Posted by truecreek on November 25, 2009 under More Dam News | 
This is turning into quite the battle of the airwaves. The mere fact that the court declined to order Verizon to pull the ads means more to come, and quickly.
By Peter Svensson
NEW YORK (AP) – What would the holidays be without bickering between siblings? AT&T and Verizon are swamping TV with ads attacking facets of each other’s wireless networks. While the ads stick fairly close to the truth, there’s a lot they don’t say.
AT&T Inc. has been running ads with actor Luke Wilson checking off points in AT&T’s favor over Verizon Wireless. It’s the continuation of a spat that started a month ago, when Verizon started airing cheeky commercials that highlighted how its fast, third-generation (“3G”) network has wider coverage than AT&T’s 3G system.
Verizon’s ad used the slogan “There’s a map for that,” a play off Apple Inc.’s ads for the iPhone, which tout the diversity of third-party applications for the phone with the line “There’s an app for that.“
AT&T sued Verizon Wireless over the “map” ads, not because the maps were incorrect, but because AT&T felt there was a danger that viewers could get the impression that AT&T had no coverage at all where it doesn’t have 3G. Last week, a judge declined to force Verizon to pull the ads.
AT&T and Verizon, two offspring of Ma Bell, are getting more aggressive in their marketing, though it’s not clear how much they are spending. Verizon and AT&T are both pulling away from their smaller rivals, so instead of competing with Sprint Nextel Corp. and T-Mobile USA, they’re increasingly focused on each other. Verizon Wireless has more subscribers than AT&T – 89 million versus 81.6 million. But AT&T added more wireless subscribers in the latest quarter – 2 million versus 1.2 million at Verizon, which is a joint venture of Verizon Communications Inc. and Vodafone Group PLC of Britain.
Posted by truecreek on November 24, 2009 under More Dam News, Research |
From Consumer Reports:
Bell ringers, perfume sprayers and the steady drumbeat of holiday music may be annoying to some shoppers. But what really brings out their grinchier instincts are stores that fail to open all the checkout lanes and then use pushy retail tactics when shoppers finally make it to the cash register.
Customers don’t like being pressured to open store credit cards or being asked for personal information. And they really object to being hounded to buy extended warranties, according to a nationally representative survey by the Consumer Reports National Research Center.
The survey was conducted as part of Consumer Reports’ annual “Dear Shopper” campaign that highlights holiday gotchas and shopping traps. This year Consumer Reports had an assist from its sister Web site, Consumerist, which collected a list of annoyances from its readers.
When the list was taken to the public at large, those surveyed were in agreement. Here are the top gripes about retail practices:
* 72% Stores that don’t open all the checkout lanes;
* 68% Fake “sales”. If something is always 20% off, it’s not on sale;
* 67% Coupons that exclude almost everything in the store;
* 62% Being hounded with the extended warranty sales pitch;
* 58% Cashiers that ask for your phone number or other personal information;
* 56% In-store prices that do not match the same company’s on-line prices;
“Consumers have told us that they just want a hassle-free and convenient shopping experience,” said Jim Guest, president and CEO of Consumers Union. “We really hope this list of holiday annoyances is a wake-up call for the retail industry.”
When we asked shoppers about the number one non-retail practice that made them grumpy almost a third said the crowds (29%) followed by difficulty parking (28%), sales people spraying perfume (16%) and bell ringers outside stores (13%). Surprisingly, few folks are annoyed by that holiday music—only three percent said that was their top pet peeve. Fa-la-la-la-la indeed.
More here.
Posted by truecreek on November 19, 2009 under More Dam News |
We’re proud to announce the addition of a new client, Fortress Technologies. They design, develop and manufacture secure wireless networking products for a wide variety of government markets, civilian organizations and corporations.
Right now, on the media side, we’re working on the planning and placement for the first half of 2010, in conjunction with Timberlake Media Services in Chicago.
Creatively, we’re working on a new direction that will offer them the ability to communicate their message effectively, while standing out in a very crowded field.
We’re really looking forward to the opportunity and hope to be posting some great work in the coming weeks.
Posted by truecreek on November 13, 2009 under More Dam News, Research |
By Keith Hampton, Lauren Sessions, Eun Ja Her, Lee Rainie
This report adds new insights to an ongoing debate about the extent of social isolation in America. A widely-reported 2006 study argued that since 1985 Americans have become more socially isolated, the size of their discussion networks has declined, and the diversity of those people with whom they discuss important matters has decreased.
In particular, the study found that Americans have fewer close ties to those from their neighborhoods and from voluntary associations. Sociologists Miller McPherson, Lynn Smith-Lovin and Matthew Brashears suggest that new technologies, such as the Internet and mobile phone, may play a role in advancing this trend.
Specifically, they argue that the type of social ties supported by these technologies are relatively weak and geographically dispersed, not the strong, often locally-based ties that tend to be a part of peoples’ core discussion network.
They depicted the rise of Internet and mobile phones as one of the major trends that pulls people away from traditional social settings, neighborhoods, voluntary associations, and public spaces that have been associated with large and diverse core networks.
The survey results reported here were undertaken to explore issues that have not been probed directly in that study and other related research on social isolation: the role of the Internet and mobile phone in people’s core social networks.
This Pew Internet Personal Networks and Community survey finds that Americans are not as isolated as has been previously reported. People’s use of the mobile phone and the Internet is associated with larger and more diverse discussion networks. And, when we examine people’s full personal network – their strong and weak ties – Internet use in general and use of social networking services such as Facebook in particular are associated with more diverse social networks.
More here.
Posted by truecreek on November 12, 2009 under More Dam News, Research |
Some 19% of Internet users now say they use Twitter or another service to share updates about themselves, or to see updates about others. This represents a significant increase over previous surveys in December 2008 and April 2009, when 11% of Internet users said they use a status-update service.
Three groups of Internet users are mainly responsible for driving the growth of this activity: social network website users, those who connect to the Internet via mobile devices, and younger Internet users – those under age 44.
In addition, the more devices someone owns, the more likely they are to use Twitter or another service to update their status. Fully 39% of Internet users with four or more Internet-connected devices (such as a laptop, cell phone, game console, or Kindle) use Twitter, compared to 28% of Internet users with three devices, 19% of Internet users with two devices, and 10% of Internet users with one device.
The median age of a Twitter user is 31, which has remained stable over the past year. The median age for MySpace is now 26, down from 27 in May 2008, and the median age for LinkedIn is now 39, down from 40. Facebook, however, is graying a bit: the median age for this social network site is now 33, up from 26 in May 2008.
It will probably become more difficult to track status updating as an independent activity as social network updates feed into Twitter and vice versa. For now, it is clear that a “social segment” of Internet users is flocking to both social network sites and status update services. This segment is likely to grow as ever more Internet users adopt mobile devices as a primary means of going online.
More here.
Posted by truecreek on under More Dam News |
Ouch. And Architectural Digest is one of my favs.
By Stephanie Clifford
Condé Nast’s ad-page numbers are in, and they explain why the company has had such a rough 2009.
Ad pages fell by 49.9 percent at Architectural Digest, part of an estimated total loss of 8,359 ad pages at Condé Nast monthlies in 2009.
The company lost 8,359 ad pages at its monthly magazines, according to estimates it released Wednesday. That is a 31.6 percent drop from last year.
The worst hit were Architectural Digest, where ad pages fell 49.9 percent; W, where ad pages fell 46 percent; and Condé Nast Traveler, where pages fell 41.1 percent. Details and Wired both fell about 39 percent.
Some magazines showed improving numbers toward the end of the year. Traveler dropped only 5.4 percent from last year’s December issue, and Lucky 8.8 percent. Glamour actually rose 6.6 percent.
More here.
Posted by truecreek on November 10, 2009 under More Dam News |
By Stephen Shankland
Google said Tuesday it will subsidize free wireless network access in 47 airports from now until January 15–and indefinitely in the airports of Burbank, Calif., and Seattle.
The promotion, in cooperation with Boingo Wireless, Advanced Wireless Group, and Airport Marketing Income, is the latest effort to use free Wi-Fi to boost a brand. Among others: Yahoo is sponsoring Wi-Fi in Times Square in New York, and Google is sponsoring Internet access on Virgin America flights during the holidays.
Among the larger participating airports are those in Houston, Boston, Miami, Las Vegas, Nashville, San Diego, Baltimore, and St. Louis. A full list of the airports is at Google’s free holiday Wi-Fi site.
The move, though not cheap, is probably smart. Plenty of business travelers have a laptop and time to kill, and today’s consumers are increasingly likely to be equipped with laptops, iPod Touches, or other devices that can use wireless Internet access. Google is spending some money for an opportunity to give a lot of people the warm fuzzies when they encounter the Google brand.
And in the big picture, Google gets to show people what the world might be like if there were more high-speed wireless Internet access–something the company has been aggressively lobbying for in Washington, D.C. Many people are used to wireless networking in their homes, but it’s a different matter on the road.
There are downsides, though, too. Having been to dozens of conferences where the wireless Net access collapses as soon as the keynote speech begins, I’m acutely aware that providing large-scale wireless Internet access is technically demanding–and people get unhappy when a promised benefit evaporates. And public, anonymous places such as airports and urban population centers are great spots for hackers to launch main-in-the-middle attacks by offering “Free Wi-Fi,” so exercise caution when logging on to these networks.
Posted by truecreek on November 9, 2009 under More Dam News |
The battle between AT&T and Verizon is going to make for some great advertising in the near future…
Marketing Casts Verizon Device as Antithesis of the Ubiquitous iPhone
By Rita Chang
SAN FRANCISCO (AdAge.com) — Verizon’s droid is pitching itself as the anti-iPhone, and nowhere is that more evident than in the look and feel of its campaign — a blanket push you won’t be able to escape.
The integrated campaign, the largest in Verizon history, will receive an estimated $100 million in support, most of it spent before the end of the year. Within it, the new phone is touted as the robotic do-it-all antidote to the Apple handset’s shortcomings.
The TV spots set to hit airwaves Monday night are about as far from the iPhone’s cheery spots as possible. Visually somber and testosterone-packed, they could be mistaken for ads for “The Terminator.” But, like the iPhone spots, they also demonstrate what the device can deliver, such as voice-activated turn-by-turn directions, fast web-browsing and video viewing. The tagline: “In a world of doesn’t, Droid does.”
More here.
Posted by truecreek on under More Dam News |
Production insurance is a must. Trust me. Programs now cover travel delays, dangerous weather conditions for TV shoots.
By Rupal Parekh
NEW YORK (AdAge.com) — A few years ago Dianne Richter, an ad agency veteran who’s clocked time in the broadcast departments of shops such as JWT, Y&R and Saatchi & Saatchi, found herself on a nightmare of a commercial shoot. While driving to location, police had blocked the production team’s route for several hours after a suicide jumper perched himself on a bridge.
With daylight fading and under a tight production schedule, the team scrambled to rent boats to ferry their rigs and crew across the river to the set. Quick thinking saved the commercial, but those last-minute changes came at a steep cost to the client.
The good news for advertisers is that broader protections are being offered under recent changes in the U.S. insurance market. New, broader insurance programs are becoming available to fill gaps and cover things such as travel delays, dangerous weather conditions and other unforeseen issues that can crop up unexpectedly and quickly skyrocket production costs.
Traditionally, U.S. insurance policies for TV commercial shoots have covered claims only for physical damage. If a house being used in a commercial shoot burns down, for example, or if camera equipment is stolen. Arranging insurance is a small — not to mention pretty unsexy — step in the lifespan of a TV spot, but in a tough economy that has squeezed marketers’ budgets, it can help prevent extra costs from being tacked on when least expected.
The new protections are the most significant change in TV production insurance in the American ad market in years, said A. LeConte Moore, managing director at Dewitt Stern, a century-old risk insurance brokerage that specializes in insurance for media, entertainment and ad industries.
According to ad industry executives, the average cost of a TV spot these days runs about $250,000. But depending upon the complexity of the job — the location of the shoot, music rights, celebrity actors — the costs can reach a high-end of between $1 million and $2 million.
Insurance premiums tend to cost about 2% of a shoot, and the broader coverages being made available by the likes of Entertainment Brokers International, part of OneBeacon Insurance, today aren’t all that higher. So if a production budget is $200,000, and carries a $3,400 insurance premium, for another $200 a production can manage a variety of surprise contingencies.
“It feels like insurance on steroids,” said Ms. Richter, who now works at New York-based independent Droga 5, handling production estimates and contracts for the agency.
Read more.
Posted by truecreek on November 6, 2009 under More Dam News |
Franchisee’s obscure idea turns sandwich maker into national phenomenon
By Matthew Boyle
Stuart Frankel isn’t what you’d call a power player in the world of franchising. Five years ago he owned two small Subway sandwich shops at either end of Miami’s Jackson Memorial Hospital.
After noticing that sales sagged on weekends, he came up with an idea: He would offer every footlong sandwich (the chain also sells 6-inch versions) on Saturday and Sunday for $5, about a buck less than the usual price. “I like round numbers,” says Frankel, a brusque New Yorker who moved to Miami in 1972 and owned a drugstore before opening his first Subway outlet in 1988.
Customers liked his round number, too. Instead of dealing with idle employees and weak sales, Frankel suddenly had lines out the door. Sales rose by double digits. Nobody, least of all Frankel, knew it at the time, but he had stumbled on a concept that has unexpectedly morphed from a short-term gimmick into a national phenomenon that has turbocharged Subway’s performance. “There are only a few times when a chain has been able to scramble up the whole industry, and this is one of them,” says Jeffrey T. Davis, president of restaurant consultancy Sandelman & Associates. “It’s huge.”
In fact, the $3.8 billion in sales generated nationwide by the $5 footlong alone placed it among the top 10 fast-food brands in the U.S. for the year ended in August, according to NPD Group. That puts the $5 menu’s success just a notch behind KFC and ahead of Arby’s and Domino’s Pizza. It helped privately held Subway, of Milford, Conn., lift U.S. sales 17 percent last year at a time when most restaurant chains, save for industry leader McDonald’s, struggled.
Read more.
Posted by truecreek on November 5, 2009 under More Dam News, Research |
By John Horrigan.
Some 69% of online Americans use webmail services, store data online, or use software programs such as word processing applications whose functionality is located on the web. Online users who take advantage of cloud applications say they like the convenience of having access to data and applications from any Web-connected device.
However, their message to providers of such services is: Let’s keep the data between us.
Download the report here.
Posted by truecreek on November 4, 2009 under More Dam News, Research |
Broadcast radio still has reach. Now, that’s great to hear.
By Katy Bachman.
Contrary to popular belief, consumers are not trading broadcast radio for new media. Far from it. Of all audio segments, broadcast radio reaches more than 77 percent of users daily compared to 11.6 percent for MP3 players and iPods.
In total, more than 90 percent of adults were exposed to some form of audio media.
The findings, published Tuesday (Nov. 3) are based on a Nielsen analysis of data from the Council for Research Excellence Video Consumer Mapping Study. The $3.5 million landmark study conducted in 2008 used direct real-time observation methods to record the media behavior of participants in five major markets. Earlier this year, the CRE released results for video media.
Portable audio has its highest daily reach among the 18-34 demographic, but it takes up only 7.5 percent of all daily audio usage, compared to more than a 47 percent share for broadcast audio. In fact, broadcast radio has the highest daily reach among 18-34 year olds at 82.2 percent, compared to 81.6 percent for the 35-54 demo and 71.9 percent for 55 and older.
“There is a much more complex picture going on with audio than we ever really imagined,” said Dr. Michael Link, chief methodologist for Nielsen (parent company of Mediaweek). “What this report shows is that 18-34s aren’t abandoning radio. Rather, they’re adding new audio technologies in addition to broadcast radio consumption.”
Broadcast radio was also widely used among users of other forms of audio media. More than 81 percent of those who used portable audio devices, also listened to broadcast radio.
The medium also stacked up well against other media in terms of average hourly reach. Live TV reached the most people, followed by radio, the Web/Internet and newspapers and magazines.
Posted by truecreek on under More Dam News |
By Robert Seidman
Yankees/Phillies Game 4 Up +45 in Rating & +47% in Audience with the Fall Classic Overall Rating Up +42% & +45% in Audience.
Game 4 of the 2009 World Series soared to a 13.5/22 average household rating/share with an average audience of 22.8 million viewers last night on FOX according to fast national ratings issued by Nielsen Media Research. Game 4 is the highest-rated and most-watched World Series game since Game 4 of the 2004 Series (18.2/28, 28.8 million) when the Red Sox snapped their 86-year championship drought.
It’s also the most-watched, non-decisive Game 4 in eight years, dating back to the 2001 Series (23.7 million., Diamondbacks-Yankees) and the highest-rated non-decisive Game 4 in six years (13.6/23, Yankees-Marlins-12-inning game). Compared to last year’s World Series, Game 4 of Yankees-Phillies is up +45% in rating and +47% in audience compared to Game 4 of Rays-Phillies (9.3/15, 15.5 million), and ranks as the highest-rated and most-watched prime-time show of the Monday-Sunday broadcast week (10/26-11/1).
Game 4 and its pregame program (10.7/17) combined with an NFL overrun and THE OT (fast nationals for both will be released later today) to make last night FOX’s most-watched night since the AMERICAN IDOL finale in May.
PHILADELPHIA topped all markets for Game 4 with a 42.0/58, +8% over its Game 4 rating a year ago (39.0/54). NEW YORK fired a 31.2/45, a Series-high and a better rating than any of the six games of the Yankees last World Series appearance in 2003.
2009 WORLD SERIES TO DATE
This year’s World Series has been a dominant force in prime time. The first four games of the 2009 Fall Classic have averaged an 11.5/19, 19.1 million viewers and a 6.1 among A18-49. The Series is up +42% in household rating and +45% in audience over last year (8.1/14, 13.2 million) and is the highest-rated, most watched World Series since 2004. If we compare the first four games of the World Series to top-rated season-to-date prime-time shows, the World Series would rank No. 2 in households, and No. 4 among Adults 18-49.
Post-season baseball has powered FOX to its best fourth quarter performance in history. Season-to-date, FOX is averaging a 3.7/10 in prime time among Adults 18-49 (preliminary pending final NFL numbers), +16% better than second-place CBS (3.2/9), FOX’s biggest season-to-date lead ever in fourth quarter and the biggest for any network in six years. The week of October 26th, which included four World Series games, averaged a 4.9/13 among Adults 18-49, an +81% win over second-place ABC (2.7/7) and the highest-rated fourth quarter week on any network in five years, dating back to the week of the 2004 World Series on FOX.
Posted by truecreek on November 3, 2009 under More Dam News |
By Cat Moriarty
Sure, your brand message is consistent across all channels. But you haven’t truly integrated your marketing efforts unless you’re putting those channels to work together.
Mixing media — especially print and digital — is not only a smart idea, but with a little creativity, it can be a highly profitable one.
If your company depends on offline purchases, for example, improve direct mail conversions by e-mailing your audience before a drop, like True North did during a campaign for a New York–based credit union. The print-digital combination quickly produced 5,543 new members — 122 percent above expectations.
And with personalized URLs (PURLs), you can use direct mail to help drive online purchases, too. It’s what office machinery and consumer electronics company Ricoh did (with some pretty impressive results) when promoting its new high-end production print equipment
Retailer W.L. Gore had similar success when it included PURLs in its “Take Me to Everest” campaign. Not only did PURLs strengthen the company’s direct mail–Web connection, they also helped build brand awareness and generate shoe sales during the coveted holiday season.
And as this holiday shopping season soon gets under way, don’t underestimate the power direct catalogs — and their hybrid cousins (magalogs and catazines) — can have over online sales. With so much online competition, sending catalogs and other direct pieces is helping brands like mark and Zappos.com motivate customers to visit their sites more often, stay longer and get to know them better.
Posted by truecreek on October 28, 2009 under Opinions. Everyone has them. |
By Joseph Young
Well, we’ve crossed the threshold. In my travels today, I had the chance to stop off at the local Wegman’s to take advantage of their snappy food bar. Lunchtime can be pretty busy in that place and today was no exception.
What was interesting was seeing what I will call “The New Sweatpants Society.”
Men and women, meeting, then having lunch with their significant others at the grocery store. That is no big deal.
What was interesting was that in almost every case, one of them was dressed in business attire. The other, in sweats.
It was striking.
Couples all over the place, dressed entirely differently. Someone obviously didn’t get the memo.
So, do you think it’s a statement of the times? The extremely casual nature of their dress could mean that one of the two is working from a home office, works in a very casual environment or perhaps they have a day off. But this is Tuesday, yes?
Unfortunately, I suspect it’s something a little more sinister. One of them is out of a job.
On the bright side, I’m sure most of these couples are relishing the chance to break some lunchtime bread together.
But on the other, perhaps it’s a sad commentary on the current employment situation in our country.
I plan on checking in again in a month or so to see if the things have changed any. Let’s all hope I see a few more shirts and ties!
Posted by truecreek on October 26, 2009 under The Work |
Couple of nice pages and a spread from some recent work Chris produced for an agency in Tampa, FL.
Posted by truecreek on October 14, 2009 under The Work |
Some new work for Comcast. Full pager for Encore Atlanta and the Fox Theater.
Posted by truecreek on under More Dam News, Research |
By eMarketer.
College students are the most connected demographic group in the US. They own multiple electronic devices and are a prime audience for online video.
eMarketer estimates 18.2 million college students, 95.7% of the total, will go online at least once a month in 2009. As Internet usage becomes ubiquitous, the percentage of students online is growing more slowly, rising to an estimated 96.8% in 2013.
“Not only is Internet access widely prevalent, but so is technology ownership in general,” said Debra Aho Williamson, eMarketer senior analyst and author of the new report, “College Students: Connecting with the Connected Crowd.” “Since students own multiple devices, they want to use those devices to interact with friends and information in multiple ways. They care less about what method they use for their interactions and more about how easy and seamless those interactions are.”
Students are heavy consumers of online video—but also regular TV. They use social networking Websites to stay in touch with their friends—but rely on text messaging as well. And smartphones, which are becoming more and more common on campus, give students the ability to do many activities without touching a computer at all.
Despite the fears of some industry-watchers, college students are not abandoning social networks now that the sites have caught on among their elders.
“So far, that is not happening,” said Ms. Williamson. “In fact, the opposite is true. Students are more likely than ever to use social network sites.”
EDUCAUSE, which has tracked social network usage on campus for the past several years, found that the percentage of students visiting sites such as Facebook or MySpace on a daily basis has more than doubled in the past three years, from 32.9% in 2006 to 66.2% in 2009.
“But other indicators bear watching,” cautions Ms. Williamson. “One is how often students visit social networks and how much time they spend there.”
Still, in May 2009 Youth Trends found that Facebook was the No. 3 source among college students for learning about new products and services, after word-of-mouth and television commercials. Social networks remain a viable venue for marketing to the college crowd.
Posted by truecreek on October 7, 2009 under More Dam News |
Continuing the discussion about the change in consumer spending behavior….from today’s Washington Post.
By Nancy Trejos
The recession has cooled the American ardor for living on credit. After years of saying “Charge it,” consumers are more often paying with their debit cards instead.
Worry about jobs, fear of fluctuating interest rates on credit cards and wariness about spending too much are contributing to the change.
“People are managing their money in a different way,” said David Robertson, publisher of the Nilson Report, which tracks the credit card industry. “You clearly have a situation where those people who have jobs are exhibiting recession anxiety and they are making more debit transactions.”
Nine months ago, Alyson Chadwick, a public relations representative for a nonprofit organization on Capitol Hill, got a debit card with a MasterCard logo so she could use it anywhere for purchases. Carrying cash was unsafe, she thought, and a debit card would help her manage her spending better.
“I use my credit cards hardly at all,” she said. “I don’t even carry them with me.”
Trish Preston, head of U.S. debit for MasterCard, said the changing fortunes of debit and credit tell the story of how the recession has transformed consumer spending.
“Think about what’s happening in the economy,” she said. “Appliances, furniture, jewelry: Those are very sensitive to the economy, and those have generally been credit spending categories.”
Debit cards, meanwhile, tend to be used for routine necessities such as groceries and gasoline. “Those kinds of expenditures are happening,” she said.
The Federal Reserve said that revolving credit, primarily credit cards, dropped by $6.1 billion in July, or 8.1 percent on an annualized basis. Debit card usage, meanwhile, had been steadily growing over the years but has surged in this recession.
Credit cards draw on money borrowed at often high interest rates; debit cards withdraw money from the cardholder’s bank account.
Visa announced this spring that spending on Visa debit cards in the United States surpassed credit for the first time in the company’s history. In 2008, debit payment volume was $206 billion, compared with credit volume of $203 billion. MasterCard reported that for the first six months of this year, the volume of purchases on its debit cards increased 4.1 percent, to $160 billion, in the United States. Spending on credit and charge cards sank 14.8 percent, to $233 billion.
“Consumers are rational thinking individuals, and they’re going to shift their behavior in a way that fits with their current economic situation,” said Scott Strumello, an associate with the Auriemma Consulting Group, a Long Island-based payment card advisory firm. “They’re thinking more seriously about it, and many may decide, ‘I’m going to use debit where I can and reserve credit for larger purchases.’ ”
For three decades, credit cards, which emerged about 50 years ago but were not in widespread use until the 1970s, have reigned as the preferred mode of payment, mostly on big purchases, for baby boomers and their children. Before that, people used cash, bank loans or the installment plan.
Baby boomers typically charged responsibly. Their children, who grew up in the mostly prosperous 1980s and 1990s, became dependent on cards from an early age, partly because card issuers marketed heavily on college campuses. Unlike their parents, they tended to see credit cards as long-term loans. And they charged too much.
“An awful lot of kids grew up in a very big house and they grew up with pretty much everything they wanted, and then they became adults and their parents, rightly or wrongly, probably wrongly, conditioned them to a set of conditions they cannot afford,” said Lewis Mandell, professor of finance and business economics at the University of Washington and a senior fellow at the Aspen Institute.
Industry executives said much of the debit card growth is fueled by a growing disdain for carrying cash and writing checks. But they also acknowledged that credit cards have fallen out of favor with consumers who want to save more and limit their discretionary spending. In July, the personal savings rate reached 4.2 percent, up from about 1 percent of after-tax income early last year, according to government data.
“The real question is: Is consumer behavior permanent?” Strumello said. “And that’s something where the jury is still out. Consumers have made moves in other downturns.”
Mandell said the next generation might reject credit after seeing their parents struggle with money. “I think the next generation may be self-correcting depending on the duration and magnitude of the downturn,” he said.
There is some indication that the shift to debit is partly a visceral reaction to credit card industry practices in the past few months. Since a law was passed in May that will limit the industry’s ability to raise rates and fees, many issuers have cut credit lines and increased rates, forcing borrowers to look for other modes of payment.
Posted by truecreek on September 27, 2009 under The Work |
Strong piece of design from Kyle, a member of The Creekbed.
