Wednesday, August 25, 2010

The Greatful Dead: Social before Social Media was cool


The Grateful Dead Archive, scheduled to open soon at the University of California at Santa Cruz, will be a mecca for academics of all stripes: from ethno­musicologists to philosophers, sociologists to historians. But the biggest beneficiaries may prove to be business scholars and management theorists, who are discovering that the Dead were visionary geniuses in the way they created “customer value,” promoted social networking, and did strategic business planning.

Fans of the Grateful Dead are big believers in serendipity. So a certain knowing approval greeted the news last year that the band would be donating its copious archive—four decades’ worth of commercial recordings and videotapes, press clippings, stage sets, business records, and a mountain of correspondence encompassing everything from elaborately decorated fan letters to a thank-you note for a fund-raising performance handwritten on White House stationery by President Barack Obama—to the University of California at Santa Cruz. Santa Cruz was understood to be a fitting home not only because it exemplifies the spirit of the counterculture as much as, and perhaps even more than, Berkeley and Stanford, which also bid for the archive, but because the school’s faculty includes an ethnomusicologist and composer named Fredric Lieberman, who is prominent among a curious breed in the academy: scholars who teach and study the Grateful Dead.

It’s worth noting right up front the hurdles Dead Studies faces as a field of serious inquiry. To begin with, the news that it exists at all tends to elicit grinning disbelief; a corollary challenge is the assumptions people carry about its practitioners, such as my own expectation when arranging to visit Lieberman last year that I would encounter an amiable hippie, probably of late-Boomer vintage and wearing a thinning ponytail. Rough mental image: Wavy Gravy with a Ph.D.

Lieberman is nothing of the sort. A small man with parchment skin, wisps of white hair, and large round glasses, he could have looked more professorial only by wielding a Dunhill pipe. His interest in the Grateful Dead, he explained, had arisen largely by chance. In the 1960s, he studied under the noted ethnomusicologist Charles Seeger (father of Pete Seeger) at UCLA, and came to share his mentor’s dismay at the academy’s neglect of popular and non-Western music. Lieberman went on to teach a series of classes in American vernacular music and, though he held no particular fondness for the Grateful Dead, became one of the first academics to teach the band’s music, in the early 1970s.

In 1983, the Dead’s drummer, Mickey Hart, asked Lieberman to help catalog his vast collection of instruments. When the project developed into a larger study of world percussion, Hart invited Lieberman to join him on tour. “I thought it would be interesting to treat it as an ethnomusicological field trip,” Lieberman told me. For some years, when he wasn’t teaching he traveled with the band, introducing Hart to ethnomusicologists by day and attending shows by night. If you squinted hard during any number of the Dead’s most famous shows in the 1980s and ’90s, you might have glimpsed the unlikely spectacle of an ethnomusicologist crouching in earnest concentration behind the drummer, going about his fieldwork.


Lieberman apologized for not being able to show me the archive. The whole thing was under lock and key in a Northern California warehouse whose location was a closely held secret—a precaution against overzealous fans’ plundering a hoard that many would regard as akin to Tutankhamen’s treasure. On March 5, the New York Historical Society will open the first large-scale exhibit of material from the Dead Archive. Then, if all goes as planned, the collection will become the centerpiece of a new campus library at Santa Cruz slated to open later this year. Among other things, it is hoped that the Dead Archive will galvanize a nascent group of scholars across many disciplines who, like Lieberman, study the Grateful Dead—not just musicologists but historians, sociologists, philosophers, psychologists, and even business and management theorists. Some have risked their academic standing in the belief that the band and the larger social phenomenon that surrounds it are far more significant than is commonly understood. Lately, the world has been changing in ways that make that not so hard to believe.

One of the first academic articles on the Grateful Dead appeared in the Winter 1972 issue of the Journal of Psychedelic Drugs, a periodical for medical professionals, and drew on emergency-treatment records to compare drug use at a Grateful Dead concert with that at a Led Zeppelin concert. (Verdict: Deadheads favored LSD, Zeppelin fans alcohol.) The popular association between the Dead and a drug-fueled counterculture did little to encourage respectable academic endeavor.

As the band’s following grew, the notion that it might have something to offer scholars, particularly in the social sciences, became somewhat less far-fetched, though still not without professional risk. In the late 1980s, Rebecca G. Adams, a sociologist at the University of North Carolina at Greensboro, who studies friendships formed across distances, noticed deep bonds between Deadheads. The bonds seemed to belie the idea, then popular among leading social thinkers, that communities based on common interest, whose members do not live near each other, lack emotional and moral depth—that Deadheads might belong to what sociologists call a “lifestyle enclave,” but couldn’t possibly form meaningful relationships. Adams brought a class on tour with the Dead—an opportunity, she thought, to teach classical theory while letting students study a cutting-edge contemporary community.

She became instantly famous, among a small group of scholars, and then, suddenly, among a much larger group of people. One day, without warning, Senator Robert Byrd, the histrionic and prodigiously opinionated West Virginian, gave a speech decrying what he considered an appalling decline in the standards for higher education, and cited Adams’s class as an example. Adams had unwittingly placed herself in the crosshairs of the culture wars and was beset by, among other things, an inquiry from the president of North Carolina’s state university system. Though she survived with help from her chancellor and her department head, and though the question fell squarely within her specialty, Adams was politely discouraged from pursuing her line of inquiry. “I was advised to concentrate on the more respectable areas of my research,” she told me.

Other aspects of the band nevertheless continued to invite academic examination. Musicologists showed interest, although the band’s sprawling repertoire and tendency to improvise posed a significant challenge. Lieberman says that fully absorbing the Dead’s music could take years, and he has noted its similarities with South Indian classical music, with its complex notational system and highly formalized four-hour concerts. Engineers studied the band’s sophisticated sound system, radical at the time but widely emulated today. Even legal scholars took note, some contending that the American criminal-justice system, including the courts, unfairly profiles Deadhead defendants and has, on occasion, treated fandom as evidence of mental illness.

Oddly enough, the Dead’s influence on the business world may turn out to be a significant part of its legacy. Without intending to—while intending, in fact, to do just the opposite—the band pioneered ideas and practices that were subsequently embraced by corporate America. One was to focus intensely on its most loyal fans. It established a telephone hotline to alert them to its touring schedule ahead of any public announcement, reserved for them some of the best seats in the house, and capped the price of tickets, which the band distributed through its own mail-order house. If you lived in New York and wanted to see a show in Seattle, you didn’t have to travel there to get tickets—and you could get really good tickets, without even camping out. “The Dead were masters of creating and delivering superior customer value,” Barry Barnes, a business professor at the H. Wayne Huizenga School of Business and Entrepreneurship at Nova Southeastern University, in Florida, told me. Treating customers well may sound like common sense. But it represented a break from the top-down ethos of many organizations in the 1960s and ’70s. Only in the 1980s, faced with competition from Japan, did American CEOs and management theorists widely adopt a customer-first orientation.

As Barnes and other scholars note, the musicians who constituted the Dead were anything but naive about their business. They incorporated early on, and established a board of directors (with a rotating CEO position) consisting of the band, road crew, and other members of the Dead organization. They founded a profitable merchandising division and, peace and love notwithstanding, did not hesitate to sue those who violated their copyrights. But they weren’t greedy, and they adapted well. They famously permitted fans to tape their shows, ceding a major revenue source in potential record sales. According to Barnes, the decision was not entirely selfless: it reflected a shrewd assessment that tape sharing would widen their audience, a ban would be unenforceable, and anyone inclined to tape a show would probably spend money elsewhere, such as on merchandise or tickets. The Dead became one of the most profitable bands of all time.

It’s precisely this flexibility that Barnes believes holds the greatest lessons for business—he calls it “strategic improvisation.” It isn’t hard to spot a few of its recent applications. Giving something away and earning money on the periphery is the same idea proffered by Wired editor Chris Anderson in his recent best-selling book, Free: The Future of a Radical Price. Voluntarily or otherwise, it is becoming the blueprint for more and more companies doing business on the Internet. Today, everybody is intensely interested in understanding how communities form across distances, because that’s what happens online. Far from being a subject of controversy, Rebecca Adams’s next book on Deadhead sociology has publishers lining up.

Much of the talk about “Internet business models” presupposes that they are blindingly new and different. But the connection between the Internet and the Dead’s business model was made 15 years ago by the band’s lyricist, John Perry Barlow, who became an Internet guru. Writing in Wired in 1994, Barlow posited that in the information economy, “the best way to raise demand for your product is to give it away.” As Barlow explained to me: “What people today are beginning to realize is what became obvious to us back then—the important correlation is the one between familiarity and value, not scarcity and value. Adam Smith taught that the scarcer you make something, the more valuable it becomes. In the physical world, that works beautifully. But we couldn’t regulate [taping at] our shows, and you can’t online. The Internet doesn’t behave that way. But here’s the thing: if I give my song away to 20 people, and they give it to 20 people, pretty soon everybody knows me, and my value as a creator is dramatically enhanced. That was the value proposition with the Dead.” The Dead thrived for decades, in good times and bad. In a recession, Barnes says, strategic improvisation is more important then ever. “If you’re going to survive this economic downturn, you better be able to turn on a dime,” he says. “The Dead were exemplars.” It can be only a matter of time until Management Secrets of the Grateful Dead or some similar title is flying off the shelves of airport bookstores everywhere.

Recently, Barnes has been lecturing to business leaders about strategic improvisation. He’s been a big hit. “People are just so tired of hearing about GE and Southwest Airlines,” he admits. “They get really excited to hear about the Grateful Dead.”

Until now, scholars who studied the Dead were limited to what was available in the public domain. Barnes sought access to internal documents more than a decade ago and was turned down. When the Dead Archive opens, he and others expect to gain many new insights, because they’ll finally be able to draw on primary source material—and there’s plenty. For years, unbeknownst to just about everyone, the band’s longtime office manager obsessively stashed away everything that came into her office. The possibilities seem manifold. “From the economics folks to the anthropologists,” Barlow says, “increasing numbers of people are going to make a pilgrimage to the archive to see how this all came together.”

When a famous author or statesman donates his papers to history, the task of studying and making sense of them usually falls to some obvious discipline. That’s not quite the case here. Even with the recent renaissance, Dead scholars are few. The bulk of the expertise lies outside the academy, with ordinary Deadheads. So Santa Cruz library officials have devised a novel approach (some would call it strategic improvisation) to curating the collection. They intend to post as much of it as possible online in the hope that Deadheads—zealous social networkers that they are—will contribute their knowledge, and perhaps material of their own, to help build up the record. With the culture wars of the 1960s finally beginning to subside, the possibility for sober reflection on a charged era is more feasible than it once was. Today, the Dead are more attraction than liability. The library will seek to become a haven for the study of pop culture since the 1960s, with the Dead Archive anchoring its collection.

“Revolutionaries get vilified, and then, once they get older, they just become cute,” says Steve Gimbel, who is a philosophy professor at Gettysburg College and edited the recent collection The Grateful Dead and Philosophy. “Think of Oscar Wilde. Once they’re not dangerous anymore, it’s okay to discuss them in serious ways.”

By Joshua Green

Wednesday, June 23, 2010

Pirelli and F1 ink 3 yr global Sponsorship deal


Pirelli will be the exclusive tire supplier to the Formula One World Championship under a three-year agreement beginning in 2011.

The FIA (Fédération Internationale de l’Automobile); the race teams, represented by FOTA (the Formula One Teams Association); and Formula One’s organizing body, represented by FOM (Formula One Management) “have chosen Pirelli as their exclusive supplier based on the specific proposals from the Italian company to guarantee technical and operational stability to the competitors,” according to senior executives at the tire maker.

The global visibility guaranteed through extensive media interest in Formula One, together with dynamic plans to leverage Pirelli’s involvement in an activity central to the company’s core business, represents a unique opportunity for the brand to maximize its return on investment,” they say.



The new contract ensures that Pirelli will provide the racing teams with six different types of tires for the season: four slicks, with different compounds for various types of dry surfaces; one rain tire for heavy rain; and one intermediate tire for damp conditions or light rain.

“The current economic climate has led to a realistic and collaborative approach with all the teams, ensuring that manufacturing and logistical costs are shared fairly,” company officials note.

“Pirelli’s return to Formula One also has a firm eye on the future, with full collaboration with all teams,” they say. “Research into innovative new tire developments is a vital part of this exciting program.”

The company plans to make a significant investment in publicizing its Formula One involvement, especially in the emerging markets of Latin America, the Middle East and Asia- Pacific.

“Consequently,” company executives point out, “Formula One will become a vital calling card for the Pirelli brand, helping its commercial and industrial expansion without disrupting the company’s long-term financial strategy.”

Pirelli – which supplied tires for the GP3 Championship this year – will also be providing racing rubber for the GP2 Championship starting in 2011.

Friday, June 18, 2010

Quote of the Week

" In times of stress, the best thing we can do for each other is to listen with our ears and our hearts and to be assured that our questions are just as important as our answers."

-Quote from the book: The World According to Mister Rogers

Thursday, June 17, 2010

Case study: TurboTax experts take over Twitter


Tax software maker TurboTax has a unique problem. Their customers find them incredibly useful. But for a very short period every year. The company has gotten used to the seasonal nature of its business, but this year, they took that approach to Twitter.


By ramping up their staffing efforts on Twitter — and bringing some much needed expertise to the space, they happened on something great for business: an excellent customer retention program.

Chelsea Marti (@TTaxChels on Twitter), TurboTax' Social Media Manager, explained the company's approach at TWTRCON in New York this week.

The company wanted to scale its Twitter effort to help customers with their taxes during tax season. To do so, they follow the approach of Intuit's founder, Scott Cook. Cook created the concept of "follow me home" by literally hanging around Staples stores in the beginning of Intuit's history until someone bought his product. He'd then go home with them to see how simple (or difficult) the install process was for them. Says Marti:

"Getting that close to the customer, he was able to make better products year over year."

That philosophy has been ingrained in Intuit employees. And according to Marti, TurboTax has taken the same approach to its Twitter strategy:

"We've basically lived the dream of our CEO and founder Scott Cook."

The company's approach to Twitter has grown in importance and size over the last year. TurboTax now has over 20 million customers. And those customers are greatly interested in the company every year in the lead up to April 15th. Says Marti:

"We have a short period of time to get those customers the help that they need."

TurboTax' seasonal business is both a strength and a weakness. On Twitter, the company has the chance to own the users who are interested in and commenting on their taxes. But that means devoted resources to the endeavor. And until this year, TurboTax wasn't able to do that.

Before this tax season, the company had two people in corporate communications and marketing on Twitter. This year they launched TeamTurboTax. The feed went live in February, at the beginning of tax season and upscaled the company's Twitter efforts from two employees to 40 staffing the feed. They had a live community team — including experts — and scaled the idea of helping customers.

"During tax season, we see a running stream of our keyword," says Marti. "Two people handling that is not the best situation for a customer."

According to Marti, they've now utlized those customers and the conversations they're having online:

"Our overarching theme on Twitter is that it's a persuasion engine that lets us keep customers."

TurboTax has found that on Twitter customers can help each other. Corporate communications became the hub that farms out questions to the appropriate spokes. They company also uses cotweet to fetter out all the incoming customers.

Now if a customer has a complaint or a problem, it is assigned to the right person. As their Twitter feed bio reads, "TeamTurboTax is who you ask when you have tax, tech or TurboTax questions!"

And as the 2010 tax season progressed, the company realized people were using the feed differently than they expected. Mostly twitterers were coming to ask TurboTax personal tax issues.

"We set out thinking we'd have more technical questions," says Marti. "But we found out quickly we were getting tax questions."

The company had employed tax experts for their effort. They enabled them to find a buddy, train a buddy, or recruit a buddy. That effort added 10 to 12 people to the team. Says Marti:

"For us, Twitter was a great way to help customers, but it wasn't the be all and end all. What really made it for us was the expertise that people brought to Twitter."

Marti acknowledged if the feed had been staffed by herself and corporate communications alone, it would have been far less effective. With experts on deck, the response time was fast. It took an average of four minutes for TurboTax to get back to Twitter questions.

At least half of the people who came to the feed were about to finish a return. The company also found that most of the people seeking out tax help from TurboTax turned out to be existing customers. And they found those customers were 71% more likely to recommend TurboTax because of their interactions with the company on Twitter.

In the end, TurboTax' expanded efforts on Twitter became a great customer retention program. Says Marti:

"Everyone knows it's less expesnive to keep a customer than create a new one."

Wednesday, June 16, 2010

FIFA Playing Hard Ball with Ambush Marketing at World Cup


Beer company employs ambush marketing at World Cup Soccer 2010

Sports sponsorships usually come out to be huge. Companies pay millions upon millions of dollars to advertise their brands at major sports tournaments. They cut out expensive deals with an exclusive tag to go around with – all done in a bid to be the only brand of a certain category in sponsoring a major event. This phenomenon is highly evident at the FIFA World Cup where certain brands such as McDonald's and Budweiser pay top dollars to the governing body of soccer in order to win the right of becoming the main sponsors for the event. This concept was shaken up recently when a story came to the fore that a Dutch Beer company allegedly engaged in ambush marketing. The interesting part of news is that it is wrong to partake in ambush marketing when corporate sponsorship deals are in place. So can one assume that advertising has gone out of hand?



This interesting case of the supposed ambush marketing related to a recent first round game between the Netherlands and Denmark in a South Africa 2010 match. FIFA claims that a Dutch beer company named Bavaria handed out hundreds of tight fitting orange dresses to female fans before the game and asked them to wear them during the match. According to various allegations, the company also hired 36 beautiful women to wear the dresses during the match to cheer for the Dutch team. According to FIFA, the beer company knew about these women who were sitting near the pitch who received a lot of camera attention which helped in promoting the beer. FIFA spokesman Nicholas Maingot said, “What seems to have happened is that there was a clear ambush marketing activity by a Dutch brewery company”. He further said, “What we are doing actually at the moment is that we are looking into all available legal remedies against this brewery”.



What FIFA failed to understand was that if the company's intention was to bring awareness to their brand, then they succeeded in a big way. Most people apart from die-hard Dutch beer fans would have known that this stunt was done by the beer company. Others would have thought that the ladies were just a bunch of pretty ladies all sitting together in orange. But by ejecting the women from the stadium and making a fuss about it, FIFA actually gave this company the media attention that it wanted. The news was sprayed all across newspapers and online news agencies with the company's name and they probably got the boost they had planned for from the beginning. It seems to be a brilliant marketing strategy for the company, they knew the women would get media attention and they also knew that they might be thrown out of the match. It all planned out well for the company in the end.



Even if this is not what happened and it was simply a case of ejecting paying fans who wore orange, then the question comes back to the fact that has FIFA's corporate sponsorship strategy has gone out of hand. They police the sponsorship deals and its implementation is so stringently monitored that if anyone else wants to try and make a few dollars from the tournament, FIFA comes down hard on them. Over the years, it seems that sponsorship deals have been getting out of hand with the bank Santander recently insuring Alonso's thumbs for 10 million Euros in F1.



An article online explores the affects of corporate sponsorships as they are taking place now. “Sports sponsorship is now a highly developed communications tool with much of the spending being focused on sports events”. In this arena the protection of brands and sponsorship deals has gone a bit loopy. Since it is such a big business and so much money is pumped, FIFA’s organising body feels they have to protect their main sponsors from any sabotage by any other company.



This story may not have a happy ending for Bravia - the beer company - because FIFA is working with the South African police to try and gather enough evidence to prosecute the company. If they did, FIFA may make it very clear to all other companies out there that want to engage in ambush marketing to rethink on this strategy. If we did look at the footage of those ladies in the crowd, it seemed a little strange that 30 beautiful women just happened to be sitting together in the crowd all apparently friends with not a hair out of place and all made up to look their best. If even one of them had been dressed differently or worn a different costume, maybe the entire plan would have looked a little believable. But then again, football fans are known to dress up in the strangest outfits for most matches. The Dutch female fans will be closely scrutinised in the upcoming matches and if they don’t want to be arrested, they should definitely wear a different colour.

Monday, June 14, 2010

NHL ad sponsorship revenue up 66% this year


NHL ad sponsorship revenue up 66% this season and Merchandise sales rise 22 pct for playoffs.

Record viewer numbers during the Chicago Blackhawks' run to the Stanley Cup title helped fuel a 66% rise in National Hockey League advertising and sponsorship revenue, a top league executive said.

The Blackhawks' series-clinching Game 6 victory over the Philadelphia Flyers garnered the highest television ratings in the United States in 36 years.

"It was a great Stanley Cup run, really across every possible metric .... Our fans are consuming more hockey," NHL Chief Operating Officer John Collins said in a telephone interview on Monday.

The league said its annual growth rate for advertising and sponsorship revenue, which includes sales for NHL.com and NHL Network, has been close to 66% for three consecutive years.

Merchandise sales for the entire playoffs were up 22% and the number of unique visitors on the NHL.com website rose 17 percent for the playoffs after a 29 percent gain during the regular season.

"Going into the playoffs, if you would have said we would lose Crosby and Ovechkin fairly early in the playoffs ... you'd be hard pressed to think you'd end up having one of the best Stanley Cup finals in 36 years," he added, referring to the upsets of teams on which all-stars Sidney Crosby and Alex Ovechkin play.

Some analysts have pointed to struggles in the NHL's U.S. southeastern and southwest markets -- including the Phoenix Coyotes' bankruptcy -- as clouding the league's prospects outside its traditional markets in Canada and the Northeast and Midwest United States.

However, Collins said a renaissance in markets such as Los Angeles and a new crop of younger stars are helping the North American sports league.

He said the North American sports advertising market seems to have recovered and is starting to heat up. "That bodes well for us going into next year," Collins said.

The NHL is expanding the number of events on its calendar, including plans for two outdoor hockey games next season, as well as a season-launching event in Toronto, he said.

It also will continue its push in new technologies such as a mobile application with Verizon Wireless that was launched late in the season.

Wednesday, June 9, 2010

Sponsorship gives businesses more "bang for their buck"


When environmental campaigner Lewis Pugh swam across a lake on Mount Everest recently to raise awareness about global warming, he and his team had a small but prominent logo of a large South African supermarket chain, Pick n Pay, branded on their clothes.

Corporate sponsorship, especially of sports and arts events has generally been on the increase, says communications expert Victor Dlamini. He told me that despite the global downturn over the past two years corporate sponsorship has been "one of the few areas where at least there has been no decline, even if the growth has been minimal."

Pugh couldn’t have organized his Everest adventure without the support of the sponsors like Pick n Pay and SAP, the other sponsor. The companies paid $100,000 all in all to align their brands with Pugh’s message about global warming.

Gareth Ackerman, who heads up Pick n Pay, said it made business sense because "food safety, food security, is absolutely impacted by climate change and if we don’t look after food security, there’s no food in our stores. Prices go up. It’s not great for any part of the supply chain and we have to look out for that supply chain."

Pick n Pay has also contracted Pugh to speak at schools in South Africa about his trip and the issues around global warming.

As marketing budgets are slashed due to the tougher economic times, businesses try to get more “bang for their buck” as they look for more innovative and cheaper ways to sell their message.

So "cause-related" marketing is gaining popularity says Dlamini. He said: "Increasingly a lot of South African companies are beginning to say, ‘we care’ about certain community issues such as education, refurbishing sports fields, sponsoring the arts, and, interestingly enough, saving the environment."

So for modest amounts and the right branding, big companies can create opportunities for people like Lewis Pugh and they get across the message that they care.

Tuesday, June 8, 2010

Signs Point To Higher Scrutiny of Nonprofit Sponsorships By IRS





Signs Point To Higher Scrutiny of Nonprofit Sponsorships By IRS

Nonprofits should pay attention to IRS developments and continue best practices related to managing and reporting sponsorship income.

The Internal Revenue Service may be preparing to revisit whether certain types of nonprofit sponsorship revenue should be considered taxable unrelated business income.

While the IRS has taken no definitive steps in that direction, experts say nonprofit organizations and their corporate partners should be alert to the possibility of a review of the safe harbor for some sponsorship benefits and, more immediately, be aware of the government’s recent heightened scrutiny of sponsorship activity.

Marcus Owens, an attorney with law firm Caplin & Drysdale, and the previous director of the IRS’s Exempt Organizations Division, points to two developments that signal the service’s rekindled interest in sponsorship payments to nonprofits.

The first is the IRS’s increased use over the past several years of questionnaires as a tool to examine nonprofits’ sources of income.

“The IRS has greatly expanded its use of questionnaires, which allow it to collect information in greater detail than the Form 990 tax return would generate,” Owens said. “The IRS is becoming more sophisticated about data collection, and nonprofits need to be prepared for the distinct possibility that an IRS questionnaire will probe sponsorship arrangements in greater detail.

“It is far easier for the IRS to send a questionnaire than conduct an audit.”

The second indicator that the IRS is interested in delving deeper into sponsor/nonprofit relationships is the examination of sponsorship activity as part of the service’s current Colleges and Universities Compliance Project.

The investigation by the IRS into conduct, practices and reporting by one of the largest segments of the nonprofit sector (in terms of revenue and asset size) got underway in October ’08 with questionnaires sent to 400 public and private institutions of higher education.

According to the IRS, the project is focused on: “(1) the conduct and reporting of exempt or other activities that may generate unrelated business taxable income; (2) investment, management and use of endowment funds; and (3) executive compensation practices.”

One of the questions asked by the project is whether the institution engaged in corporate sponsorship activities. The IRS reported the results of that question and the others in its interim report on the project issued last month.

Survery says: Starbucks the most popular consumer brand on the social Web




A new survey of brands on social media finds Starbucks to be the most popular consumer brand on the social Web, based on an analysis that indexes consumer brands against the most popular personal brand on the planet: Lady Gaga.

UK-based Famecount took a snapshot on June 2nd of brands' followers on Facebook, Twitter and YouTube to come up with its ranking, a quantitative snapshot with no qualitative look at how brands engage with their fans, followers and subscribers across the social Web.

Starbucks came in #1 among consumer brands by having 7.4 million Facebook fans, 901,925 Twitter followers and 6,509 YouTube subscribers. American brands dominated the top 10, with Red Bull the only non-US brand to make the top 10.

read more....http://www.brandchannel.com/home/post/2010/06/07/Starbucks-Tops-Social-Media.aspx

Starbucks' business model had spiraled out of control



When Howard Schultz returned as CEO of Starbucks in January of 2008, he hadn't realized how bad things had gotten. With the company opening an eye-popping seven new stores a day at its peak, Starbucks' business model had spiraled out of control.

"We had embraced growth as a reason for being instead of a strategy," he said during a visit to Fortune's offices last week, as he outlined Starbucks' path over the last two years. Schultz, who was and still is the company's chairman, dropped his involvement with all other boards and outside distractions. From then on everything for him would be about only two things: Starbucks and his family. "The Brooklyn kid in me wants to make sure we prove everyone wrong," he says. (Note that while Starbucks might be from Seattle, Schultz is a born and bred New Yorker.)

He started the Starbucks (SBUX, Fortune 500) turnaround with what for many companies is the hardest thing to do: confessing its sins. Schultz had to tell his employees that the company had made mistakes and would pay the price by taking $600 million in costs out of the business. Part of that would come from laying off employees and shutting down 600 stores. 80% of them had been open for less than two years.

Even amid the cost-cutting Schultz refused to drop health care for his employees, a line item that tallies $300 million. That's more than the company spends on coffee. A shareholder called Schultz and said the crisis would provide him the perfect cover to cut benefits for part-time employees. He refused, and told his investor if he felt so strongly about it he should sell his stock. (The shareholder ended up cutting his position.)

Much to the dismay of Wall Street, Schultz decided to stop reporting monthly same-store sales in an attempt to move the pressure from producing good numbers to producing good coffee. "Monthly comps are like a harness around your neck," he says.

As the company cleaned up its internal mess, competition from serious industry players started to loom for the first time. McDonald's (MCD, Fortune 500) had rolled out its McCafe line and launched a marketing campaign that partly took aim at Starbucks. Dunkin' Donuts also was expanding, and independent coffee stores had turned into threats.

Starbucks' premium image also started to backfire. "Starbucks became the posterchild for excess," Schultz says. Consumers who had once embraced the brand's cachet now started to view the $4 latte as frivolous and a not very smart purchase.

Today Starbucks has managed to avert crisis and is diving into new areas of growth beyond simply opening new stores. Schultz says its VIA instant coffee line, which many saw as a move of desperation, will have 37,000 points of distribution by the end of the month. The company sees a hungry market in China and India, and in the U.S. the company is pushing out its newly rebranded Seattle's Best line.

Expect some of its stores to undergo a facelift with its recently renovated location on Spring Street in New York City as the model: community table, locally sourced and environmentally friendly materials, and a look that evokes its original location at Pike Place in Seattle. The Spring Street store uses a brewing system called Clover, which uses vacuum press technology.

Right now less than 20% of sales come from outside its stores, but Schultz plans to change that as he brings Starbucks more into the consumer products company realm. Because the company doesn't have any franchises, it can sell its products in supermarkets without having to worry about cannibalization from its stores.

Despite the one-time backlash against its premium image, Schultz says Starbucks has become a haven for people facing tough times. Job applications have never been higher. Employee turnover has dropped. The unemployed who have nowhere else to go spend their days in the company's stores. And perhaps its smartest marketing move of all: These customers can stay all day, and Starbucks won't ever ask them to leave.

Monday, May 17, 2010

Q&A Indy Racing League CEO Randy Bernard


Like most people, Randy Bernard likes to put the pedal to the metal. "Who doesn't like to drive fast?" says the freshly minted CEO of the Indy Racing League. Like most CEOs, Bernard knows all about marketing, brand building, wall-to-wall meetings and 24/7 workdays.
Oddly, what he doesn't know much about is Indy-style open-wheel car racing, where daredevil drivers zip along at speeds of up to 225 miles per hour.

For the past 15 years Bernard, 43, was CEO of Professional Bull Riders, where he learned the business from the ground up. He transformed a cowboy pastime once reserved for rodeos into a mainstream, made-for-TV, sponsorship-rich sport. He boosted the number of PBR events from eight to 400-plus, and increased sponsorships from $360,000 to $26 million.

So why not just coast and keep working at a gig he aced? Why start from scratch — again? Why take a job in an industry you know nothing about? It's a league that's fighting to win back fans, is lacking in brand-name icons such as hoops star LeBron James, is losing ground to NASCAR, and is still trying to recover from a nasty 12-year split with a rival open-wheel racing league, despite a highly publicized "reunification" of the sport in 2008.

In an era when jobs are tough to come by and workers need to reinvent themselves to survive, Bernard offers tips on how folks can break out of their comfort zones, avoid complacency and take a calculated risk to succeed at a new gig. He'll also get you up to speed on his accelerated learning curve at his new job and what's next for Indy, which is gearing up for its 94th Indianapolis 500 race on Sunday, May 30.

Q:A former PBR rider said, "There always comes a time when a man needs to saddle a new horse and go in a different direction." Is that how you felt about your decision to join Indy as a newbie to the racing game?

A: It is really important in all of our lives to embrace change. When you step outside your boundaries, you grow in another way. It's no different than folks that take classes their entire life and want to learn more. I had security at PBR. I had an offer to stay until 2012, but I believe 15 years within a single sport is a good time to leave. If you are at a place too long, you can get complacent. I saw so much opportunity at Indy Racing League, and that is what really excited me the most.

Q:What was your biggest fear before taking the job?

A: I never had any fear. It was strictly if I would be accepted in a world I did not come from. That was my biggest anxiety. It was important for me in the due diligence process to meet with the influencers in the racing industry — team owners, corporate sponsors, boards of directors — and look them square in the eye and make sure they would accept me. It was refreshing to see they would stand behind me. That relieved my anxiety.

Q: Bloggers have voiced concerns about Indy hiring a guy like you with no background in racing. Does coming in stone cold make your job harder — or easier?

A: There are pros and cons. One of the pros is I have no background in the politics of the sport, especially with the reunification, where there are deep-rooted issues, such as what side of the fence you were on. I don't care. My goal is to take Indy back to the top. The con is you do have a blind spot. The difference is not knowing the sport, the tradition, the culture. But if you can't teach the CEO about a sport, how are you going to reignite America on Indy racing and bring new fans in?

Q: In your first Indy press conference, you said you would do what it takes to learn the sport. What have you used as learning tools, and what have you learned so far?

A: I knew I would bust my butt to learn the sport. I have been spending two hours a week for the past four weeks attending a class about the history of the Indy 500 at a high school in Speedway, Ind. Donald Davidson, an Indy 500 historian who teaches the course, is brilliant. Tonight, I am going to watch sprint car races in Bloomington, Ind. It's not even an Indy event. It's a dirt track. I just want to learn more about racing and other facets of the sport. I want to see the fans of that form of racing. I want to take it all in.

Q:I heard you never saw an Indy race until you took the job. Was it similar to a kid going to Yankee Stadium for the first time?

A: My first one was the São Paulo Indy 300 in Brazil back in March. My first impression was: the speed. I was blown away by how fast these cars go. It was a street course, and they were traveling upwards of 180 miles per hour. And then there was the danger element. On the very first lap between turns one and two, there was a wreck involving Marco Andretti, and another car ended up on top of him right in front of me. My first comment was, "Oh my God! Not even one lap into it." I was praying to God, let him be all right. I didn't realize how much danger there was.

Q:Every sports league needs stars to promote. At your last job, you "humanized bulls" to the point that people wanted to know what they ate and how much Gatorade they drank. I know Mario Andretti and the Unser and Foyt names from my childhood, but no other current drivers come to mind, other than Danica Patrick, mainly because she is female. Who is Indy's LeBron James or Sidney Crosby— and do you have to promote them more?

A: We have stars. There's last year's Indy 500 winner Helio Castroneves, a Brazilian who was the winner of Dancing with the Stars in 2007. (Scotland-born) Dario Franchitti. Tony Kanaan. And then you have Danica Patrick. In my opinion, we haven't created good enough story lines for fans to follow and understand and appreciate our drivers as athletes. Fans have had a difficult time connecting with our athletes except for Danica, who keeps pushing the limit as one of the greatest drivers in the world, which people respect. Our drivers have phenomenal personalities, and we have to promote them more. How? The best example I can give is this: I could care less about watching the Winter Olympics — until they start. And once they start, and I sit down and watch those feature stories about the athletes, I am invested in following through to see if the star wins gold.

Q: As a new CEO, and an outsider at that, what's the secret to gaining the trust of your new employees?

A: The most important thing I can do is to listen. I want to listen to everyone. Not only the best driver in the world but also the 24th-best driver. The No. 1 team owner and the smallest team owner. It is my job to make sure I can understand all their concerns, while at the same time do what is right.

Q:To learn what PBR fans were thinking, you had all e-mails to the website routed to your personal e-mail. Are you doing that at Indy?

A: Not yet, but I will. I want to get a pulse of America. The fans that will send you e-mails are purists and traditionalists. They have great ideas. And getting feedback from them is invaluable. At PBR, I was looking for e-mails (that highlighted problems or ideas). If I saw a complaint from one or two people I would listen. But when I saw 25, 30, 50 or 100 e-mails on a certain issue (that needed to be addressed), I would forward it along to the appropriate department and get a response on how we could fix the problem.

Q: The mid-1990s split between Indy and CART hurt the sport, and despite the 2008 unification with the renamed Champ Car, open-wheel racing is still trying to regain its mojo. Why?

A: At the time of the split, drivers had to choose what way they wanted to go. Most of the stars went to CART. So you no longer had all your stars competing in the same races week in and week out. A perfect analogy would be if Tiger Woods and his guys created their own golf tour, but the Masters stayed in Augusta, Ga. (and went on without them). A lot of fans got frustrated and left the sport. Once you lose someone, it is much more difficult to get them back.

Q: Are you still trying to lure fans back, including those that defected to NASCAR?

A: Yes. You have to walk a fine line, because what you learn with 99 years of history is you have purists and traditionalists that see the sport in one way. These are the people that can tell you exactly what year they watched their first Indy 500, and what kind of chassis and engines were used and who was driving. Then there is the core fan, the people that just love cars. We have to reignite the core.

Q: Your old boss said you have a tireless work ethic. Are you an all-work, no play, 24/7 kind of guy? Is that what it takes to be a CEO?

A: I'm not sure about most CEOs, but from my standpoint, I need to eat, sleep and breathe it. Two months ago, racing became my life, and my family has an understanding of how I operate. Thank God they accept that.

Q:What's a typical day at your new gig?

A: I'm up at 5 a.m. and at the gym by 5:30. I do 30 to 45 minutes of cardio using the elliptical and treadmill. Then I do a very light weight workout. Typically, I'm at the office by 7:30 a.m. I check e-mails and phone messages. Then it is wall-to wall meetings. I take my own notes and have three or four notepads that are completely full right now. I never get home before 10:30 p.m. But I love being a CEO. I have a spring in my step. I enjoy what I do. I'm excited to get up every morning.

Q:What's the most important thing you learned at PBR that you will bring to Indy?

A: The importance of brand and the perception of the brand. We have a great sport. We need to let the fans know that the best drivers in the world are competing in Indy races.

Adam Shell, USA TODAY

Thursday, May 13, 2010

Hispanic Millennials: The Future of MLS


Major League Soccer’s future success is contingent upon its ability to market its game to first and second generation Hispanic-Americans.

The United States Census Bureau estimates there are 48 million Hispanics living in the United States, a number which is expected to increase to 73 million by 2030. I contend that this figure will be driven by an increase in American born Hispanics, opposed to immigration. Arizona may be considered a rogue state today, but we are nation which is increasingly moving right of center. However politically untenable the situation may become, I believe the rate of illegal immigration will decrease in the coming decades. Thus, any increase in the Hispanic population of the United States will be attributable to an increase in birth rates; a development which my statistics suggest will serve MLS well.

I recently recruited 202 survey participants from the Facebook fan pages of five MLS teams, and Hispanics accounted for 25% of survey participants. I acknowledge the economic bias of my recruitment method; however, I contend the disparity between immigrants and first-generation survey participants is indeed indicative of a trend amongst MLS fans.

First-generation Americans accounted for 76% of Hispanic respondents, with immigrants accounting for the remaining 24%. The lack of second-generation Hispanic-Americans, indicates first-generation Hispanic-Americans of the Baby Boomer generation assimilated into American culture through football, basketball and baseball, and did not communicate a passion for soccer to their children. First-generation Hispanic-Americans from Generation X did not face the discrimination of their predecessors, and gravitated to soccer without the fear of being ostracized. This generation will produce a second-generation of Hispanic-Americans whom share a passion for soccer with their fathers. However, to maximize the potential of the Hispanic demographic, MLS must attract more Mexican-Americans to its games.

Mexican-Americans account for 68% of Hispanics in the United States, but only 30% of Hispanic survey respondents. It has been theorized that Mexican-Americans have been slow to adopt MLS because of the availability of Mexican First Division matches on Spanish language television in the United States. Mexican-Americans can continue to follow teams in their native country, unlike their Central and South American counterparts. Furthermore, the escalating rivalry amongst the national teams of Mexico and the United States, inhibits many Mexican immigrants from accepting any form of American soccer. Mexican immigrants’ indignation towards American soccer will not transcend generations.

MLS provides first-generation Hispanic-Americans the opportunity to define their American identity, without abandoning their cultural attachment to the sport of soccer. First-generation Hispanic-Americans from Generation X have proven that they will embrace MLS. Therefore, it stands to reason that first-generation Hispanic-Americans of the Millennial generation will continue to gravitate to the league. Their support, in conjunction with their second-generation counterparts, provides a reassuring confidence to MLS; the only professional sports league which is expanding domestically.