Eros card goes green

Here at ME Towers, we're working across a number of converged sectors and technologies. Those who know us will be aware of our efforts on plastic card based loyalty schemes, enabling brands to have proper links with customers at an individual level, in our view crucial to a successful and profitable future.

With this in mind, we liked the Evening Standard's Eros scheme as a concept when it launched. Rewarding loyal buyers in a ferociously competitive market made sense. We were running tracking research when the free papers launched, so we could see the effect it was having on the paid for ES. This seemed like a good plan.

However, its key message of pre-pay and save 20p didn't fit with its target audience of discerning and intelligent suits, who frankly didn't care about saving 20p for the hassle involved in loading a card. Coupled with its single use closed loop acceptance network, it seemed like the concept would struggle.

Looking at the ABC circulation figures for the ES, you can see the small number of copies being bought on lesser rate pre-pay, so it's obvious that phase 2 development was needed.

And now we have the Green card - jumping on the bandwagon, or in response to consumer insight and demand? We don't know, but have a sneeking suspicion it may be the first of the two. We hope not, we applaud the ES for their vision, and having the confidence to go for this sort of venture - there's few things out there in the sector that have the potential to change the market dynamics, but this is one of them.

The future is plastic, and we are working hard to enable this with our clients, but always listening to the consumer as we do so

Expensive business

Free London afternoon paper thelondondon (News International) lost nearly £17m (€22m) in the first ten months (September 2006 - June 2007). Turnover in that period was £8m.

Launching costs and slow start for ad sales are held responsible for the loss.

Thelondonpaper has a staff of 52 people, 33 working in editorial positions. Circulation is around 500,000. (Guardian)

Credit crunch continues

Lead story in The Times today is the JP Morgan forecast that 40,000 City jobs will go as a result of the ongoing global credit crunch. This follows last weeks news that 1 in 4 estate agents will be jobless, as the housing market starts to plunge.

Turbulent times out there, and all the signs remain bleak. As households start to suffer more, belts are tightened and spending reined in, how's that going to hit the media sector?

Free content should in theory come to the fore, as the "floating buyers" in the market, and the occasional buyers, count the pennies and switch from paid-for-print, to free print, or to free digital. I fear for the weekend market most, with higher cover prices already looking to have driven down the number of people dual-buying at the weekend - and the budget conscious will be looking hard before spending £2 on a Sunday newspaper.

The rest of 2008 should see paid-for circulations under increasing pressure. Which of the newspaper brands is going to be first to establish something tangible to recognise their readers real financial issues, and start acting like a real life trusted and helpful brand?

Deal or no deal?

Just a short post today on two interesting developments in the media world.

Firstly, Dennis O'Brien, Irish billionaire who now owns 21% of Independent News & Media looks like he may have to put up or shut up in his potential quest for ownership of the Irish Media business. He has publicly criticised Tony O'Reilly's ongoing ownership of the loss making UK Independents, and pushed for their sale. Much talk around the industry about what would happen if the titles closed, but personally our view is that there will always be a buyer for a national newspaper, regardless of how loss-making it is. As the Barclay Brothers and Richard Desmond have demonstrated in the last few years, national newspapers do get bought when they get put on the market. Maybe Axel Springer could return with a bid for a UK title, or maybe David Montgomery may feel like a UK presence for his European wide business could be too good an opportunity to pass up.

Our view, O'Reilly doesn't want to sell, and provided he can repel the unwanted dissident shareholder, we can't see the Independent changing hands

Second story of the day - the collapse of the bid by Lachlan Murdoch to takeover Consolidated Media Holdings, part of the Packer dynasty. Reports indicate that this came down to Lachlan being unable to get the right price for the right shareholding in the JV - and the backers pulled out through fear over the investment required in todays volatile global economy. Things must be serious when a Murdoch and a Packer can't get a deal done. Which target is next for Murdoch Jnr?

Confused marketing messages

Today I read that email marketing is dead, killed by the avalanche of spam that continues to swamp inboxes around the globe. Not sure if that's true or not, personally I still read emails from brands I like and trust.

Waterstones is one of those brands. I read books, I like their shops, and I buy their books each and every month. I actually prefer to spend time in the bricks and mortar world of Waterstones than their online store.

Their email marketing campaigns have been fairly woeful, mainly I think because they don't tailor their messages to me based on what I like, and what they know about me. Presumably because they can't connect all the insight and behaviour they have on me as an individual. I'm anonymous in-store where I spend money, and inactive online, where I don't spend cash.

Either way, oddest subject matter on a marketing email this morning came from Waterstones, and I quote:

"Change your life with Salman Rushdie, Charlie and Lola"

Salman Rushdie - Fatwa suffering Satanic Verses author with international notoriety
Charlie and Lola - found on the shelves of discerning 5 year olds across the country

Maybe I'm missing something, but this is just random isn't it?

Toxic mortgages coming home to roost

There are dark clouds on the horizon, and the storm seems to be gathering pace.

First Direct have withdrawn all mortgages from the market, which is the equivalent of one of our newspaper clients deciding that they can't afford to cover sport any further. My understanding of the dynamics driving this are:

Mortgages sold badly in US to people who can't afford them, who default, making the investment fall over. All these have already been packaged up and sold onto financial institutions, who re-package again and then re-sell. Which then starts falling over to an extent, but is a timebomb ticking away, with no-one having much idea as to future effect at an individual bank/institution level as more of the wheels (on the house) start coming off.

So, the banks stop lending each other money as they don't know who is solvent, and who is playing pass the parcel with the timebomb with the music still playing. This means cash liquidity gets badly squeezed, and the cost of borrowing the diminishing amount of money available then goes up.

Then the institutions don't have money to lend for mortgages at competitive rates, so they have to stop offering the products.

So, then it gets harder to get a mortgage, and also to re-mortgage when you come off a fixed mortgage. Which means it costs people more in monthly payments. Which hits consumer spending, which slows economic growth, and threatens recession, which costs jobs, incomes and home ownership.

And all because some grubby American salesperson, with the ethics and morals of the gutter, was sent to sell mortgages to people who could never hope to afford them, and signed up vast numbers of the economically challenged into really bad deals.

Anyone got any good news?