Food Inflation Knocking at the Door

The global economy is getting back on its feet, but so too is an old enemy: food inflation.  The United Nations benchmark index hit a record high last month, raising fears of shortages and higher prices that will hit poor countries hardest.  So why is the United States, one of the world's biggest agricultural exporters, devoting more and more of its corn crop to ethanol?

• In 2001, only 7 percent of U.S. corn went for ethanol, or about 707 million bushels.
• By 2010, the ethanol share was 39.4 percent, or nearly five billion bushels out of total U.S. production of 12.45 billion bushels.
• Four of every 10 rows of corn now go to produce fuel for American cars or trucks, not food or feed.
• This trend is the deliberate result of policies designed to subsidize ethanol.

This is increasing even as global food supply is struggling to meet rising demand.  U.S. farmers account for about 39 percent of global corn production and about 16 percent of that crop is exported, so U.S. corn stocks can influence the world price.  Chicago Board of Trade corn futures recently hit 30-month highs of $6.67 a bushel, up from $4 a bushel a year ago, says the Wall Street Journal.

Super Bowl spending expected to set record $202 Million

The Fort Worth/Dallas area is expected to see a record number of visitors and related spending for Super Bowl XLV, according to PricewaterhouseCoopers U.S., with an expected spending total coming in at approximately $202 million.

 

Spending by the National Football League, businesses, visitors and the media on area lodging, transportation, food and beverage, entertainment, business services, hospitality and other tourism activities is estimated based on characteristics such as the participating teams, the local market, national economic conditions, corporate and ancillary activities and other factors.

 

This year’s event is estimated to generate a level of spending slightly higher than the previous record of $195 million during the 2007 Super Bowl in South Florida.

 

“Dallas/Fort Worth appears ready to capture much of the fan and corporate spending that might have stayed away over the past two years.  Major parties and other events such as the NFL Experience have returned and are poised to prove the adage that everything's bigger in Texas,” said Robert Canton, director, sports and tourism sector, PwC U.S., in a release.

Super Bowl Consumer Spending to Hit $10 Billion

Consumers Will Purchase Plenty of Food and Beverages -- but also TVs and Team Apparel

Americans are planning to take a break from their spendthrift ways, at least for Super Bowl Sunday.

According to a new survey out from the Retail Advertising and Marketing Association, conducted by BIGresearch, total consumer Super Bowl spending is expected to reach $10.1 billion, the highest in the survey's eight-year history. More people also plan to celebrate the event by throwing a party, attending a party or watching at a bar or restaurant.

Likewise, consumer sentiment toward advertisers also appears to be improving. In the depths of the recession more consumers said advertisers should bypass pricey Super Bowl spots and pass the savings onto them. This year 17% expressed that sentiment, down from 21% in 2009 and 19% in 2010. Fox, which is broadcasting the game on Feb. 6, is reportedly seeking between $2.8 million and $3 million for 30 seconds of commercial time in this year's game.

"The consumer is feeling more optimistic," said Mike Gatti, executive director at RAMA. "Spending is starting to come back, and it's on these little splurgy things. It's not crazy. But people are saying we're going to crack open the wallet and do something."

Of the 83% saying they will purchase Super Bowl-related items, including food, beverages, TVs, furniture, team apparel and decorations, the average person will spend $71.51, up from $64 a year ago and in line with 2007 spending. Mr. Gatti said he expects to see a lot of promotion around the Super Bowl, with retailers looking to the event as the first opportunity to stimulate sales post holiday.

While the majority of people plan to purchase food or beverages, plenty are still looking to bigger-ticket items, like TVs. The number of consumers saying they'll purchase a TV jumped 25% this year to 4.5 million people.

That's good news for electronics retailers, which saw tepid TV sales over the holidays. Best Buy, for example, reported that for the month of December, consumer electronics sales fell 8% at stores open a least a year, primarily because of a low double-digit decline in TVs. Best Buy and Sears are already aggressively promoting high-definition TVs for the big game.

"Our customers tell us that this is an ideal time of year to upgrade or invest in new big-screen televisions, so we wanted to give them a great excuse to come into Best Buy by offering deals on some of the best and largest TVs we carry," said Mike Mohan, senior VP-home theater at Best Buy.

With the New York Jets' and Chicago Bears' Super Bowl dreams dashed, some sporting goods execs have speculated that apparel and accessory sales could be lackluster. The Green Bay Packers and Pittsburgh Steelers represent smaller markets. But, Mr. Gatti pointed out, both are storied teams. "Maybe sales would have been a little higher, based on the teams, but Green Bay and Pittsburgh are both pretty strong, popular teams," he said.
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What consumers plan to purchase for Super Bowl Sunday:
-- Food/Beverages, 69.5%
-- Team apparel or accessories, 7.3%
-- Decorations, 6.0%
-- Television, 4.5%
-- Furniture, 2.0%

Agency Survey Shows 'Rebirth' of Buyers' Interest in Radio

A survey of advertising agency buying teams finds fewer are cutting radio budgets, and client interest in the medium is growing. STRATA executives say the top three media -- television, Internet and radio -- also appear to be the breakout hits of the advertising recovery.

"It's looking very bright for radio," STRATA marketing chief J.D. Miller told Inside Radio. The firm's quarterly survey of buyers found 24% of agencies' clients are more focused on radio, up from 17% in the prior quarter. The number of agencies reporting they are spending less on radio is off by half -- 17% say they're trimming radio budgets compared to 34% who said that three months ago.

When it came to classifying the advertising avenue that agency clients are most focused on, the STRATA survey found TV remains at the top with 44%, followed by digital at 21%. But even the survey takers were surprised with #3: radio. The results show 16% of clients rate radio as their top pick, compared to 9% who said that in the prior quarter's survey. Miller says, "Something good is happening for radio."

Beyond the top three, there's a "considerable drop off" of interest in other media. Print ranks fourth, with 7% of clients making it their top pick. Miller says that could be considered good news for newspaper publishers. "Print has a pulse -- it was almost nonexistent, now it has a pulse," he says.

Agencies Grow More Confident in Recovery -- and Old Media Friends

By their nature, media buyers are a tough crowd not known for gushing optimism. So when a survey shows a steady uptick in client activity, it's worth taking note.

More than half (51%) of buyers surveyed by STRATA say their agency is seeing improving business, up from a low of 23% during the 2008 economic meltdown. STRATA president/CEO John Shelton says, "Advertisers are finally feeling more confident about the economy."

That confidence is manifesting itself in a surprising way. As budgets come back, buyers appear to be more interested in traditional advertising like television and radio -- with demand for digital advertising going in the other direction.

"We see that the focus on digital has fallen off a bit," Shelton says. "While still hot, it is used more in a solid media mix than more dollars heading its way."

The most popular digital menu items are website display ads, social media and search. Mobile may have buzz, but just 29% of buyers say they're buying mobile ads. Among those who are, mobile display is the preferred format with SMS text ads fading fast. Just 15% of agency buyers say they're on their radar in 2011.

(Source: Inside Radio, 01/21/11)

Assisting the Poor While Preserving Work Incentives

As Republicans in power work to create a strong, affirmative agenda, they would do well to revisit a policy proposal devised by the late Milton Friedman, say Guy Sorman, a contributing editor at the Manhattan Institute's City Journal.

In his 1962 book "Capitalism and Freedom," Friedman acknowledged that some form of welfare was necessary in capitalist societies; the trick was to improve it.  His answer was the negative income tax (NIT).
As Friedman pointed out, no one pays taxes on the first few thousand dollars of income, thanks to personal exemptions and deductions.  Most earners pay a fraction of their "positive taxable income" -- that is, the amount by which their earnings exceed that first few thousand dollars.  In Friedman's plan, the poor would similarly receive a fraction of their "negative taxable income" -- the amount by which their earnings fell short of that level.  This direct cash grant would replace all other welfare programs for the poor, says Sorman.
To limit the disincentive, Friedman argued, the NIT should be progressive.

• Say the government drew the income line at $10,000 for a family of four and the NIT was 50 percent, as most economists recommend.
• If the family had no income at all, it would receive $5,000 -- that is, 50 percent of the amount by which its income fell short of $10,000.
• If the family earned $2,000, it would get $4,000 from the government -- again, 50 percent of its income shortfall -- for a total post-tax income of $6,000.
• Bring in $4,000, and it would receive $3,000, for a total of $7,000.
• So as the family's earnings rise, its post-tax income rises, too, preserving the work incentive.

Yet another NIT advantage is a freer labor market.  No minimum wage would be necessary, since a minimum income would now be guaranteed, says Sorman.

Source: Guy Sorman, "Why Not a Negative Income Tax with Cash Subsidies to the Poor?" Investor's Business Daily, January 20, 2011.

The Coming Doctor Shortage

Recently, the President's National Commission on Fiscal Responsibility and Reform proposed cutting Medicare funding to train doctors by $60 billion through 2020.  If this cut is enacted, the current doctor shortage would get far worse, says Herbert Pardes, president and CEO of New York-Presbyterian Hospital.

• Already, 30 percent of hospitals lose money, according to the American Hospital Association, and even more barely break even.
• Health care reform will add an estimated 32 million people to the ranks of the insured, driving them to seek medical attention that in the past they may have avoided due to expense.
• The aging population will also create much greater demand: The number of seniors who need more medical care is expected to soar to 72 million by 2020 -- nearly double today's number.
• But doctors are aging, too: Almost a third of doctors in the country -- about 250,000 -- are over the age of 55.

According to a 2010 report by the Association of American Medical Colleges, the increased demand means that our nation will need an additional 130,000 doctors, both general practice physicians and specialists, 15 years from now.  That's about 20 percent more doctors than we have currently.  Right now we train roughly 16,000 doctors a year.  To keep pace with demand, this nation will need to train an additional 6,000 to 8,000 each year for the next 20 years, but without Medicare reimbursements, many hospitals will not be able to afford to maintain critical training programs, says Pardes.

Source: Herbert Pardes, "The Coming Doctor Shortage," Wall Street Journal, January 19, 2011.

Survey Finds 51 Percent of Men Are Primary Grocery Shoppers

Mom is losing ground to Dad in the grocery aisle, with more than half of men now supposedly believing they control the shopping cart. The implications for many marketers may be as disruptive as many of the changes they're facing in media.

Through decades of media fragmentation, marketers of packaged goods and many other brands could take solace in one thing -- at least they could count on their core consumers being moms and reach them through often narrowly targeted cable TV, print and digital media.

But a study by Yahoo based on interviews last year of 2,400 U.S. men ages 18 to 64 finds more than half now identify themselves as the primary grocery shoppers in their households. Dads in particular are taking up the shopping cart, with about six in 10 identifying themselves as their household's decision maker on packaged goods, health, pet and clothing purchases. Not surprisingly, given that such ads long have been crafted for women, only 22% to 24% of men felt advertising in packaged goods, pet supplies or clothing speaks to them, according to the Yahoo survey.

The Great Recession has thrown millions of men in construction, manufacturing and other traditionally male occupations out of work and by extension into more domestic duties. At the same time, gender roles were already changing anyway, with Gen X and millennial men in particular more likely to take an active role in parenting and household duties.

Of course, in the survey, men could be overestimating their own role in shopping for the family. Lauren Weinberg, director-research and insights for Yahoo, acknowledges that could be possible -- and that women don't see them making as much progress on that front. But she said the fact that so many men now see themselves as masters of the shopping cart not only reflects real shifts but also means any stigma once attached to men as shoppers is fading fast.

Yahoo's interest in the subject is obvious: The portal has a lot of inventory geared toward men, such as page after page of fantasy-sports content, that could use more advertisers. But its research on men nonetheless seems to describe a new and disruptive reality.

Behavioral research of shoppers shows a number more like 35% of grocery and mass-merchandise shoppers are now men, said Mariana Sanchez, chief strategy officer for Publicis Groupe's Saatchi & Saatchi X. That number has been growing thanks to the economy and changing gender roles, she said.

And while that figure may be far from a majority, the fact that a third of a brand's shoppers are male is an awful lot to ignore. As a result, shopper-marketing efforts are increasingly gender-neutral rather than targeted for female shoppers, Ms. Sanchez said.

A subtle case in point came during the latest Procter & Gamble Co.-Walmart collaboration on "Family Movie Night," Jan. 8 on Fox. The program itself, "Change of Plans," did show a new dad more domestically impaired than a mom when unexpectedly thrust into adoptive parenthood. But in the commercial pod "story within a story" via Martin Agency, Richmond, the dad made a shopping trip to Walmart to load up on P&G and private-label Great Value products.

Such scenes could be a wave of the future for more categories as consumer packaged brands must elbow their way past car insurers, pickup trucks and erectile-dysfunction drugs into one of the surest and most-DVR-proof forums for reaching men: football.

P&G's Head & Shoulders and Prilosec already have become deeply involved in NFL marketing. But most P&G brands still primarily target moms, and it's not always easy to please both. While last year's tear-jerking "Behind Every Olympic Athlete is an Olympic Mom" Winter Olympics ads for P&G from Wieden & Kennedy were generally well received, the Twitter stream about them included an undercurrent of resentment from dads, who still make up the vast majority of volunteer coaches for youth sports.

The shift toward male shoppers, of course, didn't happen overnight, and that may also help explain why some brand managers for years have privately said more broadly focused network prime-time programming delivered better for their brands than more female-focused cable buys, regardless of the cost and what media optimizers indicated.

Perhaps favorably for marketers, Yahoo research finds men are more brand-loyal and less focused on promotions than women shoppers, Ms. Weinberg said. In advertising, they do more product research in packaged-goods categories than women, she said, and, because they're often newer to the categories, prefer ads with more information.

John Badalament, author of "The Modern Dad's Dilemma" and operator of ModernDads.net, does see more ads that speak to men, including recent ads for P&G's Old Spice and Kimberly-Clark Corp.'s Huggies. But many ads featuring men still portray them as hapless domestically, which he doesn't believe helps marketers. He likens such ads to the once laughable, now anachronistic grocery scene from 1983's "Mr. Mom."

"Men," he said, "need to be something other than invisible or buffoons in advertising."

(Source: Advertising Age, 01/18/11)