The day may seem bleak here in sub-9000 DJIA America, but we've been here before, and came back swinging. Perhaps Steely Dan can remind you of how we in the market world still know how to rock 'n roll.
"When Black Friday comes I'll stand down by the door and catch the gray men when they Dive from the fourteenth floor"
Where does a business handcuffed by a covenant that caps debt at 7.5 times cash flow go when it needs more money? If it's Las Vegas Sands (NYSE: LVS), it reaches into the bulging pockets of major shareholder and chairman Sheldon Adelson. According to The Wall Street Journal, Adelson has loaned Las Vegas Sands almost half a billion dollars.
The move will allow the company to remain within the covenant of its current $5 billion facility, which is crucial as it looks to raise an additional $2 billion for ongoing projects and refinance a current $3.3 billion loan. Earlier this month, S&P lowered the company's credit rating to B+ from BB-, reflecting weakness in the gaming industry and illiquidity in the company's position.
Traditionally, the large casino-based companies have looked to investment banks for project financing (ouch!) and LVS continues to press forward on plans to build not just in Macau, but other Far East markets such as Singapore and perhaps Taiwan. Even before the current tight money climate in the U.S., though, LVS and other major players in the Far East casino development business have been looking overseas for financing.
According to AdAge,McDonald's (NYSE:MCD) broadside at the battleship Starbucks (NASDAQ:SBUX) has been delayed by the credit crunch. The chain's plans to build coffee bars in its 14,000+ locations won't meet its previous deadline of April 2009. The delay means the ad campaign planned to accompany it will also be postponed, to the disappointment of the media world.
The magazine reports that in an internal memo the company explains that the program it runs through Bank of America to loan franchisees development funds has been tapped out earlier than expected. Franchisees are expected to resort to local funding sources for operational and development loans, in the short term.
The coffee bars are expected to cost each outlet around $100,000. A later launch could result in the bars landing in the hot summer months, not prime time for coffee drinks.
Too bad for McDonald's, since the economic uncertainty of the moment would provide a wonderful marketing platform for lower-cost, boutique coffees. Perhaps the government will include a little taste of TARP money to compensate Mickey D's for this loss of business. Crazier ideas have been floated.
The last dying gasps of Hurricane Ike were strong enough last week to knock out power here in Ohio for four days. As a confirmed electricity and Internet addict, I found the thought of going cold turkey (and warm beer) terrifying. Thankfully, I had my Blackberry to nurse me through this crisis.
How did I use Research in Motion's (NASDAQ:RIMM) gem? E-mail is a given. I was able to keep up with the normal flow of jokes, funny video links, cat photos, and occasional work-related messages. I had loaded the new AOL Messenger for Blackberry a few days before, which worked flawlessly, so I could also keep in contact with our writing team by IM.
I'd already uploaded a nice playlist of tunes, which helped fill the silent hours. The mobile portal for YouTube offered video entertainment if I wished, although the connect speed wasn't as fast as I would have liked. I kept up with the news via the web browser and the electronic version of WSJ.
I also used the screen as a flashlight. The most interesting use, though, was as an e-book reader. I can't go to sleep without reading for an hour in bed beforehand, and my flashlight-and-book routine didn't work so well. The alternative? I bought a novel (Running Blind by Lee Child) from MobiPocket and read it on my phone screen. With a blue background and white text, I found the text very readable and less tiring on my eyes. Nothing like snuggling down in bed with a good phone.
Now if I could only get my BBerry to do laundry, chill beer and write blog posts, I would never fear a power outage again.
Innovation, thy name is Google (NASDAQ:GOOG). A couple of its latest innovations came across my screen this week -- a patent application for sea-based server farms, and a cooperative venture to create a satellite network.
The more interesting of the two, to me, is the sea-based server farm concept. The patent application described this water-based data center as a system that "includes a floating platform-mounted computer data center comprising a plurality of computing units, a sea-based electrical generator in electrical connection with the plurality of computing units, and one or more sea-water cooling units for providing cooling to the plurality of computing units."
It expands this concept to include wave, motion, tide, wind power generation and the use of sea water to cool the server farm. The idea is very sexy, straight from many science fiction novels but more practical every day. Air-conditioning land-based server farms is a huge expense.
Google has also partnered with Liberty Global and HSBC to create O3b networks, according to Cnet.com. The company's goal is to place sixteen satellites that would link with ground units to provide wide-ranging wireless communications, including Internet connectivity, to underserved world populations, including those of Africa and Asia.
The aggressive target date for the satellite network completion is 2010. The sea-based server farm idea is just a patent application today, but with Google's nest egg and focus on innovation, the time to implementation could be shorter than you might think. I think my next science fiction short story will be about server farm pirates.
This post is part of our Ads Gone Bad series. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
Blending cultures is a particular challenge for advertisers. How do they appeal to one culture without offending others, who may misunderstand references and not recognize noted figures featured in ads? These are questions that Cablevision (NYSE: CVC) is probably asking.
To market its "Triple Play" offering (bundled cable, broadband, and telephone), the company hired globalWorks to create ads featuring the music and stars of reggaeton. Reggaeton, urban music that became popular with Latin American young people in the 1990s, is a fusion of Caribbean reggae and Latin forms such as salsa with rap and hip-hop.
This post is part of our Ads Gone Badseries. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
In 1995, Calvin Klein had clawed back from the verge of bankruptcy and was poised for expansion, hoping to jump into the top tier of mass-merchandised high fashion. Apparently, somebody forgot to tell the marketing department, which was happily rolling out yet another over-the-edgy ad campaign. When the offal hit the fan, it covered the whole company with a foul stench.
The campaign in question featured videos set up to resemble screen tests for low-budget skin flicks. Young men and women stood in front of cheap wood paneling, the kind one might find in the rec room of an 8mm director wannabe. These kids are interviewed by an unseen older adult, who asked them provocative questions and made suggestive comments about their physiques.
This post is part of our Ads Gone Bad series. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
Thanks to our unfortunate history with slavery and the subsequent economic slavery imposed on minority Americans, we as a nation are very sensitive to charges of racism. So sensitive, in fact, that advertisers are often accused of such transgressions for the slightest intimation. Six Flags (NYSE: SIX), the amusement park chain, found this out recently.
The park created what I thought was a clever series of ads contrasting the humdrum routine of ordinary life with the thrills to be found at a Six Flags park. For example, one ad showed a lumpy teen attempting to dance, another a chortling woman teasing her cat with a laser pointer, both compared to gleeful coaster riders at Six Flags.
This post is part of our Ads Gone Bad series. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
One day long ago I found myself standing in line at the unemployment office behind a man with a t-shirt that featured a version of Da Vinci's famous painting, the Last Supper. However, in place of Jesus, Elvis sat in the center, surrounded, not by apostles, but country and western singers. Our society had been rather tolerant of parodies of this iconic painting, until the Folsom Street Fair went over the line, taking its sponsor, Miller Beer, with it.
The San Francisco fair is the culminating event of "Leather Pride Week," and the poster advertising showed a group in Last Supper pose, garbed (scantily) in leather, including dominatrix, a man in a leather dog mask, and many pec and bountiful bosoms. As you might imagine, the image didn't travel well beyond the SF city limits, and particularly offended the Catholic League, which launched a boycott of Miller Beer.
The League would not be appeased with a simple apology, either; it wanted contrition, for Miller to issue a condemnation of the more unsavory activities associated with the event. Miller moved quickly to remove its name from the poster and the event, and issued a statement, part of which read, "we are aware of other disrespectful activities, objects and groups association with or present at the fair which, like the promotional poster, violate our marketing policies."
This post is part of our Ads Gone Bad series. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
At the start of the 20th century, two companies that would go on to dominate American industry were locked in a battle over which type of electrical current the country would embrace. The direct current (DC) champion in this War of the Currents was Thomas Edison and his company, General Electric (NYSE: GE), while Westinghouse, now part of CBS Corp. (NYSE: CBS), pushed AC, alternating current, made commercially viable by Nikola Tesla.
To make his case that DC was safer than AC current, Edison conducted a number of public exhibitions in which he "Westinghoused" -- his term for electrocuted -- cats, dogs, and cows using AC. He also had constructed the first electric chair for New York, which was used in 1890 to attempt the execution of William Kemmler. Unfortunately, those in charge underestimated the current needed, resulting in what was described as a horrifying display of cruelty, leaving Kemmler alive but badly hurt.
Undisuaded, Edison continued his campaign of Westinghousing all sorts of mammals. Meanwhile, Coney Island's Luna Park was puzzling over what to do with its elephant Topsy, who had killed three of her handlers in three years (one of whom had been trying to feed her a lit cigarette). When the ASPCA stepped in to protest plans to hang the animal, the owners struck on the idea of electrocuting Topsy. Edison made sure cameras were on hand to capture the tragic event on January 4, 1903 as 6,600 volts of AC dropped her in her tracks He released the film under the title Electrocuting an Elephant.
This post is part of our Ads Gone Bad series. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
One could question whether there could be an ad so controversial as to harm the fortunes of haute couture shops. Certainly, noted fashion house Dolce & Gabbana has tested that hypothesis with an ongoing series of sex-charged ads, one of which caused an Italian minister to accuse it of inciting gang rape.
That particular shot, in which a nubile young lady is pinned down by her wrists by a virile male under the interested gaze of several other men, was singled out for its intimation of violence toward women. Other ads by B&G have heavily homoerotic content, and one, a tableau of soldiers posed around a particularly attractive male with a bullet hole in his forehead, has even been thought by some to play on the naughty joys of necrophilia.
This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Taco Hell below in the comments.
Homer Simpson, when naming his first child, eliminated many monikers that he feared would invite rhyming nicknames (Screwy Louie, etc.) before choosing Bart (D'oh!). Combine this human propensity, the heat of Mexican food, and a soupçon of suspicion that low prices equal lower-quality ingredients, and the nickname for Taco Bell, Taco Hell, seems inevitable.
The YUM! Brands (NYSE: YUM) chain was born in the same town and at the same time as Mickey D's -- San Bernardino, California. There Glen Bell began selling 19-cent tacos, made possible by his innovation, using pre-fried taco shells. His restaurants, then know as Taco Tia, spread throughout southern California. In Redlands, the football L.A. Rams players who trained nearby began flocking to Bell's shop, and two of them became his first franchisees. In 1962, Bell sold out his share of the existing restaurants, now called El Tacos, and started Taco Bell. He took the company public in 1966 and sold his holdings to PepsiCo (NYSE: PEP) in 1975.
Shortly thereafter, the chain went international. It continued to grow thanks in part to savvy marketing, including one promotion offering a free taco to everyone in the U.S. if the Russian Mir space station, on its fall from orbit, were to hit a floating taco target in the Pacific. (It didn't.)
This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about the Tiffany Network below in the comments.
If CBS Corp.'s (NYSE:CBS) nickname The Tiffany Network were newly coined, I'd speculate that it referred to the long history of Tiffany's, and how the current CBS viewing public had probably begun shopping there back in the '20s. If the company has a more recently gained nickname, it would be the silver (-haired) network, due to the skewing of its viewership toward the geezer crowd.
In reality, the Tiffany moniker hearkens back to the CBS of radio's heyday and the early days of television. With the likes of Edward R. Murrow reporting from London during the Blitz, Orson Wells scaring the bejebus out of listeners with his broadcast of The War of the Worlds, the hit multi-cultural comedy I Love Lucy, and the iconic western Gunsmoke, the network's reputation for quality was once as glittering as one of Tiffany's diamond-pavéd bracelets.
How the mighty have fallen. CBS, with debacles such as the Katie Couric news anchor stint, now lags behind Fox in weekly ratings.
The Tiffany Network is part of a massive entertainment company with fingers in television (66% of revenues), radio (remember radio?) (12%), outdoor advertising (16%), and publishing (6%). Yes, those are all very 20th century businesses. The question troubling current investors is just how the company will move into the 21st century without swapping all its diamonds for rhinestones?
Yang busted some moves recently dancing with the star of Where the Hell is Matt?, the outstanding internet feature following adventurer and dancer (I use the term loosely) Matt Harding. Don't miss the video at the end of this post, if you're not familiar with Matt. - it's perhaps the most charming, uplifting video I've seen in years.
Of course, who can forget Steve Ballmer's dance at the podium during a Microsoft presentation? And, of course, Mark, 'Gimme the Cubs" Cuban performing on Dancing with the Stars?
Come to think of it, many CEOs are already quite accomplished at performing the fan dance with their balance sheets. Ex-Gov. Spitzer has shown his fondness for the hustle and the shag, while Donald Rumsfeld is still waiting for the cakewalk to begin. Senator Craig seems to favor the swing, while President Bush appears dead-set on taking on the Persian Dance before he waltzes out of the White House.
And me? Having lived through the Vietnam Era, I'm doing the Time Warp again.
Don't end the week on a dour note! Here is a little gallows humor to lighten your day, culled from the 'net for your enjoyment.
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The week in preview: Mulling over techs, financials
'Crash-and-burn economy?' 'Bailout beer bust?' What should we call America's economic disaster?
Yogi is right: Ninety percent of this (economics) game is half-mental
