The long tail is longer than you think

I left the world of financial aid and student loans way back in January 2010.

Slackershot: Financial Aid Podcast Shirt

I had created a ton of content for the company I was working for at the time, including the very first financial aid podcast, and I’m proud that kids paid less for college based on the work I did.

But this should give you a sense of just how long the long tail of content is. I got this email today – October 23, 2014, almost 5 years after leaving the field:

Quick question could you recommend where my daughter should go/apply for a student loan? I remember you were connected with a student loan site or was I tripping?

This demonstrates the power and longevity of content online. Half a decade has passed since it was my job to answer questions like this, yet people still find me through evergreen content and ask questions. (I’m still happy to answer as best as I can, because it’s for a good cause)

The content you create today can come back to you years later. As long as content marketing programs take to get running, once they have momentum, they can continue paying benefits to you long into the future.

Financial aid stuff

For those interested, by the way, the answer to the above question is as follows. Before you go shopping for loans, be sure you’ve applied for scholarships. There are millions of dollars out there and many scholarships only get a handful of applicants, especially the low dollar ones. Winning 10 $500 scholarships is just as good as winning 1 $5,000 scholarship, and the competition is lighter. Googling for scholarships is simple to do, and just requires dedication and work.

One parent who was a listener of my podcast back in the day had a great tip: he paid his child 10 cents on the dollar for every scholarship they brought home. When Junior wanted a new car, new phone, new etc., this dad reminded him of the deal. By the time freshman year rolled around, the kid had the new phone, new laptop, etc. – because they brought home $138,000 in scholarships.

When it comes to loans, start by completing a FAFSA and then seeing what financial aid you qualify for. Every student enrolled in an eligible, accredited school can get an unsubsidized Stafford federal student loan. Students who file a FAFSA and are given approval by demonstrating financial need can get subsidized Stafford federal student loans as well. After that, students can either apply with a cosigner for private student loans, or parents can apply for federal PLUS loans. For complete information about federal student loans, go visit the US Department of Education’s website.

Your best bet before you begin the financial aid process is to talk to a qualified financial planner to look at all of your options. Many community banks and credit unions offer these services for free to members; typically they work on salary and receive no commissions or incentives to sell you extra stuff. Sometimes, taking out a home equity loan if possible may make greater overall financial sense than taking out a student or parent loan – but you can make that determination only when you look at the big picture, financially.


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Economic outlook for marketers, 4Q 2014

One of the things I like to do from time to time is check in on a variety of different leading economic indicators to get a sense of how the overall economy is doing. That knowledge lets me know – within a certain amount of error – what marketers can expect their quarter to look like. How much should we push our customers? How much should we challenge pricing?

B2C

The consumer is the heart and soul of B2C. If the consumer doesn’t shop, the B2C company doesn’t sell – and the B2C marketer has to work doubly hard just to tread water.

So how is the consumer looking?

Employment:

All_Employees__Total_nonfarm_-_FRED_-_St__Louis_Fed

Nonfarm payrolls are expanding, and fairly significantly. We’ve technically got more people employed now than ever. Of course, some portion of that is natural because as a nation, we have more people than ever.

Unemployment:

Civilian_Unemployment_Rate_-_FRED_-_St__Louis_Fed

U-3, the general measure of unemployment, is below 6%, a place it hasn’t gone since before the Great Recession. If you look in the data, even U-6, the total labor pool across the board, is down to 11.8% underemployment. That’s a far cry from the peak of the Great Recession, when we were pushing 20% underutilization of labor.

Initial Claims of Unemployment:

4-Week_Moving_Average_of_Initial_Claims_-_FRED_-_St__Louis_Fed

We’re back to almost the first dot com bubble, and the height of the boom times before the Great Recession, in terms of the number of people who are filing for job losses. While there are still a whole bunch of people without work, it could be much, much worse.

Real Disposable Income:

Real_Disposable_Personal_Income_-_FRED_-_St__Louis_Fed

2012 was a much better year for income, but we’re approaching it in a much more sustainable way as we head into Q4 of 2014.

Overall, there are a lot of macroeconomic potential shocks out there waiting in the wings. Instability in the Middle East. The Russian-Ukrainian war. Ebola. But the bigger picture, at least for the general US consumer, is that 2014 is ending on fairly solid footing. What does that mean for you as a marketer, if you’re a B2C marketer? You probably don’t have to overhype the low cost message quite as much as you did last year – the consumer overall probably feels a little bit better than 2013, which means slightly looser purse strings for the holiday season.

B2B

For the world of B2B, we look to things that are going to impact companies’ ability to buy from other companies. This means looking at leading indicators from shipping to what it costs to run a business.

PPI:

Producer_Price_Index__All_Commodities_-_FRED_-_St__Louis_Fed

PPI, the Producer Price Index, is the general cost of doing business. What’s unusual here is that business got really expensive during the Great Recession, then prices dropped as the economic shocks rippled up the supply chain, and then for a while things got back on track. But in 2011, PPI plateaued, and it’s been holding there ever since. While you might think it’s a good thing that production costs have leveled off, the reality is that level pricing means that companies of all sizes aren’t making more money on average.

BDI:

BALDRY__1041_00_UNCH__0_

The Baltic Dry Index, BDI, is an index of what it costs to put a bunch of things on a container ship and ship it overseas. This is a great B2B leading indicator because companies don’t buy shipping containers unless they have product to sell. It’s not something you buy just for the heck of it. Again, we see that things went crazy int he run up to the Great Recession, BDI crashed hard at the beginning of 2009, and it really hasn’t made a huge lift since then. We also see the softness in 2011 extending out to today.

VIX:

VIX_Index_Charts_-_CBOE_Volatility_Index_Interactive_Index_Charts_-_MarketWatch

The CBOX VIX, or volatility index, looks at how volatile the markets are. It’s an indicator of how safe or risky investors feel. The VIX hit the roof during the Great Recession and had a few aftershocks in 2011 and 2012, but has calmed down considerably since then. A major portion of that has been the Federal Reserve Bank effectively handing out free money for years to investors via TARP and the Quantitative Easing programs, as well as holding interbank interest rates near 0%.

Do you see the pattern here? In each of the three charts, B2B leading economic indicators show that the B2B economy is in a holding pattern. The sky isn’t falling by any means, but the pie isn’t getting any bigger, either. If you’re in B2B, maybe you’ve noticed this already. Leads are probably becoming sales opportunities at a slower pace. Sales opportunities are probably taking longer and longer to close. If that’s the case, then there’s a good chance you’re caught in this economic plateau as well.

The good news is that a strengthened consumer will eventually ripple upstream to B2B, in general. As you can see from the charts above, the consumer face-planted in 2008, while B2B took as long as two years to fully feel the impact. Thus, as the consumer gets back on their feet, we should expect B2B to do the same. When will that be? Assuming the consumer continues to heal up and get back in the game, probably B2B will feel it in late 2015 or early 2016.

So overall, a merry holiday season for the consumer B2C marketer; B2B won’t get any coal in the stocking, but Scrooge’s ledgers will still be a bit thin.


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Economic indicators snapshot, July 2014

Every now and again, something bugs me, a little voice in the back of my head that says, “Go take a look at some other data sources to see a bigger picture”. This stems from my years in financial services, where every chart held the potential to be the insight you were looking for to get an edge. That little voice comes and goes – sometimes, I’m so immersed in the world of marketing that it’s quieted. Other times, when I have some breathing room and thinking time (like on long holiday weekends), the voice reasserts itself.

I decided to listen to the voice and check out the landscape. Let’s see what the financial runes tell us.

On the one hand, initial jobless claims appear to be near a bottom. All other things being equal, this is generally a good thing:

Initial_Claims_-_FRED_-_St__Louis_Fed

So why doesn’t it feel so good when you head out into the real world, when you walk down the streets of your town?

Alternate_Unemployment_Charts

Part of the reason may be because there are a lot more people who are not fully utilized. The official unemployment rate is closing in on 5%, but the U-6 measure of everyone who isn’t being used to their fullest capacity (and thus not hitting their fullest earning potential) is still significantly higher, around 12%. If you look at pre-1984 long-term discouraged workers (people who are no longer counted anywhere), the number of people who aren’t doing as well as they could be is nearly 23%.

Then there’s the other side: the expenses. There are two semi-permanent invisible taxes on us right now (at least in America):

Europe_Brent_Spot_Price_FOB__Dollars_per_Barrel_

That’s oil. Brent Crude has been hovering over $100 a barrel for more than 3 years. Generally speaking, take Brent Crude and divide it by 4 and you get retail gas prices, which have indeed been in the $3.50 – $4.00 / gallon range for quite some time. That’s an invisible tax on everyone who drives or rides to work, and an invisible tax in the form of price boosts to everything that requires petroleum products to be made or transported.

Here’s the second invisible tax, a side consequence of the persistently high oil prices:

Rough_Rice_Monthly_Commodity_Futures_Price_Chart___CBOT

That’s the price of rice, rough rice by the Chicago Board of Trade, the CBOT. The price of one of the grains most eaten in the world has been consistently high for about the same period as Brent Crude. When the price of food goes up, it imposes another invisible tax on your wallet. It’s not just rice, either:

Commodity_Food_and_Beverage_Price_Index_-_Monthly_Price_-_Commodity_Prices_-_Price_Charts__Data__and_News_-_IndexMundi

That’s all food and beverage commodity prices. Between energy and food, life is more expensive.

These invisible taxes impact our ability to buy stuff, as shown here:

Real_disposable_personal_income__Per_capita_-_FRED_-_St__Louis_Fed

Real disposable income is leveling out, and has been for years. If you did a basic trend line from 1990 to 2005 and extended it to 2014, real disposable personal income should be about $3,000 more per person than it currently is. Those invisible taxes are taking their toll.

Don’t forget about real taxes, too:

Personal_current_taxes_-_FRED_-_St__Louis_Fed

Food and energy are eating the consumer from the top, while taxes are eating the consumer from the bottom. With this much chewing up the wallet of the average consumer, it’s no wonder other indicators are starting to look soft. People just don’t have the money to buy stuff like they used to. For example, houses:

Housing_Starts__Total__New_Privately_Owned_Housing_Units_Started_-_FRED_-_St__Louis_Fed

Housing starts are still recovering from multi-decade lows. The last time the housing market was this soft was in the early 1990s.

The other place the wallet’s weakness is showing up is in the Baltic Dry Index (BDI). For those who are new, BDI is the cost to ship stuff by sea on big container ships. It’s a good leading indicator because companies don’t buy up space on container ships unless there’s product to actually ship. What we see here is that BDI has been soft and remains soft. In fact, BDI is on the decline right now, which means the economy overall might be stalling.

BDIY_Chart_-_Baltic_Dry_Index_-_Bloomberg

The only saving grace in all of this is if you’re a B2B marketer. Corporate profits are at an all-time high, so your job as a B2B marketer is probably safer than most:

Corporate_Profits_After_Tax__without_IVA_and_CCAdj__-_FRED_-_St__Louis_Fed

What picture do all of these indicators paint? If you’re looking to the consumer for growth, it’s probably not going to happen for a long time. If you’re a B2C marketer, chances are things have been tougher than normal the past few years, and there’s no sign of pressure being released on the consumer. If you’re a B2B marketer, chances are you’re doing better than your colleagues on the B2C side of the house.

Keep an eye on BDI if you’re a B2C marketer especially! It’ll tell you about the upcoming holiday season and how weak or strong the consumer is likely to be. Right now, things are not looking great for a strong 2014 close for consumer B2C.


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