Five Actual Reasons Our Economy Remains In The Tank - Walter Sabo

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Cover image for  article: Five Actual Reasons Our Economy Remains In The Tank - Walter Sabo

Walk down any block in Manhattan or Beverly Hills and there are empty storefronts. A lack of foot traffic is obviously not the problem. Each store employed at least 10 people and each store had dependent vendors. Empty stores hurt all stores on the block in business, security and community ambiance. They are tangible signs that our country remains in a depression, not a recession. General Motors DID go bankrupt.

Lehmann Brothers and bad mortgage loans are blamed for our Depression economy but that's all very complicated. Here are five real world progenitors of the crisis:

1. MBA-thinkers were put in charge. In the early 1980's MBA thinkers moved from the finance and budget offices into the executive suite. When I saw this happening in broadcasting I was certainly impressed with their analytic minds, devil talk and spreadsheets. But it was also clear that they didn't "get it." They wanted to turn a "show" into pure math. Sometimes a show is just a show. This applies to all industries and their products; sometimes people just like pink.

MBA thinkers conceived of no-money-down mortgages and I can just imagine the "deck" they assembled to sell-thru the concept…to other MBA thinkers.

2. Advertising is the engine that drives our economy. Good advertising works in the worst economy. Chrysler has the best advertising and its results are stunning. Note that it took a Frenchman CEO, Francois Oliver to embrace the fact that the city of Detroit is cool.

Mr. Oliver took a stand, made a statement and attached your emotions to his cars. Great advertising. Chrysler sales up 40% in a year.

As eyeballs have moved online, advertising creative has not actually changed. Most brands take TV primetime creative and put it on the Internet and call it Video Advertising. It's not. It's just video noise. Advertising sells.

From the moment you started reading this until now, the audience to prime time TV has diminished. Yet more ad dollars will go to prime time TV this year than last year. If you KNOW an investment will diminish, would you buy it? No. But all those fancy pants brands hurt the economy and their business with safe "protect our brand" ads and Guttenberg media buys. (Not Steven.)

3. Venture money goes to patents. At root, most VC's look at scrap value when investing. No hardware, no patents; no scrap. Consumers watch shows, listen to the radio, eat food, drink stuff and wear clothes. They don't watch a blank screen or chose their clothes based on the manufacturing process.

The opportunity for VC money to revitalize the economy is the entertainment experience, the touchpoint with the consumer. This is not a new challenge.

Walt Disney could not get a bank to fund his completion of Disneyland. They wouldn't touch it. Leonard Goldenson, Chairman of ABC, a great showman, gave Disney the final funding in exchange for the rights to the film library for his network.

My team created an incredibly successful form of advertising that embedded products in online video. Products, not messages, the product was part of the show. Clients included FOX, CBS, SONY Screengems, TiVo, Timberland and many others. The business enjoyed 50% profit margins on every project. We had a young, zesty team of execs with cute accents. Problem: No software, patents, hardware---no Venture money.

The biggest transaction you can think of, over $300 Billion for NBC Universal by Comcast was a 100% CONTENT acquisition. No hardware.

4. The lack of secretaries and receptionists. If all the receptionists and secretaries were re-hired that were fired in consolidations, you could actually reach people whenever you called and the call back reminder would be 3-D with every trip down the hall.

5. The Port Authority of New York and New Jersey. The bridges and tunnels were supposed to be no-tolls by now.

Walter Sabo is the Chairman of Sabo Media, a company that offers executive-on-demand services. He has worked on-site to build out new digital content platforms such as Sirius/XM. His team was the first to discover the marketing clout of web stars, Internet organic video producers. They founded OMMA award winning HITVIEWS. The company placed brands such as CBS, TiVo and Mountain Dew inside UGC. In FM broadcasting he is a leader in the profitable sector of FM Talk and held executive positions at NBC and ABC Radio. He can be reached at walter@sabomedia.com.

Read all Walter's MediaBizBloggers commentaries at Sabo Strategies.

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