expected profit in the fiscal fourth quarter on smaller charges and its first increase in same-store sales in nearly four years, as consumers—especially those abroad—warmed up to renovation spending. Carried by the momentum, the world's top home-improvement retailer also gave a cheery outlook for this year and boosted its quarterly dividend.
Fresh off announcing an unusually strong Q4 and full-year 2009 (particularly by current restaurant industry standards), Chipotle Mexican Grill is looking to build on the momentum with a new marketing campaign to launch in Q2, a new rewards program and new packaging -- not to mention expansion into Europe. For 2009 overall, the fast-casual chain reported revenue up 14% (to $1.52 billion), net income up 62% (to $126.8 million) and diluted EPS up 67% (to $3.95). The sales gain reflected both revenue from 121 new stores opened during '09 and comparable-store sales growth of 2.2% (including a 2% gain in Q4). Like other chains, Chipotle saw some traffic fall-off, but comp-store sales grew as a result of menu price increases instituted in 2008.
PepsiCo Inc.'s fourth-quarter profit almost doubled on strength in its snacks business and overseas beverage operations, while U.S. beverages continued to slump. The drink maker said Thursday it will continue to launch new snack products as well as speed growth in developing markets, which it expects to boost revenue and profit. The company has been expanding its international units and food products division to buffer the decline in U.S. drink sales.
It's been three years since radio advertising last posted quarterly revenue growth, back in the first quarter of 2007 -- three years that most recently saw Citadel Broadcasting, owner and operator of 224 stations, file for bankruptcy protection in December and long-struggling Air America shut down entirely in January. It's hard not to dread the full-year figures for 2009, due out from the Radio Advertising Bureau later this month, after the third quarter alone delivered a 21% plunge.
Gannett Co., the largest U.S. newspaper publisher, said Monday it turned a profit in the fourth quarter, helped by a drop in one-time costs and a smaller decline in ad sales. The earnings report showed Gannett has been able to slash expenses enough to stay profitable despite steady revenue declines. Other big publishers, such as Miami Herald owner McClatchy Co., have followed a similar course in trimming staff and consolidating printing and delivery operations.
Microsoft Corp.'s new Windows 7 operating system has fattened the company's earnings and boosted personal-computer sales at retailers like Best Buy Co. But it hasn't increased the profits of PC giants Hewlett-Packard Co., Dell Inc. and others. While consumers purchased more than 90 million new PCs during the holiday quarter, when Microsoft released Windows 7, up 22% from a year earlier, PC revenue grew at just a single-digit rate, analysts say.
Hyundai Motor, the biggest South Korean auto maker, said Thursday that its quarterly profit had almost quadrupled as its small cars proved popular with recession-weary buyers. Fourth-quarter net profit reached 945.5 billion won, or $819.7 million, considerably more than analysts’ forecasts. That total compared with profit of 243.5 billion won in the fourth quarter of 2008 and profit of 979.1 billion won in the third quarter of 2009. Sales in the October-December quarter grew 9.3 percent from the same period a year earlier, to 9.65 trillion won. Hyundai also posted a record quarterly operating profit of 837.2 billion won, up 44 percent from a year earlier.
The Ford Motor Company earned $2.7 billion in 2009 and said Thursday that it now expected to be profitable in 2010 as well. The profit for 2009, equal to 86 cents a share, was a swing of $17.5 billion from 2008, when the company lost $14.8 billion. It is Ford’s first full-year profit since 2005. The company ended 2009 with $25.5 billion in cash reserves, nearly twice the $13.4 billion it had at the start of the year. It also expects an operating profit in 2010, which is a year sooner than executives had previously said the company would become consistently profitable.
General Electric Co. posted a 19% slump in fourth-quarter profit as it was again dinged by a big drop in earnings at its finance arm and substantial weakness at its NBC Universal media unit. But the overall results topped Wall Street expectations, and the conglomerate heralded "encouraging signs" at its infrastructure divisions. New orders for big-ticket equipment and services came in at $22.1 billion in the fourth quarter. The figure was off 3% from about $22.8 billion in the year-ago period, but up from $18.4 billion in the third quarter and from $18 billion in the second quarter.
Google Inc. reported its strongest revenue growth in a year and issued its firmest public statement saying it would like to continue doing business in China, a week after it said it may pull out of the country due to a sweeping cyber attack. The Mountain View, Calif., company said its revenue rose 17% in the fourth quarter to $6.67 billion from a year earlier, up from only 7% revenue growth in the third quarter and 3% growth in the second quarter. Meanwhile, Google's profit more than quintupled in the fourth quarter to $1.97 billion, or $6.13 a share, from $382 million, or $1.21 a share, a year ago. During the 2008 quarter, Google took a charge related to investments in AOL Inc. and wireless service provider Clearwire Corp.
General Motors Co. will make money in 2010, its chairman said Wednesday, a bold and surprising forecast for a business that exited bankruptcy proceedings just last summer and hasn't turned an annual profit since 2004. "My prediction is we will be" profitable in 2010, Edward E. Whitacre Jr. told reporters at GM's Detroit headquarters, a sign of rising confidence that also sets a tough benchmark for the still-struggling car maker's employees. "Do we have obstacles in the way? Yes. But we have a good management team and a good plan in place."
Now that the leaves at the bottom of the old gypsy's teacup indicate that the 2008-09 recession is in reverse, it's time for us to accelerate the synergy across the disciplines of finance and marketing. Will things return to normal in 2010? If our idea of normal includes the notion that marketers manage their discipline as a cost, then no, that's no longer normal. This kind of thinking has long been in decline, and the recession has hastened its obsolescence. Especially entering a positive economic cycle in 2010, CMOs must absolutely lead their corporations in generating profit and growth. Marketing is no longer a cost center; it's a profit-and-growth center.
Rental business Netflix saw its Q3 profit increase 48% due to a larger number of subscribers joining the service. The company's revenue increased 24%, with the company adding 510,000 new subscribers to the service. The company's revenue was $423.1 million, with consumers signing up for the low-cost rental service -- staying home and watching a movie continues to be more appealing than a night at the movies, which costs significantly more than Netflix rental service.
I'm on record as saying that Second Life was not worthy of the hype. I did my due diligence. I wandered the pricey real estate, and came to the conclusion that Second Life was "vapor ville." MIT colleagues like Beth Coleman and Ilya Vedrashko begged to differ. They could see something here that would endure. Well, we have data in hand. They were right and I was wrong.
When Salesforce.com Inc. Chief Executive Officer Marc Benioff wanted ideas about how to run his business during the technology recession of 2001, he turned to his friend Michael Dell. Dell’s advice: “Economic difficulties are a time when companies can reassess where they are in the market and rebuild themselves rapidly,” says Benioff, who has known Dell Inc.’s founder and CEO for 20 years. Now Dell is trying to follow his own advice.
Leo Laporte, creator of This Week in Tech and the TWiT network of podcasts, spoke before the Online News Association this week and presented the very model of the new media company: small, highly targeted, serving a highly engaged public, and profitable.
Lots of negative feedback from our post the other day on Cash4Gold’s amazing growth and profitability. This year, their third year of operations, they are on track to make $160 million in revenue and $50 million or so in profits. All from encouraging people to send in gold jewelry in exchange for cash. Making obscene profits may make you jealous, but it isn’t evil.
I started my ad career working on an airline account – American. So like my first love, my first kiss and a host of other firsts in my life, American and the airline industry will always be special to me. Guess that is why it really irks me to watch them making such tragic mistakes. You can’t nickel and dime your way to profits.
How does unnovation happen, anyways? Why does the zombieconomy churn out unnovation as reliably as Lady Gaga churns out bad outfits?
Why spend $10,000 to do a photo shoot for a magazine? After all, all your profit is in the ads. Sometimes it seems like people who build websites and magazines that take the high road aren't paying any attention at all to conversion and revenue and manipulation.
In the three years since its launch, the messaging service Twitter has attracted millions of users, but its fast growth hasn't translated into significant revenue. Now, other companies are trying to profit from Twitter's popularity by experimenting with business models that incorporate parts of the free messaging service.
After its Super Bowl ad promoting a free breakfast created demand on Main Street, Denny's top executive Nelson Marchioli tried Wednesday to serve up interest on Wall Street. The CEO told investors that Denny's has had "a very encouraging lift in guest traffic" since the gimmick, but stopped short of predicting long-term results.
Amidst the current retail meltdown, one specialty retailer that has managed to keep its sales up like a pair of spandex-infused leggings is American Apparel. Last week, as most retailers announced dismal December same-store sales — including double-digit declines at competitors such as Abercrombie & Fitch, Gap and Pacific Sunwear — American Apparel managed to pull out a 3 percent gain.
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