Paul Daversa, Daversa Partners | Nov. 1, 2010, 2:59 PM | 5,036 | comment 21
San Fran v. NYC

Paul Daversa

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Paul Daversa is the CEO of Daversa Partners, the leading executive search firm to the VC’s and start-up community in the Internet and tech sector.

“What’s the deal flow look like?””What are you seeing in general?”

“What’s the breakdown of Alley vs Valley deals you’ve been contacted on?”

“What themes and patterns are developing?”

These are the typical questions we get from the VC’s, Angels, Founders, and Executives with whom we work.

The questions seem to be coming much more frequently these days.

Daversa Partners is a leading executive search firm focused on building teams for venture backed, emerging growth companies. We have 40 people in the firm and offices on both coasts.

Until mid-2009 Silicon Valley had dominated our attention and dwarfed the sheer number of companies we have recruited talent for by a 4-1 ratio, driven by breakaway consumer internet businesses as well as the emergence of the cloud based offerings. The big location question used to be San Jose or San Francisco, the valley or the city.

With our good fortune of being able to work with great venture firms and great entrepreneurs, we are often one of the first calls when people need to build leadership teams — thus we become an interesting barometer for the ebbs and flows of industry trends. The most glaring observation over the last year has been that, for the first time in my 20 years of search, the deal flow and investment lines have begun to blur as NY has become a hot-bed for building great tech companies and leadership talent is migrating to New York.

Silicon Valley will maintain its undisputed grip on engineering talent, overall thought leadership and sheer volume of innovation. There is no arguing that point. The depth of the talent pool in the Bay, especially in product and engineering seems almost unfathomable.

But here’s is what has changed: more than any time in recent history I am seeing a migration of talented engineering and operating executives leaving the Bay area and other parts of the country to lead NY companies. As a matter of fact, it seemed commonplace to hear “NFW” when talking to Valley execs as recently as 18 months ago when called about a NY opportunity.

Now we expect the receptivity! There is no doubt that the burst of NY’s momentum is being fueled by signs of life from Madison Avenue and large brands that dominate the East Coast. There is also a newfound energy that is serving as the shot in the arm of vitamin B to Silicon Alley investors and start-up…a signal that Silicon Valley’s birthright and mecca of professions is being threatened (or least facing some viable competition).

Here’s the most telling statistic for us; at least 50 percent of all the projects we do–and we get our share of the plum projects–are coming out of New York.  The challenge used to be that NY was viewed as a one hit wonder…if a candidate moved to NY then they knew they would have to consider moving again for that next job. And, even if the candidate did really think about the move, the idea of having to build his/her team was a major issue.

Some of our recent  projects have included multiple senior hires for Zynga (CA), CFO of Twitter(CA), CEO of Recycle Bank (NY), CFO of (NY), CEO of Mozilla (CA), CEO of (NY), SVP of Rockyou (CA), CTO of AOL (NY), VP Engineering Boxee (NY), CEO of Grockit (CA), President of (NY), President of Knewton (NY) and CTO of (NY), and CMO of The (NY).

What is telling about the NY projects is the infusion of Silicon Valley executives as well as other executives from other locations that often flock to the bay.  Gilt’s CFO and President of Stores,’s CEO and CTO, and Renttherunway’s CTO were either West Coast recruits or from other locations in the country.

In a recent Daversa Speaker Series (a fireside chat we have monthly with industry leaders and innovators), Ron Conway of SV Angels and legendary Angel investor disclosed that 25 percent of his current portfolio of investments are now in NY — up from 5 percent just two years ago. NY has regained some of its swagger thanks to companies like that picked up where Doubleclick left off, setting in motion an ecosystem being developed around the 5th Avenue and Madison Avenue beachheads of advertisers, brands and buyers.

The big question remains: can NY create 2nd and 3rd generation legacy much like executives at Google, eBay and Paypal that have been a part of the Web 3.0 emergence? The theory would go that, as NY companies continue to scale, those companies will create the next generation of innovators. As Gilt, Foursquare, TheLadders, Etsy or Boxee (or whomever the winners will be) grow, employees from these companies will branch out to form new ventures.  No longer does great talent have to think of NY as a one hit wonder.  The talent pool will grow exponentially over the next 3-5 years. And NY will find itself as the definitive “other” market where great US tech companies are born.

The prevailing theme is that the Valley vs. Alley dogfight is in its early stages and given that there is a flurry of high quality start-ups germinating at a frenzied pace on both coasts, we are already seeing the stepped up and accelerated decision making being made to lock down talent.  So, the recruiting won’t get any easier, but the once scoffed at idea of moving to NY to run tech companies will be replaced by the idea that any good exec will have to have NY on their radars.

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Posted by: Patrick | October 25, 2010 Being A Twitter Snob Is A Good Thing

October 24, 2010 2:07 PM

Mitch Joel – Six Degrees of Separation

It annoys many people when they follow you on Twitter and you do not follow them back. Too bad. Don’t do it.

The only people you should follow on Twitter are people who are immediately interesting to you or people who might become interesting to you. Ignore the rest. I know, this doesn’t sound very “social media,” but it’s true and it’s a needed commodity in a cluttered world (you can read more about why you should be a Twitter Snob right here: The Trouble With Twitter – Confessions Of A Twitter Snob and, if that doesn’t get you re-thinking your Twitter strategy, read this: The Dirty Little Secret Of The Twitter Elite). You may think that this reasoning is anti-Social Media or that by not following someone back, you will be insulting them, but if you read the Blog post, The Dirty Little Secret Of The Twitter Elite, you’ll understand that even though they may be following you back, they’re probably filtering you and/or ignoring you.

But, there’s a better reason to not follow back everyone who is following you on Twitter.

Here’s a real-life example: the other day, Alistair Croll recommended I check out Tim Carmody on Twitter. Tim has a cool Blog called, Snarkmarket, and is a contributor to Wired. He has 2,221 followers but only follows 414 people. I wasn’t immediately struck by Tim’s Twitter feed, so I looked at some of the people he was following and I could not believe the quality of people he is connected to. What really shocked me is how few of those people I was following. I hit the Twitter equivalent of pay-dirt.

Who you follow adds to your credibility.

One of the better ways to understand the type of person you are considering to follow is to see who they are following. What interests them? Who piques their curiosity? It’s an amazingly powerful barometer to learn and understand more about the person you are about to connect to. In this instance, Carmody gained instant credibility with me. He was following people that I wanted to follow… and these were people that I hoped would find me interesting enough to follow me back as well.

What does following everybody back actually say about you?

If you follow everybody back on Twitter does that mean that you’ll accept to connect to everybody? Or, does that mean that you have your Twitter feed automated to accept everybody? Does it mean that you don’t care who you follow back? Does it mean that you care so deeply about people that you must follow everybody back? It’s hard to tell… and because it’s hard to tell, it doesn’t ever feel like it matters, or that you care all that much, in the end.

Those who are more selective add value for the new people coming along.

Curating, editing and pruning who you follow is an important step. It helps those new connections sort the wheat from the chaff. It helps quantify that you’re in this to really connect. It also sets a standard that you’re not going to accept the smart people and the spammers as the same. It says that you’re going to take the time (at least a second) to ensure that you’re following someone of value. That sounds better than following everyone and giving off the allure of being social, when in reality you’re probably filtering them out and not helping the next person who connects with you to better understand what interested you (granted, if you’re a brand – or a corporate account – none of this applies: why not follow back everybody who is following you?).

So, what’s your take on being a Twitter snob?

Interesting read… Part of the GOP’s problem has been its too cozy support of “crony capitalism” rather than true free market enforcement of competitive measures at every level. I think the only thing Big Business has to fear from the Tea Party is their equal disdain for both political and business corruption through the levers of the Federal Gov’t. What say you??

BusinessWeek Logo

Cover Story October 13, 2010, 11:00PM EST
The Tea Party’s small-government slogans may be appealing, but its policies could throw the U.S. economy into chaosBy Lisa Lerer and John McCormick

Nikki Haley is almost everything the South Carolina Chamber of Commerce could want in a candidate for governor: A former small business owner (she helped run her family’s luxury-clothing company in Lexington, S.C.), Haley has served on the boards of two local chambers and campaigns on the traditional business gospel of lower taxes and smaller government.

As Haley was steaming toward an easy win in the Republican primary runoff last June, the South Carolina Chamber’s board—56 business leaders representing sectors ranging from banking to health care to construction—met at Clemson University to decide whether to endorse her or her general election opponent, Vincent Sheheen, a Democratic state senator. It took only 20 minutes around a U-shaped conference table for the board to make its decision: Almost 80 percent of members voted for the Democrat—even though they knew Haley was a virtual lock to become the next governor of their heavily Republican state.

The issue, as the board saw it, was Haley’s extreme and inflexible approach, an ideology of confrontation that can be summed up in two words: Tea Party. Haley had allied herself with this grassroots network of self-described mad-as-hell revolutionaries, which has overrun the GOP—sending at least 14 Senate candidates, including challengers and incumbents allied with the movement, into the Nov. 2 elections—while accusing other Republicans of abandoning conservative tenets. Haley became one of Sarah Palin’s “Mama Grizzlies”; the former Alaska governor and Tea Party celebrity endorsed her in May.

For business leaders who prize pragmatism and stability, it was all too much. “We worried about her ability to get along with the legislature,” says Otis Rawl, chief executive officer of the South Carolina Chamber of Commerce. “We wanted to bring the debate away from the Tea Party and back to the middle.” Chamber members, he says, tend to be “more realistic and moderate in their thought processes. We prefer candidates who are not extreme. If you look at the Tea Party, I think most of them would say they hate Big Business.”

Austerity Appeal

To businesspeople concerned about the 9 percent increase in federal spending under President Barack Obama and the Democratic-controlled House and Senate, a Tea Party-led return to fiscal austerity has undeniable appeal. That’s certainly what the leaders of this anarchic, decentralized movement are selling. Tea Party principles, Palin told Bloomberg Businessweek in a brief interview on Sept. 11 in Wasilla, Alaska, are “exactly what we need for free enterprise and business in America because these are commonsense solutions. It’s just getting back to the basics, realizing that growing government—and reaching into our private sector by government—is not the solution. That has been proven throughout eternity.”

There’s no such thing as the Tea Party platform; in the absence of centralized leadership, Tea Party-backed candidates have come up with an array of positions based on the doctrine of less intrusive government. Most say they would preserve the Bush tax cuts, end the estate tax, and lower taxes on savings and dividends. They’d repeal the federal health-care reform law, abolish the Federal Reserve, and shrink or shutter a range of other federal agencies. They are not numerous or popular enough to enact all of these positions; less than three weeks before the midterm elections, the Cook Political Report rates Tea Party candidates in three Senate races—Nevada, Colorado, and Kentucky—as “toss-ups.”

To measure the Tea Party’s success by who wins on Nov. 2, however, is to miss the movement’s full impact. Through a combination of brilliant politics, genuine discontent, and intense emotional appeals, the Tea Party has helped pull national Republican leaders such as John McCain to the right, and has defeated those—such as Lisa Murkowski in Alaska and Bob Bennett in Utah—who didn’t move quickly enough. Its impact on the local level has been similarly dramatic. In May the historically moderate Maine Republican Party adopted a platform that included such Tea Party planks as eliminating the Federal Reserve, sealing the borders, and prohibiting stimulus funding.

It may sound like a corporate dream come true—as long as the corporation in question doesn’t have international operations, rely on immigrant labor, see the value of national monetary policy, or find itself in need of a subsidy to boost exports or an emergency loan from the Fed to survive the worst recession in seven decades. Business leaders who favor education reform, immigration reform, or investment in infrastructure can likely say goodbye to those ideas for the short term as well; they won’t be possible in the willfully gridlocked world of the coming 112th Congress.

Political Instability

As the South Carolina Chamber realized, the Tea Party’s seductive small-government principles are hitched to a train full of explosive cargo—from Alaska’s U.S. Senate candidate, Joe Miller, who suggested Social Security is unconstitutional, to Delaware’s U.S. Senate candidate, Christine O’Donnell, who has no relevant job experience. (She’s a former sexual morality campaigner and perennial candidate who at times has had no visible means of support, and who once claimed to possess classified information that China was planning to take over the U.S.) The Tea Party’s brand of political nitroglycerin, in short, is too unstable for businesses that look to government for predictability, moderation, and the creation of a stable economic environment. “A lot of the agenda is being driven by the extremes,” says John Castellani, the former head of the Business Roundtable who left in July to take the helm of the Pharmaceutical Research and Manufacturers of America (PhRMA). “This kind of extremism makes it much harder to plan from a business perspective.” (So far this election cycle, PhRMA’s political action committee has sent about three-quarters of its campaign contributions to Democrats, according to the Center for Responsive Politics.)

Even the U.S. Chamber of Commerce, the biggest-spending business lobby and a vociferous opponent of the Obama Administration, has kept its distance from many Tea Party candidates. The Chamber, which has been the target of White House attacks over undisclosed campaign expenditures, says it plans to spend at least $75 million in this election cycle. So far, most of the money has gone to Republicans not closely associated with the Tea Party, such as former Hew�lett-Packard (HPQ) Chief Executive Officer Carly Fiorina in California and former U.S. Trade Representative Rob Portman in Ohio. The Chamber has endorsed Rand Paul, the Tea Party-backed U.S. Senate candidate in Kentucky, and former Florida House Speaker Marco Rubio, an early Tea Party favorite who is running for the U.S. Senate in Florida and is distancing himself from his Tea Party roots. The Chamber evaluates each Tea Party candidate individually, says national political director Bill Miller, because “all of our friends have different characteristics.” Miller expects that the Tea Party candidates who win will be forced to moderate some of their views. “Some of the politics of the Tea Party and legislative practicalities just don’t match up,” he says.

Consider three prominent Tea Party politicians: Palin, Paul, and South Carolina Senator Jim DeMint, whose endorsements and campaign contributions have made him a kingmaker on the right. All say they support lower taxes, less regulation, and smaller government. Yet they have divergent and at times inconsistent ideas about how to achieve those goals. As governor of Alaska in 2007, Palin raised taxes on oil companies to increase revenues for her state. DeMint celebrates governmental gridlock, telling Bloomberg Businessweek his business supporters call it “the best thing that could happen for business.” He says he wants to deport all illegal immigrants, and he opposed the $700 billion bailout of the financial system in 2008.

Paul is among those who want to abolish the Federal Reserve and the IRS. He would have let the U.S. auto�makers fail last year—a position with ramifications not only for car companies and parts makers but also for agriculture, mining, and other industries dependent on government support. Paul describes Medicare as an unsustainable boondoggle, though about half his income as a Kentucky ophthalmologist comes from Medicare and Medicaid payments, according to his campaign, which says that’s in line with the national average for eye doctors. Last year, Paul advocated a $2,000 deductible for Medicare patients, which would shift more of the cost burden to retirees, though he’s retreated from that idea in recent days. Locked in a close race against state Attorney General Jack Conway, he has been sounding more like a conventional politician, focusing his rhetoric on Obama instead of the Tea Party. On Oct. 9 he thanked “the guy in the White House” for making “this election juggernaut possible.”

Opposition Force

Ask Bill Miller of the U.S. Chamber what his 98-year-old group likes best about the Tea Party, and his reply is blunt: its opposition to the White House agenda, particularly health care, climate change legislation, and phasing out tax cuts for the wealthy. “What they are for is important,” he says, “but what they are against is almost more important.”

That oppositional force—against Obama, against bailouts, against spending and regulation—attracted conservative political and business leaders to the Tea Party from the unlikely moment it came into being. Its date of birth is usually given as Feb. 19, 2009, a time when the Great Recession was still in its most frighteningly vertiginous phase. That morning, CNBC on-air editor Rick Santelli, who reports from the floor of the Chicago Mercantile Exchange (CME), unleashed a rant heard ’round the world, asking why Americans should have to “subsidize the loser’s mortgages” by propping up Fannie Mae and Freddie Mac. A few traders around him began cheering. “We’re thinking about having a Chicago tea party in July,” Santelli continued. “All you capitalists that want to show up at Lake Michigan, I’m going to start organizing.”

It was enough to light the fuse. As local activists began using the Internet as an organizing tool, Fox News amplified the discontent on its airwaves, with on-air personalities Glenn Beck and Sean Hannity rushing to the front of the Tea Party parade, adopting the nascent movement as their own. Other journalistic organizations took notice during the summer of 2009, when House passage of the Waxman-Markey climate and energy bill and congressional debate over health-care reform unleashed more conservative anger and activists began disrupting town hall meetings held by members of Congress.

Business leaders began trying to direct the parade as well. A libertarian nonprofit called FreedomWorks, which grew out of Citizens for a Sound Economy, a group founded in 1984 by billionaires Charles and David Koch—the brothers who control Wichita-based petroleum conglomerate Koch Industries, the second-largest privately held company in the U.S., according to Forbes—had been holding annual antitax rallies throughout the 1990s with little to show for it. Now a true grassroots movement was spreading, and FreedomWorks wanted to channel it.

Armey’s Team

The nonprofit, chaired by former House Republican leader Dick Armey, began holding training sessions for Tea Party activists, and a FreedomWorks volunteer, Bob MacGuffie, reportedly circulated a memo with tips—”You need to rock-the-boat early in the Rep’s presentation”—for those who wanted to disturb town halls. With Beck and others, the organization helped shape an emerging Tea Party cosmology in which Big Government and Big Business are twin poles of an evil empire plotting to destroy free enterprise and screw the little guy.

“Big Business is sitting there on fat, pushy duffs looking for government to keep them in business,” said Armey in an August interview with Bloomberg Businessweek. Only “incompetent” companies needed bailouts, he added. “People who run corporations are basically taking care of themselves. They’re not very reliable people, and they’re very comfortable with Big Government that greases the skids for them.”

During his 18 years as a congressman from Texas, from 1985 to 2003, Armey accepted more than $900,000 in contributions from financial, insurance, and real estate companies, according to Federal Election Commission records, and almost $400,000 from energy and natural resources companies. After leaving office he joined DLA Piper, one of the largest law firms in the world, and became chairman of FreedomWorks. Armey says he left Piper last year after the rowdy demonstrations at town hall meetings brought unwanted media attention to the firm.

FreedomWorks says it plans to spend $10 million turning local Tea Party chapters into political machines. The group is steering funds into tools that help local groups organize, such as campaign flyers and signs, a phone system that lets volunteers across the country make calls for candidates from their computers, and an online mapping system to target likely voters.

Operating those tools are conservatives like Ryan Hecker, a Houston antitrust attorney who worked as a senior researcher for Rudy Giuliani’s 2008 Presidential campaign. Hecker moved into grassroots organizing after the election. “I got involved in political and economic conservative causes because I wanted to be part of something greater than myself,” he says. In September 2009, Hecker and other Tea Party activists organized an online effort that became the “Contract from America,” a list of 10 Tea Party goals—slashing the size of government, repealing the health-care reform law, blocking a cap-and-trade system to reduce greenhouse gas emissions, and scrapping the IRS code and replacing it with a single-rate code no longer than 4,543 words, the length of the original U.S. Constitution. Over a period of several months in late 2009 and early 2010, he says, they gathered 1,000 ideas online and held a series of surveys and discussions to winnow the list to 21. About 500,000 Web votes were cast to arrive at the final 10 items.

Published in April 2010, the Contract from America creates what Armey calls a “seal of approval” for Tea Party candidates. There are obvious similarities between the Contract and the anti-regulatory wish list of libertarian David Koch, who is among the nation’s 10 wealthiest Americans, according to Forbes, with a net worth of $21.5 billion. Yet Koch has distanced himself from the Tea Party in media statements, and a Koch Industries spokeswoman, Missy Cohlmia, says Koch’s foundations don’t fund FreedomWorks, though “we applaud anyone willing to advance economic freedom and opportunity in a civil and respectful manner.” (The Koch brothers have supported an affiliated pro-Tea Party group, Americans for Prosperity.) “We live by the creed ‘hard work beats daddy’s money,’ ” Armey says. “We are not a corporately well-funded operation, as we are alleged to be.” Hecker says FreedomWorks helped with publicity but didn’t shape the Contract. “This is a grassroots document,” he says. More than 300 candidates have signed it, including about 15 House incumbents. “We’re looking for candidates who truly believe in the ideology,” he says.

Ideological Purity

Confirmation of the Tea Party’s power came in January 2010, when Republican Scott Brown won the Massachusetts Senate seat once held by the late Edward M. Kennedy. Rand Paul’s May primary win in Kentucky, over a candidate backed by the state’s Republican Establishment, added to the momentum, as did primary victories by Tea Party-backed Senate candidates Sharron Angle in Nevada, Ken Buck in Colorado, and Miller in Alaska.

The movement’s energy could help boost Republican turnout, but it has also forced the party to spend time and money on primary contests in which inexperienced candidates—Angle, O’Donnell—have jeopardized Republican control of Congress. Despite her call to privatize Social Security, Angle is in a virtual tie with Senate Majority Leader Harry Reid and has raised an astonishing $14 million in the past three months. If Republicans fail to win the congressional majorities that seemed within reach earlier this year, she and other Tea Party candidates may take the blame.

To the movement’s true believers, however, winning is less important than ideological purity. “We need people up here who understand that we’ve got to get back to limited government, and we cannot afford to have other Republicans who don’t get that message,” DeMint said recently on Capitol Hill. One cornerstone of their faith—the notion that large corporations are leeches sucking the blood of the people—is sharply at odds with Republican theology that has held sway for generations. “The business community writ large is the essence of the inside-the-Beltway type,” says lobbyist Rich Gold, who represents Dow Chemical (DOW), Next�Era Energy (NEE), and other energy companies. “And these people are the essence of the outside-the-Beltway type.”

The Tea Party’s chief theologian is Beck, the cable-TV personality whose rise has mirrored the movement’s. Beck’s world is full of demons, but the devil that enraged the sold-out crowd in a ballroom at the Atlantic City Hilton on Aug. 5 wasn’t Obama or even House Speaker Nancy Pelosi. “Give the money to the people!” Beck shouted to a packed room of around 1,500. “Give us our money back—not to Goldman Sachs! (GS)”

Intellectual Leader

In 2009 a campaign by the liberal group Color of Change confronted Beck’s advertisers with clips of the TV host making racially charged statements on his show. In July 2009, for instance, he called Obama a “racist” with a “deep-seated hatred for white people or the white culture.” According to the group, more than 100 companies joined a boycott of his show last year. Beck declined to be interviewed; Fox News has said it didn’t lose revenue because advertisers shifted to other programs.

Tea Party activists describe Beck as the intellectual leader of their movement. They devour the books he mentions on his show, many of them the works of fringe political theorists such as W. Cleon Skousen, an anticommunist historian too extreme for conservative activists of the Goldwater era. In The Five Thousand Year Leap, published in 1981, Skousen argued that business, communists, and government were conspiring to push the U.S. into “a world-wide collectivist” society. After Beck authored a new foreword to the 30th anniversary edition, the book shot to the top of the best-seller list. “Beck is the great educator,” says Representative Jason Chaffetz, a Utah Republican allied with the Tea Party. “He’s empowering people with history and information.”

The conspiratorial message was still fairly novel in 2009, when a group of corporate leaders led by General Electric (GE) CEO Jeffrey Immelt came out in support of the Waxman-Markey climate bill, which would cap industrial emissions that contribute to global warming. As Beck led the charge against the corporations, calling them Enron-style favor-seekers, Republican leaders in Congress found themselves attacking not only GE but also DuPont (DD), Alcoa (AA), Duke Energy (DUK), and other stalwarts of the U.S. economy. “Corporations should not be at the public trough,” says DeMint. “We do not need corporations or their associations selling out just because they can get a little carve-out in some bill.”

In June the Tea Party-affiliated National Center for Public Policy Research demanded Immelt’s resignation, calling GE an “opportunistic parasite feeding on the expansion of government.” Immelt’s offenses included lobbying for a $450 million earmark to fund an F-35 Joint Strike Fighter engine, taking advantage of federal subsidies for clean energy, and running the conglomerate that owned liberal cable channel MSNBC.

Contradiction Among Supporters

Americans who support the Tea Party brim with contradiction. An October Bloomberg National Poll found that while 83 percent of Tea Party supporters favor repeal of the health-care reform bill, majorities would keep key provisions of it. Fifty-seven percent would prohibit insurance companies from denying coverage to patients with preexisting conditions, 52 percent would add more prescription drug benefits for Medicare users, and 53 percent would require states to set up plans for people with major health problems. “The ideas that find nearly universal agreement among Tea Party supporters are rather vague,” says pollster J. Ann Selzer, who conducted the survey. “You would think any idea that involves more government action would be anathema, and that is just not the case.”

Tea Party candidates show no such ambivalence. When it comes to government, they don’t want to trim fat, they want to amputate limbs. Angle says she would eliminate the Environmental Protection Agency, the IRS, Fannie Mae, and Freddie Mac. Buck says he would get rid of the Energy and Education Depts. And candidates across the country say they aim to eliminate the web of special tax breaks, earmarks, and subsidies that benefit industries from golf cart manufacturers to the largest automakers.

In March 2008, Representative Michele Bachmann (R-Minn.), the leader of the newly formed 24-member Tea Party caucus in Congress, introduced legislation that would repeal the national phaseout of conventional lightbulbs in favor of compact fluorescent lights. Congress, she said, had no right to tell consumers what kind of bulbs to buy. Her bill was opposed by the electrical and manufacturing industries, which had already begun the transition.

Tea Party supporters want to seal the borders, depriving industries such as technology and agriculture of a major source of labor. They have turned a stringent Arizona immigration law passed in April into a cause célèbre for the movement. “We’re all Arizonans now,” says Palin. Buck, a former prosecutor, rose to prominence in Colorado after a series of high-profile immigration raids. Most famously, Buck’s office raided a tax preparer and seized thousands of confidential documents. The search was later ruled unconstitutional by the Colorado Supreme Court.

Another Tea Party villain is the Federal Reserve. As Rand Paul travels around Kentucky, he blames the recession primarily on the central bank, which he says sent “bad signals” to the marketplace. His desire to abolish the Fed is shared by his father, libertarian Texas Representative Ron Paul, who spread banking conspiracy theories during his 2008 Presidential run. In the Senate, DeMint has also pushed for greater scrutiny of the central bank, holding up the renomination of Fed Chairman Ben Bernanke until Senate leadership agreed to a vote on his bill proposing regular congressional audits of the Fed.

On global trade issues, the Tea Party tilts toward protectionism. In polling earlier this year by the Mellman Group, a majority of Tea Party supporters said they would favor a tax on imports from countries with lower environmental standards. In June, Bachmann suggested that the U.S. should somehow withdraw from the global economy, calling the Group of 20 summit “one short step” away from “one world government.”

“I don’t want the U.S. to be in a global economy where our economic future is bound to that of Zimbabwe,” she told a conservative radio host.

Republican Uneasiness

This set of policy prescriptions doesn’t sit well with the regulars inside the clubhouse at Bowling Green (Ky.) Country Club. The wooded retreat is frequented by Rand Paul and other local business owners. Even Paul’s supporters inside the modest clubhouse concede some uneasiness about their hometown candidate and his Tea Party compatriots. “If he were a mainstream Republican, this election would probably be over,” says physician Bill Wade, a Republican, sitting in the clubhouse.

Paul is for the elimination of everything from farm subsidies to mine safety laws and has said private businesses should have the right to discriminate. Although Kentucky farmers, including his in-laws, collected $3�billion in farm subsidy payments from 1995 through 2009, he has questioned the wisdom of such payments. “There are a good number of Republicans that are uncomfortable with certain Paul positions,” says Bill Betson, a county Republican chairman in the state.

As he argues against government, Paul often cites his experience as a small business owner. “Without the profit incentive, without meeting a payroll, they don’t make good decisions,” he says. “Government can’t do things as efficiently as the marketplace because they don’t get the right signals.” Asked whether business has anything to fear from the Tea Party or his own candidacy, Paul is emphatic. “No. I think business needs to be afraid of the vision of the Democrats who believe that government should be in charge of everything,” he says during a brief interview at an event in London, Ky. “We believe in term limits, a balanced-budget amendment. Read the bills. Those sound like pretty calm, mainstream ideas.”

A few minutes earlier, hammering away in his stump speech, Paul had trotted out Hitler to make a point about the dangers of economic uncertainty. “When you have chaos, bad things happen in your country,” he began. “In 1923 there was chaos in Germany. Out of that chaos, they elected Hitler. And what did Hitler do? He vilified certain people and said, ‘These people caused your problems.’ He blamed it on these people and he said, ‘Give me your liberty and I’ll give you security.’ There is still a danger to that.”

Back in the clubhouse, another waiting golfer, a Republican building supply company owner named Ferrell Price, confesses to uncertainty about Paul’s libertarian views. But, he adds, “Nancy Pelosi scares me a whole lot more than Rand Paul.”

Lerer is a reporter for Bloomberg News. McCormick is a reporter for Bloomberg News.



Transparency, Authenticity and Relevance Key When Marketing to These Quiet Agents of Change

By Thomas Pardee

Published: October 11, 2010

NEW YORK ( — They entered the consumer market during the stormiest economic climate since the Great Depression. And like the generation that was forever altered by the harsh sacrifices of World War II, millennials are likely to be permanently affected by the Great Recession and its long-term ripples. But these characteristics won’t change about the demographic: They are vocal, demanding and discerning.

TWITTER JOCKEY: Gabi Gregg (l.) won the new MTV 'TJ' position.
TWITTER JOCKEY: Gabi Gregg (l.) won the new MTV ‘TJ’ position.

Members of Generation Y — the demographic loosely defined as those born between 1980 on the early end and 2000 on the high end — are truly the product of the turbulent times in which they were reared, and present a challenge for marketers who dare target this shrewd and, yes, narcissistic generation.

Today, many millennials are unemployed; according to a Pew Research study released in February, a staggering 37% of 18 to 29-year-olds don’t have jobs, the highest share in three decades. Those who can afford to attend college are going to less-expensive state schools or community colleges and many are moving back home after graduation. More than a third depend on family members for regular financial assistance.

They’re tightening their belts and re-evaluating what makes them happy — and they’re spending money accordingly.

“We may not have lost jobs now, but we never had them in the first place,” said Gabi Gregg, a 24-year-old graduate of Mount Holyoke College who was recently chosen as MTV’s first “Twitter Jockey” in a nationwide competition. Ms. Gregg was awarded the coveted $100,000-a-year position — her first stable job — in which she’s charged with engaging millennials like herself in the topics that matter most to them. “Almost everyone I know is living paycheck to paycheck, just trying to survive. It’s easier to interact online than to go out and pay for dinner, or go to a movie.”

Paul Taylor, exec VP of the Pew Research Center, said finding footing on the first rung of the career ladder can be the hardest step for Gen Y.

“Young adults who start out in bad economic times suffer long-term consequences,” he said. “If you don’t find a job right out of college, it may affect you for as long as 10 to 15 years down the road.”

Aside from the economic wrench, millennials bear key characteristics that distinguish them: they live and die by social media and peer validation; they were raised in “peer-renting” households that placed them at the center of their families’ attention; they’re endlessly optimistic about their futures despite current hardships; and they care about social causes — at least enough to serve up a mean Facebook campaign.

But whether millennials can tangibly unite behind a cause is a key tension point between experts and millennials themselves. Nick Shore, head of research for MTV who’s currently conducting a study on the behavior patterns of Gen Y, suggests most millennials are willing to click the “like” button on Facebook to indicate support of a cause, but won’t venture too much further beyond the gesture.

This isn’t to mean that millennials don’t care, though. Experts agree that given their collective upbringing, for Gen Y, negotiation is the new rebellion. “They don’t see themselves as revolutionaries or reformers, they see themselves as quiet [agents of] change,” said Carol Phillips, founder of the market research firm Brand Amplitude, which specializes in millennial studies. “It’s about working within the system. They’ve never had to reject anything; they’ve just had to build on it. And their numbers suggest that they can be successful at it.”

This is a defining characteristic of the generation, according to author and economist Neil Howe, who coined the term “millennial” in the early ’90s in his first of several books on Gen Y. And like most millennial-related issues, technology plays a part. “If you ask a bunch of Gen Xers [born in the ’60s and ’70s] what they would do if they didn’t like where they worked, most would say ‘leave.’ But if you ask millennials that question, their attitude is, ‘Someone will fix it,'” Mr. Howe said. “They’ll start IM-ing each other, a few will get Mom and Dad on their cellphones, someone will call the local media, another will alert the congressman. Millennials trust in their institutions more than baby boomers or Gen Xers.”

Ms. Gregg cites the massive response to gay rights advocate Dan Savage’s recent “It Gets Better” YouTube project as a prime example of millennial might. In just a few weeks, hundreds of videos of LBGT adults and allies, including many millennials, had submitted videos with anti-bullying messages and support for gay youth. (The channel has since been viewed more than a million times.) Gen Y isn’t physically storming the castle walls, but Ms. Gregg said that doesn’t mean it’s not making its voice heard.

Millennials are also perhaps the most analytical and media-savvy consumers ever. Mr. Shore said that, while some characterize millennials as suspicious or cynical of old-school linear marketing ploys, they’re just better at seeing through them. “We shoot a beam of content to the audience, and they take it apart like light through a prism. … Millennials are super-deconstructive of any kind of media messaging.”

Mr. Shore said for this reason and others, transparency and authenticity are key in marketing to Gen Y, and he’s not alone — Ms. Phillips said Gen Y has a love/hate relationship with marketing. “They love brands, and they talk about them more than anything else, but they hate the interruptive model of advertising,” said Ms. Phillips. “[Millennials] like to see ads tailored to them. It’s not that they don’t want to see ads, they just don’t want to see ads for Cialis.”

Ms. Phillips says millennials are now tinged with a sense of frugality that will likely remain for the rest of their lives. Her research suggests they’re big into redistribution of materials, into sharing smaller houses and taking public transit or walking. They’ve dropped their cable and never used landline phones; they’re not eating out as much, and they’re paying down their debt. Though they will splurge on necessities (which now include smartphones) and rationalize that occasional Coach bag as a career investment, “they’ll go online and ask their friends for recs. They’re very careful shoppers.”

Ms. Phillips says millennials’ focus on experience helps explain why social currency is the new gold standard for smart marketers and advertisers. “If I can add value, they’ll tell my story for me,” she said. “It puts pressure on marketers to go back to their roots — it’s about engaging consumers with your message.”

Mr. Shore, who conducts focus groups for new programming with millennials from the earliest stages of a show’s creation, said an essential element in making this new concept of social currency work is actually not so new at all — linear programming, like the MTV Video Music Awards, around which millennials can engage on digital platforms like Twitter. After all, “smart and funny is the new rock and roll,” Mr. Shore said.

Mr. Howe said it’s no accident that millennials voted for President Obama by a 66% margin: Mr. Obama, who was Ad Age’s Marketer of the Year in 2008, relentlessly peddled the most millennial ideas possible — positivity and inclusiveness. Mr. Howe said these are values that millennials respond to most.

“Gen X slogans were ‘No rules, just right’ and ‘Grab life by the horns,’ all very in-your-face,” said Mr. Howe. “For millennials, it’s ‘Yes, we can,’ ‘Wii would like to play’ and ‘We’re all in this together’ from ‘High School Musical.’ It’s a different attitude. It has to be inclusive, and it has to look for a better day.”

While experts note millennials are also known for their arrogance, self-centeredness and reliance on technology, Ms. Phillips said marketers and older generations in general would do well to not pander, over-simplify or write them off too quickly. “They get it. They deeply get it,” she said. “And where they go, everyone else is going to follow.”

5 tips for marketing to millennials

Be fast
For millennials, there’s nothing worth saying that can’t be said in 140 characters or less. It’s not that they can’t handle long-form pitches, they just know you can do better. So do better.

Be clever
As Nick Shore, head of research for MTV, said, “Smart and funny is the new rock ‘n’ roll.” Millennials are set to be the most-educated generation on record, with the largest social-media platform (Facebook) having been famously born on a college campus. “With their roots in college culture, it’s no wonder eloquence and timing are more prized than ever for this generation. Err on the side of overestimating the millennial — as the Old Spice campaign shows — and sometimes they’ll surprise you.

Be transparent
Millennials may be arrogant and entitled, but they’re not stupid, and they know media exists to sell them things. So rather than pretending your branded beverage isn’t conspicuously placed in a TV character’s hand to entice them, look for new ways to make it funny. It will ring true with them, and they’ll appreciate the honesty. (Need a cue? Look no further than the deliciously self-referential “30 Rock.”)

Don’t “technologize” everything
By their own definition, millennials are in part defined by their use of and reliance on technology. But marketers should resist the urge to attempt to “speak their language” — Gen Yers can smell those ploys a mile away. Remember, millennials are digital natives — they don’t use technology; they live it, and they do so subconsciously.

Give them a reason to talk about you
Millennials don’t like ads, but they don’t mind marketing that’s non-invasive, non-interruptive and that adds something to their experience, either online or off. Whether it’s a fun and timely iPhone app, a targeted high-profile event or a personalized viral-video campaign, if you want your message to resonate with millennials, give them something to talk about. And if we know the first thing about millennials, talk they will.

Posted by: Patrick | September 8, 2010 – Social Media Is Fashion’s Newest Muse

Social Media Is Fashion’s Newest Muse
Leah Bourne, 09.07.10, 6:00 PM ET

Last month Marc Jacobs CEO Robert Duffy was so impressed with the amount of Twitter feedback from customers who wanted plus sizes that he tweeted, “We gotta do larger sizes,” to the company’s more than 26,000 followers. “I’m with you. As soon as I get back to NY I’m on it,” he wrote.

It was great news to Marc Jacobs’ fans who wear larger sizes. It also was evidence that, in this era of the social Web, fashion designers and retailers are no longer operating in an ivory tower or for solely the red carpet. Because of the close relationships they now have with customers on social networking sites, many have adopted an “ask and ye shall receive” policy.

Want your favorite designer to make ruby red handbags, re-issue a dress from last season or roll out plus sizes? You may only need to tweet or post a Facebook comment to get a response. While this strategy is hardly new for big corporations such as PepsiCo and JetBlue, many fashion companies are taking social media to new levels. Those that have are seeing the upside in terms of revenue and customer appreciation.

Want To Talk To Marc Jacobs? Click Here

Ann Taylor, which has struggled to boost sales in recent years, saw a 16% rise in same-store sales for the second quarter of 2010–and many analysts are pointing to the company’s aggressive use of social media for helping to lure new customers. Earlier this summer LOFT, which is owned by Ann Taylor, posted photos on its Facebook page of a new pair of pants worn by a skinny model. Many commenters complained, one writing: “Sure, they look great, if you’re 5’10” and a stick like the model in the photo.”

The retailer responded the next day. “You asked and we listened,” it wrote, posting several new photos of employees wearing the same pants in sizes ranging from 2 to 12. The response garnered almost 100 comments, most applauding LOFT’s effort. One woman wrote, “This is fab idea. Kudos to you for listening to your shoppers.” The campaign has since been copied by retailers such as Banana Republic.

Ann Taylor CEO Kay Krill says, “Online and social media are playing an increasing role and complementing our direct mail outreach, advertising and PR efforts. We’ve a learned a lot by dialoguing with our customer this way.”

The company has also benefited financially, she says. In the second quarter, ending June 30, LOFT posted a 55% increase in its e-commerce sales, while the Ann Taylor brand had a 29% jump in online sales.

Besides using real women on Facebook to model its latest styles, the company has expanded its petite offerings and its shoe collection, both based on customer feedback, most of which is now coming from social media channels.

It isn’t just major retail chains that are listening to the views of their customers online. Israel-based Daria Shualy, a former fashion editor, launched the website Sense of Fashion this year with the intention of helping indie designers sell their wares and better communicate with customers. Designers sell their merchandise directly from the site and are also able to poll potential customers about favorite colors and styles.

“The whole idea is to create a closeness between customers and designers,” says Shualy. “There is something about fashion that comes across as inaccessible. That’s all changing. Today consumers are expecting direct access and a say.”

This helps boost the bottom line. “We’ve seen an exact correlation on the back end for designers,” she says. “The more they are interacting with their customers, the more they are selling.”

One Sense of Fashion merchant, Francesca Audelo, who started a line of vintage- inspired hair accessories called FancyThat in Los Angeles, regularly polls her customers on everything from feather colors to favorite styles. “The comments from my customers have shaped the way I design my headbands, and even the way I’ve set prices,” she says. “I have lowered and raised my prices based on customer feedback.”

Audelo, who attests to spending most of her day online using various forms of social media, is among a new breed of entrepreneurs who have become online friends with her customers. “I keep in touch with customers,” she says. “I know who they are and what they like.”

New York-based handbag designer Dareen Hakim, who sells to Henri Bendel and specialty retailer Intermix, has developed a similarly close relationship with her customers. Some offer color suggestions, while others have requested a clutch in a certain material via e-mail or on her Facebook fan page. “Trends are moving so quickly and fashion companies have to be nimble and react quickly to their customers,” she says.

By the end of the year Hakim, whose handbags are already customizable, hopes to offer customers the opportunity to make color and leather suggestions right on her website; she says she will then produce the suggested designs if there is enough interest.

But Hakim and other fashion designers also must learn to balance responding to digital customer feedback while maintaining a consistent brand identity. “It’s an enormous challenge,” Hakim says. “A brand today has to be both a reflection of a designer while remaining open to the suggestions of customers.”

Shauna Mei, who is launching online specialty retailer AHALife this month, aims for her site to be a two-way conversation. “I want to create a dialogue between my site, brands and shoppers, but it isn’t a democracy,” she says. “We need to filter our customers’ suggestions.”

Similar to Daily Candy‘s newsletter, one new product will be introduced on AHALife daily, handpicked by curators like Diane von Furstenberg and Tim Gunn. Shopper will also be able to suggest items for the site. Stumble across a hand-blown glass candy dish in Italy or a basket maker in rural Ohio? Make the suggestion and it might just be sold on the site. “We are relying on our customers,” Mei says, “and we will be listening.”

Athletic wear retailer Lululemon has been successful striking this balance by attaching its unique brand of customer service to its brand identity. Communication and dialogue via social media have become central to the Vancouver-based company, whose second quarter operating profits more than tripled since the same period last year. “We learn on Facebook and through social media what are our guests are really screaming for, and we actually use the feedback,” says Lululemon CEO Christine Day.

Lululemon offers a form on its website and in its stores for customer suggestions. Comments on the Lululemon Facebook page and via Twitter almost always get a response. With more than 183,000 Facebook fans and nearly 40,000 Twitter followers, that is no small task.

The company has adjusted everything from where pockets sit on pants to the placement of waistbands on running shorts, and even learned that it needed to stock more small sizes, based on online customer feedback. It doesn’t go unnoticed. Customers regularly tweet about the great service, then get a thank you in response from the Lululemon social media team.

Posted by: Patrick | September 7, 2010 Spending A Lot On Facebook

Social Media
Spending A Lot On Facebook
Adam Ostrow, 08.31.10, 11:00 AM ET

In the social media world a number of trends are dictating how, why and where money gets spent–trends that will push the industry past the $2 billion mark in 2011, according to eMarketer’s projections.

Not surprisingly, the biggest beneficiary of the current euphoria around social is Facebook, with several estimates now pegging the company’s 2010 revenue at better than $1 billion. That growth is being fueled in part by what some advertisers see as competition to scoring prime advertising space on the site.

“Most of our clients see a real need to spend a lot on Facebook ads,” says Andrea Wolinetz, a partner at MEC Global, which represents the likes of Ikea, AT&T and Citi. “There’s so much noise and clutter on Facebook now, that spending a good deal has become important in order to be heard.”

There’s also a growing sense that social media advertising can deliver a return on investment. Neil Kleiner, head of social media at Havas Media UK says, “We’ve found advertising on social networks to be very effective, but mainly as a part of a larger piece of activity that involved more ‘traditional’ social media techniques … ads on social media work best when they drive interaction and engagement. Interaction and engagement can then drive purchase.”

Kleiner, whose firm does work for brands ranging from McDonald’s to Warner Bros., adds that Facebook advertising has become a “default for most brands as a part of their media spend.”

Twitter’s Experimental Phase
After years of fielding questions about how it plans to make money, Twitter has launched numerous experimental business models over the past several months. At the forefront is Promoted Tweets, a program that inserts a brand-sponsored topic into Twitter’s “trending topics” list and presents a tweet from that sponsor to users, in hopes of generating retweets, replies and other forms of engagement.

Early testers of the program include Virgin America and Coca-Cola, the latter of which reported 86 million impressions and an “engagement rate” of 6% back when it used the program in June during the World Cup. More recently, the online brokerage firm Zecco reported that engagement on its promoted tweets was 50% higher than its regular tweets, with “200 to 300% increases in some cases.”

Case studies are still limited, though. “Promoted Tweets have not seen that much traction [with my clients],” Kleiner says, though he sees an opportunity to “add real value to a long tail of advertisers.” For the moment though, that long tail is mostly left out of Promoted Tweets, as the program remains in limited beta.

As the program sees public rollout later this year, the results could be significant for Twitter and advertisers. In its report, eMarketer said it expects “spending on the microblogging service [to] be low in 2010,” but adds that, “the potential for 2011 and beyond could be dramatic if it proves that its ‘resonance’ model of measuring advertising effectiveness works.”

Location Excites Marketers, Maybe More Than Consumers
The latest extension of social–knowing not just what your friends are doing but where they’re doing it–is one of the hottest trends of the year.

The field collectively referred to as “location” has marketers from Starbucks to Best Buy excited about the possibilities of increasing foot traffic through programs that reward customers for “checking in” and sharing their location and brand affinity with their friends.

That said, such programs are largely experimental, and many of the startups in the space lack the critical mass to significantly move the needle for big brands. “Foursquare is the buzz word on a lot of people’s lips, but it has such a comparatively small audience that are niche to the point of incestuous,” Kleiner says. “It’s mainly used by people that work in marketing, not ‘normal’ people.”

Still, getting started in the location realm requires less of an investment than competing for space on Facebook. Says Wolinetz: “We spend a lot of our time testing and focusing interest in location-based services and Twitter, as our clients are eager to ‘master’ these emerging platforms, and [they] generally require less of a paid media investment than Facebook does.”

Kleiner concedes that he’s bullish on the potential of Facebook getting into location with the recent launch of Places, though the tools aren’t yet there for advertisers. “We will have some real mass to play with when Facebook allows advertisers to buy against location,” he says.

Social No Longer Sits at the Kids’ Table
While the market sorts out the winners and losers from a platform perspective, one thing that’s becoming clear is that social–which eMarketer estimates will account for 6.7% of total online ad spend this year–is being thought of in a much broader light than even the increasingly optimistic projections show.

“Social campaigns used to be more siloed from the rest of the communications and marketing strategies,” says Wolinetz. “Now we’re seeing social as either an extension of an overall activation idea that occurs throughout other media outlets, or conversely, the marketing/communication strategy is at its heart and inception social, and we’re using other media outlets to drive awareness and scale.”

And while that might mean social’s share of ad dollars is still relatively small, its importance within organizations is as high as it has ever been. “The biggest shift for us is that we are now seeing brands move away from pure campaign planning altogether and are allowing social media to be the bedrock for a 24-7, 365 days a year chance to engage their customers,” says Kleiner.

Adam Ostrow is editor in chief at Mashable, a widely read blog that covers the latest technologies, trends and people that are driving the current evolution of the Web.

Is It Time to Listen to Rep. Paul Ryan’s Economic Prescription?
Brian Wingfield, 09.13.10, 12:00 AM ET

Paul Ryan, a professional policy wonk from Wisconsin, sees trouble ahead if the country stays on its present course. The cost of entitlement programs like Medicare and Social Security is racing ahead, at the same time that the federal government is ladling out dollars to fight the recession and collecting less in tax revenue because of the recession. Meanwhile, he argues, we are contending with chronically high unemployment, insurmountable debt payments and a crushing tax burden that could kill U.S. competitiveness. Maybe, just maybe, those entitlements have to be redesigned. He’s not quite saying, “Stop Social Security!,” but he is getting dangerously close to the thought.

Who is this guy? It would be no surprise if he turned out to be a wealthy financier who had taken up budget policy as a retirement hobby (like Peter G. Peterson) or a professional forecaster whose views on consumer spending are bearish (like Gary Shilling). The surprise is that Ryan is an elected official. He’s running for election to a seventh term in Congress, representing a district with a razor-thin Republican edge south of Milwaukee.

Mess with Social Security? Are voters ready for this? Maybe they are. Those trillion-dollar deficits can’t go on much longer.

“We have to give the country a very clear choice,” Ryan, 40, says as he’s campaigning in his home state on a mid-August afternoon. “Do you want the American idea, which is an opportunity society with a sturdy safety net, or do you want to have the cradle-to-grave, Western European-style social welfare state?”

Ryan’s choice is clear, and it’s not something many Americans of either party will easily swallow. His “Roadmap for America’s Future,” both a policy paper and a proposed bill, calls for reducing the federal deficit and debt in decades to come by partly privatizing and trimming Social Security and Medicare, freezing most government programs and instituting a simplified, optional two-tier tax system that would cut taxes for the rich.

Skeptics say his roadmap will run the country into a ditch. They say that, despite eviscerating Medicare, the plan won’t control spiraling health care costs. They say that it won’t cut the deficit drastically and could raise taxes on some people.

Yet Americans will need to take some version of this medicine, and Ryan has, as some detractors concede, at least started the conversation. President Obama called the roadmap (97 pages in the short version) “a serious proposal.” Ryan is seen as the GOP’s answer to its reputation as the “party of no” and as such has embarrassed Democrats for their lack of a comparable deficit-cutting plan. This backbencher from Janesville (pop. 63,000) and Ayn Rand admirer could be the future economic idea man for the Republican Party.

“People see that this debt crisis is real and right in front of us,” says Ryan. They are paying attention to him, he adds, “because, unfortunately, I’m the only person who’s put a plan out there.”

Ryan worked as a staffer for Senator Bob Kasten (R–Wis.) while attending Miami U. in Ohio and just after college. He hopscotched among political jobs in the mid-1990s, writing speeches for the late representative Jack Kemp (R–N.Y.) and directing legislation for Senator Sam Brownback (R–Kans.). He was elected to Congress at 28 in 1998. His private-sector experience includes a brief stint as a marketing consultant for Ryan Inc. Central (a site construction business owned by his cousins’ family) and part-time jobs waiting tables and occasionally driving the Wienermobile during a summer gig at Oscar Mayer.

How The Roadmap Would Work

Austerity plans surprisingly are cropping up in leftist locales, like Britain, Spain and Greece. Even Denmark, famous for its unfrayed safety net, is cutting the length of its unemployment benefits from four years to two to deal with its financial troubles. Washington will need to take action soon to keep the U.S. economy from sinking deeper. The Congressional Budget Office projects that federal debt would, by 2020, rise to nearly 100% of GDP–compared with 62% today and 36% only three years ago–if the Bush tax cuts are extended, the alternative minimum tax is indexed for inflation and current spending policies remain in place. According to the Social Security Board of Trustees, by 2037 the program’s trust funds will be depleted. In June Federal Reserve Chairman Ben S. Bernanke warned that unless action is taken, “We will have neither financial stability nor healthy economic growth.”

To keep that from happening, Ryan proposes to freeze nondefense discretionary spending–15% of the budget–for ten years and essentially move to more means-tested programs to cover retirees and sick people. His tax plan would eliminate itemized deductions and set rates at 10% for the first $50,000 of income on an individual return and 25% for income above that. He would replace the corporate income tax with an 8.5% business consumption tax.

Paul Van de Water of the nonpartisan Center on Budget & Policy Priorities points out that, by one analysis, the plan will slash by 50% the income tax liability of the richest 1% in 2014 while 75% of all Americans will see their tax burdens rise, partly due to the consumption tax being passed on to consumers.

Ryan counters that his tax system is progressive, even though it lowers tax rates on the rich, because it cuts out itemized deductions and loopholes frequently enjoyed by wealthy earners. Moreover, the idea behind lowering taxes isn’t to redistribute income, he says; it’s to encourage investment in the U.S. The business consumption tax would be levied on value added and inevitably would be passed along in the prices of goods and services.

Ryan admits his plan for Social Security could lead to lower benefits for people now under 55. “We don’t have a choice,” he says. These younger workers would have the option to put their Social Security money in an investment account managed by Uncle Sam but subject to market fluctuations.

He would wipe out ObamaCare and replace it with a voucher-based system in which adults get a $2,300 refundable tax credit to pay for health care. Similarly, Medicare recipients under 55 today would, on retirement, get vouchers to buy private insurance. He would raise the eligibility age for both Social Security and Medicare to 69 and 70, respectively, by the end of this century. How does this tame health care costs? By creating competition among doctors, price transparency and more “skin in the game” for consumers. “This requires some faith in the marketplace,” he says.

It also requires faith in which numbers to believe. According to the nonpartisan Tax Policy Center, the Ryan roadmap would decrease revenue by $4 trillion over the next ten years, compared to an extension of current spending and revenue policies. “Our numbers could be right, they could be right,” says Ryan.

Only 14 other GOP members in all of Congress have endorsed the plan. In other words, it has no chance of becoming law in its present form. “My goal was to get other plans launched, to ignite and start a debate,” Ryan says. The congressman blames the inability to put his ideas in motion on “the crowd that runs Washington now.” But even if Republicans win convincingly in November’s congressional elections, he’ll still have to face opposition from the other side of the aisle and the President. Ryan’s strategy, then, is to win over moderate Democrats and, if the GOP takes control of the House, to force change.

“I see dozens of reinforcements coming in the fall to help us take this fiscal situation seriously so we can get this thing fixed,” he says.

How The Roadmap Would Work

In August Nobel Prize-winning economist and New York Times columnist, Paul Krugman, predictably called Ryan a “flimflam man” and announced that the roadmap is a “fraud.”

But Ryan is still the only member of Congress with a plan. According to Ryan, that’s because other lawmakers are too interested in self-preservation. “We have more ‘be-ers’ up here than ‘doers,'” says Ryan of Washington. “People want to be a congressman rather than actually do something.”

Laurence Kotlikoff
Boston University
Kotlikoff has already declared the U.S. bankrupt, and he says the U.S. must take swift action to prevent a run on its debt. Solution: Replace income tax with a progressive consumption tax and overhaul entitlement programs.

Peter G. Peterson
Peter G. Peterson Foundation
Blackstone Group cofounder has been preaching fiscal restraint for years. In 2008 gave foundation $1 billion to educate the public on the need for a simpler tax code, greater savings rate, entitlement reform and debt reduction.

Gary Shilling
A. Gary Shilling & Co.
Bearish FORBES columnist predicts slow growth and deflation as both governments and consumers tighten their belts. Commodity prices will slump. Investment advice: Sell cyclical stocks, buy long-term Treasuries and seek refuge in the U.S. dollar.

How The Roadmap Would Work

Posted by: Patrick | September 2, 2010 Why Wall St. Is Deserting Obama

The New York Times

August 30, 2010


Daniel S. Loeb, the hedge fund manager, was one of Barack Obama’s biggest backers in the 2008 presidential campaign.

A registered Democrat, Mr. Loeb has given and raised hundreds of thousands of dollars for Democrats. Less than a year ago, he was considered to be among the Wall Street elite still close enough to the White House to be invited to a speech in Lower Manhattan, where President Obama outlined the need for a financial regulatory overhaul.

So it came as quite a surprise on Friday, when Mr. Loeb sent a letter to his investors that sounded as if he were preparing to join Glenn Beck in Washington over the weekend.

“As every student of American history knows, this country’s core founding principles included nonpunitive taxation, constitutionally guaranteed protections against persecution of the minority and an inexorable right of self-determination,” he wrote. “Washington has taken actions over the past months, like the Goldman suit that seem designed to fracture the populace by pulling capital and power from the hands of some and putting it in the hands of others.”

Over the weekend, the letter, with quotations from Thomas Jefferson, Ronald Reagan and President Obama, was forwarded around the circles of the moneyed elite, from the Hamptons to Silicon Valley. Mr. Loeb’s jeremiad illustrates how some of the president’s former friends on Wall Street and in business now feel about Washington.

Mr. Loeb isn’t the first Wall Streeter to turn on the president. Steven A. Cohen, founder of the hedge fund SAC Capital Advisors and a supporter of the Obama campaign, recently held a meeting with Republican candidates in his home in Greenwich, Conn., to strategize about the midterm elections, according to Absolute Return magazine.

Other onetime supporters, like Jamie Dimon, chief executive of JPMorgan Chase, also feel burned by the Obama administration, people close to him say.

That the honeymoon between Washington and Wall Street has turned to bitter recriminations is not news, given that the administration had long pledged to revamp Wall Street regulation in the wake of a crisis that rattled the global financial system.

Less than two years ago, Democrats received 70 percent of the donations from Wall Street; since June, when the financial regulation bill was nearing passage, Republicans were receiving 68 percent of the donations, according to an analysis by the Center for Responsive Politics, a nonpartisan research group.

But what is surprising is that some of the president’s biggest supporters have so publicly derided his policies, even at the risk of hurting their ability to influence the party in the future. Issues like the carry-interest tax on private equity or the Volcker Rule have become personal.

Why so personal? The prevailing view is that bankers, hedge fund mangers and traders supported the Obama candidacy because he appealed to their egos.

Mr. Obama was viewed as a member of the elite, an Ivy League graduate (Columbia, class of ’83, the same as Mr. Loeb), president of The Harvard Law Review — he was supposed to be just like them. President Obama was the “intelligent” choice, the same way they felt about themselves. They say that they knew he would seek higher taxes and tighter regulation; that was O.K. What they say they did not realize was that they were going to be painted as villains.

That Wall Street view of itself as a victim has prompted much of the private murmurings and the unfortunate — or worse — outburst from Stephen A. Schwarzman, who likened the administration’s plan for taxes on private equity to “when Hitler invaded Poland in 1939.” Mr. Schwarzman later apologized for the “inappropriate analogy.”

Now Mr. Loeb, who manages about $3.4 billion at his firm, Third Point Partners, has articulated in a more thoughtful way what a lot of others in finance and business are saying.

“We have given a great deal of thought about the impact that public policy has on individual companies, industries and the economy generally,” he said. Third Point has sold its investments in big banks as a result of “regulatory headwinds”; got rid of its stake in Wellpoint, which Mr. Loeb described as “a statistically cheap stock owned by several hedge funds, but which we saw as being overly exposed to unpredictable government regulation”; and taken a short position against for-profit education companies as a result of “the government’s increased willingness to use its regulatory muscle.”

Mr. Loeb’s views, irrespective of their validity, point to a bigger problem for the economy: If business leaders have a such a distrust of government, they won’t invest in the country. And perception is becoming reality.

Just last week, Paul S. Otellini, chief executive of Intel, said at a dinner at the Aspen Forum of the Technology Policy Institute that “the next big thing will not be invented here. Jobs will not be created here.”

Mr. Otellini has overseen two big acquisitions in the last two weeks — the $7.7 billion takeover of the security software maker McAfee and the $1.4 billion deal for the wireless chip unit of Infineon Technologies. If he is true to his word, those deals will most likely lead to job cuts in the United States, not job creation.

Mr. Loeb declined to comment.

But it seems clear that he wrote the letter because so much of his fund’s investments were being driven by the impact of politics. It appears he is no longer betting that a chief executive will make his numbers; he’s betting on what legislation Congress will pass next.

Mr. Loeb, whose poison pen is legendary, usually targets obstinate corporate managers or rivals. In one such note to the chief executive of Star Gas Partners, Mr. Loeb wrote: “It is time for you to step down from your role as C.E.O. and director so that you can do what you do best: retreat to your waterfront mansion in the Hamptons where you can play tennis and hobnob with your fellow socialites.”

In his letter to investors, he took issue with a number of Washington initiatives, including the Credit Card Act of 2009 and a proposed “enterprise tax” that would be levied on hedge fund managers who sell their firms.

“So long as our leaders tell us that we must trust them to regulate and redistribute our way back to prosperity, we will not break out of this economic quagmire,” Mr. Loeb wrote.

“Perhaps our leaders will awaken to the fact that free market capitalism is the best system to allocate resources and create innovation, growth and jobs,” he continued. “Perhaps too, a cloven-hoofed, bristly haired mammal will become airborne and the rosette-like marking of a certain breed of ferocious feline will become altered. In other words, we are not holding our breath.”

Critics of Wall Street will rightfully complain that it was the actions of free market capitalists that prompted a push for regulation. On that point, Mr. Loeb does not entirely disagree.

“Many people see the collapse of the subprime markets, along with the failure and subsequent rescue of many banks, as failures of capitalism rather than a result of a vile stew of inept management, unaccountable boards of directors and overmatched regulators not just asleep, but comatose, at the proverbial switch,” he wrote. “It is easy to see why so many people have concluded that the entire system is rigged.”

The latest news on mergers and acquisitions can be found at

Get To The Point from MarketingProfs

Old Spice Guy’s Viral Coup: How He Did It

From July 13 to 14, “Old Spice Guy” (towel-clad spokesman Isaiah Mustafah) responded to users’ Old Spice references at YouTube. Short YouTube video clips featured OSG charming users with witty repartee. Links to the videos appeared on Twitter like that.The resulting user stats were impressive: Upload views at YouTube, over 83 million; subscribers to the YouTube channel. over 140,000; Twitter followers, 92,000; Facebook Likes, 686,000. Now, that’s a lot of listening fans!

How did Old Spice (and agency Wieden + Kennedy) score this multimedia coup? Here are the key ingredients that made this campaign a mega-winner:

A brave, playful strategy. Old Spice hails back to the 1930s. Observing the ironic attitude of modern man, it inversed its persona, creating a Manly Man so impossibly smug (yet so self-deprecating) that he was lovable.

Relinquishing of content. Appropriations (and imitations) of its “The Man Your Man Could Smell Like” ad appeared in droves (case in point). Users were inspired, having fun. Old Spice let them be—allowing word about its content to spread.

Acknowledging users while staying true to the original ad. Its decision to have Mustafa answer questions worked because people love acknowledgement. The material was also thoughtful and well-written without breaking the universe created around OSG; there he was, in the bathroom!

Clever use of media (Twitter, YouTube). Inspired media morphs made the content a medium in itself. Observe: a marriage proposal via OSG. (We’d totally say yes!)

Continuing the discussion. The effort couldn’t last forever, but the goodbye was epic and well-timed. To ease separation anxiety, Old Spice launched a second TV ad featuring Mustafa. And users who still want to play with OSG can do so on Facebook and Twitter.

The Po!nt: You, too, can enjoy the sweet smell of success. Brands still have the power to create beloved icons and spark crowd love. The key these days is to give folks the chance to build it with you.

Looking for great social media marketing data? MarketingProfs reviewed hundreds of research sources to create our most recent Social Media Marketing Factbook (May 2010). With 140 pages and 102 charts, it is full of relevant social media marketing stats and trends. The Social Media Marketing Factbook is Part 5 of the complete Digital Marketing Factbook (our 296-page full report).

Apple And Google Set To Capitalize (And Compete) On Internet TV
Laurie Sullivan, Aug 16, 2010 06:01 PM
Piper Jaffray/set top-internet tv

Connected TVs and set-top devices enabling consumers to view video from across the Internet on TVs could ultimately drive online video ads and marketing content budgets. The online video ad segment should grow at a 39% compounded annual growth rate (CAGR) during the next five years, becoming a more than $5 billion market by 2014, estimates analyst firm Piper Jaffray, which released a series of reports Monday related to IPTV.

The slow shift of consumers spending more time with online video has already begun. The report explains some private video advertising networks admit to securing at least seven-figure budgets from major TV advertisers. Ad networks like Tremor, and those producing proprietary content like Adconion or BBE, could benefit from the transition. The bottom line, according to Piper Jaffray analysts, points to numerous Internet companies like Apple, Google and Yahoo, as well as Rovi, also capitalizing on this move.

Expect Google TV to comprise about 15% of the connected TVs by 2013, rising to 18% by 2014, according to Piper Jaffray. Intel’s CE4100 SoC and Google’s Android operating system is the technology platform that Sony and Logitech will build into products and release in the fall. Other set-top boxes, media players and TV makers have Google TV products slated for the first quarter in 2011.

Google’s share of connected TV devices will contribute to about 32 million units in 2010, reaching 180 million units in four years, but Piper Jaffray analyst believe the Mountain View, Calif., tech company will have competition from Cupertino, Calif.-based Apple.

Apple tried to launch Apple TV in March 2007, but the box failed to catch on. A Piper Jaffray white paper describes a data center in Maiden, NC that the company’s analysts believe could serve as the main control room for a cloud-based service for iTunes video. A growing family of connected Apple devices it makes sense Apple would deliver a cloud-based media service to leverage the lineup of connected devices, from iPhone to iPad to iPod Touch to Apple TV to Macs.

As part of this move, analysts at Piper Jaffray expect Apple to update Apple TV with limited storage, lower price, and focus on accessing content from the Internet and on a local network. It then becomes a stepping-stone to an all-in-one connected television. The move could position Apple to enter the television market with a connected-HDTV in the next two to four years, along with full content services.

Piper Jaffray estimates of the 220 million flat panel TVs that will sell in 2012, about 65%, or 143 million units, will become Internet-connected. Of those, Apple could sell 1.4 million units, contributing 3% to revenue in 2012.

The white paper hypothesizes about solutions to Apple CEO Steve Jobs’ challenges related to Apple TV. Create an all-in-one, connected TV that does not require an extra box, for starters. Then launch an Internet-based iTunes TV Pass at $50-$90 per month. These products could replace a consumer’s monthly $85 cable bill and offer access to a variety of select shows on premium channels. Additionally, this hurdle could be solved with the addition of an App Store for the TV, offering apps like Hulu Plus available today for consumers with an iPhone or an iPad, and TV content through Hulu for $10 per month.

The ad-based Internet video will likely become the choice model to generate revenue because consumers view it as being close to the traditional TV viewing experience, according to the report. Piper Jaffray analysts expect ad -based services will capture margins between 20% and 25%. Hulu, for example, commands a significant premium cost per thousand ad views (CPM) vs. traditional broadcast TV. While these rates vary, depending on content and time of broadcast, the analysts firm estimates the average broadcast TV CPM is approximately $15, while Hulu’s average CPM is more than $25.

Recently launched Hulu Plus, a $9.99 per month subscription service for additional ad-based content on Hulu, represents a hybrid subscription or ad-based model that could also provide on-the-go mobile or TV-based access to online video content.

Similar to Piper Jaffray, analyst at Parks Associates believe advertising, including delivery and analytics, provides Google with enormous potential. But in a white paper released in June, Park Associates analysts point to troubled television manufacturers trying to determine how big their share of potential revenue for online content will become.

To date, the business models between television manufacturers and content providers or aggregators have been revenue sharing based on online video orders. As a result, the TV manufacturer may get a few pennies per video on demand orders. Online video revenues on connected CE devices other than the game console could reach $180 million in 2010, reaching $800 million by 2014.

Other concerns Park Associates highlights includes the ability to search and discover, and how much high-quality content Google can actually contribute through YouTube.


Posted by: Patrick | August 10, 2010 GOP cash woes threaten fall gains

GOP cash woes threaten fall gains

By: Jonathan Martin
August 6, 2010 06:46 PM EDT
KANSAS CITY, Mo. – The Republican National Committee is entering the fall election season with dire financial problems and, to an unprecedented degree, will be forced to rely upon outside groups to fund activities traditionally paid for by the national party.While embattled RNC Chairman Michael Steele and a top aide sought to use the party’s summer meeting here to publicly put the best face on the cash shortage, behind the scenes senior Republicans expressed grave concern that their fundraising deficiencies may be the difference between a good election year and a great one.

With $11 million on hand as of the end of June—and about $2 million in reported debt—the RNC’s paid get-out-the-vote (GOTV) effort will be limited to just targeted House races, POLITICO has learned.

And the committee is only going to be able to spend money on those relatively inexpensive House races thanks to a $10 million line of credit that was approved at the meeting here. Until then, said one incredulous Republican, there was no money available for paid GOTV activities like mailers and automated phone calls.

Even with the line of credit, though, the party can’t afford to assist their many gubernatorial and Senate candidates with any dollars for paid voter contact and will have to effectively outsource that operation.

The expectation – and it’s only that because the party is barred from coordinating with third-party groups – is that the new organizations that have sprung up amid the RNC’s woes will step in to pay for such GOTV efforts in statewide contests.

Senior Republicans are particularly hopeful that the group American Crossroads, founded in part by Karl Rove and Ed Gillespie, is planning to fill the void in turnout funding.

“You’re not going to spend $200,000 on micro-targeting if all you’re doing is TV ads,” said one top GOP operative, alluding to the money American Crossroads has spent so far to identify voters.

POLITICO reported last month that the third-party group has hired veteran Republican strategist Carl Forti to run a micro-targeting effort and, according to a “concept paper,” would spend $15 million on “targeted grassroots advocacy” – paid voter contact.

The RNC will, though, be able to pay for volunteer GOTV activities for the final three months, such as the costs associated with housing and enabling phone banks, and they already have 285 “Victory” offices to carry out such tasks.

Because of laws against coordination, spokesmen for both the RNC and American Crossroads were cagey in describing their efforts.

“We are thrilled they have joined the fight,” said RNC spokesman Doug Heye of the new groups, noting that Democrats have had effective outside groups in previous cycles while Republicans paid a price for not having any such outfits.

“American Crossroads has said from the get-go that we’ll be active in get-out-the-vote,” said spokesman Jonathan Collegio, promising “in-depth voter contact programs in our targeted states and races.”

But the RNC’s cash-flow problems will impact far more than just turnout operations. The RNC has given the two congressional campaign committees, the National Republican Congressional Committee and the National Republican Senatorial Committee, only $2 million each so far this election cycle and top GOP officials tell POLITICO that there isn’t any more available to be transferred.

So as Republicans try to regain control of the House and Senate, they’ll do so with only $4 million of already-spent dollars from the national committee. By contrast, in the 2006 election cycle the RNC transferred a total of over $57 million to the two campaign committees and independent expenditure efforts to help congressional candidates.

The NRCC alone received $17 million from the RNC then. The lack of resources could especially hamper the House Republican effort this year as they are badly trailing their Democratic counterparts financially.

At the state level, the impact of the RNC’s cash shortage is just as acute.

Consider Ohio and Missouri. Both states had hard-fought Senate races in 2006 and will again this election. But the two state parties and their candidates will get significantly less help than they did four years ago, GOP officials tell POLITICO. Ohio got over $5 million from the RNC in 2006—the last midterm election—but is slated to get just over $1 million this year. It’ll be just as bad for Missouri, which will also get just a slice of the $5 million the state received in 2006.

“If our ground game is not funded, it will really be tough,” said Ann Wagner, campaign chair for Senate hopeful Rep. Roy Blunt and a former Missouri GOP state chair and RNC co-chair.

Wagner said that while she was “hopeful” that the RNC would come up with the cash, she was also counting on assistance from other groups outside the party structure.

“It’s going to be a problem if it doesn’t come from somewhere,” she said.

An Ohio Republican said it would have a significant impact on the party’s field operation if they got a fifth of the money they received four years ago.

“I’m hoping that they’ll raise their commitment,” said the Republican.

Asked about concerns from the states about the disparity between what they’re getting this year compared to previous years, Steele declined to answer the question.

“Let’s stop that, it’s not true,” he insisted to reporters here. “Were you watching the presentation?”

Steele was alluding to RNC Chief of Staff Mike Leavitt’s PowerPoint-equipped speech to committee members here Friday morning in which he stressed what they had raised, not had currently available, and repeatedly noted that the party didn’t have a president to help them raise money this year.

Yet as Republicans privately gripe about the committee’s fiscal straits and blame it partly on the rocky stewardship of Steele, there was little appetite here to take after the already-embattled chairman.

Even critics of the gaffe-prone Steele said the final months before such a promising election was not the time to litigate his tenure.

John Sununu, the former New Hampshire governor and the state’s current GOP chair, stood up at a private breakfast on Thursday morning here with Steele present and said that with about 90 days until the election Republicans ought not be trying to hurt the chairman.

That’s because, Sununu said, according to multiple sources in the room, Steele does a pretty good job of hurting himself.

The comment was said somewhat light-heartedly, but it reflects the consensus among high-level GOP officials: avoid criticizing Steele between now and Election Day and make the best of a difficult situation.

Financially, that means turning to alternate entities to boost Republican candidates.

“You’ve got to look at the complete picture,” said Mississippi GOP Committeeman Henry Barbour, citing the strong fundraising from groups such as American Crossroads, the Norm Coleman-and-Fred Malek-led American Action Network and the Republican Governors Association. “They’ll help make up any gap that may be there.”

Plus, Barbour noted the more favorable terrain on which the GOP is running this year.

“You always want more money but I’ll take momentum and the climate over more money any time,” agreed Massachusetts GOP Committeeman Ron Kaufman.

But if the GOP comes close but falls just short of recapturing control of the House—widely seen as the more likely of the two chambers to flip—it’ll be in part because they didn’t have the cash.

“Those last 10 or 15 seats [that would hand Republicans the House majority] come down to cash,” said a senior GOP operative. “And the way we’re going now we could be two-point losers instead of one-point winners.”

© 2010 Capitol News Company, LLC

The best thing that could happen to the GOP is to have someone like Paul Ryan become the face and voice of the party.  The GOP is in desperate need of “re-branding” and the current house leadership, particularly Boehner doesn’t have a clue.  Ryan has plenty of intellectual firepower and the ability to communicate in plain speak about very complex fiscal and budget problems.  Plus he’s driven to do the real work of how to restrain the size and influence of the Federal government  rather than just falling back on old tired GOP platitudes of smaller government, less spending, yada yada yada.  Check out Ryan’s “Roadmap for America’s Future“.

I would even go so far as to say that if the GOP wins a House majority this November, that Ryan should shake up the leadership and run for Speaker of the House.


A Young Republican with a Sweeping Agenda

Darren Hauck for The New York Times

Representative Paul D. Ryan, a 12-year veteran at 40, meeting with a women’s group in June in Burlington, part of his southeastern Wisconsin district.

Published: August 2, 2010

ELKHORN, Wis. — Still early on a recent weekday morning, the mostly elderly crowd that half-filled a hall in this small town looked like it might be thinking about another cup of coffee. But Representative Paul D. Ryan, the rangy Republican who represents this southeastern Wisconsin district, was in full PowerPoint roll, gesturing and barking out, in staccato tones, why the nation must make major changes to Social Security and Medicare.

Darren Hauck for The New York Times
Representative Paul D. Ryan listening to a constituent in June at a gathering in Burlington, Wis.

“The question is, Could this happen here?” Mr. Ryan said, as an image of a burning street from the recent riots in Greece flashed on a screen behind him.

“Do you want this welfare state, which puts us down this tipping point, advances this culture of dependency, moves us away from the America idea toward more of a Western European social democracy welfare state? Do you want that which invites a debt crisis? Or the alternative party is offering you an opportunity society on top of a safety net where we reclaim these ideals and principles that founded this country. That’s what we owe you. And if we get back in office and we shrink from that challenge, shame on us.”

In this highly charged election season with both houses of Congress at stake, not a lot of politicians are lining up publicly behind Mr. Ryan. He is, nonetheless, suddenly a rising star in some corners. And like many other politicians whose ideas were once considered extreme, only to later be mainstream — like Ronald Reagan — Mr. Ryan is seen as on the leading edge of something.

Why? His “Roadmap for America’s Future,” an elaborate (critics say drastic) plan that aims to erase the federal debt by 2063, simplify the tax code and significantly alter (his critics say eviscerate) Medicare and Social Security. When asked to handicap the 2012 Republican presidential field, Sarah Palin called Mr. Ryan “sharp.” Newt Gingrich dubbed him “extraordinarily formidable.” And, in a column, George Will imagined him as vice president to a President Mitch Daniels (now the Republican governor of Indiana).

Mr. Ryan, 40 and the ranking Republican on the House budget committee, has been in Congress 12 years, but it may have been President Obama who gave him and his Roadmap the broadest attention yet. This year, Mr. Obama alluded to the plan as a “serious proposal,” though the White House promptly made it clear that it had problems with its details.

Mr. Ryan’s Roadmap served as an answer to those who have accused Republicans of saying no, while having no ideas of their own. It has taken fierce criticism from Democrats, who seem content to have something to hate, but it is drawing a far more awkward, unwanted dividing line for Republicans over the sensitive politics of entitlement programs.

Representative John A. Boehner, Republican of Ohio, the minority leader, has praised Mr. Ryan but said the Roadmap would not be a part of the Republican agenda this fall.

“There are parts of it that are well done,” Mr. Boehner told reporters last month. “Other parts I have some doubts about, in terms of how good the policy is.”

In fact, only 13 House Republicans have signed on as co-sponsors, and Republican leaders, hoping for gains in the fall and, ultimately, in 2012, seem concerned at the possibility that the Roadmap may eventually become something candidates will be forced to take a position on. After all, what candidate wants to talk about major changes to Medicare and Social Security?

Even some of Mr. Ryan’s loudest supporters are reluctant to support the Roadmap top to bottom. Mr. Gingrich, the former speaker of the House, lavished praise on Mr. Ryan’s intellect and discipline, but did not go so far as to endorse the Roadmap.

“I think it’s a very good starting point,” Mr. Gingrich said. “It’s not a yes-no. When you undertake change on that scale, you have to have a national conversation.”

Fit from years of an intense exercise program called P90X and with hair as thick as Rod R. Blagojevich’s (and cut in a more contemporary fashion), Mr. Ryan has become a regular on the cable news circuit, and a book about conservative politics that he co-wrote — “Young Guns” — will include his picture on the cover when it comes out this fall.

But Mr. Ryan is still a wonk. He studied economics in college, once intended to seek an advanced degree from the University of Chicago’s school of economics, and meant to become an economist. Somewhere between stints working for Jack Kemp, a mentor, and Senator Sam Brownback, Republican of Kansas, he meandered into public policy. The inner nerd seeps through: he often sleeps on a cot in the office, says he has “every 15-minute interval” until September scheduled, and writes up these PowerPoints himself (“I really like PowerPoint”).

Mr. Ryan favors small government and gun rights and opposes abortion. Mr. Obama, he says, is a pleasant person — not “nefarious or evil” — but extremely liberal, and “accelerating our path to cradle-to-grave welfare programs.”

The Roadmap, which cuts spending decades into the future, is packed with detail, though not everyone agrees what it would yield. People could choose a simplified, two-rate tax system. Corporate income tax would be replaced with a business consumption tax.

For people now younger than 55, Medicare would become a voucher program in which they would buy private insurance, and Social Security would allow people to create individual investment accounts paid for with payroll taxes. With both entitlement programs, the age eligibility requirements would gradually go up. Advocates praise the plan as a realistic way to take on the nation’s out-of-control debt and prevent the utter collapse of a Medicare and Social Security program, while critics say it guts those programs and would leave old, vulnerable people fending for themselves. Most political consultants advise steering clear of the whole conversation: messing with Social Security and Medicare, they calculate, never wins votes — something Wisconsin Democrats have instantly homed in on.

“We will be talking about his oddball plan to end Medicare and privatize Social Security,” Graeme Zielinski, a spokesman for the state Democratic Party, said. “Republicans usually do a tap dance around the reality of the Republican fantasy of ending Social Security and Medicare. One thing you can say for him: he really wants to make it the reality.”

Mr. Zielinski also questioned Mr. Ryan’s professed passion about the deficit; where, he asked, was Mr. Ryan’s concern during the Bush administration? (Mr. Ryan’s staff counters that he has talked about these concerns and voted against several Republican spending bills over the years.)

For now, Mr. Ryan appears politically safe. His campaign has raised $2.1 million, more than in any of his six prior races.

His family has lived in these parts since 1851, and it shows. He calls the waitress at the hamburger joint by name. Older residents stop to fuss over whether he is eating enough.

Democrats, meanwhile, scrambled to find an opponent, eventually signing up John Heckenlively, who has never won office but said he was moved by the thought, “What, nobody is going to run?”

That is not to say that Democrats never win this district, a conglomeration of farm towns, industrial cities like Janesville and south Milwaukee suburbs. Mr. Obama won here.

Mr. Ryan has been talking about the ideas in the Roadmap since 2008, when he published an earlier version. During several town-hall-style meetings on a recent day, he received a few questions about Social Security and Medicare, but no pointed complaints. His plan, he tells one group, is not to end anything.

“If we did that, my mom would kill me,” Mr. Ryan said, adding that his mother, Betty, receives Social Security.

Later, Mr. Ryan said, “I don’t think these things are third rails anymore. People are ready for this.”

Mr. Ryan and his allies — who admit that the Roadmap is unlikely to get a real hearing in Congress soon — say Republican colleagues who have yet to support the idea are probably following the admonitions of political consultants. But Representative Devin Nunes, Republican of California, who signed on to the Roadmap months ago, says candidates in 2012 will be forced to take a stand — up or down — on its ideas.

“The deficit isn’t going away, the entitlements aren’t getting better, and it’s tough times out there,” Mr. Nunes said. “The presidential candidates are going to have a problem with this.”

Jeff Zeleny contributed reporting from Washington.

Representative Paul D. Ryan, a 12-year veteran at 40, meeting with a women’s group in June in Burlington, part of his southeastern Wisconsin

Marketers Are Certainly Tweeting, but Users Are Barely Listening

By Michael Learmonth

Published: July 27, 2010

NEW YORK ( — Attention brands: Twitter users aren’t talking to you or about you. In fact, they barely know you exist.

The most mentioned brands on Twitter tend to be there because they are part of constant daily conversation, not because of anything the brand is or isn't doing on Twitter.
The most mentioned brands on Twitter tend to be there because they are part of constant daily conversation, not because of anything the brand is or isn’t doing on Twitter.

That’s one of the conclusions of a six-month analysis of the service’s ubiquitous 140-character messages conducted by digital agency 360i and released today.Despite marketers’ embrace of the medium, brands are finding themselves on the outside of the conversation. Of the 90% of Twitter messages sent by real people — the other 10% come from businesses — only 12% ever mention a brand, and most of those mentions are of Twitter itself.

Further, only 1% of consumer tweets that mention a brand are part of an active conversation with that brand, meaning marketers are, for the most part, conducting one-way conversations — the opposite of the way consumers often use Twitter.

The most mentioned brands on Twitter tend to be there because they are part of a constant daily conversation, not because of anything the brand is or isn’t doing on Twitter. The most mentioned brands on Twitter are, in descending order, Twitter, Apple, Google, YouTube, Microsoft, Blackberry, Amazon, Facebook, Snuggie, eBay and Starbucks.

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Embedded in the culture
Snuggie is the surprise brand on the list, but that appears to reflect the brand’s place in the culture, not its own Twitter activity. Official Snuggie profile @OriginalSnuggie has just 591 followers and @WeezerSnuggie, an account set up to promote the once-popular Weezer video, has just 693 followers and has been dormant since November.After spending six months going over a statistically significant sample of 1,800 tweets, 360i Senior-VP Sarah Hofstetter was struck at just how mundane and personal they were. “They’re mostly doing what people mocked Twitter about in the first place, as in, what I had for lunch.”

The vast majority of real people’s tweets, 94%, are personal in nature. Most tweets, 85%, are original and not re-tweets of other messages. They’re also very often conversational: 43% of tweets begin with an “@” sign, meaning they’re directed at another user, not the sender’s followers at large.

While marketers such as Dell, Comcast, Ford and Starbucks have been, at times, clever participants on Twitter, the majority of marketers use it as a mini press-release service. Only 12% of messages from marketers are directed at individual Twitter users, meaning marketers still see it as a broadcast medium rather than a conversational one.

Showing up isn’t enough
“There is still a misperception that if brands show up, people will listen to them, kind of like Facebook a few years ago,” Ms. Hofstetter said. “Twitter can be used as a promotional RSS feed, but that’s not going to establish a relationship with anybody.”

The study was conducted before Twitter took any advertising, from October 2009 through March 2010. Twitter has since rolled out a series of ad units including promoted tweets and trends. Ms. Hofstetter said the ads are great to help boost things already popular on Twitter. “They are only going to work if they are relevant in the first place,” she said.

Twitter posts are intrinsically navel-gazing, conversational and personal, but they aren’t predominantly self-promotional. Depending on your circle of connections, it can certainly feel, as Wired’s Evan Ratliff noted, that “self-aggrandizement” is “standard fare” on Twitter. But the 360i study found only 2% of tweets were professional updates or career-related.

What do Twitter users talk about? Beyond the 43% of individuals’ tweets that are conversational, 24% are status updates, 12% are links to news or comment on current events, and 3% are seeking or giving advice.

The good news for brands is that when a consumer does mention them on Twitter, they’re usually not complaining about it. Only 7% of tweets mentioning brands indicated negative sentiment, 11% positive and an overwhelmingly 82% neutral.


The Answer Just Might Surprise You

By Jack Neff

Published: July 26, 2010

NEW YORK ( — Isaiah Mustafa, aka “The Man Your Man Could Smell Like,” has clearly broken through all previous viral-video records and achieved pop-icon status. The question is: How much Old Spice body wash has he sold? And the answer is a bit of a mystery.

Isaiah Mustafa, aka 'The Man Your Man Could Smell Like.'
Isaiah Mustafa, aka ‘The Man Your Man Could Smell Like.’

Since Mr. Mustafa lent his sotto voce humor to the production wizardry of the Wieden & Kennedy ad in February, the Procter & Gamble Co. brand has been consistently gaining market share, even though that’s only been enough to erase a deficit for the brand built up earlier. In the 52 weeks ended June 13, it had a roughly flat share in a category that grew a robust 8.6%, according to data from SymphonyIRI.Then again, some other men’s brands also have been making substantial share gains of late, including P&G sibling Gillette and Beierdorf’s Nivea. And the thing Old Spice, Gillette and Nivea have in common isn’t Mr. Mustafa, but rather multiple national drops of high-value coupons. They included buy-one, get-one-free offers from both P&G brands and up to $4 off a single bottle of Nivea Men from Beiersdorf, reflecting unprecedented levels of promotional intensity in the category.

Strong Gains chart
Source: SymphonyIRI Dove Men+Care launched in February, so has no year-ago comparison.

Meanwhile, Unilever’s Dove Men & Care has also picked up some share, albeit with lower-value coupons and higher price points.

The bottom line: Mr. Mustafa and Wieden & Kennedy are clearly selling some body wash, but they may not be responsible for the bulk of Old Spice’s sales gain this year.

Consider the four weeks ended June 13, possibly the best month ever for P&G body wash. Old Spice’s sales were up 106% from the prior-year period, jumping 4.8 share points in a category that grew 17.7%. But sales of Gillette body wash, also backed by buy-one-get-one-free coupons and by TV ads (but not Mr. Mustafa), were up a lot more, 277% and 3.9 share points, though it’s by far a smaller brand in the category.

Nivea men’s body wash, backed by little other media support but $4 coupons, saw its sales rise a mere 63% and its share go up 0.5 points.

And Dove Men & Care, the newest brand in the segment and against which all three were defending vigorously, dropped no coupons and was outside the main promotional burst of its February launch, but still held on to 2.4 share points for the four weeks ended June 13, down a bit from the 2.7 points for the 12-week period.

How much of Old Spice’s recent gains — of that 106% bump measured by Symphony IRI in June, for example — come from Mr. Mustafa’s ads and how much from the coupons? “It’s impossible to know,” said P&G spokesman Mike Norton.

Nor is it clear how much Old Spice’s 106% gain will disappear from P&G’s top line when coupon redemptions, which don’t figure into scanner data but do come off the company’s top line when financial results are reported next month, figure in.

But it seems clear the ad, which won the Film Grand Prix at the International Advertising Festival at Cannes in June, has had some positive impact. Old Spice began to reverse share losses as soon as it began in February.

Mr. Mustafa, a former NFL wide receiver who essentially switched to playing defense for Old Spice against the Dove launch, is now clearly back on offense. None of the data (including that for the four weeks ended July 11 that showed continued gains for P&G in body wash), yet reflects the sales impact of Mr. Mustafa’s 186 highly publicized personalized response videos earlier this month, which generated more than 34 million aggregate views and a billion PR impression in a week, according to P&G. In a single week, views of the personalized ads surpassed the nearly 29 million viral video views of Mr. Mustafa’s four TV ads since February.

As of July 18, Old Spice, with 94 million views, had become the No. 1 all-time most-viewed sponsored channel on YouTube, Mr. Norton said. Old Spice had eight of the top 11 most-popular videos on YouTube on July 16. In the six days following the start of Mr. Mustafa’s personalized videos, he reached more than 100 million followers.

The effort sent Old Spice to more than 80,000 Twitter followers (finally ahead of Mr. Mustafa’s own follower base of 30,000) and its Facebook fan base to 630,000. Facebook fan interaction jumped 800% since the launch of the personalized videos.

The effort also bumped traffic to to 300%, inspired a fan to create a website ( where people can download voicemail messages that sound like Mr. Mustafa, and inspired a marriage proposal from another fan, which was accepted.

In perhaps another boon for P&G, Mr. Mustafa has also inspired a counter-video from a man claiming to be a fan of Dove Men & Care, and who may be to some women a cautionary tale of the man their man could look like:

On behalf of enlightened conservatives, I’d like to apologize for the damage done to Ms. Sherrod’s career and reputation for nothing more than cynical political reasons.  I think David Frum does a pretty good job of attempting to hold conservative media accountable for their role in this mess by his blog entry.

I’ve long since stopped listening to Limbaugh as he became more of a blow hard and less a political satirist as he was in the 80s.  Sean Hannity I’ve never liked and hardly took seriously.  Bill O’Reilly I like and I’m confident he will clean up the lack of due diligence he did on the situation.  Finally, Glenn Beck, who I don’t ever watch but haven’t had a reason to want to either, I hope he does as I believe O’Reilly will.

What’s funny interesting (as opposed to funny ha-ha) about this was the focus group I organized on behalf of Congressman Tom Price (GA) with a group of centrist/independent leaning BUPPIES two weeks ago.  What boiled up over and over again was that while many in the room could agree in some measure with a number of conservative policies and issues, what they couldn’t get past was the brand of the GOP around matters of the aforementioned type.

To his credit, Cong. Price, who is also Chairman of the Republican Study Group, was a great listener and there was a genuine give and take between the audience and a leader of the Conservative Caucus.  Congressional Republicans in general are cursed with have too homogeneous of districts and can’t extol the virtues of conservatism with any credibility beyond the “amen” party base.

Unfortunately, Michael Steele doesn’t help matters by being a dud of a party Chairman.  And Lord knows that many of the “old faces” of the GOP — Boehner, McConnell, especially — don’t help the brand either.

More to come on my thoughts on how to revitalize the GOP brand for modern times and for the changing electorate.

David Frum

When Andrew Breitbart unveils a selectively edited tape to defame a federal employee, conservatives blame Barack Obama

posted on July 21, 2010, at 9:10 AM
David Frum

You want to see media bias in action? Okay — look at the conservative media reaction to the firing of Shirley Sherrod.

Sherrod is the former U.S. Department of Agriculture employee fired for supposed anti-white racism. On July 19, Andrew Breitbart’s website posted a short video clip from a speech Sherrod had delivered to an NAACP gathering in March.

In the clip, Sherrod confessed to having deliberately declined on racial grounds to help a white farmer faced with a foreclosure on his farm. She was immediately terminated by the USDA and condemned by the national NAACP.

But a second look at the tape made it obvious that the tape had been severely edited, abruptly cut short. Within hours it emerged that the story on the tape was exactly the opposite of the story Breitbart had wanted to tell.

Conservative pundits justify fraudulent journalism on the grounds that all is fair in war.

Sherrod was telling a story about overcoming her own racial antagonisms. She had repented, had helped the white farmer, had saved the farm, had formed a friendship with the farmer and his family that lasts to this day. Besides which: The episode in question dates back to 1986, long before Sherrod ever went to work at the USDA.

By the morning of July 20 the Sherrod-as-racist narrative had collapsed.

What is most fascinating about that second day, however, was the conservative reaction to the collapse. At midday on the 20th, Rush Limbaugh was still praising Breitbart: “I know that Andrew Breitbart’s done great work getting this video of Ms. Sherrod at the U.S. Department of Agriculture and her supposed racism and so forth saying she’s not gonna help a white farmer.”

By the evening of the 20th, however, conservatives were backing away, acknowledging that an innocent women had been defamed.

Here’s Glenn Beck.

Here’s Rich Lowry, editor of National Review.

Here’s Instapundit

Here’s the popular Anchoress blog at First Things.

Even the racially incendiary Eric Erickson tweeted his disquiet, and then posted this on his RedState website.

But you’ll never guess who emerged as the villains of the story in this second-day conservative react. Not Andrew Breitbart, the distributor of a falsified tape. No, the villains were President Obama and the NAACP for believing Breitbart’s falsehood.

Breitbart went almost universally unmentioned. Erickson even justified Breitbart’s falsehood as a tragic but necessary and justifiable measure of conservative self-defense:

This is what we have become in politics because of the unrepentant race-baiting on the Left. It has become a tit for tat war of retribution. … That war has casualties on both sides. Ms. Sherrod is the latest. It is not fair. But that’s how the Left plays and the Right must fight on offense or not fight at all. It disgusts me to have to say it, but that is so very sadly where we are.”

Breitbart himself had this to say about those who would manipulate the public record for ideological purposes:

Journalists love whistle-blowers. Just not when the whistle is blown on them. Journalists love transparency. As long as they’re not the ones being exposed. No steadfast journalism rule is unbendable when it comes to justifying and protecting the racket that is modern journalism, specifically, political journalism in the United States today. The ends justify the means …. They lie when they claim to be objective. They lie when they claim to be unbiased, because these so called “truth seekers” are guilty of engaging in open political warfare. And when the whistle is blown, they simply double down.

But that of course was not a confession or apology. Breitbart continues to defend his own “ends justify the means” bending of the truth, as you can see here in this July 20 interview with CNN’s John King.

No, Breitbart’s indignant words on the 20th were aimed at another snippets-out-of-context scandal for the Right: the Daily Caller’s publication of quotations from the JournoList archive in which liberal activists and bloggers jeered George Stephanopoulos for asking Barack Obama about Jeremiah Wright.

Speaking on a liberal list serve, journalists had wondered how the Wright story could be stifled. One obnoxious young participant had even suggested that the story could be killed by hurling accusations of racism at conservative figures like Fred Barnes and Karl Rove. Conservatives exploded: The media were colluding to quash bad news about their beloved Obama! Only of course the Wright story was not quashed — unlike the story of Breitbart’s role in Sherrod’s firing, which has been, at least among conservatives.

On the phone on the evening of July 20, a friend asked me: “Can Breitbart possibly survive?” I could only laugh incredulously. I answered: “Of course he’ll survive, and undamaged. The incident won’t matter at all.”

There will be no apology or statement of regret for distributing a doctored tape to defame and destroy someone. There will be not even a flutter of interest among conservatives in discussing Breitbart’s role. By the morning of July 21, the Fox & Friends morning show could devote a segment to the Sherrod case without so much as a mention of Breitbart’s role. The central fact of the Sherrod story has been edited out of the conservative narrative, just as it was edited out of the tape itself.

When people talk of the “closing of the conservative mind” this is what they mean: not that conservatives are more narrow-minded than other people — everybody can be narrow minded — but that conservatives have a unique capacity to ignore unwelcome fact.

When Dan Rather succumbed to the forged Bush war record hoax in 2004, CBS forced him into retirement. Breitbart is the conservative Dan Rather, but there will be no discredit, no resignation for him.

Instead, conservatives are consumed with a new snippets-out-of-context uproar, the latest round of JournoList quotations. Here at last is proof of the cynical machinations of the hated liberal media! As to the cynical machinations of conservative media — well, as the saying goes, the fish never notices the water through which it swims.

More Than 566 Million Video Ads in June, According to New Numbers From ComScore

By Michael Learmonth

Published: July 15, 2010

NEW YORK ( — Hulu is far from the biggest video site on the web; YouTube holds that distinction by a wide margin. But Hulu is a lot bigger than YouTube in one area that counts: the number of video ads it serves each month.

Hulu commands some of the highest ad rates in video, about $35 for  1,000 impressions.
Hulu commands some of the highest ad rates in video, about $35 for 1,000 impressions.

In fact, no other video site or ad network served as many video ads in the month of June than Hulu, according to new measurement data from comScore. Hulu served more than 566 million video ads in June to 7.6% of the U.S. population in June. By comparison, Google’s sites, including YouTube and Google’s ad network, served just over 200 million ads to 15.6% of the country.

The new numbers are part of comScore’s next-generation Video Metrix measurement service, released to clients on Thursday. The company began measuring video on the web more than three years ago but only recently became able to discern the ads in and around the content, and report that data separately from the content itself.

The result is data similar to the commercial ratings from Nielsen that the TV networks and agencies began using to buy and sell advertising several years ago, and will give new insight into the economics of video sites, which until now have been relatively opaque.

Hulu was 98% sold-out in June, according to an exec familiar with the matter, and passes as much as 70% of ad sales revenue to its content partners and third-party distributors. Hulu CEO Jason Kilar told the New York Times in March that the site made $100 million in 2009 and expected to match that by summer of 2010. With its high-quality content and much-lower ad loads than TV, Hulu also commands some of the highest ad rates in video, about $35 for 1,000 impressions.

Hulu also pioneered the choose-your-own pre-roll ad format, where advertisers only pay when their ad is chosen, a format later adopted by an industry consortium led by several media companies and Publicis unit Vivaki.

Because it is predominantly short clips, YouTube does not lend itself to online video ads in the way that Hulu’s long-form TV content does. But Hulu is well above other purveyors of TV content such as Viacom Digital, CBS Interactive and ESPN, and trailed more closely by video ad networks like Tremor Media and Brightroll.

ComScore has been working on the next iteration of Video Metrix to bring online video measurement more in line with TV standards.

“Online video has evolved in recent years from a medium delivering primarily user-generated content to a channel that now delivers a great deal of professionally produced long-form content that is identical to what a viewer would find on TV,” said Tania Yuki, comScore senior director of video and cross-media products. “ComScore recognized that it was time to revisit our measurement of this space in order to provide the information being demanded by media planners as content increasingly moves towards digital formats.”

Top U.S. Online Video Properties by Video Ads Viewed
(Total U.S. – Home/Work/University Locations, June 2010)
Property Video Ads (in millions) % Reach (Total U.S. Population) Frequency (Ads per Viewer)
Hulu 566.162 7.8 24.2
Tremor Media Video Network* 523.938 21.4 8.2
BrightRoll Video Network* 333.492 16.5 6.8
Microsoft Sites 222.427 8.1 9.2
SpotXchange Video Ad Network* 202.408 13.1 5.2
Google Sites 200.011 15.4 4.3
Break Media 179.603 9.6 6.2
CBS Interactive 151.123 7.3 6.9
ESPN 149.717 4.2 12.0
Viacom Digital 135.629 8.0 5.7
Total Internet: Total Audience 4,341.110 46.1 31.5
*Indicates video ad network/server
Source: comScore Video Metrix
Why Many Teens Are Moving on from Facebook
JULY 12, 2010
The main reason? They just lost interest

There’s no question of Facebook’s position at the top of the social networking space, and one thing that makes the site so powerful is that when it comes to social networking, a user’s friends must be users too. But among some teens, Facebook may be losing its stickiness.

According to a study from OTX and virtual fashion site Roiworld, nearly one in five teens with a Facebook profile had decreased or discontinued their use of the site as of April 2010.

What’s more, the decreases seemed to speed up in recent months, with two-thirds of the lapsed users having turned away from the site in the past six months.

In addition, 9% of teen internet users said they had a Facebook profile but had completely abandoned it.

This turnover does not approach the level of MySpace, where 22% of teens had completely stopped using a profile. YouTube and Twitter both sported relatively high 15% abandonment rates.

In Facebook’s case, decreased usage does not appear to be related to the privacy issues raised in spring 2010, or even to the influx of older users on the site. Instead, the plurality of lapsed users simply find the site boring.

Keeping fickle teens’ interest will be important both for Facebook and the marketers who want to connect with them there. Social games, which most consider a cheap way to relax, have fun and kill some time while playing with friends, are one solution. According to the report, 73% of teen internet users play some kind of social games, and 81% of teen Facebook users play games on Facebook. And the time spent doing so can add up: Facebook gamers reported spending 7 hours a week on the activity.

©2010 eMarketer Inc. All rights reserved.

Posted by: Patrick | July 11, 2010 A New Look at Branded Content

A New Look At Branded Content
Andy Meyers, Jul 08, 2010 03:45 PM
Every year at the upfronts, we get a glimpse of new programming built to bring viewers to the networks. But that willingness to evolve stands in sharp contrast to the majority of advertisers, which remain stubbornly tied to the past with traditional 30-second spots that have poor retention rates.For a generation that prides itself on conservation, a lot of green is being wasted. Creative conservationists may want to consider giving an evolving form of branded content a try instead, if they truly want to preserve their budgets.

Marketers upped the dollars spent on branded content in 2009, doubling the 2008 tally. Branded content snagged 32% of overall marketing, advertising and communications budgets. And reports state the numbers are expected to jump significantly this year, following a recent Kantar Media study revealing that companies utilizing branded entertainment spots are experiencing double-digit growth.

Yet the 30-second spot continues to reign supreme, despite living in the blur of the DVR fast-forward. In a landscape where traditional ads are designed to fill holes between programming — or, rather, entertainment is split to create holes for the ads to be placed — it is time we realize the formula is not working well. That is, unless clients are willing to spend ungodly millions for shelf space in the Super Bowl in the hope of hitting the pop culture jackpot.

In the early days of television, marketing began as a completely overt concept. Integration into content started when brands sponsored entire programs. It wasn’t a bad fit, and audiences were comfortable with product placement. But as the years went by, viewers’ acceptance turned to disdain; critics said product integration was bad and the public agreed. Producers couldn’t find subtle ways to integrate. Cups with soda brands appeared on tables, while logos were inserted into shows during post-production.

There is, however, some solid evidence that integration can be fun, memorable and, above all, works. Network and agency executives are creating content that doesn’t just blur the line between programming and advertising but wraps the whole package in a bow. And the public wants to watch when it is well-produced.

When the economy tanked and ad dollars tightened, advertisers looked to the Web — and transmedia as whole — as a place where traditional commercials could live and be micro-marketed to each segment of their demo base. Initially, brands repurposed on-air spots, amortizing the fortune they spent to cast the widest net possible on cable and the Web. But when this specialized, intrusive advertising model also tanked, clever marketers realized there is another, more effective, way to reach specialized audiences.

Meet the branded content interstitial: low-cost, one- to two-minute interstitials that audiences cannot skip over. They look like programming because they are programming. These modernized longer-form spots have a narrative and are packaged for today’s short-attention span audiences, so brands can have the ability to create their own super-cool marketing content for a fraction of the cost of traditional commercial spots.

Since TBS initially struck advertiser gold with its brand-friendly, multiplatform interstitial “Dinner and a Movie” and saw its ratings increase an average of 11% in the 18-49 demo by the middle of the last decade, these produced sponsored specials have evolved. Today, they are customized to play across multiple distribution platforms, which has allowed sponsors to target a wide range of audiences, from potential movie-goers on cable to tweens with iPad applications and young adults surfing specific websites.

The question is whether more brands will eventually catch on, spending more money on more content that truly is content.

By the way, it just took you two minutes to read this. Now, back to your show.

Capital Ideas

How to Generate Innovation in the Public Sector

It’s rare for innovation to be institutionalized in government. And it’s even rarer to find officials and politicians who are aware of the full range of tools to accelerate better ideas.

SOURCE: iStockphoto

By Jitinder Kohli, Geoff Mulgan | July 1, 2010

We see innovation in action every day in our lives. Whether it’s listening to music on a cell phone, or taking the latest medication to help tackle an ailment, our lives are better and easier as a result of the work to create new products and services.

When we think of innovation, most of us think of the private sector. And that’s hardly surprising since private-sector innovation accounts for more than 85 percent of economic growth in the United States.

But innovation is needed just as much in the public sector. Some of the impetus for innovation comes from new challenges such as childhood obesity, or climate change. Others come from public demands—public services can easily become stuck with outdated and ineffective approaches. And still more urgency emerges from fiscal pressures: as money gets tighter, public agencies will have to find more efficient ways to conduct the census or administer social security, improve workplace safety, or tackle crime. Public-sector productivity matters just as much for future prosperity in these days of fiscal tightness as private-sector productivity.

“It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something.”
– Franklin D. Roosevelt, governor of New York, Looking Forward (1933).Finding the right way to tackle these issues is rarely straightforward. But it nearly always requires a cycle of coming up with new ideas, testing whether they actually work, and scaling up those ideas that are most effective.

We know from other fields—such as science and medicine—that innovation doesn’t just happen by accident. There are well developed systems to foster innovation in the commercial sector. Yet too often in the public sector, even though there is a great deal of talk of the need to be innovative, there is little specific action. It’s still rare for innovation to be at all institutionalized in government budgets, roles, and processes. And it’s even rarer to find officials and politicians who are aware of the full range of tools that they could be using to accelerate the development and spread of better ideas.

This report looks at the actions that leaders in the public sector can take to ensure that there is a constant flow of promising ideas into the federal government. Across government, we recommend that Congress and the Obama administration work together to:

1. Identify priority fields for innovation: The government must first identify the fields of public action where innovation is most needed. These may be ones where problems are intensifying—such as climate change or aging. They may be fields where the evidence points to underperformance—such as schooling. Or they may be fields where new technologies and knowledge are opening up new opportunities. Some innovation happens through serendipity. But scarce time and resources need to be focused where the returns are likely to be greatest.

2. Open up the space for ideas: The second priority should be to widen the range of options, creating more space for creative and entrepreneurial solutions. This report identifies many tools that the federal government can use both inside agencies and to mobilize social entrepreneurs, the public, and others to help generate promising ideas.

3. Finance innovation: We propose a broad target that at least 1 percent of agency budgets should be used to develop, test, and scale up new and better ways of doing things in the public sector. There are a wide range of ways that the government can use financing to spur innovation, from very small grants for ideas from frontline staff to stage-gate investment models.

4. Fix incentives: Existing incentive frameworks dampen public servants’ desire to come up with newer, potentially better ways of doing things. We need greater recognition that new methods may be both more effective and more efficient than existing programs and initiatives.

5. Change the culture: Innovation has to be supported from the top, and senior leadership in the executive and the legislative branches should signal that they recognize that some ideas will fail, and that’s acceptable—as Franklin D. Roosevelt first proposed in the 1930s. The need to recruit large numbers of federal employees over the next few years provides an opportunity to change federal employees’ skill set. Future federal employees need to be clear that they should be constantly looking for better ways to accomplish government goals.

6. Grow what works: There should be a much stronger focus in government on trying to scale up ideas that work—even if that means closing down popular programs or initiatives that have been less effective in the past. Our accompanying report, “Scaling New Heights: How to Spot Small Successes in the Public Sector and Make Them Big,” recommends building a social innovation mentorship program and creating Institutes for Effective Innovations to help the scaling process.

Action is also needed in each government agency. Effective agencies need to become better at generating great ideas—both from within and from beyond their boundaries. We set out a series of techniques to generate promising ideas under five themes:

  • Unleashing the creative talents of agency staff
  • Setting up dedicated teams responsible for promoting innovation
  • Diverting a small proportion of agency budgets to harnessing innovation
  • Collaborating with outsiders to help solve problems
  • Looking at issues from different perspectives to notice things you wouldn’t otherwise

This report includes more than 20 different ways that public agencies are promoting the generation of great ideas. Few public-sector organizations will wish to implement all of them. Instead, leaders should establish what they think will work best in their organization under each theme—and focus energy on implementing those. It is, in effect, a menu of practical ways in which organizations can help to generate a flow of great ideas. By choosing elements from each of these five themes, public-sector organizations will be able to ensure that there is a strong flow of great ideas on how to improve the way they go about their business.

Generating ideas is only one part of the innovation cycle. Our companion report focuses on how to scale up those ideas that have been proven to be effective.

Jitinder Kohli is a Senior Fellow with the Doing What Works project at the Center for American Progress; Geoff Mulgan is director of the Young Foundation.

By Andy Fixmer and Cliff Edwards – Jun 24, 2010 CEO Jason Kilar CEO Jason Kilar attends a meeting in Los Angeles. Photographer: Armando Arorizo/Bloomberg

Sony Corp. is close to an agreement to carry a paid TV service from Hulu LLC, operator of the second-largest video website, on its PlayStation 3 game console, two people with knowledge of the talks said.

The partnership could be announced as soon as next week, according to the people, who asked not to be identified because the arrangement hasn’t been made public.

Access to video-game consoles would give Hulu’s planned pay service a bigger audience and more revenue by making its Internet programming more widely available on television sets. Hulu also is in talks with CBS Corp., Viacom Inc. and Time Warner Inc. to add their TV shows to the website’s subscription service, people with direct knowledge of the discussions said.

PlayStation 3 owners registered for the console’s free Web service, the PlayStation Network, would be able to subscribe to a Hulu service that provides on-demand access to current and past seasons of prime-time TV shows from NBC, Fox and ABC, the people said. Hulu also is in talks to put its $9.95 a month service on Microsoft Corp.’s Xbox, Reuters reported previously.

Patrick Seybold, a spokesman for Sony’s PlayStation Network in Foster City, California, declined to comment on a possible agreement, as did Christina Lee, a spokeswoman for closely held Hulu. Worldwide, the PlayStation Network has 50 million registered users, Seybold said in an e-mail.

Sony fell 1.2 percent to 2,462 yen as of 10:52 a.m. on the Tokyo Stock Exchange. The shares of the world’s third-largest TV maker have declined 7.8 percent this year.

Founders, Investors

Hulu, based in Los Angeles, was founded by General Electric Co.’s NBC Universal and News Corp.’s Fox. Walt Disney Co.’s ABC and private-equity firm Providence Equity Partners Inc. are also investors in the website.

The site, which now lets computer users watch shows for free and gets its revenue from advertising, is seeking to expand the ways users can view programming, as well as add new shows to attract paying subscribers. The company will need to renew program rights from owners including NBC at the end of 2011, according to Laura Martin, a Needham & Co. analyst. The network investors also offer shows on their own websites.

A subscription would put Hulu in more direct competition with Netflix Inc., which supplies online and mail-order access to movies and past-season TV shows starting at $8.99 a month. Netflix already provides its online movie service on consoles from Sony, Microsoft and Nintendo Co., as well as through Blu- Ray players and Roku Inc. devices that connect TVs to the Web.

Hulu Chief Executive Officer Jason Kilar has said his site’s ad-supported model is profitable on a cash-flow basis.

The website garnered $52.4 million in sales in February, with 72 percent going to the content owners, according to estimates from research firm SNL Kagan. That left Hulu with $14.7 million in revenue, $12.6 million in costs and a $2.04 million profit, SNL Kagan calculates.

To contact the reporters on this story: Andy Fixmer in Los Angeles at; Cliff Edwards in San Francisco at

Pointroll Says Target, Ford, Marriott, Unilever Seeing High Engagement Rates After Four Weeks on Platform

Published: June 15, 2010

NEW YORK ( — It’s early days for advertising on Apple’s iPad, but advertisers running campaigns on the device over the last four weeks say people are watching — and a lot more than your typical rich-media web ad.

A Pointroll iPad campaign for Ford's Lincoln brand.
A Pointroll iPad campaign for Ford’s Lincoln brand.

Much of that can probably be explained by the fact that the iPad’s early adopters find just about everything on the device — including the ads — a curiosity. The question is whether those rates will stay high once the novelty of the device wears off.Gannett-owned ad technology company Pointroll has placed four iPad campaigns so far, including ads for Ford, Unilever, Marriott and Target within the iPad edition of USA Today, part of its parent company, and the communications app TextPlus. Pointroll says interaction times for ads on the iPad are averaging about 30 seconds. Click-through rates have been between 0.9% and 1.5%, six times the benchmark for click-to-expand ads on the web.

That’s both an indictment of web advertising in general and the click-through specifically as a measure of performance, but it is giving marketers another reason to continue to experiment on the iPad beyond the halo effect of being “first” on a hot new device.

“We’re approaching it as a trial,” said Scott Kelly, digital marketing manager at Ford Motor Co. “This is all new territory and we are in experimentation mode.”

Early iPad advertisers are eager to experiment with the new platform to see how campaigns perform and how best to approach it, either directly through publishers — as was the case with the Pointroll campaigns — or as a network ad buy via iAd, which is launching in July.

“Should we do an iAd, go direct to the publisher or wait for [Google’s] Android to do the same thing?” Mr. Kelly said. “We want the targeting and the interactivity of the big screen where you can do 360 [degree] views and videos — we’re just trying to find the most economical way to do that.”

Ford hasn’t yet committed dollars to the iAd platform, but it is considering it. Key is the ability to create an ad once to use on many platforms, which is complicated by different formats and technologies, namely the iPad, which doesn’t handle Adobe’s Flash, the dominant technology for web ads.

“It challenges us to come up with ads that are more personal, because there is less tolerance for interruptive ads,” Mr. Kelly said. Notably, ads on Pandora’s iPad app don’t stop the music, allowing users to look and continue to listen, if they wish.

Catherine Spurway, Pointroll VP-advertising and marketing, said the company is encouraging marketers to think of the iPad as a another device in their marketing plans, one that moves the internet beyond the PC.

“What is unique about the iPad is they are truly the most tactile device, with a larger screen where you are actually moving the content with your hands, not a mouse or keyboard,” she said. “This is a more immersive experience than the lean back of TV or the lean forward of the PC. You are part of the content.”

The company believes it will also make ads for the iAd platform, but have yet to get clarity on. It would appear to have an inside track given it serves TBWA’s rich-media ads for Apple on the web, but execs there say they haven’t been given clarity on the topic.

Regardless, advertisers will be able to access the iPad through the publishers themselves, which is how all advertising on the platform exists today.

“We’re also looking forward to seeing how iAd pans out,” said Pointroll CEO Jason Tafler. “Its rich-media capabilities, like tying geolocation and its accelerometer into ads, are really interesting and we’re eager to incorporate those and start running ads with iAd as well hopefully in the near future.”

Copyright © 1992-2010 Crain Communications

Internet Matches TV’s Influence Over Conversation, According to New Research

By Jack Neff

Published: June 11, 2010

BATAVIA, Ohio ( — Once, TV was the symbolic water-cooler that drove consumer conversations. It still is. But the tube is being upstaged by the web, which now nearly matches it in terms of influence on conversations, according to a new study from Yahoo and Keller Fay Group.

Keller Fay has taken the air out of the online buzz balloon for years with survey research finding that most discussion about brands still happen face-to-face, and are influenced far more by traditional media than what happens online.

But that is changing. The internet is growing as the channel that influences or prompts those conversations, however they occur. The web influenced nearly 15% of consumer discussions about brands in January 2010, according to the survey, up from 12% from a year earlier and nearly matching the 16% of such conversations inspired by TV ads or shows.

TV’s impact constant
TV’s impact on word-of-mouth remained constant year over year, while the internet’s grew substantially. This coincides with the mainstreaming of social networks that facilitate online sharing and communication, like Facebook, which nearly doubled to 133 million unique U.S. visitors in January from 69 million the prior year, according to

The vast majority of consumer conversations about brands take place face-to-face, which accounts for 76% of consumer brand mentions vs. only 7% that happen online. The rest are mainly by phone. But the internet is growing as a channel that influences or prompts those conversations however, or wherever, they occur.

Oddly, the internet doesn’t appear to be replacing other media as an influence over conversations. In addition to TV, which remained stable, print drove a fairly constant 10% of brand-related conversations over the 18 months from July 2008 to January 2010, while the percentage driven by in-store or point-of-sale displays rose from around 8% in January 2009 to 9% in January 2010.

“Displacement of one medium by another has been less than people expects as the whole media pie keeps growing,” said Brad Fay, chief operating officer of Keller Fay.

Younger demos drive conversation
The study found people 13 to 29 drove most of the increase in internet-influenced brand conversations, with those 30 to 39 also playing a role. “More and more of the millennials, the first internet generation, are now in purchasing brackets,” said Radha Subramanyam, VP-corporate and media research at Yahoo. “They’re now coming into a phase of their lives where brands matter.”

She also believes the pervasiveness of mobile devices in making the internet a round-the-clock presence has played a role in driving more brand conversations. Mr. Fay said the increased role of the internet in brand discussions may also owe to people doing more research and being more cautious about their money due to the economy.

Social media, online reviews and non-company websites were the fastest-growing components of internet influence in the study, but the two leading drivers remained company websites followed by internet ads, with the influence of both rising slightly over the 18-month period. In all, 38% of consumers in the study said they had at some point talked about brands based on something they’d heard or seen on the internet. And they indicated 66% of brand word-of-mouth mentions are mostly positive.

The study found 8% of the population account for 19% of brand word-of-mouth, a group Yahoo calls “Conversation Catalysts.” The company notes that a disproportionate 10% of the Yahoo audience is made up of such people.

A Primer About Successful Online Communities

If you’re new, here’s a background primer on successful communities.

Successful online community building is connecting a group of people online and making them feel a part of something special. This ‘something special’ element is the overlooked bit.

You do this by identifying something people believe in and inviting them to talk to each other. You don’t create the interest, you create the platform that epitomizes it. It’s important you don’t try to create the raison d’etre. i.e. Don’t try to persuade non-swimmers to become swimmers and join your community, just focus on persuading enthusiastic swimmers to join. Most brands stumble at this stage.

However, the common interest is the first level of the group bonding. It’s usually overrated. If you’ve ever been part of a purposeful group you know it’s not the mission/common interest that matters. The most important missions on the planet often have the lowest level of engagement. What matters most is how well you bond with others members of the group.

The better you get to know and like your fellow members, and the more you care about their opinion of you, the more you participate and thus work towards a successful goal.

Your role is to create an environment, through both your mass and micro (one to one) communications, that facilitates this. This means in public you might recognize top members, talk about the community and plan events. In private you might build relationships with key members, introduce members to each other, ask for opinions and suggestions and work towards a greater good.

This also means designing your community that reflects both the common interest and the individual contributions as equals. Half your community might be about developments on the topic, the other half should be about the contributions of members.

It’s important to start small. Big launches tend to struggle with their own high expectations. No successful online community had a big launch day. They began small and celebrated other milestones, perhaps their birthday, or perhaps their 1000th member.

So begin by talking to a few members at a time and introducing them to each other. Make sure you know the early members very well personally. Aim for slow, steady growth and a high level of participation from each member. As you grow you can begin focusing your attention on the key members and recruiting volunteers to help develop the community.

The most difficult element is usually recruiting people in the first place. You need to target people that use the internet but typically aren’t heavy internet users. You can find them on Twitter, LinkedIn, Facebook, YouTube and dozens of other outlets. Use too, find people talking about your topic and get to know them. It’s time-heavy, but pays off in the longer run.

As you recruit members you need to bond them together. Bonding a community means doing things together. Like challenges for your community, milestones to reach or problems to overcome. It also means having a high level of interactions per member and ensuring members are happy to disclose their thoughts, feelings and other information.

This self-disclosure is important. If you’re not continuously asking members to share their thoughts and experiences, members will never truly bond as a group. No bonds means low engagement and participation rate. More importantly, it means no community spirit (the something special we mentioned at the beginning).

Allowing self-disclosure also means accepting negative comments. Not personal attacks, they’re nearly always worth removing (as our racist, bigoted and sexist remarks, but allowing conversations to be negated. Allowing heated debates and open disagreement to take place. It’s tough to let this happen, it feels like you should jump in and break it up. But don’t. Let people get their opinions out into the open.

Now as your community grows you need to begin decentralizing responsibility. Give popular members their own forums/groups to moderate. Schedule regular events/activities that other members can be responsible for organizing.

Finally, dream big. Begin arranging offline meet-ups and consider pushing the boundaries. Try adding a paid job adverts page, developing branded products, inviting relevant companies to run focus groups.

If only creating a community was as easy as writing about how to create one. You’re going to find it hard. You’re going to find some things fail. You might not get it right on your first time. However, give it time, be patient and you will be rewarded for your efforts.

Good luck.

Richard Millington is an online community builder currently working for the United Nations Refugee Agency.

Richard is the founder of Commania, a community for community professionals and the author of the Online Community Manifesto.


Posted by: Patrick | June 3, 2010 Spending Through The Tax Code

Spending Through The Tax Code
Bruce Bartlett, 05.28.10, 6:00 AM ET

Conservatives are united in their belief that government spends much too much and that spending ought to be cut sharply. But they almost universally ignore de facto spending through the Tax Code even though many tax provisions are functionally identical to spending. These “tax expenditures” not only hemorrhage revenue unnecessarily, but they distort private decision-making, create unfairness and reduce economic growth.

The problem of tax expenditures was first identified in the 1960s by Harvard law professor Stanley Surrey, who went to work for John F. Kennedy in 1961 as Assistant Secretary of the Treasury for tax policy. At that time the top marginal income tax rate was 91%, meaning that reducing one’s taxable income by $1 saved 91 cents in taxes for those in the top bracket, while earning $1 of additional income netted them only 9 cents. For some people it was worth spending 90 cents to reduce their taxable income by $1, which gave rise to many wasteful tax shelters designed to produce nothing except tax deductions.

Obviously, this not only encouraged rich people to mine the Tax Code aggressively for tax loopholes but also to pressure Congress to enact new ones. As a consequence, effective tax rates–those people actually paid in terms of taxes as a share of income–diverged sharply from statutory rates. In effect, the high statutory rates implied that the rich were being soaked, while the reality was that the actual tax rates that they paid were much lower.

There was a widespread perception that many rich people were paying little if any federal income taxes. A popular book during this era was The Great Treasury Raid by Philip M. Stern, who reported the following cases as well as many others: In 1959 five Americans were known to have incomes above $5 million (more than $37 million in today’s dollars) yet paid no income taxes. In 1961, 17 Americans were known to have had an income of $1 million or more ($7.5 million today) without paying any federal incomes taxes. And Mrs. Horace Dodge had her entire $56 million fortune invested in tax-exempt municipal bonds, which paid her an annual income of $1.5 million (more than $11 million today) that she wasn’t even required to report on her tax return.

Surrey had hoped that Kennedy’s big tax initiative would cut rates in exchange for loophole closing. Indeed, it’s now forgotten that Kennedy’s Jan. 24, 1963 message to Congress proposing a big tax cut also included many reforms that were later dropped from the final legislation, which was enacted the following year by Lyndon Johnson and reduced the top rate to 70%.

Surrey was disappointed at the lack of interest in tax reform. He thought that one problem was that no one realized just how many tax loopholes existed, and he had his staff compile a list. It turned out to be a bigger project than anyone imagined, and it took several years to list every tax expenditure and how much they cost in terms of revenue.

Treasury’s first tax expenditure list was released in the last days of the Johnson administration. Treasury Secretary Joseph Barr presented it at a hearing of the Joint Economic Committee of Congress on Jan. 17, 1969. He punctuated his testimony by revealing that in 1967 there were 155 taxpayers with adjusted gross incomes above $200,000 ($1.3 million today) who paid no federal income taxes, including 21 with AGIs above $1 million ($6.5 million today).

This revelation created a nationwide firestorm, leading Congress to enact the Tax Reform Act of 1969, which sharply cut back tax preferences for the wealthy. Richard Nixon signed it into law on Dec. 30 of that year. Among its provisions that still vex taxpayers to this day was the first alternative minimum tax.

The Nixon administration was not thrilled with the idea of tax expenditures. One fear was that it provided a too-convenient shopping list for members of Congress looking for revenue-raisers. Also, the mere fact that something appeared on an official Treasury list of tax expenditures implied that they are all illegitimate and equally so.

Critics quickly pointed a serious problem with tax expenditures–they necessarily had to be calculated with reference to a baseline. In other words, if there were no tax expenditures at all what would the tax system look like? Surrey implicitly adopted an idealized tax system that had been developed in the 1930s by economists Robert M. Haig and Henry Simons. They said that the ideal tax base consisted of all consumption during a year plus the change in net worth.

The Haig-Simons definition of income still underlies tax expenditure analysis–but not completely. Surrey understood that a pure Haig-Simons tax base was impractical, so he made some exceptions to create a “normal” tax system from which to calculate tax expenditures. Under a pure Haig-Simons definition of income, for example, people would theoretically pay taxes on unrealized capital gains yearly, the imputed rent that homeowners pay to themselves for living in their own homes and other forms of income that have traditionally been exempted from taxation.

Thus, Surrey’s definition of income was essentially judgmental, embodying a liberal concept of the appropriate tax base. Conservatives have long argued that pure consumption can be just as easily justified as the ideal tax base, which would eliminate from the tax expenditures list all provisions that defer taxation on saving such as 401(k) plans, Individual Retirement Accounts and so on. Since a consumption tax would not tax saving, any tax preference for saving would necessarily be part of the normal tax system.

Nevertheless, Surrey’s concept of tax expenditures is the one that was adopted, and the Budget Act of 1974 requires the Treasury Department to produce a list annually, which appears in the analytical perspectives volume of the president’s budget. Congress’ Joint Committee on Taxation also compiles an annual list of tax expenditures that differs slightly from Treasury’s owing to some differences in methodology. Both lists show that the largest tax expenditure is the exclusion for employer-provided health insurance, which will reduce federal revenues by $177 billion this year. The second-largest tax expenditure is the deduction for mortgage interest, which reduces federal revenues by $107 billion.

Unfortunately, it’s not really possible to just add up tax expenditures and arrive at a net revenue gain, because they interact with each other in complex ways. But a recent effort to do so by the Tax Policy Center estimated the total cost of tax expenditures at 5.5% of the gross domestic product.

The real problem with tax expenditures is that they tend not to get the scrutiny that spending programs get. Historically, new tax expenditures became permanent parts of the Tax Code and were seldom reviewed for effectiveness. Also, in recent years both parties have supported the creation of many new tax credits that subtract directly from one’s tax liability. Previously, most tax preferences took the form of deductions or exclusions that reduce taxable income.

Tax credits are really just spending disguised as a tax cut. This is literally true in the case of refundable tax credits such as the Earned Income Tax Credit. If someone qualifying for it has no tax liability against which to use the credit, he or she can get a check from the Treasury for the difference.

To see just how similar a refundable tax credit is to direct spending, imagine that instead of having the Defense Department pay $1 billion to Lockheed Martin for some spare parts for the Air Force, it instead gave it a $1 billion refundable tax credit that was tradable. If Lockheed Martin didn’t have at least a $1 billion federal tax liability, it could simply sell the unused portion to another company that did. Either way the company gets paid $1 billion and $1 billion worth of resources are extracted from the private sector for government’s use.

There’s not a tax expert on the left or the right who doesn’t recognize the illegitimacy, inefficiency and ineffectiveness of many tax expenditures. There is a desperate need to clean up the Tax Code, as Ronald Reagan and a Democratic Congress did in 1986. Unfortunately, Republicans now take the view that eliminating any tax expenditure constitutes a tax increase, and they oppose it because they oppose all tax increases for any reason.

When the time comes, as it inevitably will, when raising revenues will be part of a big deficit reduction bill mandated by financial markets, Republicans will really have only two choices: raise tax rates or restrict tax expenditures. Since many of the latter are conceptually identical to direct spending, the choice should be an easy one. Those concerned about our nation’s fiscal future should be focusing as much attention on tax expenditures as they do on the spending side of the budget.

Bruce Bartlett is a former Treasury Department economist and the author of Reaganomics: Supply-Side Economics in Action and The New American Economy: The Failure of Reaganomics and a New Way Forward. He writes a weekly column for Forbes.

Posted by: Patrick | May 16, 2010 Tax Cuts & ‘Starving the Beast’

Tax Cuts And ‘Starving The Beast’
Bruce Bartlett, 05.07.10, 6:00 AM ET

I believe that to a large extent our current budgetary problems stem from the widespread adoption of an idea by Republicans in the 1970s called “starve the beast.” It says that the best, perhaps only, way of reducing government spending is by reducing taxes. While a plausible strategy at the time it was formulated, STB became a substitute for serious budget control efforts, reduced the political cost of deficits, encouraged fiscally irresponsible tax cutting and ultimately made both spending and deficits larger.

Once upon a time Republicans thought that budget deficits were bad, that it was immoral to live for the present and pass the debt onto our children. Until the 1970s they were consistent in opposing both expansions of spending and tax cuts that were not financed with tax increases or spending cuts. Republicans also thought that deficits had a cost over and above the spending that they financed and that it was possible for this cost to be so high that tax increases were justified if spending could not be cut.

Dwight Eisenhower kept in place the high Korean War tax rates throughout his presidency, which is partly why the national debt fell from 74.3% of gross domestic product to 56% on his watch. Most Republicans in the House of Representatives voted against the Kennedy tax cut in 1963. Richard Nixon supported extension of the Vietnam War surtax instituted by Lyndon Johnson, even though he campaigned against it. And Gerald Ford opposed a permanent tax cut in 1974 because he feared its long-term impact on the deficit.

By 1977, however, Jack Kemp, Dave Stockman and a few other House Republicans concluded that the economy was desperately in need of a permanent tax rate reduction. Kemp believed that such a tax cut would so expand the economy that the revenue loss would be minimal. He also thought that much spending was driven by slow economic growth–welfare, unemployment benefits and so on–that would fall automatically if growth increased.

But the Republican Party’s economic gurus–Alan Greenspan and Herb Stein, in particular–were not comfortable supporting a tax cut without stronger assurances that the deficit would not increase too much. At a time when inflation was our biggest national problem their concerns were not unreasonable.

After enactment of California’s Proposition 13–a big property tax cut with no offsetting spending cuts or tax increases–on June 6, 1978, there was an immediate change in attitude among Republican economists who were previously skeptical of a permanent cut in federal income tax rates. They could see that a tax revolt was in the making and that Republicans could very possibly ride it all the way back into the White House in 1980.

On July 14, 1978, a few weeks after the Prop. 13 vote, the Senate Finance Committee held a hearing on the Kemp-Roth tax bill, which would have cut all federal income tax rates by about one-third. A key witness was Greenspan, who had recently served as chairman of the Council of Economic Advisers and was undoubtedly the most respected business economist in the United States. He was the first Republican to articulate what came to be called “starve the beast” theory.

Said Greenspan to the committee, “Let us remember that the basic purpose of any tax cut program in today’s environment is to reduce the momentum of expenditure growth by restraining the amount of revenue available and trust that there is a political limit to deficit spending.”

Citing Greenspan’s testimony, conservative columnist George Will endorsed Kemp-Roth and STB in a column on July 27, 1978. “The focus of the fight to restrain government has shifted from limiting government spending to limiting government receipts,” he reported.

On Aug. 7, 1978, economist Milton Friedman added his powerful voice to the discussion. Writing in Newsweek magazine, he said, “the only effective way to restrain government spending is by limiting government’s explicit tax revenue–just as a limited income is the only effective restraint on any individual’s or family’s spending.”

By 1981 STB was well-established Republican doctrine. In his first major address on the economy as president on Feb. 5, Ronald Reagan articulated the idea perfectly. As he told a nationwide audience that night, “Over the past decades we’ve talked of curtailing spending so that we can then lower the tax burden. … But there were always those who told us that taxes couldn’t be cut until spending was reduced. Well, you know, we can lecture our children about extravagance until we run out of voice and breath. Or we can cure their extravagance by simply reducing their allowance.”

Unfortunately there is no evidence that the big 1981 tax cut enacted by Reagan did anything whatsoever to restrain spending. Federal outlays rose from 21.7% of GDP in 1980 to 23.5% in 1983, before falling back to 21.3% of GDP by the time he left office.

Rather than view this as refutation of starve the beast theory, however, Republicans concluded that Reagan’s true mistake was acquiescing to tax increases almost every year from 1982 to 1988. By the end of his presidency, Reagan signed into law tax increases that took back half the 1981 tax cut. His hand-picked successor, George H.W. Bush, compounded the error, Republicans believe, by supporting a tax increase in 1990.

When Bill Clinton became president in 1993, one of his first acts in office was to push through Congress–with no Republican support–a big tax increase. Starve the beast theory predicted a big increase in spending as a consequence. But in fact, federal outlays fell from 22.1% of GDP in 1992 to 18.2% of GDP by the time Clinton left office.

Although all of evidence of the previous 20 years clearly refuted starve the beast theory, George W. Bush was an enthusiastic supporter, using it to justify liquidation of the budget surpluses he inherited from Clinton on massive tax cuts year after year. Bush called them “a fiscal straightjacket for Congress” that would prevent an increase in spending. Of course nothing of the kind occurred. Spending rose throughout his administration to 20.7% of GDP in 2008.

Nevertheless STB remains a critical part of Republican dogma. On April 8 Rep. Michele Bachmann, R-Minn., told right-wing talk show host Sean Hannity that the Republican response to health care reform would be to “starve the beast” by refusing to fund it. On April 14 Sarah Palin begged her followers in Boston to “please starve the beast” by resisting any tax increase, no matter how large the budget deficit.

Despite its continuing popularity among Republican politicians, at least a few conservative intellectuals are starting to have misgivings about STB. In 2005 free-market economist Arnold Kling admitted he had been wrong. “Cutting taxes did not help to reduce the size of government,” he conceded.

For some years Bill Niskanen of the libertarian Cato Institute has argued that STB actually increased spending and made deficits worse. His argument is that the cost of spending is ultimately the taxes that will have to be raised to pay for it. Thus fear of future tax increases was the principal brake on spending until STB came along. By eliminating tax increases as a necessary consequence of deficits, it also reduced the implicit cost of spending. Thus, ironically, STB led to higher spending rather than lower spending as the theory posits.

In the latest study of STB, political scientist Michael New of the University of Alabama confirms Niskanen’s analysis. “Revenue reductions by themselves are not an effective mechanism for limiting expenditure growth,” New concluded. “The evidence suggests that lower levels of federal revenue may actually lead to greater increases in spending.”

In effect STB became a substitute for spending restraint among Republicans. They talked themselves into believing that cutting taxes was the only thing necessary to control the size of government. Thus, rather than being a means to an end–the end being lower spending–tax cuts became an end in themselves, completely disconnected from any meaningful effort to reduce spending or deficits.

Starve the beast was a theory that seemed plausible when it was first formulated. But more than 30 years later it must be pronounced a total failure. There is not one iota of empirical evidence that it works the way it was supposed to, and there is growing evidence that its impact has been perverse–raising spending and making deficits worse. In short, STB is a completely bankrupt notion that belongs in the museum of discredited ideas, along with things like alchemy.

Bruce Bartlett is a former Treasury Department economist and the author of Reaganomics: Supply-Side Economics in Action and The New American Economy: The Failure of Reaganomics and a New Way Forward. He writes a weekly column for Forbes.

Posted by: Patrick | April 16, 2010 The Promise of E-Commerce

Zero In
The Promise Of E-Commerce
Sramana Mitra, 04.09.10, 6:00 AM ET

Whichever way you look at it, the Web has become the place for commerce.

Online spending grew 18% in March compared to last year — the eighth consecutive month of double-digit growth, according to MasterCard Advisors’ SpendingPulse. The growth rate has outpaced that of traditional brick-and-mortar stores. While many chain retailers’ online sales are growing, their store sales are shrinking. At 41 of the 50 biggest retail chains in 2008, e-commerce revenue grew as store sales declined, says

For the longest time entrepreneurs wanting to venture off on their own would open a store downtown where foot traffic abounds. But that trend, it seems, is changing. Today’s equivalent of foot traffic is eyeballs. Much of that traffic flows from search engines and mega-marketplaces such as and eBay. Today an entrepreneur contemplating a retail business no longer leases space on Main Street. She opens a Web site. Her market is no longer local.

There is much discussion today about how we will reverse this recession and why entrepreneurs are a key piece of the puzzle. The U.S. Census reports that there are 19.5 million nonemployer firms — mom-and-pops — and a large portion of this segment operates retail stores. Another 4.5 million firms operate with less than 10 employees, a segment that is also heavy in retail. In this recession many of them have gone out of business.

For an economic recovery, the small, specialty retail segment will need to get back to a healthy state. E-commerce may be the answer. Evidence suggests many small online retailers are doing quite well.

Take, an online marketplace and social networking site for painters, photographers and other visual artists. Artists can use to the site to connect with collectors and other buyers and, says founder Sean Broihier, put the business side of their career on “autopilot,” leaving them more time to create art. (FAA) has more than 28,000 artists who upload new images to the site each day; 6,000 of them offer prints for sale.

FAA has been profitable since launch in 2007, thanks in part to its low overhead. Founder Broihier is its solo owner, and the company has no employees. Revenues were $175,000 in 2008 and $1 million in 2009, and the company projects revenues of $2.5 million for 2010. Broihier says that currently attracts 175,000 unique visitors a day, and traffic is growing by 10%-15% a month.

Broihier is a very good example of someone who has taken destiny in his own hands by embracing the Web rather than joining the 10% unemployment pool in America. (See my post Deal Radar 2010: FineArtAmerica.)

Another entrepreneur, Jeff Taxdahl, founded Thread Logic in 2002 to create custom-logo-embroidered apparel for businesses and organizations. Products range from polo shirts to aprons to fleece blankets. In a business that has been slow to go online, Thread Logic has focused almost exclusively on Internet sales while keeping in close touch with customers. In 2009 sales were $1.1 million, up 27% over 2008. (See my post Deal Radar 2010: ThreadLogic.)

North of the border in Montreal, Beyond the Rack is a private sale shopping club serving members throughout the U.S., Canada, and elsewhere. The company sells designer fashions, hosiery, underwear, swimwear, jewelry, cosmetic and beauty products, and accessories from recognized brands at prices up to 70% off retail prices. Beyond the Rack was founded by Yona Shtern and his business partner, Robert Gold.

Beyond the Rack has more than 750,000 members and continues to grow. Site traffic is currently in the range of one million page views per day based on 200,000 daily visits. For the past 12 months, both membership and revenue are up 35% month-over-month, and the monthly revenue run rate exceeds $2 million. The company says that earnings before interest, taxes, depreciation and amortization (Ebitda) — excluding marketing expenses — is approaching break-even. Beyond the Rack has raised a total of $4.5 million in venture financing. (See my post Deal Radar 2010: Beyond the Rack.)

These are a few examples of how a high-tech spin is being put on a quintessentially old school business. Providing the high-tech spin are companies like Austin, Tex.-based BigCommerce founded by Mitchell Harper and Eddie Machaalani, who met in an online programming forum. Harper and Machaalani, a Web designer, founded BigCommerce because they saw that there was no e-commerce product really designed for the nontechnical business owner.

BigCommerce currently has 3,000 customers and yearly recurring revenues of $1.5 million. It is forecasting 13,000 customers by the end of 2010 and says it is growing at 114% month on month. The company is 100% bootstrapped. (See my post Deal Radar 2010: BigCommerce.)

For retailers confused about how to manage their inventory and marketing budgets across their own Web site, eBay, Amazon, comparison shopping engines and search engine marketing, a company called ChannelAdvisor offers some answers. CEO Scott Wingo says, “By our estimation, 80% of e-commerce begins through one of three channels. If you’re a small business, you have a good shot at getting in front of consumers if you can be aggressive on eBay, search engines or comparison shopping engines. If you’re not [on these channels] then you are missing 80% of the opportunity.”

Wingo’s company helps retailers manage inventory and traffic acquisition across various channels from a single integrated platform. From 3,000 customers, ChannelAdvisor pulls in$30 million in sales, and has raised $80 million in financing. (See Scott Wingo’s Entrepreneur Journey.)

A major movement from brick and mortar to online retailers is taking place, especially in North America. In a few years, this will change the look of Main Street, but hopefully, it will give small retailers greater leverage and more efficient access to markets, including international markets in some cases. As emerging markets embrace e-commerce, large populations of both consumers and retailers will be buying and selling online.

Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies and writes a business blog, Sramana Mitra on Strategy . Her three books, Entrepreneur Journeys, Bootstrapping, Weapon Of Mass Reconstruction, and Positioning: How To Test, Validate, and Bring Your Idea To Market are all available from Amazon. Her new book Vision India 2020 was recently released. Mitra also runs the 1M/1M initiative.

Syndicator’s Usership Has Skyrocketed Thanks to Its Careful Selection of Which Media Channels to Embrace

By Nicole C. Wong

Published: April 13, 2010

NEW YORK ( — National Public Radio is walking a tightrope: Its business is built upon an old-fashioned mode of distributing information, but its embrace of digital channels, such as blogs and smartphone applications, has skyrocketed NPR’s usership.

Vivian Schiller
Photo By: Gary He

Vivian Schiller

“Our heritage is radio,” Vivian Schiller, president-CEO of the news and entertainment programming producer and distributor, told the audience at Ad Age’s Digital Conference today. “But the digital sphere has been a boon to us and is a second core. … There is no platform more conducive to mobile than radio.”

The challenge, with the fire hose of distribution-platform choices blasting full-force as new technologies keep arising, is for its executives to decide what to invest their staff and budget in. At NPR, where its content reaches a combined audience of 26.4 million listeners weekly through more than 900 stations nationwide, Ms. Schiller tries to strike a balance between going “back to basics” and jumping on “every bright, shiny object that comes along.”

Foursquare, the latest location-based mobile-network craze, falls into NPR’s need-not bucket while Apple’s new iPad zings into the absolutely must-do bucket, she said. The difference? An iPad application can help NPR reach a wider audience and enable its news consumers to become more informed. “We’re a not-for-profit, mission-driven organization, so for us the first question is always about mission,” Ms. Schiller said. “We have almost a religious fervor about two things: the user experience and the quality of the content. If you just keep focused on those two things, the rest of it falls into place.”

Focus on core mission
Tom Cunniff, VP-director of interactive communications at Combe, said it’s crucial for an organization to focus on its core mission when making marketing decisions. “With all the clutter, there are a zillion things you can actually do,” said Mr. Cunniff, who oversees both traditional and digital advertising. “Which things are useful to a consumer and which things does a consumer actually need?”

That’s a question Dell tries to answer by setting up lots of “listening posts.” The computer maker uses social tools as well as customer-feedback forms to figure out what consumer are looking for, what they’re aggregating, what aggravates them, and what will make their shopping experience easier. “They vote with their fingertips on their keyboard,” said Erin Mulligan Nelson, Dell’s chief marketing officer.

From left: Pete Blackshaw, Erin Mulligan Nelson, Vivian Schiller  and Tom Cunniff.
Photo By Gary He

From left: Pete Blackshaw, Erin Mulligan Nelson, Vivian Schiller and Tom Cunniff.

NPR’s iPad app has quickly become something many consumers’ fingers are tapping. Since the electronic tablet hit stores 10 days ago, one in five iPad owners have downloaded NPR’s app, which has sponsors and underwriters who created a less-cluttered ad experience aimed at feeling natural rather than annoying to consumers, Ms. Schiller said.

But NPR realizes a large chunk of its audience probably will never touch its iPad or iPhone apps, and that’s OK. It strives to provide for middle-age consumers who only listen to NPR’s shows on their phones while exercising as well as for those consumers’ parents who don’t know how to turn on cellphones.

“Obviously we cross-promote the benefits of NPR on various platforms like crazy. But the beauty of being on multiple platforms is it’s not like we’ve abandoned radio and will let it whither,” said Ms. Schiller, who tried to teach her 88-year-old mother how to use e-mail. “We’ve got to keep innovating on those core platforms the same way we’re innovating on other platforms.”

That’s smart, Mr. Cunniff said, because “the traditional stuff still throws off a whole lot of money.”

Posted by: Patrick | April 12, 2010

eMarketer: US Internet Population Diversifies

US Internet Population Diversifies
APRIL 9, 2010
Demographic shifts online

Change is happening within the US Internet population on many levels. The average age of Internet users is rising in tandem with that of the general population, for example, and racial and ethnic characteristics are more closely mirroring those in the offline population.

eMarketer predicts that in 2010, 221 million people in the US will be online, about 71% of the total population. Their numbers will continue to grow, reaching 250 million in 2014—more than 77% of the population.

“Marketers already know they are navigating a dynamic digital landscape in 2010,” said Lisa E. Phillips, eMarketer senior analyst and author of the new report, “US Internet Users, 2010.” “In five years, the results of some demographic shifts now taking place will become more evident. Internet users will be older, and many will have lower levels of education and annual income.

“One thing is certain,” she said. “They will be more diverse racially and ethnically and expect marketing messages to appeal to them.”

Growth is still occurring among all races and ethnicities of Internet users. eMarketer estimates the Internet population will increase 13.4% between 2010 and 2014, compared with 3.9% for the general population. Despite their already high Internet use, non-Hispanic whites and Asians will see further penetration by 2014, to 81.2% and 81%, respectively. Blacks and Hispanics, while still underrepresented online, will see steady growth in penetration rates, to 72.3% of the black population and 70% of Hispanics.

“Marketers should use multicultural marketing campaigns to target Asian, blacks and Hispanic audiences, because most are proud of their heritage and appreciate marketers who reach out to them with cultural messages,” said Ms. Phillips. “But keep in mind that all these groups are blending into the American population and do not want to feel separate from the mainstream.”

The full report, “US Internet Users, 2010,” also answers these key questions:

  • What is the makeup of the US Internet population?
  • What will it look like in 2014?
  • How much time do consumers spend online compared with other media?
  • How has the recession affected Internet usage?

To purchase the report, click here. Total Access clients, log in and view the report now.

DealBook - A Financial News Service of The New York Times

April 1, 2010, 1:19 am

For Start-Ups, Late Bursts of Private Cash

Paul Sakuma/Associated Press, Jim Wilson/The New York Times NOT YET Some founders, like Mark Zuckerberg, above, of Facebook and Jeremy Stoppelman of Yelp, are not yet planning public offerings.


A FEW years ago, Facebook, which brought social networking to college students and grandparents alike, was expected to be a public company by now. Founded in 2004, it is cash-flow positive and is expected to bring in $1 billion in revenue this year.

Yet it is stubbornly staying private and has turned to a new kind of investor for the money that otherwise might have come from a public offering.

In May, Facebook raised $300 million from a Russian investment firm called Digital Sky Technologies, known as D.S.T. In November, Elevation Partners, a private equity firm in Silicon Valley, quietly invested $90 million, according to a person briefed on the deal.

Such big investments so late in a Web start-up’s life are unusual. But these deals have another twist: $100 million of D.S.T.’s investment and all of Elevation’s millions went to buying shares owned by employees or early investors.

Special Section Wall Street’s MakeoverDealBook’s spring 2010 special section delves into Wall Street’s efforts to reshape its image in the wake of widespread public anger. Read More »

“That’s what’s new about these deals,” said Marc Bodnick, a managing director at Elevation Partners. “The private market is emerging as a substitute for what used to be done only in the public markets.”

At Facebook, which was facing the collapse on Wall Street and a shriveling ad market, “this seemed like an opportunity for us to create insurance and long-term flexibility” while letting early employees cash out, said Vaughan Smith, head of corporate development.

Asked about the Elevation Partners investment, Larry Yu, a Facebook spokesman, said, “Facebook is a private company, and we don’t typically address rumor or speculation about equity-related matters.”

An initial public offering used to be the obvious route for high-flying Web start-ups like Facebook, Yelp, Zynga and Twitter. Instead, they are all staying private for now and have raised large late-stage investments, sometimes called growth capital, big chunks of which have gone to buying shares from early employees and investors.

This new type of investment “has filled a very important void in Silicon Valley,” said Jim Breyer, a partner at the venture capital firm Accel who is on Facebook’s board.

The deals have earned the nickname “D.S.T. deals,” a reference to the firm that started the trend. In addition to its $300 million investment in Facebook, in December, it led a $180 million investment in Zynga, which makes online games.

“Transactions of this nature are proving to be pretty efficient for the fast-growing business where the founders are focused on optimizing for the long term, not necessarily doing an early I.P.O.,” Yuri Milner, chief executive of D.S.T., said after making the Zynga investment.

In September, Twitter raised $100 million from its previous investors and a new, unusual source: T. Rowe Price, the mutual fund company. And Elevation Partners, which typically invests in older companies like Palm and Forbes, in January pledged $100 million to Yelp, the six-year-old Web site for ratings and reviews of local businesses.

Late-stage private equity firms, like Warburg Pincus and General Atlantic, have invested in Silicon Valley start-ups before. But typically, the Valley’s start-ups have grown up on a diet of $10 million to $50 million in venture capital over five to seven years, at which point the successful ones have been acquired by a bigger company or gone public.

For the most promising start-ups, like Twitter or Yelp, selling is not always an attractive option. Twitter turned down an offer from Facebook in 2008, and acquisition talks between Google and Yelp fell apart last year.

Yet the public markets have been virtually closed to tech start-ups for the last few years.

“Companies that need additional growth or expansion capital can’t count on the public markets, so to make sure they have enough financial runway to achieve whatever their financial goal is, many are doing large, late-stage financings,” said Gordon K. Davidson, chairman of Fenwick & West, a Silicon Valley law firm.

Founders and executives of start-ups are also discovering that there are some big benefits to remaining private, if they have the money to do it.

“We were able to push off the burdens and distractions of being a public company until it made sense strategically, while still gaining the liquidity benefit for longtime employees and remaining independent so we could double down and really focus,” Jeremy Stoppelman, chief executive of Yelp, said about the Elevation Partners investment.

Private companies can take a longer view without worrying about the demands of quarterly earnings, entrepreneurs and investors say. They also avoid the costs of complying with public company regulations like the Sarbanes-Oxley Act, and can keep innovations under the radar of competitors.

“A lot of people look at what Google did, and they said that was smart — staying private until they had built an enormous audience and nailed an ad product and a business model,” said Mr. Bodnick of Elevation Partners.

But early investors and employees get antsy: investors expect a return in less than a decade, and workers agree to lower salaries and long hours in exchange for stock options they may someday sell in a hot public offering.

With the new breed of investment, employees can buy a house or a new car, and remain loyal to the company without the proceeds from an offering. “It’s really a way for us to keep people motivated,” said Mr. Smith at Facebook.

D.S.T. bought $200 million of preferred shares of Facebook, and at least $100 million in employee-owned common stock. Of the $100 million that Elevation Partners agreed to invest in Yelp, $25 million will go to opening offices, hiring ad sales representatives and developing mobile applications. The rest will go to buying back shares.

For such investments to pay off, the companies must eventually have a successful I.P.O. That is one reason these investors are looking for companies that already have the revenue and profit to contemplate going public, like LinkedIn or Tesla Motors.

“My guess is that the companies with the billion-dollar and above market caps have all been approached,” said Greg Brogger, founder of SharesPost, a marketplace for shares of private companies.

These deals will continue to be attractive to both start-ups and investors, even if the public markets become more hospitable to tech start-ups, some analysts say.

“Imagine if you could have bought Google stock a year before it went public,” said Bing Gordon, a partner at Kleiner Perkins Caufield & Byers who is on the board of Zynga. “You could have looked pretty smart.”

MTV Developing ‘Co-Viewing’ Apps for the iPad

By Kunur Patel

Published: March 26, 2010

NEW YORK ( — Magazines and newspapers aren’t the only media eying big benefits upon the iPad’s arrival: TV is poised to use the device in new ways, including creating interactive, social apps designed to be used while watching live programming.

MTV Networks, for example, is developing a “co-browsing app meant to be used while watching live TV,” said one executive familiar with MTV’s iPad plans. “This means the iPad could be the appendage that makes interactive TV a reality.”

Kristin Frank, general manager of MTV and VH1 Digital, said MTV is focusing on two approaches to its apps, whether for mobile or the iPad: co-viewing apps that capture the social-media chatter around TV and awards shows and apps for video on the go. IPad apps for “Beavis and Butt-Head,” “MTV News” and “VH1 To Go” are all due in April, she said.

“Fifty-nine percent of people are multitasking when watching TV — that’s something we’ve always known,” said Ms. Frank, referring to recent Nielsen data quantifying a longstanding observation. “This is the next evolution.”

Mobile phone apps to run on the iPhone and Android devices remain MTV’s priority for 2010, Ms. Frank noted, but the iPad apps under construction are a reminder that TV is not about to sit the tablet out.

‘Sweet spot’
Part of the idea is that mobile devices are easier and more appealing to play with while watching TV than laptop or desktop computers — but the tablet will hit the sweet spot in between.

The iPad is going to open new opportunities, said Somrat Niyogi, CEO at the app developer Bazaar Labs. “I do think that with the iPad you are going to see a lot more conversation because the screen is bigger,” he said. “People will be more receptive to typing. It’s early, but you’re going to see in the next 12 to 18 months a series of start-ups experimenting in new ways to layer digital on the TV experience.”

Bazaar Labs has already released an iPhone app called Miso that suggests another avenue opening up. Miso users “check in” to TV shows or movies — much like they do on Foursquare and Gowalla for physical places like bars and restaurants — to share what they’re watching on Twitter and Facebook and earn badges.

Networks and movie studios are interested in the app’s ability to get viewers to broadcast what they’re watching to their social networks, according to Mr. Niyogi, who recently partnered with MGM Studios so users can unlock branded badges for its movie “Hot Tub Time Machine.”

Social media boost
You can see why networks and others might be intrigued by apps that revolve around what’s on TV right now. Major live, broadcast events like this year’s Oscars and Winter Olympics have already demonstrated how much social media chatter can surround televised events — and boost ratings. And tweets about TV shows tend to spike as they air, often making hit shows into trending topics on Twitter during airtime, according to data from Trendrr, a tracking service for social and digital media .

Even Google TV, the search giant’s planned partnership with Intel and Sony, intends to better integrate social networking and web-based applications with TV — imagine social-networking apps for television built by developers with Google’s Android operating system. The companies are reportedly working with Logitech to develop remotes with keyboards to make it easier to do things like update Twitter — a behavior we’re already seeing with users on mobile phone touchscreens or QWERTY keyboards.

Bravo recently introduced Talk Bubble, which lets viewers interact with the Real Housewives of New York, for example, while the show is on air and share comments via Twitter or Facebook. About 40% of Talk Bubble’s use so far is coming from mobile devices, according to Lisa Hsia, senior VP-Bravo digital media.

Web-Video Future Hinges on It Working Out Pay Model

By Michael Learmonth

Published: March 29, 2010

NEW YORK ( — Hulu is everyone’s favorite provider of TV on the web, but it’s facing an ideological battle over its future. On one side are its network backers, which would like Hulu to become a paid service. On the other is the advertising community, which would like to keep Hulu free as a test-bed for new targeted-ad formats that can’t be skipped.

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It’s an important issue, because any debate about Hulu is a debate about the future of purely ad-supported TV, which is increasingly becoming an endangered species. Hulu is the No. 2 video site on sheer volume of video views behind YouTube, yet no one is yet making much money from its model: not its network backers, other content partners and least of all Hulu itself, which has a hard time paying for its bandwidth bills.

“[Hulu] does have to move to a premium model,” said one network exec. “If you look at the business, it’s just not economically feasible to give away programming at low rates.”

Hulu won’t comment on its economics, but if you consider that it’s selling video ads and companion banners together in the $40 CPM range, and it appears to be about 50% sold out, when 70% is paid back to networks, Hulu is netting pennies per viewer per hour, about what it costs to deliver video of that quality.

One caveat, however, is that a significant amount of Hulu inventory is sold by the networks, which can buy back inventory to sell to advertisers. Hulu gets 30% of that CPM without any of the costs. Also, Hulu has ad deals with many TV networks on different terms.

Complex web
“There’s room for an ad-supported model for TV online,” said Curt Hecht, president of Publicis innovations unit Vivaki. “Hulu is a great environment with great programming; the onus is on us to help figure out the business model.”

Hulu is navigating an increasingly complex web of agendas, not least of which is what will happen when it is partly owned by a cable company after Comcast takes control of NBC Universal. “Ultimately, as a content company, you have to be paid on multiple platforms for multiple eyeballs in multiple ways,” said Quincy Smith, partner in Code Advisors and adviser to CBS and web video service Vevo.

When Hulu launched, it was set up as the perfect online distributor for network TV, which was completely ad-supported. But since then, broadcast networks have fought for and won retransmission fees from cable operators, making their model a lot more like cable. The TV business is only 50% ad supported, with $68 billion coming from advertising. When you tally up TV subscriber fees collected by cable, satellite and telcos, it comes to, well, about $68 billion. And the reality is, between cable, satellite and telecom TV offerings, 90% of Americans pay for their TV.

And then there’s Hulu.

Increasingly, networks want paid models for their content online, such as Fox’s mobile service introduced last week, which will charge users $9.99 for mobile access to programming. Hulu has promised a mobile app for months, which may also be a paid service.

Pay wall
As the networks rely more on subscription fees, pressure is growing on Hulu from its partners — and from cable providers themselves — for Hulu to erect a pay wall, which would not only help pay the bills but allow Hulu to get some of the cable programming it covets, such as “The Daily Show” and “Colbert Report,” which Viacom pulled off the service last month.

An easy answer would be to increase the ad load, which an array of studies has suggested it could do. Hulu has steadfastly remained at six ads per hour, fewer than CBS is showing online (as many as nine) and far fewer than the more than 20 that the networks show in a typical hour-long drama on TV.

From the agency perspective, it would be better to keep Hulu free but invent new ad formats with precise targeting to demographics and stated interests. The pre-roll “selector” was invented at Hulu. This gives the consumer the chance to choose the ads he wants to watch before a show starts, which also means the viewer is interacting with the ad even before watching it. The format was chosen by Vivaki as a format of choice across Publicis agencies. Those are sold at a much-higher CPM than $40; so too would targeted ads to certain demographics. But would it be enough to support Hulu and pay for the production of content?

“It definitely gets you closer to the answer than just throwing up more ads with no targeting involved,” said Tracey Sheppach, innovations director at Vivaki, who worked closely with the company as it tested a variety of digital video ad formats over the past year.

Posted by: Patrick | March 23, 2010 GOP weighs costs of losing ugly

It’s time for the Republicans to “turn their frown upside down” and make the case to the American people that the idea of reform IS in fact timely; however, the difference is in how it’s shaped, amended and implemented from here on out.  The goal now show be to Hijack the Reform Bill, strip out the Big Gov’t intrusions and mandates, and align the elements to the strictures of the free market and our Nat’l Budget. (Frankly this should have been done when the GOP had majorities in both houses).

The question is whether the same party responsible for the conditions that brought about the majority status of the Democrats — after all there would be no President Obama or Speaker Pelosi if it weren’t for Bush era Republicanism & mismanagement — can pivot from the same ol’ tired playbook of mere opposition.

Can the GOP actually “Listen Louder” and not just “Speak/Yell Louder”?!!  What say you??

GOP weighs costs of losing ugly
By: Glenn Thrush and Marin Cogan
March 23, 2010 05:05 AM EDT
The only thing worse than winning ugly is losing uglier.

The Democrats’ ungainly march toward a victory on health care reform Sunday night provoked a graceless response from angry House Republicans, who shouted insults across the chamber, encouraged outbursts from the galleries, brandished “Kill the bill” placards from the Speaker’s Balcony and, apparently, left veiled threats of electoral retribution on the benches of undecided Democrats.

And that all came before Texas Republican Rep. Randy Neugebauer shouted “baby killer!” as anti-abortion Rep. Bart Stupak (D-Mich.) spoke on the House floor.

That incident followed an even uglier series of events outside the chamber Saturday, when tea party protesters reportedly shouted the N-word at civil rights hero Rep. John Lewis (D-Ga.), spit on Rep. Emanuel Cleaver (D-Mo.) and hurled an anti-gay insult at Rep. Barney Frank (D-Mass.).

While House Minority Leader John Boehner (R-Ohio) was quick to criticize the racial and anti-gay outbursts and to distance himself from Neugebauer’s shout, he made no apologies for the feisty floor debate or the overall tone of the health care opposition.

“My impression is that Rep. Boehner was satisfied with the tone of the debate, which focused on the serious factual arguments against the Democrats’ job-killing government takeover bill,” said Boehner spokesman Michael Steel.

Other Republicans weren’t so sure.

“It was like a mob at times,” lamented one House Republican, speaking on the condition of anonymity. “It wasn’t good for us. … Remember, it took years [for Democrats] to recover from the bad publicity the anti-Vietnam protests generated.”

In an interview for POLITICO’s “Health Care Diagnosis” video series, Rep. Paul Ryan (R-Wis.) called the “baby killer” outburst “horrible” but said the issues Democrats are pursuing are “so polarizing that they’re really bringing out emotions and the darker sides of people on both sides.”

Still, Ryan made it clear he would have preferred a less emotional approach over the weekend.

“In our conference [Sunday] before the vote, a lot of us said, ‘Look — no screaming, no shouting, no yelling, no nyah-nyah-nyah. If they pass this thing, be somber be glum,’” Ryan said. “I said look, ‘We’ve got to be adults about this. This is a serious situation; this isn’t something that we politicize. . . . Yes, in basketball games you hear things like this. We don’t do that. We’re grown-ups.’”

Neugebauer’s outburst, which echoed the infamous “You lie!” shout by Rep. Joe Wilson (R-S.C.), had Republicans worried about the impact on “persuadables” — independents skeptical about President Barack Obama but leery of the GOP’s increasingly conservative tilt.

The incident also undermined attempts by Republicans to project the image of a sober, less combative party willing to meet Obama halfway. And it prompted a salvo of rebuke from Democrats, who spent much of their post-passage Monday accusing the other party of violating the chamber’s decorum and coarsening debate.

Stupak accepted Neugebauer’s apology — the fiery Texan claimed he was caught up “in the heat and emotion of the debate” — but only barely.

“I feel it is important for members to maintain [the] decorum of the House,” said Stupak, who found himself defended by abortion-rights-supporting Democrats with whom he had clashed during the tense final hours of haggling over the bill.

“Over the past year, there have been a couple of incidents on the House floor where outbursts have tarnished Congress’s reputation, and I hope there are no further incidents,” he added.

“I don’t know that I would want to explain to my 6-year-old why I had done or said some of the things that were done or said this past weekend,” White House press secretary Robert Gibbs told reporters at his Monday briefing. We “ought to be able to have that debate without the type of language and actions that we’ve seen in some places over the weekend.”

Hours before Neugebauer’s outburst, several Republicans in the chamber cheered for an anti-reform protester as he was being removed by police, prompting gasps from both sides of the aisle.

Early Sunday, Democrats entered the chamber to discover color photocopies showing the 34 House Democrats who lost their seats after voting for President Bill Clinton’s budget bill 17 years ago. The headline: “In 1993 they voted ‘yes’ and a young president said don’t worry it will be OK.”

It’s not clear who handed out the sheets — there was no name on them — which was a breach of chamber protocol requiring handouts to note their source, according to Brendan Daly, a spokesman for House Speaker Nancy Pelosi (D-Calif.).

Then there was the scene on the Speaker’s Balcony adjacent to the chamber. All day Sunday, House Republicans walked from the floor to shout encouragement and wave American flags to whip up a crowd of boisterous anti-health-bill protesters.

All of this was accompanied by the more typical chamber mischief used by any party in the minority, including frequent interruptions of opponents with points of order and booing mentions of the president’s name.

Several Republicans said their party acted no worse than Democrats did during the Bush years.

“When the CodePinkers and [Michael] Moore et al. were up here, you should’ve heard some of the things they were saying,” said Rep. Greg Walden (R-Ore.). “At any time there is a heated public debate, people say things they shouldn’t say. We don’t condone it. … It wasn’t appropriate then, and it wasn’t appropriate now.”

Walden told POLITICO that the GOP leadership was upset about members inciting people in the gallery.
“They shouldn’t” clap, said Walden. “And the leadership said that doesn’t belong.”

But Rep. John Campbell (R-Calif.) said that the outbursts were “a reflection of widespread passion and anger that exists throughout the country.” And while he said that such behavior “is never helpful,” he also suggested that much of the anger stems from the feeling — amplified exponentially by the passage of health care reform — that the country is slipping out of his party’s hands.

“Members of Congress are just people,” he said. “We just feel like they are rapidly taking this country in a wrong direction, with no interest in what anyone else thinks and with a taunting arrogance unlike anything I have ever seen. So, yes, people will say things they shouldn’t say or do things they shouldn’t do, but that is reflective of the intensity we feel about how bad the majority is.”

Jake Sherman contributed to this report.

March 18, 2010

IT was not that long ago when Madison Avenue believed that Web video — also known as webisodes, online video and Web series — would replace television, or at least put a big dent into the ability of TV to reach consumers.

Now, however, as more marketers turn to Web video, many are increasingly doing so along with — rather than in place of — television.

Take, for instance, “The Next Round Served Up by Jim Beam,” a Web series for Jim Beam bourbon that ESPN plans to introduce on April 4. Although the webisodes will be on, excerpts will appear during the first commercial breaks on 11 p.m. episodes of “SportsCenter” on the ESPN cable channel.

“We feel very strongly that video is video,” said Ed Erhardt, president for the ESPN customer marketing and sales unit of ESPN in New York, part of the Walt Disney Company.

Another example is provided by the Bertolli unit of Unilever, which promoted “Into the Heart of Italy” — a Web series that began this week — with commercials on ABC. One spot ran during the Academy Awards broadcast on March 7 and a second appeared in an episode of “Desperate Housewives.”

Some Web series use familiar television faces as hosts. Among them are “Fan vs. Wild” for another Unilever brand, Degree antiperspirant, which features Bear Grylls of the Discovery cable series “Man vs. Wild,” and “In the Kitchen,” for the Jenn-Air appliances sold by Whirlpool, which features Tori Ritchie, a chef and author.

And as American Express and Constellation Brands team up for “Pairings,” a Web series about food, wine and music that went live on Thursday, its creator, GreenLight Media and Marketing, is considering proposing a series based on the webisodes to a cable television channel.

The pairings of Web video and television reflect a school of thought that the old and new media can coexist and perhaps even benefit from each other. That idea has been reinforced recently by growing audiences for the Super Bowl and other big events on TV. They seem to be stimulated by blogs and social media like Facebook and Twitter, enabling viewers to discuss together what they are watching separately.

“When digital came in, people said, ‘No one is going to watch TV,’ ” said Gloria Rosenberg, president at Market Fusion Analytics in New York, a consult firm that helps advertisers develop growth strategies.

But as it turns out, “there’s a synergy and not a cannibalization,” she added, which is leading marketers to “create integrated communications programs” involving multiple media.

For example, the Jim Beam Web series will be supported not only with TV but also with ESPN Radio, ESPN the Magazine and displays in stores.

“This is primarily driven as a Web series, using as a lever,” said Kevin George, chief marketing officer at the Beam Global Spirits and Wine division of Fortune Brands in Deerfield, Ill., “and each piece of the program plays a different role, all the way down to retail.”

“Digital is important because our guys are watching online video a ton,” Mr. George said, referring to the men at whom the campaign is aimed, “and ad recall on digital is great.”

Still, “the TV part is nice,” he added, because “it gets you the awareness.”

This week, the Principal Financial Group introduced a campaign, “America rebuilds,” centered on a Web site with video clips featuring experts like Jean Chatzky. The campaign, by the Los Angeles office of TBWA/Chiat/Day, part of the TBWA Worldwide division of the Omnicom Group, includes a sponsorship of the “Building Up America” series on the CNN cable channel.

“I’m a big believer in using all the tools in the toolbox,” said Mary O’Keefe, chief marketing officer at Principal in Des Moines. “People can get the information however they like to.”

In developing the online video for “Pairings,” said Dominic Sandifer, president and managing partner at GreenLight in Los Angeles, “we made sure during production that we captured enough great content and story line” to create sample episodes of a TV version.

A television version would “take an even deeper look at the creative collaborations and inspirations” of the celebrities who appear in the webisodes, he added, including the musicians Dave Matthews and John Legend and the chefs John Besh and Tom Colicchio.

Of course, not all Web video has a television counterpart. For instance, “Undercover” — a weekly Web series created and produced by A. V. Club, part of The Onion — can be watched only online. (The Onion does offer computer users make-believe TV, with video clips on sections of called Onion News Network and Onion Sports Network.)

“Undercover,” which began on Tuesday, presents 25 new music acts like Ted Leo and the Pharmacists and the Retribution Gospel Choir. They were invited to perform cover versions of 25 rock standards like “Everybody Wants to Rule the World” and “Kokomo.”

The first eight webisodes are sponsored by Starbucks, which gets an old-school “Brought to you by” acknowledgment. Budweiser, sold by the Anheuser-Busch unit of Anheuser-Busch InBev, was signed on Wednesday as a second sponsor, said Steve Hannah, president and chief executive at The Onion.

Asked why he sought sponsors for the Web series, Mr. Hannah replied, “Because we want to pay for it.”

“Contrary to what the world thinks about The Onion,” he said, laughing, “we are rapacious capitalists.”

Posted by: Patrick | March 14, 2010 Facebook Helps Social Start-Ups Gain Users


Published: March 12, 2010

Frank Curry for The New York Times

Mark Hendrickson, the chief executive of Plancast, where members share social or business plans, said social networking services are more valuable when your friends are using them.

But a growing number of start-up companies are getting around this problem by, in essence, outsourcing the sign-up process. They are making use of a Facebook service that lets users log into new sites using their Facebook credentials. The free service, Facebook Connect, can help nascent Web services recruit a healthy crowd of users in a hurry, and help the users find their friends on those sites.

At the same time, the service reinforces Facebook’s role as the central hub of the social networking world.

“There is always a chicken-and-egg problem with any social service,” said Mark Hendrickson, co-founder of a service called Plancast, which lets members share their social or business plans with their online circle of friends. “You have to have friends there already to make it valuable.”

Relying on another company for such an important function can be risky. For example, an unexpected technical problem at Facebook could affect a start-up’s site. More broadly, any big change in the way Facebook works could have ripple effects.

Mr. Hendrickson acknowledged those challenges, saying, “These platforms are essential for next-generation technologies, but they are also still minefields for those same new technologies.”

Most sites hedge their bets by also creating ways for people to sign up directly, or to use their log-in information from Twitter, in addition to Facebook, as Plancast has elected to do.

Of course, coming up with a clever idea and synching it to Facebook Connect does not guarantee a home run. Gelato, a matchmaking service that finds other lovelorn people in your social circle, failed to gain much traction after it was introduced last fall.

On the other hand, Aardvark, which lets users seek answers to questions from people in their extended online network, was bought by Google for a reported $50 million last month.

Facebook Connect has helped give rise to a new wave of social Web services that benefit from piggybacking on Facebook and its 400 million users.

Blippy, for example, is a new service that allows members to give friends a glimpse into their spending habits by showing purchases made through iTunes and Netflix and on major credit cards.

“There hasn’t been a big forum for talking about what you buy online,” said the service’s co-founder, Philip Kaplan. “The concept came from the idea that every time you use your credit card to pay for something, there is potentially an interesting conversation to be had with friends and online followers.”

The approach seems to be working. Although Blippy opened its site to the public only in January, members have shared details of more than $15 million in purchases with their friends.

Quora, a question-and-answer service that is still in a test phase, uses new members’ Facebook profiles to flesh out their Quora accounts, picking up clues as to which topic areas the members are experts in. In contrast to most question-and-answer sites, Quora attaches real names to answers.

Another advantage to using the Facebook service is that it makes it easy for people to send messages back to Facebook from the other sites that are linked to it. A service called LoKast, which lets users share media like songs and videos with others nearby using a mobile application, will rely heavily on Facebook and Twitter to increase its user numbers.

“People also invite friends through Facebook Connect, but you can also use it to find new users to share content with,” said Boris Bogatin, co-founder of the company. “You may not know who is in your vicinity, but if you twittered or posted to Facebook that you’re on LoKast with media to share, you can find people.”

Businesses built around Facebook Connect could also reap benefits when it comes to advertising, said Charlene Li, founder of the consulting firm Altimeter Group.

“Knowing the tailored details about a user and their interests is infinitely more valuable to an advertiser,” said Ms. Li.

Since Facebook Connect was introduced in December 2008, more than 80,000 Web sites and services have put the log-in feature to use, said Ethan Beard, director of the Facebook developer network. They are not just start-ups either: The Huffington Post uses it to allow readers to comment on news articles, and Yahoo recently built it into a handful of its products, including Yahoo Sports and Yahoo Answers.

But just as the service allows people to travel across the Web, bringing their identities and social networks with them, it is also a way to cement Facebook’s role as a central hub for socializing — and to keep other Web companies from usurping it.

“Facebook is evolving through Facebook Connect into much more than a Web site,” said Mr. Beard, who works closely with Facebook’s community of third-party developers. “It’s also a technology and a service to provide social plumbing and creating a social layer the whole Web can leverage.”

Although there is no formal process to approve the Web services and applications that use Facebook Connect, the company says it has a team that keeps close watch on it to curtail spam and other illicit activity.

Amanda Lenhart, a researcher at the Pew Internet and American Life Project, said that services like Facebook Connect could help people cut through the noise online.

“In a way, these services are a response to the ever-increasing amount of information on the Web,” she said. “How are you going to filter it? We need our network and like-minded people to connect us to the information we need the most.”

Posted by: Patrick | March 13, 2010 Digital Media Lift-Off

Digital Lift-Off
Dirk Smillie, 03.08.10, 12:00 AM ET

We’ve been waiting for this: A study by Outsell, to be released Monday, reveals that U.S. advertisers are spending more this year on digital media than on print. Long predicted, this Madison Avenue milestone has finally arrived thanks to a 9.6% boom in digital advertising in 2010.

That number comes from Outsell’s annual advertising and marketing study, which collected data from 1,008 U.S. advertisers (both consumer and B2B) in December 2009. Of the $368 billion marketers plan to spend this year, 32.5% will go toward digital; 30.3% to print. Digital spending includes e-mail, video advertising, display ads and search marketing. “It’s a watershed moment,” says the study’s lead author, Outsell vice president Chuck Richard.

As disrupting as this digital onslaught is to champions of print, the Outsell report has some surprising news for one old media category. Ad spending for magazines will rise this year by 1.9%, to $9.4 billion. That number reflects a spending boost of 4.2% for consumer titles and 1% for B2B. “Marketers are telling us they’re giving this print category some serious attention,” says Richard.

Digital may now be the primary survival strategy for publishers, but Richard offers another glimmer of optimism for print denizens. After a year of pounding their expenses and debt into far slimmer balance sheets, “We should see far fewer closures and cutbacks among traditional media,” he says.

Not so for mobile marketing, another category studied in the Outsell report. “The proof isn’t in yet that mobile spending is all that effective,” says Richard. He offers this example: The Sports Illustrated swimsuit iPhone app was touted by many as a huge success. The issue is the most hyped magazine event of the year. The app was the 33rd-highest-grossing mobile app in the iPhone store. “But if you do the simple math, 32,000 people paid $2 apiece to download it. That’s $64,000.” A single page of advertising in the print version of the swimsuit edition, says Richard, brings in about $135,000 a page. “It’s time for a reality check.”

Marketers seem to know that. In spite of the staggering number of ventures flinging content onto mobile platforms, advertisers will spend 16% less on mobile in 2010, notes the study.

March 9, 2010


Rafaela Espinal held her first poolside chat last summer, offering cheese, crackers and apple cider to draw people to hear her pitch.

She keeps a handful of brochures in her purse, and also gives a few to her daughter before she leaves for school each morning. She painted signs on the windows of her Chrysler minivan, turning it into a mobile advertisement.

It is all an effort to build awareness for her product, which is not new, but is in need of an image makeover: a public school in Harlem.

As charter schools have grown around the country, both in number and in popularity, public school principals like Ms. Espinal are being forced to compete for bodies or risk having their schools closed. So among their many challenges, some of these principals, who had never given much thought to attracting students, have been spending considerable time toiling over ways to market their schools. They are revamping school logos, encouraging students and teachers to wear T-shirts emblazoned with the new designs. They emphasize their after-school programs as an alternative to the extended days at many charter schools. A few have worked with professional marketing firms to create sophisticated Web sites and blogs.

Brochures, fliers and open houses have become all but required in New York City neighborhoods like Harlem, where many schools have shown lagging academic performance. Where parents once simply sent their children to the nearby school, they now can enter lotteries for two dozen charters.

“We have to think about selling ourselves all the time, and it takes a concerted effort that none of us have ever done before,” said Ms. Espinal, who is in her first year as principal of Public School 125, also known as the Ralph Bunche School. “We have to get them in the door if we are even going to try to convince them to come here.”

Five years ago, P.S. 125, on West 123rd Street, had more than 460 students. Today, the school, with students in kindergarten through the fifth grade and an A on its last school report card, has fewer than half that, and now shares its building with the Columbia Secondary School, which serves students in grades 6 through 12.

During her open house last week, Ms. Espinal spent more than two hours channeling her enthusiasm to persuade half a dozen parents that P.S. 125 was the best place for their children. She walked quickly and spoke even faster as she led the parents through the school, proudly showing off a building with an ornate auditorium and a spotless gym.

And then there was the functioning pool, where she held the chat last summer. Few other public schools in Manhattan have one, she boasted.

Parents oohed and ahhed at the pool and ran through dozens of questions about which reading program the school used, how often students used the science lab and which students used the gym on rainy days. Several counted the children in each classroom and smiled contentedly when they did not get to 20.

“That’s key,” said Shoshana Haulley, whose 4-year-old son will enter kindergarten next year. After the tour, Ms. Haulley said she was impressed with Ms. Espinal’s assertiveness but was unsure where she would send her son.

Officials at Alain L. Locke Elementary School, on West 111th Street, spent months with a marketing firm, which worked free of charge to develop a blog and Web site to keep parents up to date. Since 2005, enrollment at the school has dropped by more than 25 percent, but has stabilized this year.

“Sometimes it’s just a matter of sharing what’s happening,” said Susan M. Green, the principal of the school. Like other school leaders in Harlem, Ms. Green said sometimes parents were “pleasantly surprised” when they visited open houses, which the schools now routinely hold.

River East Elementary, on East 120th Street, draws students throughout Harlem and typically has more applicants than seats. But at this time of year, staff members spend hours scurrying to day care centers, churches and apartment complexes to find prospective parents, said Katie Smith, the assistant principal. “We have to be out there constantly representing ourselves,” Ms. Smith said.

Keeping the classrooms full is not just a matter of pride. Dwindling enrollment is one of the criteria that the schools chancellor, Joel I. Klein, uses when deciding which schools to close, saying that it shows parents are “voting with their feet.”

The prospect of being shut down has left educators in Harlem’s public schools anxious. Teachers from closed schools keep their salaries even if they cannot find new positions, though Mr. Klein has been seeking the power to lay them off after a certain time. In some cases, principals and other administrators can lose their jobs or be pushed out of the system.

Last year, the Education Department moved to shut down Public School 241 and replace it with a charter school run by the Harlem Success Academy network, but backed off after the teachers’ union filed a lawsuit. Still, Mr. Klein sent a letter home to parents at the school, encouraging them to “seriously consider” applying to Harlem Success, which now shares the building with P.S. 241.

This fall, 232 students enrolled at the traditional school, a drop from 299 the year before.

For most schools, the marketing amounts to less than $500, raised by parents and teachers to print up full color postcards or brochures. Typically, principals rely on staff members with a creative bent to draw up whatever they can.

Student recruitment has always been necessary for charter schools, which are privately run but receive public money based on their enrollment, supplemented by whatever private donations they can corral.

The Harlem Success Academy network, run by the former City Council member Eva Moskowitz, is widely regarded, with admiration by some and scorn by others, as having the biggest marketing effort. Their bright orange advertisements pepper the bus stops in the neighborhood, and prospective parents receive full color mailings almost monthly.

Ms. Moskowitz said the extensive outreach was necessary to make sure they were drawing from a broad spectrum of parents. Ms. Moskowitz said they spent roughly $90 per applicant for recruitment. With about 3,600 applicants last year for the four schools in the network, she said, the total amounted to $325,000.

As another example of the buzz that public schools are up against, the Oscars broadcast on Sunday night included a 60-second American Express advertisement featuring Harlem Children’s Zone, which runs two charter schools.

The regular schools are contending, most of all, with a perception that charter schools deliver a superior education. Many of Harlem’s regular schools, like its charter schools, received A’s last year from the city for showing progress on standardized tests. But, in general, they tend to have lower passing rates.

Even Ms. Green, of Alain Locke Elementary, said there was only so much a school could do to increase enrollment. “For me there are variables you can control and some that you can’t,” she said. “Our job is catering to the needs of the children who are here.”

Karen Zraick contributed reporting.

Fast-Growing Video Site Fails to Reach Extension With Parent of Popular Comedy Central Shows

By Michael Learmonth

Published: March 03, 2010

NEW YORK ( — Hulu is losing two of its most popular series — Comedy Central’s “The Daily Show” and “The Colbert Report” — after failing to reach an extension of a deal with Viacom.

Unlike ABC, NBC and Fox, Viacom is not an equity investor in Hulu, but since 2008 it has been the most prominent provider of cable programming to the video service, which is dominated by broadcast TV programming.

Viacom’s rationale for putting those two shows on Hulu, as opposed to, say, “Jersey Shore” from MTV, is that they’re topical, like news programming, and don’t have the kind of long-term value as a dramatic series.

Hulu has been growing fast, but even its partners are taking a more cautious approach to how many episodes in a given series they put on the service. Shows on Hulu typically run with one-quarter of the ads broadcast TV has, but those ads include innovative formats such as “Ad Selector,” which allows users to choose the ad they watch before an episode.

As a service, Hulu is built for broadcast TV in that it is free online and supported by advertising. Hulu has said it would implement a pay wall to accommodate other business models such as cable, with its dual revenue stream of advertising and subscriptions, or even recent movie releases.

Deal over
The deal with Comedy Central was always a short-term one, and Comedy Central execs monitored it closely to determine what value the company was getting, weighing that against the impact on ratings and the network’s own websites.

In a blog post, Hulu’s senior VP of content and distribution, John Forssell, wrote, “We’ve had very strong results for both Hulu and for Comedy Central, in terms of the views and the revenue we’ve generated … we’ve driven steadily increasing revenue per view as advertisers voted with their budgets to take advantage of innovative ad formats and very strong advertising effectiveness.”

The shows will come down from the service March 9, but they will remain in Hulu’s directory, which lists shows not on the service, such as CBS content, and Hulu helpfully directed fans to Comedy Central’s sites, and

But the removal of “The Daily Show” and “The Colbert Report” is a blow; both resonated with Hulu’s viewers. The “Daily Show” was Hulu’s seventh most-watched series last week, and “Colbert” was No. 10.

Nielsen reports online user trends

Study finds 79% would avoid Web site that charges

By Georg Szalai

Feb 16, 2010, 11:05 AM ET

NEW YORK — As media and entertainment companies continue to mull new ways to charge consumers for online news and entertainment, 85% continue to prefer that content remain free.

According to new research from Nielsen, which asked more than 27,000 consumers across 52 countries, there are, however, some opportunities.

While media firms continue to debate business models and experiment with various approaches to charging for digital content, Nielsen found that 52% of respondents favor micropayments. That said, only 43% say an easy payment method would make them more likely to pay for online content.

Advertising will certainly remain a key revenue stream for media companies in the digital space. Nielsen found that 47% of respondents are willing to accept more advertising to subsidize free content. In turn, 64% believe that if they must pay for content, there should be no ads.

Digital content, for which consumers are most likely to pay, or have paid for already, is professionally produced content that they are used to paying for offline, such as theatrical movies, music, games and select videos, including current television shows, Nielsen found.

“Consumers are least likely to pay for content that is essentially homegrown online, often by other consumers at fairly low cost,” according to a summary of the Nielsen study. Such content includes online communities, podcasts, consumer-generated videos and blogs.

In between those two categories are various news offers — from newspapers and magazines to Internet-only news sources and radio news and talk shows. While relatively expensive to produce, “much of their content has basically become a commodity, readily available elsewhere for free,” Nielsen concluded.

Overall, Nielsen found that 79% would no longer use a Web site that charges them — presuming they can find the same information at no cost. The research firm found that consumers look for content to meet certain criteria before they are willing to pay for it in the digital world. For example, 78% of respondents said they should get free online access if they already subscribe to a newspaper, magazine, radio or TV service.

And 71% say online content must be considerably better, but only 34% believe the quality of content would suffer if companies couldn’t charge for it.

Also, 62% said if they pay for content, they should be free to copy and share it with whomever they want.

By Jeff Sexton
Published February 11, 2010

Let’s be honest, you don’t just want your voice to be added to the conversation; you want your voice to be heard, repeated, and valued—and your message to be influential. Ultimately, you’re after influence.

So what better way to understand social media than by looking at the fundamental principles of influence as taught by Dr. Robert Cialdini, professor of psychology and marketing at Arizona State University? In his seminal book, Influence, Cialdini covers six “weapons of influence” that are hardwired into our social and cognitive minds. In other words, we can’t help but behave in accordance with these laws of social interaction.

Does this sound like something useful to keep in mind during your social media engagements? Well, let’s take a look six powerful persuasion techniques:
1. Reciprocation

In Cialdini’s words, the rule for reciprocation “says that we should try to repay, in kind, what another person has provided us. If a woman does us a favor, we should do her one in return; if a man sends us a birthday present, we should remember his birthday with a gift of our own; if a couple invites us to a party, we should be sure to invite them to one of ours.”

And so it is in social media: we’re more likely to retweet someone who has already retweeted us. We link to people who have linked to us. And we tend to give a business far more trust after it has provided us with a lot of free value.

Used manipulatively, this turns into autofollow bots that help you amass thousands of followers in a breathtakingly short time—none of whom may actually care what you have to say. Doh!

Used more positively and constructively, if you focus on initiating reciprocity by providing no-strings-attached value to those in your network, you’ll ultimately wield far more influence. Not because the gift economy is a new fad in marketing, but because following the law of reciprocity is how we’re wired as humans.
2. Commitment and Consistency

“Once we have made a choice or taken a stand, we will encounter personal and interpersonal pressures to behave consistently with that commitment. Those pressures will cause us to respond in ways that justify our earlier decision,” said Cialdini.

Chances are, you follow too many people on Twitter. And you’re signed up for more RSS feeds and newsletters than you can really read. Objectively, purging your list of followers and unsubscribing would eliminate distractions and increase your social media signal-to-noise ratio.

But most people never make that purge and hardly ever unsubscribe. Part of it goes back to reciprocation, but a larger part stems from consistency: you’re loath to admit that following and subscribing to those people and newsletters was a mistake.

On the positive side, how much more likely are you to comment on a blog that you’ve already commented on before? Especially if you’re now “signed in” to comment on the blog during future visits—and if your Gravatar or Disqus headshot shows up next to the comments?

According to the principle of consistency, you’ll want to remind people of their previous positive commitments through perks, public displays, an elimination of friction for increasing their commitment, etc. It works for Amazon prime, Amazon’s 1-click ordering, and Amazon’s reviewer system, and it will work for fostering blog comments and a blog community, too.
3. Social Proof

One method we use to determine correct behavior is to find out what other people think is correct. We view a behavior as more correct in a given situation to the degree that we see others performing it.

Just watch this video to see this in action!

Whether we admit it or not, most of us are impressed when someone has a ton of blog subscribers, Twitter followers, YouTube views, multiple blog reviews for their upcoming book, and so on.

Yes, people can game the system (autofollows and such), which can jade our intellectual response, but our core and initial emotional reactions stay the same.

On the positive side, creating a lot of value for others can help companies and individuals gain social proof via reciprocation: writing engaging content for guest posts, offering to interview authors and subject matter experts, and so forth. Not only do these activities provide social proof in themselves, but they can help you gain a support network capable of “salting” your blog comments, your retweets, etc.

And when it comes to social proof, tribes matter. It’s not just about what the mass of people are doing on social media that constitutes proof, it’s what other like-minded people and peers are doing. So according to the principle of “social proof,” you should concentrate your social media efforts on finding and building social proof within your tribe.
4. Liking

“We most prefer to say yes to people we know and like,” says Cialdini. Extensions of this principle are:

1. Physical attractiveness creates a halo effect and typically invokes the principle of liking;
2. We like people who are similar to us;
3. We like people who compliment us;
4. We like things that are familiar to us;
5. Cooperation toward joint efforts inspires increased liking;
6. An innocent association with either bad or good things will influence how people feel about us.

How does this work for social media? Well, to start with the virtual equivalent of physical attractiveness, we give extra credence to attractively designed blogs, messages contained in videos with higher production quality, and corporations’ landing pages displaying a better sense of social media savvy in their overall design and layout.

Similarly, individuals involved in coordinating joint ventures for the common good are associated with—and therefore “haloed” by—those efforts, while at the same time invoking cooperation toward a joint effort, which further increases “liking.” Think of Seth Godin’s efforts at compiling free and thoughtful ebooks and then using the compilation to raise funds for a non-profit. Bryan Eisenberg’s Trick or Tweet efforts from a year ago also come to mind.

As for complimenting others, what else is a retweet, a trackback, or a positive blog comment than a social compliment? And yes, those are all activities you should participate in authentically, sincerely, and liberally if you wish to leverage the principle of liking to your advantage.
5. Authority

Cialdini talks about “The extreme willingness of adults to go to almost any lengths on the command of authority…” In his book, he examines how authority can be conferred by (and also manufactured by) titles, clothes, and trappings.

In social media, authority is less about titles and clothes than about virtual trappings. In his (fantastic) report, “Authority Rules,” Brian Clark talks about how perceived expertise can frequently differ from real expertise. Meaning that the guy known for blogging about and offering intelligent commentary on a subject will likely have far more perceived expertise (and therefore influence as an authority) than a genuine but unknown non-blogging expert.

But perhaps the most direct measure of authority is the number of people who will buy or download a recommended resource based on little more than an authority’s endorsement. How many people would buy a copywriting book simply because Brian Clark said it’s a must-read? How many people will download a free PDF on nothing more than Seth Godin’s evaluation that it contains important insights?

But one thing social media has seemed to spark is a dawning understanding that authority is (or should be, at least) limited to a legitimate field of knowledge. So when a relatively famous figure like Robert Scoble states on his website Scobleizer that search engine optimization isn’t important for small businesses, he’s “taken to task” on it rather severely.
6. Scarcity

Apart from reciprocity, this is perhaps the most used tool in social media. When bloggers open up a class or inner circle membership or subscription service, it is never for an unlimited number of customers or for an always open/unlimited time. Smart bloggers either create or fully leverage already existing scarcity by limiting seats available, length of time to buy, etc.

Laura Roeder has rather famously made scarcity a centerpiece of a signature technique, wherein bloggers hold competitions with free services as a prize. When contestants don’t win, they then value the prize more highly precisely because of the newly perceived scarcity. This makes them more likely to accept a consolation prize of getting the services at a slight discount.
Parting Recommendations

While the six principles of persuasion started out as “weapons of influence” that were used against us by “compliance professionals,” I—along with Cialdini—would encourage you to practice the positive side of wielding influence. To sum up many of the recommendations from the post, here are some very positive ways to leverage the principles of influence to increase your social media success:

* Focus on creating value and initiating the reciprocity principle by gifting your social media contacts with high-value content, insights, reports, etc.
* Sincerely flatter your subscribers, friends, and commenters by responding to them and nurturing your growing community. Actively reach out to people you admire using social media and pay them the compliment of commenting on their blogs, following their tweets, linking to their content, etc.
* Commit to consistent engagement on the social media platforms you chose to use, to the point of staying away from new social media platforms that you don’t have the resources to actively participate in.
* Use social proof as credibility cues where appropriate. Show off your number of subscribers next to the Subscribe button. Possibly use colleagues to “salt” your comments on important posts, build up your network by guest posting, commenting, and retweeting.
* Coordinate within your community on larger efforts for the greater good. You’ll probably be psyched at what you create or accomplish, you’ll do good and feel good about it, and you’ll likely become associated with the effort.
* Put the extra effort in on achieving professional and inspiring design. Dress for success on your blog, website, and social media landing pages.
* When creating a contest or trying to spark immediate action, use the scarcity principle to positive effect. But be honest about it—no changing “last day for” dates, no miraculously replenishing supplies, etc

But, hey, I’d be THRILLED to add to the list if you recognize any of your tried-and-true techniques as falling within—or totally falling outside of—these weapons of influence.

What are your secret weapons of influence? Let’s engage. Please comment below now.

Tags: authority, authority rules, autofollow, blog comment, blog subscribers, brian clark, bryan eisenberg, commenting, commitment, community, consistency, consistent engagement, design, emotional reactions, expertise, flatter, followers, free value, guest posting, halo, high value content, influence, inner circle, laura roeder, liking, measure of authority, membership service, multiple blog reviews, newsletters, perceived expertise, reciprocation, retweet, retweeting, robert cialdini, rss feeds, salting, scarcity, seth godin, signal to noise ratio, smart bloggers, social compliment, social interaction, social media, social media engagement, social media persuasion, social media platforms, social proof, subscription service, trackback, tribes, trick or tweet, trust, twitter followers, virtual trappings, weapons of influence, youtube views

About the Author, Jeff Sexton

Jeff Sexton is a copywriting and website optimization specialist who combines content and messaging improvement with aggressive analytics and testing as part of a “holistic” approach to online marketing optimization. Other posts by Jeff Sexton »

Posted by: Patrick | February 11, 2010 Obama Plays Conciliator-In-Chief

I happen to believe that while this may be a good political strategy for Obama, he can’t sustain it because all of his political instincts and tendencies still lean left.  As a result, his “inauthenticity” will be perceived by the voting public louder than his words.  Clinton was a political realist when he learned to accommodate the emergence of Republicans in 1994.  Obama still believes that he can stem the tide of losses amongst independents by talking centrist, while having no real capacity within himself, his staff or the Democratic leadership to govern from there.  What say you??

The Way We’ll Be
Obama Plays Conciliator-In-Chief
John Zogby 02.11.10, 12:01 AM ET

As he campaigned for the presidency Barack Obama offered himself as a conciliator, and voters responded favorably. But one year into office, public anger has grown, and Obama is still pleading with Republicans and Democrats to get along.

Democrats on the left are frustrated that Obama continues to reach out to Republicans when it seems obvious to them that the GOP’s plan is to obstruct every initiative. Republicans on the right don’t trust Obama and believe all his talk about cooperation is just cover for his plans to promote a socialist agenda. Obama’s continued appeals to bipartisanship aren’t aimed at either extreme. He is talking to voters in the middle and hoping to maintain their trust in him, and our polling shows he may be having some success.

Obama effectively used his State of the Union address to call for an end to “the tired old battles” that divide the nation. He challenged his own party “not to run for the hills” after losing a filibuster-proof Senate majority and told Republicans that now that they have 41 votes in the Senate, “the responsibility to govern is now yours as well.”

Obama followed that by meeting with the House Republican caucus. Both aired their grievances and disagreements, but having the president publicly meet with the opposition party may have been more important to voters than the content of the dialogue.

Obama met again with Republican leaders on Feb. 9, and next up is a televised Feb. 25 bipartisan summit on health care reform where both parties and Obama can present their ideas.

Our latest Zogby Interactive poll (Jan. 29-Feb. 1) asking about Obama came after the State of the Union and his meeting with House Republicans. His approval rating hit 50% for the first time since last September. Among independents his approval bounced from 36% at the end of 2009 to 45%.

Another interactive poll in the first week of February asked whether voters believed Obama was being sincere about wanting to work with both parties to find solutions. By 53%-46% voters agreed that Obama was sincere about bipartisanship. The question measured agreement-disagreement on a four-point scale and found voters much more divided than the overall result seems to show. Forty-one percent strongly agreed Obama was sincere, and 39% strongly disagreed he was not.

It wasn’t just Republicans and Democrats who took the more extreme positions. By a 52%-39% margin, independents agreed Obama is sincere about working with both parties, but three-quarters agreed or disagreed strongly.

We also asked voters to compare Obama and his two predecessors on the same question. Obama was seen as more sincere about being bipartisan than George W. Bush, 49%-38%. However, Bill Clinton was chosen over Obama, 42%-33%.

Why would a President whom a Republican House majority impeached be seen as more bipartisan than Obama? Clinton emphasized repeatedly that he was not a liberal. But so has Obama, including when he specifically told the House Republicans “I am not an ideologue.”

Clinton had eight years to show he was not an ideologue, and a Congress that still had a working core of moderates in both parties willing to make deals. After passing welfare reform and failing at health care reform, Clinton went for small-bore initiatives that looked good when the economy was strong and the nation was not at war.

Today there are few, if any, moderates among Congressional Republicans and not as many among Democrats as there were in the 1990s. Obama inherited a deep recession, huge debt and two wars. He had to stem the banking crisis with government money, and he chose to take on health care. And as much as we might like to not see race as a factor, Obama is still the first African-American President.

Obama governs in a hyperpolarized time, so he must continue to be seen by moderate voters as the leader standing above the fray trying to bring both parties together for the public good. Fortunately for him, Obama is very good in that role; and that will make him a very formidable candidate in 2012, even if the economy has not fully recovered.

There is also a more immediate strategy in dialogue with Republicans: passing health care reform and a jobs bill. Now that Republicans have proven they can stop anything in the Senate, Obama is telling them that they must now share in governance. Our most recent interactive poll found voters split at 49%-49% on whether Congress should finish the process and pass health care reform. Among moderate independents, 55% want the process to go on.

By bringing them to the table Obama is forcing Republicans to present their health care proposals. If Democrats accept some of these, the Republicans will look like obstructionists if they continue to use their 41 Senate votes and block an up or down vote on final legislation. Also, going the extra step of meeting publicly with Republicans could make it easier for Democrats to use budget reconciliation rules and pass much of their health care bill with a simple majority in the Senate.

As for a jobs bill, Republicans know that voter anger is aimed at all incumbents, and failing to act on people’s central concern will be bad for them as well.

Since last August all of the momentum has been with Republicans. Obama is hoping that being seen as the conciliator-in-chief will change that dynamic. Stay tuned.

John Zogby is president and CEO of Zogby International and the author of The Way We’ll Be: The Zogby Report on the Transformation of the American Dream. He writes a weekly column for Forbes .

House Dem Claims Ryan Plan Would Send Economy Into Ditch, CBO Disagrees

By on 2.5.10 @ 12:08PM

Ever since his back and forth with President Obama during last week’s question time at the Republican retreat, Rep. Paul Ryan’s “Roadmap for America’s Future” has been gaining attention as a plan that the Congressional Budget Office has projected would actually solve our nation’s long-term entitlement crisis.  As a result, Democrats are seeing it as a new opportunity to attack Republicans for trying to destroy the nation’s safety net.

Ryan’s ambitious proposal would represent a comprehensive overhaul of our nation’s finances. While preserving Medicare for those over 55, everybody else would get a voucher upon retirement, which would have a higher value for sicker and poorer retirees. The Social Security system would allow younger workers the option of investing a portion of their payroll taxes in personal accounts.  The health care system would move to a consumer-based one by ending the tax exclusion for employer-based health insurance and giving individuals a tax credit instead. The proposal would also change the tax system, giving Americans the option of choosing a new simplified tax code with just two brackets and no deductions (other than the individual health care tax credit). It also eliminates the corporate tax and replaces it with a lower business consumption tax.

After a year of portraying Republicans as the party of “no,” Democrats are now seizing on the Ryan plan as a way to reframe November’s election along traditional lines – with Democrats as the party that will protect entitlements from being cut by Republicans.

“That’s their budget plan,” Rep. Chris Van Hollen told Talking Points Memo of the Ryan proposal. “He’s the ranking Republican member on the Budget Committee. That is their so-called roadmap. And it’s a roadmap right into the economic ditch that we got ourselves to begin with.”

I plan to write more about Ryan’s “Roadmap” and the broader debate, but I thought I’d quickly point out that far from leading us into the ditch, the CBO projects that the proposal would dramatically improve our nation’s economic outlook relative to current trends (known as CBO’s “alternative fiscal scenario”).

“The lower budget deficits under your proposal would result in much less federal debt than under the alternative fiscal scenario and thereby a much more favorable macroeconomic outlook,” CBO writes in page 14 of its analysis of the Ryan plan.

CBO projects “real gross national product per person would be about 70 percent higher in 2058 under the proposal.” But after 2058, the CBO’s model completely breaks down when trying to project current trends, “because deficits become so large and unsustainable that the model cannot calculate their effects.” By contrast, the model shows the Ryan plan continuing to achieve economic growth in the decades that follow. This is demonstrated by the CBO chart below.

The one thing that’s certain to drive our economy into the ditch is continuing policies that shield entitlements from any meaningful reform.

Philip Klein is The American Spectator‘s Washington correspondent.

Posted by: Patrick | February 1, 2010 Barack Obama’s no Bill Clinton

Published on The Weekly Standard (

The Ideologue

Barack Obama’s no Bill Clinton.

BY Fred Barnes

February 8, 2010, Vol. 15, No. 20

President Obama’s greatest need is to escape the ideological grip of congressional Democrats and the liberal base of the Democratic party (they’re one and the same). But he either doesn’t recognize this or, as a conventional liberal himself, isn’t so inclined. This self-inflicted difficulty has put Obama in worse political straits than President Clinton faced after the Republican landslide of 1994.

Certainly there was nothing in Obama’s State of the Union address last week to indicate he understands the fix he’s in or has devised a credible way to get out of it. His message, though he didn’t put it in quite these words, was that he’d rather fight for unpopular liberal policies than switch to broadly appealing centrist ones.

A bad omen for Obama and Democrats was the pleased-as-punch response of Capitol Hill’s top Republican, Senate Minority Leader Mitch McConnell. “It makes my job a little easier than if he were moving to the middle and picking up people,” McConnell says. “I naïvely thought he was going to do a course correction.”

McConnell characterizes the Obama strategy as: “Ignore the public, we know what’s best, full speed ahead.” The practical effect is to yield the political high ground to Republicans. “He can call us the party of no till he’s blue in the face,” McConnell says. “It depends on what you’re saying no to.”

When the president had lunch with television anchors at the White House the day of the speech, he minimized his political distress. Were the rate of unemployment two points lower, he’d be in fine shape, Obama suggested. That’s probably true. And if pigs had wings they could fly.

Since the Republican Senate victory in Massachusetts on January 19 and the collapse of Obama’s domestic agenda, the parallels between Obama now and Clinton in 1994 have come into sharp focus. The president, by the way, told the anchors Republican Scott Brown won because he was the better candidate, not because he made opposition to Obama’s policies the centerpiece of his campaign.

To save his presidency after his stiff rebuff in the midterm elections, Clinton lurched to the political center. He adopted a strategy of “triangulation” that involved painful compromises with Republicans, who had captured the House and Senate. It worked. Clinton glided to reelection in 1996, defeating Republican Bob Dole by 7 points.

Though it’s rarely acknowledged, Clinton’s most significant successes in the White House were all in conjunction with Republicans: the North American Free Trade Agreement in 1993, welfare reform in 1996, and balanced budget legislation in 1997 that included a cut in the capital gains tax rate from 28 percent to 20 percent that spurred the financial boom and budget surplus of his second term.

For Clinton, creating daylight between his presidency and liberal Democrats was easy. They hadn’t been responsible for his election in 1992, nor was he ideologically tethered to them. In Obama’s case, separating himself would be hard. The liberal base was instrumental in his election, controls both houses of Congress, and may retain its majority after the 2010 midterms as well. As a politician, Obama is a creature of modern liberalism.

Even if Obama wanted to, it would be awkward for him to negotiate legislative deals with Republicans while liberal Democrats control Congress. And it would be regarded as a betrayal if he vetoed a Democratic bill. I can’t recall a recent example of a president vetoing a measure passed by his own party. Obama’s veto threats in the State of the Union weren’t taken seriously by Democrats or Republicans.

At the core of Obama’s trouble is a misreading of the 2008 election. He and Democratic liberals interpreted it as a mandate for an era of liberal lawmaking and governance in a newly minted center-left America. And they set out to create that era with sweeping initiatives on health care, energy and the environment, and the economy.

They were wrong, as everyone but the most unswerving or fogbound liberal now understands. America is a center-right country politically and has been for decades. Pushing a liberal agenda for a year has cost Obama dearly. His public approval has fallen at a record rate (for a first-year president), and so has support for his policies.

He is clinging to the one advantage his party retains, its strength in Congress. “To Democrats, I would remind you that we still have the largest majority in decades and the people expect us to solve some problems, not run for the hills,” Obama declared in the speech. Sorry, Mr. President, but dozens of Democrats in Republican-leaning districts or red states are already in full flight, either deciding to retire or abandoning your agenda.

Obama is giving aid and comfort to the Republican counterstrategy. As in 1994, Republicans say they’re ready to cooperate with the president when they can, oppose him when they can’t. So McConnell, for one, is willing to go along with Obama’s puny budget freeze. But Obama hasn’t offered Republicans much else that might be risky to oppose.

To salvage Obamacare, Democrats buttonholed several Republican senators last week with schemes for tweaking the bill. The senators declined to negotiate, telling the Democrats,  “Call McConnell.” Under McConnell’s leadership, Senate Republicans are united in preferring to start over, from scratch, on health care reform. So far, McConnell hasn’t gotten a call from the White House or any Democrat.

To boost his recovery after the Republican landslide of 1994, Clinton found a useful foil, the new House speaker, Newt Gingrich. When Gingrich overreached, Clinton was the beneficiary. Obama desperately needs a foil, but his attempts to turn McConnell and Republicans into one have failed. Instead, he’s become their foil.

Let’s give Obama credit for intellectual honesty. He believes in his agenda. Speaking at a House Republican retreat in Baltimore last week, Obama insisted, “I am not an ideologue.”  But he sure can pass for one. And despite his travails, Obama brims with self-confidence. He told Democrat Marion Berry of Arkansas, a seven-term House member, that Democrats today have a unique advantage they lacked in 1994—“me.” Berry doesn’t agree. He’s retiring.

Fred Barnes is executive editor of The Weekly Standard.

Posted by: Patrick | January 26, 2010

Washington Post: How GOP won the Internet

Pray tell that National GOP Leadership will “drink the social media kool-aid” by the gallon. The Party needs it much more from a voter listening and conversation technology as much as they do for fundraising and content (message) syndication.  Relevancy through voter conversation is key…

How Republicans won the Internet
By Mindy Finn and Patrick Ruffini
Sunday, January 24, 2010;

Scott Brown’s supporters became fans of the candidate on Facebook, where they commented on his status updates and uploaded their own photos. The Republican Senate hopeful took to Twitter, using the #masen hashtag to let his followers know how the race was going. His campaign powered its field operation through targeted online ads and Web-based spreadsheets, and raised $12 million from 157,000 individual donations in the last two weeks of the race. After he won last week, his team live-streamed the election-night party in Boston online.

Democratic candidates don’t have a monopoly on online organizing anymore. Brown and his campaign staffers deserve the credit for proving this, but it’s a reason to celebrate for us and our new-media colleagues, too — we’ve been working to get the GOP into the Web era for the past decade. We’ve been laughed out of high-level campaign meetings, told that online budgets are the first thing to go and informed that having a Facebook page is “unpresidential.” And it wasn’t until recently that people stopped asking us to fix their computers.

But we’ve always had faith that the rightroots could organize for victory, as the netroots had on the left. It just needed some nurturing. And now that it’s launched Sen.-elect Brown in Massachusetts, the online-organizing playing field is more even than it’s ever been in the past 10 years of American politics.

From the beginning of the race, Brown’s campaign knew its candidate was a long shot. To have any hope, his team needed to get his message directly to voters. This populist approach — and the hope for a 41st Senate vote against the Democrats’ health-care overhaul — inspired the rightroots to latch onto Brown’s campaign through blogs, Facebook and Twitter. This paid off in an overflow of volunteers and contributors from across the country and a nearly five-point victory.

It’s not as though GOP organizers woke up last fall and realized they’d better learn to use this Internet thing. Our party is out of power — and the party out of power has the stronger incentive to innovate. If it doesn’t, the base will. Netroots protests dragged the Democratic Party into the 21st century kicking and screaming in 2006 and 2008. Frustrated with the president and health-care reform, the conservative “tea party” movement has done the same for the Republicans in the past year.

Howard Dean ran the first hair-raising netroots campaign in 2004. The former Vermont governor didn’t secure the Democratic presidential nomination, but his online strategy emboldened his party. Democrats embraced meet-ups. They came to rely on Internet contributions, and they kicked off 2005 with a 50-state strategy and a score of new new-media institutions. They were mad as hell and they weren’t going to take it anymore; it was time to use the most effective tool available to overtake the Republicans. The Internet was and is that medium.

Meanwhile, Republicans appeared way behind the times. It’s not that the GOP is any less capable of using technology than the Democrats are. It was just that during the years that the netroots really took off — 2004 to 2008 — Republicans were not angry enough (or desperate enough) to use all the weapons in their arsenal. A single, unifying outrage, like the Democrats’ opposition to the Iraq war and to President George W. Bush, was missing.

We tried. We explained how important it was to reach voters where they are. But lockstep support for White House policies does not inspire a national political movement.

Now, of course, the White House belongs to a different party. And we didn’t have to wait for 2010 or 2012 to take action. There was a governor’s race in Virginia and another in New Jersey last fall — and then the Massachusetts special election. In those contests, Republican candidates thoroughly embraced Web tools and ran circles around the opposition online — and it paid off.

Before the GOP’s recent grass-roots revival, top-down thinking was on full display in many campaigns for which we worked. Even after the Obama campaign’s initial success online in 2008, Republican staffers responded to our calls for a movement-based approach with a dismissive tone. “We don’t care about building a base,” said one. “We care about raising money.”

Even among the GOP consultants and top strategists who paid lip service to the Internet, it was, to many of them, simply another avenue for executing a dusty playbook, written in a different era. In many campaigns, even today, there’s an unspoken assumption that though Facebook, Twitter and a Web site are necessary, they also are not terribly consequential (except as online ATM machines). The “real” work of politics goes on behind closed doors, in fundraisers, where progress is measured in increments of $2,400.

Recently, these traditional impulses have reasserted themselves — in the Democratic Party. When San Francisco’s Twittering mayor, Gavin Newsom, withdrew from the California governor’s race last October, political strategists charged that it was because he had placed too much emphasis on new media. Newsom’s former top strategist, Garry South, scoffed that “the Newsom campaign was living proof that you cannot depend entirely or mostly on the Internet or social-networking sites to run a competitive campaign at this level.” Translation: Web geeks should just buzz off and leave the real work to the adults with Rolodexes.

South’s statement betrays the defensive mentality of the consultant class, which raises the straw man of Internet-obsessed campaigns (no rational person we know would suggest Facebook as the only tool a campaign should use) while advocating a narrow strategy that spends 70 percent or more of a campaign’s budget on a single medium, television.

That kind of thinking has already been proved wrong. As GOP campaigns struggled to enter the 21st century — even well into its first decade — the Obama team built an agile online machine. The results spoke for themselves: $500 million raised online, a 13 million-address e-mail list and 3 million text-message subscribers collected thanks to a clever gambit to announce Barack Obama’s vice presidential pick via text. When McCain staffers advocated a similar approach, they were told that the impact of a vice presidential announcement could be maximized only through a television event.

In the wake of the 2008 election, after four years of aloofness from most of our party’s leaders about the role of new media and technology in electoral politics, we took a break from the day to day of campaigns and thought seriously about how to help our party move forward.

We outlined a strategy; it had a lot to do with technology, but it wasn’t just about social networking, e-mail list management or YouTube. We talked about decentralizing the GOP and running a candidate in all 435 congressional districts. That got us some bewildered reactions: I thought this was about the Internet — what’s this about running in every district?

Such responses revealed a mind-set that for too long has prevented the party from innovating: wedded to the status quo and out of touch with the American experience. (One could draw parallels to the policy front as well.)

The Internet isn’t a line item in a campaign budget anymore. It’s not just something you have to pay for, underneath catering and radio ads. It has reorganized the way Americans do everything — including elect their leaders. Candidates who would have had no chance before the Internet can now overcome huge odds, with the people they energize serving as the backbone of their campaign.

We don’t have it all figured out. Like the technology companies whose products we rely on, the only way forward is to innovate constantly. Campaigns must continually update their playbooks.

But our party seems finally to be catching up — just in time for 2010 and 2012.

Mindy Finn and Patrick Ruffini are partners at Engage, an online political consulting firm in Washington. They worked on Bob McDonnell’s campaign for governor in Virginia, and their company provided fundraising technology to Scott Brown’s Senate campaign. They will be online to chat with readers on Tuesday at 11:00 a.m. Submit your questions and comments before or during the discussion.

© 2010 The Washington Post Company

Posted by: Patrick | January 19, 2010

NYTimes: The Pragmatic Leviathan

January 19, 2010
Op-Ed Columnist

When I was in college, I was assigned “Leviathan,” by Thomas Hobbes. On the cover was an image from the first edition of the book, published in 1651. It shows the British nation as a large man. The people make up the muscles and flesh. Then at the top, there is the king, who is the head and the mind.

When the Pilgrims left Britain to come to America, they left behind that metaphor as well. For these settlers, and the immigrants who have come since, the American nation is not a body with the government as the brain. Instead, America has been defined by its vast landscape and the sprawling energy of its entrepreneurs, scientists and community-builders.

In times of crisis, Americans rally around their government, but most of the time they have treated it as a supporting actor in national life. Americans are an unusual people, with less deference to central authority and an unparalleled faith in themselves. They seem to want a government that is helpful but not imperious, strong but subordinate.

Over the years, American voters have reacted against any party that threatens that basic sense of proportion. They have reacted against a liberalism that sought an enlarged and corrosive government and a conservatism that threatened to dismantle the government’s supportive role.

A year ago, the country rallied behind a new president who promised to end the pendulumlike swings, who seemed likely to restore equilibrium with his moderate temper and pragmatic mind.

In many ways, Barack Obama has lived up to his promise. He has created a thoughtful, pragmatic administration marked by a culture of honest and vigorous debate. When Obama makes a decision, you can be sure that he has heard and accounted for every opposing argument. If he senses an important viewpoint is not represented at a meeting, he will stop the proceedings and demand that it gets included.

If the evidence leads him in directions he finds uncomfortable, he will still follow the evidence. He is beholden to no ideological camp, and there is no group in his political base that he has not angered at some point in his first year.

But his has become a voracious pragmatism. Driven by circumstances and self-confidence, the president has made himself the star performer in the national drama. He has been ubiquitous, appearing everywhere, trying to overhaul most sectors of national life: finance, health, energy, automobiles and transportation, housing, and education, among others.

He is no ideologue, but over the past year he has come to seem like the sovereign on the cover of “Leviathan” — the brain of the nation to which all the cells in the body and the nervous system must report and defer.

Americans, with their deep, vestigial sense of proportion, have reacted. The crucial movement came between April and June, when the president’s approval rating among independents fell by 15 percentage points and the percentage of independents who regarded him as liberal or very liberal rose by 18 points. Since then, the public has rejected any effort to centralize authority or increase the role of government.

Trust in government has fallen. The share of Americans who say the country is on the wrong track has risen. The share who call themselves conservative has risen. The share who believe government is “doing too many things better left to business” has risen.

The country is now split on Obama, because he is temperate, thoughtful and pragmatic, but his policies are almost all unpopular. If you aggregate the last seven polls on health care reform, 41 percent support it and 51 percent oppose.

Many Democrats, as always, are caught in their insular liberal information loop. They think the polls are bad simply because the economy is bad. They tell each other health care is unpopular because the people aren’t sophisticated enough to understand it. Some believe they can still pass health care even if their candidate, Martha Coakley, loses the Senate race in Massachusetts on Tuesday.

That, of course, would be political suicide. It would be the act of a party so arrogant, elitist and contemptuous of popular wisdom that it would not deserve to govern. Marie Antoinette would applaud, but voters would rage.

The American people are not always right, but their basic sense of equilibrium is worthy of the profoundest respect. President Obama has shown himself to be a fine administrator, but he erred in trying to make himself the irreplaceable man in nearly ever sphere of public life. He erred in not sensing that even a pragmatic government could seem imperious and alarming.

If I were President Obama, I would spend the next year showing how government can serve a humble, helpful and supportive role to the central institutions of American life. Even in blue states like Massachusetts, voters want a government that is energetic but limited — a servant, not a leviathan.

Posted by: Patrick | January 14, 2010 Republican’s Tweet Revenge? Say What?!

Twittering Politicians
Republican’s Tweet Revenge
Taylor Buley, 01.13.10, 4:50 PM ETBurlingame, Calif. –

Compared with Barack Obama’s campaign romance with social networking technologies like Twitter, Republican presidential hopeful John McCain was quite the luddite. His sending of telegrams likely didn’t help the senator gain any tech-savvy street cred.

Since the campaign ended, the technological tables appear to have turned. According to a new study being released Thursday, Republican Congressmen are much more active on Twitter than their Democratic counterparts. And the member of Congress with the largest number of followers on Twitter? None other than Arizona Sen. John McCain. No one in Congress comes close to McCain’s million-strong following.

Political revenge can be so tweet.

The mashup study, “Twongress: The Power of Twitter in Congress,” is authored by Mark Senak, a policy wonk at public relations firm Fleishman Hillard. It profiles the behavior of politicians in both the House and Senate. Senak cross-referenced active members of Congress identified by SourceWatch as having Twitter accounts with a free Twitter analysis tool called Twitalyzer that measures things like authority and influence.

The research showed that in the House of Representatives, Republicans are far more prolific, sending out 29,162 Tweets through early January, five times as many micro messages as their Democratic counterparts. In the Senate, Republicans’ 6,310 tweets outnumber Democrats’ by a far smaller 35% margin.

Because Republican Congressmen tweet more often, more people subscribe, or “follow,” their Twitter feeds. Thanks in part to lots of Twitter activity from groups like Top Conservatives On Twitter (TCOT), Republicans occupy 18 of the top 20 spots in terms of followers on Twitter. Republicans “follow” people back, too–or at least more than Democrats. The study says they subscribe to more people’s feeds by a factor of 10.

Author Senak theorizes that the shift toward Republican twittering is more a reflection of the fact that Republicans have had to become more resourceful and inventive in the way they communicate with constituents and media than it is of any big cultural sea change on either side of the aisle. One other possibility: marginalized Republicans are looking to commiserate with other conservatives.

South Carolina Republican Sen. Jim DeMint had the most clout and influence in the Senate, according to Twitalyzer. In the House, Ohio Congressman John Boehner had the most followers, and Florida representative Ileana Ros-Lehtinen led in overall clout and influence.

The study’s sample is small, since not every member of Congress is on Twitter and not all those on Twitter are active enough to be analyzed. But the data suggest–even if somewhat unscientifically–that while all politicians are good at keeping on message, if that message is a tweet, it’s most likely from a Republican.

To read more of Taylor Buley’s stories, click here. Contact the writer at

Posted by: Patrick | January 13, 2010

AdAge: Sarah Palin Does Well in Day One at Fox News

Media Reviews for Media People: Sarah Palin, Fox News Contributor

By Larry Dobrow

Published: January 13, 2010

Let’s get the partisan stuff out of the way: Sarah Palin is shrewd, stylish and skilled. No, she’s turbo-dumb and majestically uninformed. Wait, she’s a media visionary blessed with an innate ability to frame the day’s pressing issues in a way that both Joe the Plumber and Alec the Baldwin can comprehend. No, she’s a menace who diminishes the intellectual standing of western civilization every time she opens her mouth. Actually, she embodies the American Dream, having worked her way up the socioeconomic and professional ladders by dint of hard work. No, she embodies the American Dream, in that she has achieved a level of fame incommensurate with her ability and appeal.

Within the context of her limited initial role, Palin exceeded expectations.
Within the context of her limited initial role, Palin exceeded expectations.

There. Now we can get around to a subject about which it might be possible to engage in respectful debate: Namely, whether the first appearance of Sarah Palin on Fox News Channel as a paid analyst heralds the arrival of a telegenic natural star or the coming of the sixth horsewoman of the media apocalypse (if the stars of “The View” were the first five).

I thought Palin did nicely. Say what you want about her syntactical shimmies or tendency to lapse into campaigny monologues — the camera digs her, which gives her an advantage over some rigorous-thinking but grooming-resistant wonks of cable news. Also, unlike the myriad smart-because-they-say-they-are commentators fanned out across the dial, Palin has long since established her bona fides with her audience — which, coincidentally, just happens to overlap with Fox News’ viewership. In the parlance of a business of a distinctly different kind, Sarah Palin arrives at Fox as a made woman.

Over the course of her 14 on-air minutes, Palin wasn’t asked to steer the conversation, work the telestrator or engage in parry-and-thrust with an ideological adversary like Nancy Pelosi. Instead, she was asked a rat-a-tat series of questions by Bill O’Reilly that basically boiled down to “What would you do?” — about President Obama’s sputtering poll numbers, about Sen. Reid’s poor choice of language and about Iran. She answered them well enough, even if she insisted on pounding the “America doesn’t care about that kind of [media] crap” drum as if being paid by the beat.

Palin had clearly been tipped in advance to O’Reilly’s lines of interrogation, but this hardly makes her unique in the cable-news world; It’s not like David Gergen shows up at CNN unsure whether he’ll be asked about spearfishing or corruption in the Bersculoni administration.

Within the context of her limited initial role, Palin exceeded expectations. She commanded my attention. That’s plenty.

If I have a concern about Palin the Pundit, it’s this: You can only glean so much from her comments on the day’s top political stories, because much of the time she is the story. She’s been the story from the moment John McCain plucked her out of snowplow obscurity, and will stay the story as long as she remains the human flashpoint in the liberal/conservative yelp war.

Thus Palin can’t really come across as anything other than another politician with an agenda, which, to be fair, was her job description until recently. Any time she answers a question, her response will be framed in the context of a possible 2012 presidential bid. Unless, and until this changes — she’s set to host periodic episodes of “Real American Life,” a new Fox News Channel series that will explore real-life stories about overcoming adversity — Palin’s every utterance will feel like a rough draft of a stump speech. She’ll be less an analyst than a news-maker, which could pose a headache before too long.

The bottom line? If you believe Sarah Palin is Ronald Reagan in sensible shoes, you’re going to adore her every plain-talkin’-about-that-there-thing segment. If you regard Sarah Palin as a potential reason to apply for dual Canadian citizenship, you’re going to be vexed by them. You like her or you don’t, just as you like the way Fox News goes about its business or you don’t. There’s no middle ground here.

Maybe It’s Time to Ask if You’re Getting Enough Out of All the Volunteer Work You Do for Biz & Ev and Mark

By Simon Dumenco

Published: January 11, 2010

Facebook and Twitter are, of course, increasingly trying to prove that they can be real, self-sustaining businesses with meaningful revenues, and maybe even consistently positive cash flow. Good for them!

ZUCKERBERG: Has his company really 'turned evil'?
ZUCKERBERG: Has his company really ‘turned evil’?

But what about the rest of us — the great unwashed masses of social-media addicts? What are we getting out of the deal?

Before we get too far into this new decade, let’s pull back a second and ask: Are we all just toiling mightily to make a bunch of rich nerds (Facebook’s Mark Zuckerberg and his employees and investors, Twitter’s Biz Stone and Evan Williams and their employees and investors) richer, while we impoverish ourselves?

I’m not trying to be melodramatic here. For one thing, both Twitter and Facebook are demonstrably robbing us of our privacy — and the sole ownership of our own thoughts, emotions, personal expressions, etc. (Or, rather, we’re sitting back and allowing the theft to occur.) Last September in a column titled “Twitter: A Vampire That Can Legally Suck the Life Out of You,” I wrote that Twitter had made little-noticed changes to its TOS (Terms of Service) that give it the right to do whatever it wants with your tweets. Though you “retain your rights to any Content you submit, post or display on or through the Services,” that’s merely a technicality, because if you use Twitter you’re automatically giving it “a worldwide, nonexclusive, royalty-free license (with the right to sublicense) to use, copy, reproduce, process, adapt, modify, publish, transmit, display and distribute such Content in any and all media or distribution methods (now known or later developed).” And sure enough, after my column was published, Twitter ended up doing deals to license its data stream — your and my tweets — to Google and Bing for their search engines.

Meanwhile, Facebook got all sneaky with its TOS at the end of the year. If you haven’t yet read Ryan Tate’s Dec. 14 Valleywag post titled “Facebook’s Great Betrayal,” it’s a great place to start to understand how Facebook suddenly changed its business relationship with you. “Facebook’s privacy pullback isn’t just outrageous,” Tate begins, “it’s a landmark turning point for the social network. … The company has, in short, turned evil.”

But privacy isn’t all we’re giving away.

As of this writing, Twitter has just 156 employees. Facebook currently says it has “1,000+” employees — a shockingly tiny work force for a site with 350 million active users. Neither company needs a lot of warm bodies because you and I are doing most of the work: perpetually creating and uploading vast amounts of fresh content that Twitter and Facebook can do with as they please.

Think of these companies as the Walmarts of the 21st century — behemoths that steamroller American (and global) culture, radically reconfigure communities big and small, and take share from everyone else (in their case, media mindshare) — only they have an almost all-volunteer work force. And you’re one of the volunteers.

Now, depending on what business you’re in, maybe you’re fine with that. If you’re a brand marketer, chances are good that you’re extracting real value from investing time and energy in social media (and you’re happy to have consumers volunteering their time to be your “brand ambassadors” or whatever you want to call them); good for you. (And if you’re a consumer who gets off on connecting with big brands — or just wants to interface with customer service in a forum, like Twitter, where certain marketers seem to be hyper-responsive — well, good for you too.) In general, if you’re soft-selling something — like content or an idea — that can benefit from free publicity, Facebook and Twitter are your friends. Even if, well, they’re the two-faced sort who think nothing of riffling through your handbag or backpack when you get up to go the bathroom — you know, glad-handing “friends” (those are air quotes) who are obviously using you for something, only it’s not always entirely clear what.

For my part, I’ve made a point of never posting anything particularly personal on Facebook, and you won’t find out where I am or what I’m doing from my Twitter feed. I mostly just tweet links to things I’m reading that I’m happy to share with my followers, and I also tweet links when I publish new columns and stuff. My Twitter ROI — the return I get on the time I invest in tweeting — feels like it’s worth it. For one thing, because I track in-bound links to my column on, I know that I’ve gotten literally tens of thousands of additional page views to my column and its offshoots, thanks to readers tweeting and retweeting links. So, thank you, Twitter.

But what if you’re not in the business of selling content or a “personal brand” or whatnot? What’s the payoff then? All that time and energy spent making virtual connections with friends and strangers, tweeting ephemera, tagging pictures, etc. — does the, say, entertainment value or networking/emotional benefit (e.g., getting to feel “connected”) outweigh the opportunity cost (i.e., if you spend 20 hours a month on Facebook, what could you do with those 20 hours instead)?

I’ve said this before, but I’ll say it again here: Is your time better spent communicating with the people you’re not with than communicating with the people you’re actually with? In short, how do you figure out the tipping point at which you’re doing more for Facebook and Twitter — doing, basically, pro bono work to make paper billionaires even richer — than Facebook and Twitter are doing for you?

I leave you to do your own personal math.

~ ~ ~
Simon Dumenco is the “Media Guy” media columnist for Advertising Age. You can follow him on Twitter @simondumenco

From Network World:

This story appeared on Network World at

In 2010, companies will set policies governing social networking use
By Jon Brodkin, Network World
January 07, 2010 11:47 AM ET

Will 2010 be the year Facebook and Twitter take over the business world? The social networks are growing in popularity by the day, both for personal and business use, yet many IT and business executives remain wary of the risks posed by the online services and skeptical about potential benefits.

Social networking hacks: Top 10 Facebook and Twitter security stories of 2009

A number of Web-savvy CIOs are using Twitter to spread their views, engage with colleagues and discuss technology, yet a survey shows that more than half of CIOs in the United States do not allow employees to log onto social networking sites “for any reason” while they’re at work. Another survey conducted in the United Kingdom found that nearly three-quarters of the top brands had no official presence on Twitter, despite the service’s potential for reaching customers. (See related story, 12 CIOs who Tweet.)

Business users are logging onto public social networking sites far more often than social networks sponsored by their employers, but attempts to block such activity simply will not work, says IDC analyst Caroline Dangson, who researches enterprise collaboration and social technologies.

As workforces become more distributed, and even office workers spend time working at home, people will use personal devices for business use and it will be difficult for IT to make blanket proclamations banning tools as widely used as Facebook and Twitter.

“This concept of trying to control or block [social media usage], it is not going to work,” Dangson says. “There’s going to be a divide, with some companies that shun public social networks and are fearful of using them, and some who embrace it and take the risk.”

An IDC survey of 4,710 U.S. workers in October found that 34% use consumer social networks like Facebook and LinkedIn for business purposes, and 9% use microblogging sites like Twitter for business purposes.

Yet many of their employers are trying to stop them from doing so.

A Robert Half Technology survey of 1,400 CIOs from U.S. companies with at least 100 employees found that 54% completely prohibit use of social networking sites, such as Facebook, MySpace and Twitter, while at work. Nineteen percent allow social networking sites for business purposes only, while another 16% allow “limited personal use.” Just 10% permit use of social networking sites “for any type of personal use.”

Some brands have begun using Facebook and Twitter to reach consumers, both to promote themselves and communicate about company failures. Rackspace, for example, has used Twitter extensively to communicate with users after several power outages knocked customer services offline.

But large companies are also avoiding social networking sites in droves. New Media Age, a United Kingdom publication, analyzed the top 500 U.K. brands and found that 74% have no presence at all on Twitter, and just 10% use the site daily.

Dangson believes Facebook is a good setting for businesses to reach consumers, but that there is a greater business opportunity in Twitter, particularly in business-to-business markets, because “everything is public and open.”

Twitter “is a fantastic direct marketing tool,” she says. “People have opted in to follow you and follow your messages.”

Others tout the potential of LinkedIn, another major social network that is business-oriented, and often used to build business relationships and find new jobs.

Users of Facebook and Twitter likely care only about the sites’ usefulness, but many financial analysts have wondered how these social networks can create a compelling business model. Out of all of them, LinkedIn may have the greatest financial future, and potential to be acquired by a larger company, says Robert Armstrong, a financial analyst and senior columnist at Dow Jones Investment Banker.

Major Web properties like Google and eBay have been successful because their business model is based upon transactions, he notes. Facebook and Twitter seem to lack that advantage, but LinkedIn is centered around a pretty major type of transaction – the hiring of a new employee.

Even if you’re not seeking a new job, LinkedIn may be the best place for IT folks looking to exchange information with colleagues. An IDC survey of 204 IT decision-makers found that LinkedIn is the best social network for finding information to support IT purchases. Twitter was ranked second, followed by Facebook, MySpace, and YouTube.

Clearly, use of social networks will continue to increase in 2010. Company executives need to accept this reality – they don’t have to take a hands-off, anything-goes approach, but they do need policies governing employee use and a strategy for corporate use, analysts say.

In the next year, CIOs will get more involved, and “we’ll see companies writing policies and guidelines,” partly to protect workers, Dangson says. Businesses will also increase use of Facebook and Twitter for CRM, she predicts, saying CRM is “the most compelling business case for public social media sites where customers frequently voice their opinions on matters of everyday life, including the brands in which they interact.”

Forrester analyst Augie Ray, who studies social marketing, says companies like Best Buy and Comcast are have done a good job interacting with customers on social sites. This is necessary in part because consumers’ attention has been distracted from traditional forms of advertising.

“They’re embracing it because they have to,” Ray says. “Brands that do get it, understand that they can engage with and have a two-way dialogue with consumers.”

Companies need a strategy that takes into account who their audience is and how they prefer to be reached, Ray says. Social media efforts can’t be half-baked. Starting a company Facebook page, putting a lot of effort into it up-front and then never updating it again is not effective marketing.

Businesses should also have a plan for how to use social media in times of crisis, because Facebook and Twitter are often the most direct ways of reaching customers. The moment a public relations crisis happens is not the time you want to be asking the question “how will we respond?” Ray says.

Companies looking to improve brand image via social marketing also need to be wary of the legitimate privacy concerns their customers may have. Marketers need to be transparent about what data they collect and how they are using it, Ray says.

“As individuals become more concerned about information they’re giving up and how they’re using it, that’s going to have a big impact on companies,” he says. “There’s certainly some concern in the marketplace and government entities about use of marketing data. … Marketers just want to be fully transparent, which they haven’t always been.”

Privacy and security concerns also have businesses wondering how they can use social networking to improve collaboration among internal employees, without exposing themselves to risk. Companies are wary of employees releasing sensitive information like layoffs and acquisitions.

“The risk that comes with social media is how viral it is,” Dangson says. “It’s the risk of scale that can work both ways.”

That’s why many businesses will opt to create their own internal social networks, which can be controlled and open only to employees, and perhaps to business partners.

In 2010, you’re likely to hear the phrase “Facebook for the enterprise.” recently announced “Chatter,” a social-networking application that is designed for internal business use but can also incorporate content from public social networking sites by taking advantage of the Facebook and Twitter APIs. Therefore, employees can receive in the same feed a mix of private content from their bosses and fellow employees, and public content from Facebook and Twitter that is related to their jobs.

Bruce Francis, vice president of corporate strategy for Salesforce, says he doesn’t know anyone without a Facebook account. Eventually, he thinks employees will develop extensive corporate profiles as well, and relationships between the public and corporate profiles will develop.

“The question we are asking everyone is ‘why is it you know more about strangers on Facebook than you do about your colleagues and employees?'” Francis says. “You know who has gone to the movies, but you don’t necessarily know about when one of your key sales reps has just visited a major account.”

Even though many CIOs seem wary of social networking in the workplace, Francis is confident that IT executives will ultimately embrace the trend.

“I think that every CIO is looking at what’s been going on with the rise of social networks like Twitter and Facebook,” Francis says. “Companies are wondering, ‘how can I capture that energy, that relevance, that better way of managing all the information that’s important to me, how can I capture that for my company?'”

Just as in Facebook, Chatter allows people and applications to send users news in real time, but the security model will allow IT to determine what types of information employees can see. Salesforce believes this granular privacy control will help assuage concerns businesses have about the security of public social networking sites.

There are also private alternatives to Twitter, such as a service called Yammer, which lets companies create streams available only to their own employees. New privacy controls for Facebook, which have been criticized by many users for making too much information public, may ultimately make it easier for people to present different information to business colleagues and personal contacts.

“What companies are really asking for is a better way to collaborate,” Francis says.

Follow Jon Brodkin on Twitter:

This story, “Facebook, Twitter becoming business tools, but CIOs remain wary,” was originally published at Follow the latest developments in social networking at Network World.

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Posted by: Patrick | January 6, 2010

The American Spectator: GOP Botched Health Care First

The Right Prescription

Republicans Botched Health Care First

By on 1.5.10 @ 6:08AM

If you want to understand how the Democrats have been able to push through a gargantuan overhaul of the nation’s health care system that the public overwhelmingly opposes, a good place to look is the Republican Party.

It’s not that Republicans didn’t do anything; in fact they passed a lot of legislation on health care. They enacted the Health Insurance Portability and Accountability Act, the State Children’s Health Insurance Program, Medicare prescription drugs, Medicare Advantage, and new waivers for state Medicaid programs.

But they didn’t have any coherent analysis of the real problems in the U.S. health care system. Republicans have never seemed truly interested in the issue, and they enacted these bills in the hopes of deterring Democrat initiatives, not actually improving a dysfunctional system.

It’s a pity because each of those efforts could have made a big difference if they had been done right.

The first problem in American health care is excess reliance on “third-party payment,” which divorces patients from any knowledge of or concern for the cost of the care they receive. This inevitably puts a bureaucrat in a position of power between the doctor and the patient. It is the bureaucrat, either public or private, who decides what is worth paying for and how much should be paid.

The second problem is that health insurance is likewise provided by a third party, either an employer or a government agency. The individual consumer does not choose the policy, has little information about what it costs, and has little power to insist on changes if the insurer performs badly.

Both of these circumstances reduce the consumer/patient to a childlike dependent status, with little knowledge of or power over the health care decisions made on his or her behalf. That is bitterly ironic since every penny spent on health care actually comes directly from that same consumer/patient in the form of taxes, premiums, or lost wages. It is the consumer’s money and the consumer’s health at stake, but the consumer is the least-influential person in the transaction.

If the Congressional Republicans had bothered to understand these issues, or had bothered to listen to those who do, they could have tailored their health care initiatives to make a big difference over the past 15 years.

Take HIPAA, the Health Insurance Portability and Accountability Act of 1996. Despite its name, HIPAA does absolutely nothing to encourage portability of health insurance. Quite the opposite, in fact. It simply restricts consideration of preexisting conditions in the small group insurance market.

Under HIPAA, a person moving between jobs cannot be considered a new applicant in her new coverage if she was previously covered, so any waiting period for benefits is waived. But it is still the employer who chooses the coverage, so the worker doesn’t keep her old coverage. She has to learn how to use a whole new policy, with a different network of providers, different claims-filing procedures, different benefits, and so on.

The Republicans could have written this bill to allow workers to own their coverage and take it with them from job to job. The employer’s role would be to help fund the premium, not to dictate the kind of coverage the worker must have.

Similarly with SCHIP, the State Children’s Health Insurance Program, enacted in 1997. SCHIP was aimed at helping children in families that were low income but not poor enough to qualify for Medicaid. The federal government on average pays 70 percent of the costs, and the states pay 30 percent. Though there was some state flexibility in how to set up these programs, most states simply expanded their Medicaid programs to cover the new kids.

There are big problems with this approach. Very often the parents are covered by insurance provided by an employer, but the employer pays only for covering the worker, not dependents. To cover the children required employees to pay a pretty hefty premium. The Republicans could have simply provided help to parents to pay that premium so the whole family would be on the same insurance plan.

Instead, they arranged it so the children would be on an entirely separate health care program provided by the state. This divorces the kids from the family and makes the parents learn how to use two entirely separate and unrelated benefit programs. It is an anti-family program, and it was enacted by a Republican Congress.

The Medicare prescription drug program was another botched job, designed for political reasons, not rational policy. The program pays 75 percent of the cost of drugs up to $2,700 in spending per year. Then it pays nothing. Then when spending reaches $6,154, it starts in again, paying 95 percent of the costs. This makes no sense whatsoever. It would have been far better to have a uniform deductible of perhaps $1,000 or $1,500, after which the program’s benefits kick in. Lower-income people could have been given a funded account to pay for expenses below the deductible.

This program was massively underfunded and has become a precedent for the even-bigger deficit spending binge we are on today. Republican complaints about Obama’s spending ring hollow when it is pointed out that they did the exact same thing when they were in charge.

Finally, Medicare Advantage and Medicaid waivers would both have been better programs if they had emphasized an HSA-type approach with an across-the-board deductible for a savings account, funded or not, to pay for small expenses. These approaches have proven very successful in pilot programs with Medicare and Medicaid populations. Indiana’s Medicaid program and the Cash & Counseling programs are examples.

But here too, the Congressional Republicans were tone-deaf regarding the real problems in health care. They insisted on passing legislation that increased the role of third parties instead of empowering individual Americans. It is a national tragedy that 15 years of governance were squandered by the Republican Party.

Greg Scandlen ( is director of Consumers for Health Care Choices, a project of The Heartland Institute.

Facebook readies its Game Dashboard to organize your social gaming life

game dashboardFacebook is in the midst of redesigning how users find, interact with, and keep track of games on the social network. Called the “Game Dashboard,” the new feature is Facebook’s attempt to play nice with social game developers, serve the interests of gamers, and at the same time stop games from ruining the experience for everybody else.

The company is reining in the worst abuses of Facebook game companies, which have polluted the network’s communications with spam-like messages that general users have begun to ignore, such as “Joe Smith wants to thank you for chasing crows out of his pumpkin patch.” Facebook has announced that these “push notifications” will no longer be put into the notifications channel, which is one of the ways that apps currently communicate.

If Facebook does this previously announced redesign right, it will lead to more app usage and allow developers to keep growing. But if it does it wrong, then it will effectively shoot the golden goose, slowing the growth of game publishers such as Zynga and hurting other third-parties as well. The Game Dashboard will thus have a significant effect on how Facebook generates future revenue.

Gareth Davis, platform manager for games, said the Game Dashboard is going through iterations of its design and nothing is final yet. He said the dashboard will launch in January. Much like Facebook’s toughening stand on special offers, these changes are putting social game makers into a nervous wait-and-see mode, making it a difficult time for them as they adjust to a tectonic shift. But observers have said they think they will have long-term gain, short-term pain from all of the changes.

“We are all in the throes of major changes on Facebook now,” said Roy Sehgal, general manager at Zynga, said at our recent DiscoveryBeat conference. “They are all going to be great changes because they focus on the user experience. They are going to be great for discovery of apps. They will happen fast. They will force us all how to rethink our games.”

At the same event, Sebastien DeHalleux chief operating officer at Playfish, said he accepts the fact that Facebook thinks of itself not as a web site but an ever-changing service that has to continuously improve its relevance to users.

Under the redesign, rather than appearing in your notifications channel, games can tell you what you need to know in different ways. They can put an email in your email inbox. This will take the game spam out of your hair unless you’ve indicated you want it. And that’s the way that non-gamers like it. But for gamers, this could make it harder to tell when something is happening in a game (although there are other ways to track activity — a counter”, for instance, can tell you how many actions you have to take or acknowledge in a game or app that you have bookmarked on your Facebook page). With the redesign, all of your invites for apps will also be stored away in a tab dubbed “invites” that you must click on to view.

In that sense, Facebook is putting a stop to the spam-like messages game developers send out to attract new users to their games. At the same time, though, Facebook is creating a new page that gives game players all of the information they’d want to know about the games they’re playing.

Facebook says on its own developer page that “the goal of the Games Dashboard is to make it easier for users to find games on Facebook, including games played recently and the discovery of new games through friends.” But Facebook may want to take a lesson from Microsoft, which created a Windows “game manager” for Windows Vista that didn’t work and angered a lot of game users.

The Dashboard will display your most-recently played games. If you click on the name of a game, it will take you into that game’s canvas page, where you can find out about it and play it. The canvas page will make it clear to users if they are playing an app created by a third party. The final look for this page is still under development. The Dashboard will also feature Game News, which tells you things like “You are ranked 17th among your friends in Mafia Wars.” And it’ll tell you what your friends are playing.

Alongside the Game Dashboard is the Application Dashboard, which can tell you about the non-game apps you’re using. But Facebook is creating the Dashboard for games because it is well aware that games are the top apps being used. About two thirds of the top 15 apps are games, according to AppData. Developers can’t have an app be on both dashboards. They have to classify it one way or another, and Facebook will review the classifications.

Facebook is also, as others have reported, testing its own currency to be used in games and other apps to buy virtual goods. Right now, lots of third parties compete with each other to offer these virtual currencies. These middlemen, such as PlaySpan, take a cut. But Facebook, as the platform owner, could force the app developers to use its own native solution. That would hurt the third parties, but it could also create a universal virtual currency that could be used across games and apps. John Pleasants, chief executive at Playdom, said he was pleased with what Facebook was doing with its credits system and that it would be great if it changed user behavior.

“It should be able to double conversion rates [of getting a player to pay for something in a free app], which are around 5 percent and it would be great if we could get to about 10 percent,” Pleasants said. “It’s all about reducing friction in the system.”

Game publishers and developers are giving Facebook their feedback. So it’s a very good time to know people at Facebook. But the move by Zynga to create its own web site is telling. You still have to use Facebook Connect to play FarmVille on that site. But there is some sense that this site allows for more independence. It shows that third-party developers realize that being totally dependent on Facebook, which can change its platform at will, is not a good idea. If Facebook screws up, the third parties will move to a more friendly platform.

So Facebook has to walk a fine line of making its 350 million users happy, keeping its game developers happy, and pleasing gamers as well. The creation of the Games Dashboard will no doubt show us how far Facebook can go. Is it supplanting Xbox Live? Will it replace game consoles?

The Facebook Game Dashboard could be the beginning of something very important in the video game industry. That’s for sure.

Facebook readies its Game Dashboard to organize your social gaming life

Posted by: Patrick | November 8, 2010 The Unready Republicans

Interesting take on the challenge the GOP will have in the near term to build credibility with the very voters who held their noses in many ways and voted for them over the current majority in DC.

I’m cautiously suspicious myself and want to see definitive steps on behalf of the new GOP leadership that they can govern conservatively and not just campaign on conservative slogans.  What say you??



November 7, 2010

When a political party suffers two consecutive thrashings at the polls, its supporters can usually look forward to a long period of exile — a time to lick wounds, settle scores, feud over policy and gradually map out a road back to relevance.

Not so the Obama-era Republicans. They were thumped in 2006 and left for dead after 2008, but all it took was a 9.6 unemployment rate and an unpopular liberal majority to bring them roaring back. The wilderness era lasted all of 22 months: conservatives had barely started arguing about what went wrong during the Bush era before the American public handed them the House of Representatives again.

To his credit, John Boehner, the presumptive speaker of the House, seems aware of how little the Republicans have done to earn their summons back to power. His rhetoric since last Tuesday’s sweep has been self-effacing, and his promises have been limited and largely procedural. Newt Gingrich took power in 1994 claiming a mandate and brandishing a list of legislative priorities, but Boehner has kept his cards closer to the vest. “It is the president who sets the agenda for our government,” he told supporters on Tuesday night — not the kind of statement, to put it mildly, that leading Republicans issued in ’94.

The modest Mr. Boehner leads a party with much to be modest about. Gingrich could brandish an agenda because he had an agenda — a raft of conservative policy proposals, on welfare and crime and taxes, that couldn’t get any traction in a Democratic-controlled Congress. Today’s Republicans, by contrast, know what they’re against (the health care bill, tax increases, cap and trade) but have a world of trouble saying what they might actually be for.

Instead, they tend to fall back on the reassuring story they’ve been spinning for the last two years, in which they lost to the Democrats only because they failed to hold the line on spending. It’s a narrative that flatters conservative self-regard, while absolving Republicans of the obligation to think too deeply about policy. All they need to do is say “no” to bigger government, and the rest will take care of itself.

This strategy has worked for them in opposition, thanks to the Democratic Party’s haste and hubris. But it isn’t a blueprint for governance, and it ducks the real reasons that the Republicans lost their majority. While the Bush administration overspent, it wasn’t spending and deficits that turned the country against conservative domestic policy between 2004 and 2008. It was the fact that the Republican majority seemed to have no answers to Middle America’s economic struggles, and no appetite for the structural reforms required to keep the United States competitive.

This is even more true today. The United States is facing three overlapping crises — the short-term challenge of a jobless recovery, the long-term crisis of entitlement spending and, in the medium term, an economy that wasn’t delivering for the middle class even before the financial crisis struck. The Democratic Party may have the wrong answers to these problems. But the Republican Party as an institution often seems to have no answers whatsoever.

Some individual Republicans make a better showing. Mitch Daniels, the governor of Indiana, has a proposal for payroll tax relief that might help jump-start economic growth. Paul Ryan, the Wisconsin congressman, has his famous “roadmap” to a sustainable entitlement system. Judd Gregg, the outgoing Republican senator from New Hampshire, was collaborating with Ron Wyden, the Oregon Democrat, on tax reform that could attract bipartisan support. And during the health care and financial reform debates, the pages of conservative magazines bristled with plausible alternatives to the Democratic bills.

Yet the party hasn’t united around any of these ideas. And what consensus does exist is insufficient to the nation’s challenges. The country needs fundamental tax reform rather than the permanent extension of the Bush tax cuts. It needs a health care overhaul that doesn’t merely return the system to the pre-Obamacare status quo. It needs a plan to slow the growth of Social Security and Medicare, not just a discretionary spending freeze.

On many of these fronts, Congressional Republicans will protest that there’s nothing to be done so long as Barack Obama occupies the White House. Hence Boehner’s calculated attempt to lower expectations; hence Mitch McConnell’s insistence that the most important thing Republicans can do is work toward the president’s defeat in 2012.

But even if they’re right, that’s all the more reason to spend the next two years getting serious about policy. It will profit neither conservatism nor the country if Republicans take the White House two Novembers hence, and find themselves as unprepared to govern as they are today.

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Dan Schawbel October 5, 2010, 2:07PM EST text size: TT

Social-Networking Your Way to a New Job

Three steps to connecting with the right people and finding and leveraging the data you need via social networks, such as Twitter and LinkedIn

By Dan Schawbel

Think of the Internet as the 21st century global talent pool. To compete and secure a job, you need to have an online presence, manage it effectively, and cater to your network. Instead of submitting your résumé to job boards, classified ads, and corporate websites, take a different approach. The Internet has created a level playing field where you can connect directly with hiring managers or people who can refer you to new jobs. Instead of actually submitting your résumé to job boards, use job boards to search online for information about companies and positions you’re interested in. The more you can target specific companies, positions, and locations, the more time you’ll save.

Decide on a career path, and then construct an online presence so that hiring managers can locate information about you. Being found online can save you time and energy and get you employed faster. Your online presence should be, at a minimum, a website or a blog under your full name and profiles on LinkedIn, Twitter, and Facebook. This way, you will appear where hiring managers are searching for you or for people with your expertise. You will also have more control over how other people perceive you. Your profile information should be consistent: Use the same name, picture, and biographical information across your sites. Once your profiles are flawless, you’re ready to “people search.”

Here is a three-step method for finding your dream job using social networks:

1. Start with a handshake on Twitter.

Twitter is extremely effective for one-to-one networking, because it puts you in a public setting where people feel comfortable. Make sure to fill out your Twitter profile completely, including a custom background and at least 10 tweets with quotes, ideas, and links to relevant articles in your industry. Then proceed to and using keywords, search for employees who work at companies that interest you. Once you locate the top five to 10 people with whom you want to form relationships, follow them, and then add them to a new Twitter list called Job Search.

Spend time each day reading the tweets on your list, commenting on them using a hash tag—the “@” symbol and person’s account name. This way, the people you want to network with will see your name, face, and correspondence. The more you communicate with them, without being annoying, the more they will familiarize themselves with you, and then the relationships start. Eventually you will pique your contacts’ interest enough so they’ll follow you. This will enable you to send them direct messages: private communications between the two of you.

In your direct message, state that you’re interested in further communication through LinkedIn and provide your e-mail address. Chances are that a few of them will respond, and you can now take the relationship to the more professional environment of LinkedIn.

2. Get professional on LinkedIn.

After you connect with strategic contacts on LinkedIn, review their profiles thoroughly until you have a solid understanding of their work experience and their current job responsibilities. Then look through their contact databases so you’re familiar with the people they know at their companies; you can use that information to get introductions later. If a certain contact isn’t in your exact profession, he or she probably knows someone who is or can at least refer you. You can also see open jobs at the contact’s company by conducting searches through LinkedIn. This will make you more knowledgeable when you’re communicating with him or her later.

If this person requested the connection through LinkedIn, send a note explaining you would like to find out more about what he or she does. Depending on your contact’s preference, you may want to communicate with each other via personal e-mail rather than LinkedIn’s internal e-mail system.

3. Take contacts offline.

The whole point of using social networks in your job search is to connect with hiring managers without seeming too intrusive. Once you’ve done that, you need to bring these contacts offline for a phone call or in-person meeting. Networking in real life will always trump the digital world. When you get your new contacts on the phone, ask them about what they do and what the company is like to work at—before sending your résumé.

You have to sound enthusiastic, which should come easily because you’ve been selective about which companies and people to deal with while job searching. Don’t try to overpromote yourself in the first phone call or meeting. Let your résumé speak for your achievements and try to learn as much as possible from them. Remember that social networks can help you get a job as long as you aren’t afraid to connect with strangers and turn online connections into offline relationships.

Dan Schawbel is a personal branding consultant and author of Me 2.0: 4 Steps to Building Your Future and the publisher of Personal Branding Blog and Personal Branding Magazine. The New York Times called Schawbel a “personal branding guru.” He is also a speaker and managing partner of Millennial Branding, a branding company that serves individuals and corporations. Recently he was named to Inc. magazine’s 30 Under 30 list.

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