Mish's Global Economic Trend Analysis

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• Ukraine Aftermath: Hunt for Yanukovich, Russia Denounces Interim Leaders, Documents Reveal Plans to Use Army on Civilians
• Germany at Heart of Europe's Political Predicament; Squaring the Circle; When is the Breaking Point?
• Monetarism, Abenomics, QE, and Minimum Wage Proposals: One Bad Idea Leads to Another, and Another

Ukraine Aftermath: Hunt for Yanukovich, Russia Denounces Interim Leaders, Documents Reveal Plans to Use Army on Civilians Posted: 24 Feb 2014 04:30 PM PST Let's tie up some loose ends on Ukraine, even as much uncertainty remains. Documents Reveal Plans to Use Army on Civilians Financial Times: Papers reveal Yanukovich plans to turn army against protesters The Yanukovich regime had drawn up plans for a massive crackdown on protesters in Kiev using thousands of police and troops – and the chief of Ukraine's armed forces on Thursday last week ordered 2,500 army troops into the capital for an "antiterrorist" operation. That order was never fulfilled, but leaked documents on Monday showed just how close Kiev came to a bloodbath that could have far exceeded the 100 deaths that occurred in clashes with police and snipers in downtown Kiev last week. As well as the military documents, Ukrainian journalists were on Monday combing through piles of papers found dumped near Mr Yanukovich's luxury home outside Kiev, giving a fresh glimpse into his lavish spending and lifestyle. One document apparently found at the log-built mansion at Mezhyhirya, posted online by Mustafa Nayem, an investigative journalist with the Ukrainskaya Pravda website, was a receipt for $12m in cash. Others included receipts stretching into millions of dollars for spending on decor at a gaudy home that has become a focal point of public rage. But the most chilling were military and security papers. One set revealed that snipers who killed dozens of protesters on Kiev's central square last Thursday came from Ukraine's "Omega" special forces. Hunt for Yanukovich Financial Times: On the trail of Ukraine's missing Viktor Yanukovich Viktor Yanukovich's whereabouts remained unknown for a third day on Monday, as rumours swirled that Ukraine's deposed president was hiding out in Crimea, a pro-Moscow stronghold with easy water access to Russia via the Black Sea. While a few Ukrainian news outlets reported on Sunday night that Mr Yanukovich had succeeded in fleeing the country on his private yacht – the Bandido – by late Monday there were no reports of his arrival at a foreign destination. His options for escape, meanwhile, appeared to be narrowing. Arsen Avakov, Ukraine's interior minister, announced early Monday that the new government had opened up a criminal case against Mr Yanukovich for "the mass murder of peaceful citizens". He added the government had been keeping careful watch over the former president's movements. Russia Denounces Interim Leaders Financial Times: Moscow takes aim at Ukraine's interim leaders and the west Russia denounced Ukraine's interim leaders as dictators on Monday and blasted the western governments that it said helped bring them to power, in a sign that the toppling of President Viktor Yanukovich is triggering a regional stand-off. The Russian foreign ministry claimed the new leadership was infringing on the human rights of Russians and other minorities in Ukraine. "This is headed towards the suppression of dissent in several regions of Ukraine by dictatorial and sometimes almost terrorist means," the ministry said in a statement. Russia's furious statements came as the new Ukrainian authorities intensified their hunt for ousted president Viktor Yanukovich, who has not been seen since Friday, and tensions rose in Crimea, the Russia-friendly peninsula on the Black Sea. In the Crimean port city of Sevastopol, home of Russia's Black Sea naval base, hundreds of pro-Russia protesters massed outside the city's main administrative building on Monday for more than five hours until the city council agreed to allow Alexei Chaliy, a Russian businessman, to take over immediately as mayor. Waving Russian flags and wearing the arm bands of Russian Block, Crimea's leading pro-Russia political party, the crowd grew angry, shouting slogans such as "We won't let a fascist in!" and "Russia! Russia!" Open House Financial Times: Open house at Yanukovich's fabled palace Ukrainians expressed shock and disgust as the full extent of Viktor Yanukovich's opulent lifestyle was revealed at the weekend. Alerted via social media that Mezhyhirya – the president's fabled luxury estate, was no longer under heavily armed guard, thousands of people made the 15km trip from the capital to take a tour of the mansion and its attractions. What they found was a 127-hectare site including manicured garden, a golf course, tennis courts, a shooting range, swimming pools and a marina as well as horses' stables. The purpose-built, five-storey dacha – essentially a large log cabin – was decorated with elaborate furniture and expensive chandeliers hanging from the ceiling. Photographs on Twitter showed animals in a private zoo, a vintage car collection and a replica galleon on a lake. Visitors and commentators on social media expressed anger and disgust at the excesses revealed. "I wanted to see where the money he [Mr Yanukovich] has stolen went," said Oleksander Heruk, 24, a computer programmer who visited the mansion. "The first thing that shocked me was the colossal scale and tastelessness of the decor. It was shocking how megalomania had overtaken this person." House Fit for a Tyrant Mail Online: House fit for a tyrant: Protestors storm the sprawling, luxury estate of Ukraine's fugitive president which has its own private zoo, golf course and is half the size of Monaco Mail Online has a series of images and videos. Here are a few images. Many more pictures and videos on the site. It's amazing there was no destruction or looting. Cheers and best wishes to the citizens of Ukraine. Unfortunately, many problems linger. Election uncertainty and chants of "Russia, Russia" in Sevastopol could easily lead to further violence. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Germany at Heart of Europe's Political Predicament; Squaring the Circle; When is the Breaking Point? Posted: 24 Feb 2014 12:20 PM PST Germany is at the heart of Europe's political predicament. Although the status quo cannot and will not work, there is no incentive to change. Germany's Constitutional Court has strengthened the Eurosceptics and eliminates further moves by Germany towards debt mutualization. Some think debt mutualization, eurobonds, and combined fiscal budgets are a good idea. Others, like myself, don't. Regardless, and as noted in Rethinking "Paper Tiger", those options remain off the table. What remains on the table are policies that fuel high unemployment and undermine living standards says Brigitte Granville in Poking the Eurozone Bear. Some take the sanguine view that the current "lie still" approach is adequate to ensure that the eurozone economy does more than avoid decline. From their perspective, Germany's decision over the last three years to permit actual and prospective transfers just large enough to prevent financial meltdown will somehow be enough to enable the eurozone finally to begin to recover from a half-decade of recession and stagnation. But the fact is that these transfers – that is, European Stability Mechanism-financed bailout programs and the European Central Bank's prospective "outright monetary transactions" (OMT) bond-buying scheme – can do little more than fend off collapse. They cannot boost economic output, because they are conditional upon recipient countries' continued pursuit of internal devaluation (lowering domestic wages and prices). Reinvigorating the eurozone economy requires a more radical effort to resolve the interlinked sovereign-debt and banking crises. Specifically, it demands sovereign-debt mutualization through Eurobonds, and thus the elimination of eurozone countries' fiscal sovereignty, and a full-fledged banking union with recapitalization authority and shared deposit insurance – a far cry from the arrangement that has been agreed. If Europe's leaders continue to choose mild palliatives over bold tactics, the best-case scenario is a lackluster recovery, with GDP growing at a 1-2% annual rate. Unfortunately, this best case probably is not enough to prevent future sovereign-debt defaults in countries like Italy, Spain, and eventually even France. In other words, at some point, lying still will no longer be an option. As it stands, Europe's political class is committed to internal devaluation in all of the troubled eurozone economies. The alternative approach – dismantling the eurozone to allow for external devaluations – has thus become the playground of hitherto marginal political parties, which are now surging ahead in opinion polls. In France, the groups concerned – the National Front and the Union of the Left – represent political extremes. In Italy, a more ideologically neutral anti-establishment force may arise, with a much sharper anti-euro focus than Beppe Grillo's populist Five Star Movement, which emerged last year to become the country's third-largest political force. As these parties gain traction, the euro's chances of survival diminish. In 2011, Edmond Alphandéry, a former economy minister, declared that a eurozone exit by a member country was as likely as a dollar exit by Texas or California. Here, on full display, was the wishful thinking that brought the euro into existence in the first place: its French architects dreamed of a Europe that could equal the US. That was always an illusory ambition, but it continues to cloud European leaders' judgment. The single currency's advocates are right about one thing: political motives have always underpinned the establishment of monetary unions, from Latin America's in the period from 1865 to 1927 to that between Ireland and Britain from 1922 to 1979. But they are missing a crucial point: politics is also the reason for these unions' dissolution. When the economic costs and divergences become too much of a threat, the political will to do what it takes to ensure the common currency's survival collapses. Voter reaction against the euro may well force the eurozone to stop lying still and take real action. The question is whether that would mean that some or all eurozone countries must go their separate ways. Germany's Pyrrhic Victory Also on Project Syndicate, please consider Germany's Pyrrhic Victory by Marcel Fratzscher. The German Constitutional Court has ruled against the European Central Bank's pledge to buy potentially unlimited quantities of distressed eurozone countries' government bonds, and has called on the European Court of Justice (ECJ) to confirm its decision. Until that happens, the "outright monetary transactions" (OMT) scheme is effectively dead, weakening the ECB's ability to act as an effective and credible financial-market backstop at a time when European governments remain unwilling to fill the void. How financial markets will digest the German court's ruling remains uncertain. There may be little initial reaction to the news, as there is no immediate threat to financial stability in the eurozone. But the big question is how markets will react in the future to bad news, whether about sovereigns or banks. The tight feedback loop between sovereigns and banks in eurozone countries has become even more salient in recent years, as banks are holding an ever-larger share of their home countries' government bonds. The ECB's impaired ability to address sovereign and currency risks means that it will have to break the feedback loop via the banks – a more difficult and less effective approach that increases the likelihood of a market panic and a deeper crisis. The German court's ruling jeopardizes the ECB's ability to act as an effective lender of last resort, thereby reducing its independence and ultimately undermining its ability to deal with market panics and crises – and thus to fulfil its primary mandate of price stability. The ruling makes it more urgent than ever that European governments establish a viable and effective banking union and strengthen the ESM as a backstop for countries in crisis. When is the Breaking Point? Notice the silliness of Fratzscher's last statement. He begs for a viable and effective banking union, when it should be perfectly clear the German constitution court won't allow for one. Eventually something is going to break, and most likely at the worst possible time. Yet no one can say when. Meanwhile the imbalances continue to grow as complacency rules. Spain 10-Year Government Bond Yield That decline in yield looks like a good thing. But it comes with a huge risk. Spain's banks have plowed more and more into its own bonds. When yields rise, those banks are going to be in a huge amount of pain. Here are some charts from Squaring the Circle. Sovereign Bonds Held by Domestic Banks Sovereign Bonds Held by Domestic Banks as Percentage of Assets As long as yields decline, there are no problems. The crisis will be even bigger than before if and when yields rise. When that happens is anyone's guess. That it will happen is a near certainty. One way or another Germany is going to pay a huge price. Theoretically, there are two solutions. Germany can pay the price by debt forgiveness and mutualization of debt Germany can pay the price via default when the eurozone breaks apart If Germany will not allow option number one, the only viable choice is option number two. It would behoove Germany and the eurozone to have this discussion. Instead, Merkel has her head in the sand. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Monetarism, Abenomics, QE, and Minimum Wage Proposals: One Bad Idea Leads to Another, and Another Posted: 24 Feb 2014 01:15 AM PST Telegraph writer Ambrose Evans-Pritchard is back at it. In arguably his worst article ever, Pritchard complains France is Looking Straight Down the Barrel of a Deflation Shock. Pritchard bemoans the horrors of falling prices and says "There is a technical solution to this. It is called QE. The European Central Bank can lift the entire EMU system off the reefs by launching a monetary blitz to meet its own M3 growth target of 4.5pc." Pritchard ignores the fact that equity prices are back in bubble land. He ignores the fact that QE did not bring inflation to Japan. He ignores the fact that consumers desperately need falling prices. He ignores the fact that falling consumer prices do not stop consumers from buying anything. Pritchard complains "French President François Hollande must now pay the price for kowtowing to the contraction polices of the eurozone." Pritchard knows full well France is bound by eurozone policies. The only way France cannot "kowtow to the contraction polices of the eurozone" is if France leaves the eurozone. But Pritchard never mentions that. Instead he whines about falling prices. One Centrally Bad Idea Pritchard clings to the centrally bad idea that falling consumer prices will cause consumers to perpetually delay purchases. In the real world, people have to eat. They have to buy gasoline for their cars. They have to buy clothes when they wear out. They have to heat their homes. Those are relatively inelastic demands. But there is also no evidence consumers will hold off for long on discretionary spending either. Every Christmas, shoppers line up for bargains. People continue to upgrade TVs, computers, monitors as they wear out, or simply because prices are lower and quality is up since they last bought. In other words, people buy when bargains are many and stop buying when bargains are few. Living Wages Pritchard's solution is the same as that of many charlatans before him: Force prices up. The Fed succeeded. As a result, people now bitch and moan about "living wages". Of course "living wages" are a moving target. Force prices higher and the more it takes to keep up with them. People want $15 an hour for standing behind a cash register and handing you a sack of the worst food money can buy. It's ridiculous. Hardly anyone ever points out the fact that wages have not kept up with inflation precisely because the Fed has done exactly what Pritchard wants. People do not blame the Fed, nor do they blame economic illiterates like Pritchard. Instead they blame allegedly evil corporations like McDonalds and Walmart. Actually, the world needs more Walmarts. I hope Walmart enters the health-care business in a big way. Costs would come down overnight. It would also be great if Walmart could directly compete with banks on financial services. Costs Rising Faster than Wages The problem is not that wages are too low, but rather costs rise faster than wages. Why does that happen? Because of the very central bank polices espoused by Monetarists like Pritchard. Pritchard and others will note that falling home prices will slow bank lending and consumer credit. That is correct. OK, but what's the real problem? The real problem is monetary inflation artificially jacked up the prices of assets (homes, cars, equities) upon which unsustainable loans were made. Rather than admitting that simple and obvious fact, Monetarists propose the solution is still more monetary printing which will do nothing but create even bigger asset bubbles. Brief History Monetarists act on the theory falling prices are a bad idea The Fed prints money and holds rates too low Housing bubble builds Medical and education prices soar Student loans soar to "help" the students Because housing is not affordable numerous affordable housing programs appear causing still more unwarranted housing demand. Few see the bubble because housing is not in the CPI Housing crashes The affordable housing advocates are abhorred by falling prices Fed bails out banks and steps in to support housing prices Income inequality soars Students remain stuck with debt Because of one idiotic notion, that "falling prices are a bad thing", the Fed has generally managed to keep the CPI rising, with some things going up much faster than others. In response to uneven price inflation, we have seen numerous "affordable housing" programs, massive student aid programs, bank bailouts at taxpayer expense, Obamacare to make medical insurance affordable, cash for clunkers, Abenomics in Japan, and countless other economic idiocies. People propose bad idea after bad idea simply to fix problems caused by the previous bad idea. This is corollary six to the Law of Bad Ideas. Law of Bad Ideas Corollary Six: Bad ideas lead to more bad ideas to fix problems caused by previous bad ideas. Pritchard, like many before him and countless others yet to come, want higher inflation rates. Here is a table I put together that shows the silliness of it all. Effect of Inflation Over Time Year 2% Annual Inflation 4% Annual Inflation 6% annual inflation 10% annual inflation 1 100.00 100.00 100.00 100.00 2 102.00 104.00 106.00 110.00 3 104.04 108.16 112.36 121.00 4 106.12 112.49 119.10 133.10 5 108.24 116.99 126.25 146.41 6 110.41 121.67 133.82 161.05 7 112.62 126.53 141.85 177.16 8 114.87 131.59 150.36 194.87 9 117.17 136.86 159.38 214.36 10 119.51 142.33 168.95 235.79 11 121.90 148.02 179.08 259.37 12 124.34 153.95 189.83 285.31 13 126.82 160.10 201.22 313.84 14 129.36 166.51 213.29 345.23 15 131.95 173.17 226.09 379.75 16 134.59 180.09 239.66 417.72 17 137.28 187.30 254.04 459.50 18 140.02 194.79 269.28 505.45 19 142.82 202.58 285.43 555.99 20 145.68 210.68 302.56 611.59 21 148.59 219.11 320.71 672.75 22 151.57 227.88 339.96 740.02 23 154.60 236.99 360.35 814.03 24 157.69 246.47 381.97 895.43 25 160.84 256.33 404.89 984.97 26 164.06 266.58 429.19 1083.47 27 167.34 277.25 454.94 1191.82 28 170.69 288.34 482.23 1311.00 29 174.10 299.87 511.17 1442.10 30 177.58 311.87 541.84 1586.31 31 181.14 324.34 574.35 1744.94 32 184.76 337.31 608.81 1919.43 33 188.45 350.81 645.34 2111.38 34 192.22 364.84 684.06 2322.52 35 196.07 379.43 725.10 2554.77 36 199.99 394.61 768.61 2810.24 37 203.99 410.39 814.73 3091.27 38 208.07 426.81 863.61 3400.39 39 212.23 443.88 915.43 3740.43 40 216.47 461.64 970.35 4114.48 41 220.80 480.10 1028.57 4525.93 42 225.22 499.31 1090.29 4978.52 43 229.72 519.28 1155.70 5476.37 44 234.32 540.05 1225.05 6024.01 45 239.01 561.65 1298.55 6626.41 46 243.79 584.12 1376.46 7289.05 47 248.66 607.48 1459.05 8017.95 48 253.63 631.78 1546.59 8819.75 49 258.71 657.05 1639.39 9701.72 50 263.88 683.33 1737.75 10671.90 The above table shows what the price of something that costs $100 in year one will cost 49 years later at various inflation rates. None of these inflation charlatans discuss what happens if wages do not keep up. Nor do they discuss the incentives businesses have to outsource jobs or automate because of high wages. Amazingly, many people in academic wonderland are not satisfied with 2% annual inflation. They want 4% inflation or higher. For example, Laurence Ball at John Hopkins University claims to make a Case for Four Percent Inflation. Ball is "grateful for suggestions from Olivier Blanchard, Daniel Leigh, Gregory Mankiw, and Richard Miller. This paper is prepared for the Central Bank Review, published by the Central Bank of the Republic of Turkey." His paper was written in April 2013. How is the Turkish Lira doing since that paper came out? Let's take a look. Hmm. Once inflation steps in it seems difficult to turn it off. Ball cited Gregory Mankiw, an economic professor at Harvard, who had an even more inane idea of drawing a number out of the hat every year and making currency ending in that digit worthless. The effect would be 10% price inflation and lord only knows what asset price inflation would occur were Makniw to get his way. Mankiw claims expiring currency would be a benefit. I responded Time For Mankiw To Resign These charlatans sit in their academic ivory towers void of common sense and real world economics. Of course economically asinine proposals from those in academic wonderland is expected behavior by corollary number four. For the sake of completeness, here is a complete recap. Law of Bad Ideas: Bad ideas don't go away until they have been tried and failed multiple times, and generally not even then. Corollary One: Left alone, bad ideas get worse over time. Corollary Two: The overwhelming desire to implement bad ideas leads to compromises guaranteed to make things worse. Corollary Three: Those in positions of political power not only have the worst ideas, they also have the means to see those ideas are implemented. Corollary Four: The worse the idea, the more likely it is to be embraced by academia and political opportunists. Corollary Five: No politically acceptable idea is so bad it cannot be made worse. Corollary Six: Bad ideas lead to more bad ideas to fix problems caused by previous bad ideas. Although there is strong evidence that consumers will hold off making asset purchases (homes, stocks, bonds), when asset prices fall, there is not a shred of evidence of a meaningful reduction in consumer purchases due to falling consumer prices. The irony is that QE tends to foster asset bubbles that ultimately crash, not a price rise in general goods. Central banks in general, and the Fed in particular, are excellent examples of those in power, hell bent on implementing various bad ideas. For further discussion please see Deflation Theory Reality Check. Also see Bubblicious Questions: What Causes Economic Bubbles? When Do Bubbles Burst? Can the Fed Prevent Bubbles? In yet another irony in this madness, monetarist polices benefit those with first access to money, namely the banks and the already wealthy. Yet the same academics screaming for higher inflation are typically the same ones screaming about income inequality. The amount of damage caused by one central thesis "falling prices are a bad thing" is staggering. And to fix problems inherent in that central thesis, countless other bad ideas are sure to follow. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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Damn Cool Pics

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• This Girl Scout Has a Brilliant Business Idea
• Drug Lord Joaquin 'El Chapo' Guzman Busted
• Girl Proposes to Her Boyfriend

This Girl Scout Has a Brilliant Business Idea Posted: 24 Feb 2014 11:16 AM PST Smart girl.

Drug Lord Joaquin 'El Chapo' Guzman Busted Posted: 24 Feb 2014 09:26 AM PST The most powerful drug lord in history Joaquin 'El Chapo' Guzman was captured on Saturday. He has been on the run for more than 12 years since the prison break in 2001 when he escaped in the back of a laundry truck. When Mexican marines burst into the apartment he was staying in, they discovered Guzman with an unidentified woman. Joaquin 'El Chapo' Guzman is worth an estimated $1 billion. He is on Forbes' list of the world's most powerful people - ranked higher than the presidents of both France and Venezuela.

Girl Proposes to Her Boyfriend Posted: 24 Feb 2014 08:27 AM PST The guy looks so happy!

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An adorable "focus group"

Monday, February 24, 2014   An adorable "focus group" Let's Move! -- First Lady Michelle Obama's initiative to end childhood obesity within a generation -- just turned 4. We're celebrating all week, and we want you to join us. The First Lady wants you to share how you're moving by using the hashtag #LetsMove on social media to share a photo of your favorite activity or healthy snack. If enough people get involved, President Obama and Vice President Biden will share how they get moving, too. To kick off this anniversary week, First Lady Michelle Obama and comedian Will Ferrell held a "focus group" with young kids to talk about how they eat healthy and get active. Frankly, it was adorable. And there's more great stuff coming all this week. Watch the video -- then make sure you're signed up for Let's Move! updates. Stay Connected     Facebook Twitter YouTube Flickr Google+       This email was sent to e0nstar1.blog@gmail.com Sign Up for Updates from the White House Unsubscribe | Privacy Policy Please do not reply to this email. Contact the White House The White House • 1600 Pennsylvania Ave NW • Washington, DC 20500 • 202-456-1111

RSVP: We the Geeks

DAILY SNAPSHOT Monday, February 24, 2014             Featured RSVP: We the Geeks To celebrate Black History Month, we're hosting a Google+ Hangout with some of our foremost African American science, technology, engineering, and mathematics (STEM) achievers. These experts will share their inspiring personal stories and discuss the importance of ensuring our next generation of inventors, discoverers, and innovators fully reflects the diversity of America. Make sure you RSVP to join in tomorrow at 3:00 p.m. ET. President Barack Obama talks with Evan Jackson, 10, Alec Jackson, 8, and Caleb Robinson, 8, from McDonough, Ga., while looking at exhibits at the White House Science Fair in the State Dining Room, April 22, 2013. The sports-loving grade-schoolers created a new product concept to keep athletes cool and helps players maintain safe body temperatures on the field. (Official White House Photo by Chuck Kennedy)       Top Stories The President Isn't Sitting Still Yesterday, White House Senior Advisor Dan Pfeiffer sent a message to the White House email list, detailing the actions President Obama will take this week to make sure that 2014 is a year of action. READ MORE Weekly Address: Time to Lift the Minimum Wage and Give America a Raise In this week's address, President Obama says this is a year of action, and he will do everything he can to restore opportunity for all. The President already lifted the wages for federal contract workers, and he calls on the American people to tell Congress to finish the job by boosting the federal minimum wage for all workers to $10.10 and give America a raise. READ MORE West Wing Week: "Don't Make Small Plans, Make Big Plans" From February 14th to February 20th, the President traveled to Toluca, Mexico for the North American Leaders' Summit; to California to address the current drought and to meet with the King of Jordan; and to Upper Marlboro, Maryland to announce an increase in fuel efficiency standards for heavy-duty trucks. READ MORE       Today's Schedule All times are Eastern Time (ET) 10:00 AM: The President and Vice President receive the Presidential Daily Briefing 11:00 AM: The President and Vice President deliver remarks to the National Governors Association  1:15 PM: Press Briefing by Press Secretary Jay Carney WATCH LIVE 1:45 PM: The President meets with governors of Western States 2:30 PM: The Vice President meets with Prime Minister Irakli Garibashvili of Georgia   Facebook    Twitter   |   More Ways to Engage Did Someone Forward This to You? Sign Up for Email Updates This email was sent to e0nstar1.blog@gmail.com Unsubscribe | Privacy Policy Please do not reply to this email. Contact the White House The White House • 1600 Pennsylvania Ave NW • Washington, DC 20500 • 202-456-1111

6 Steps to Compiling an Integrated Online Marketing Strategy

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6 Steps to Compiling an Integrated Online Marketing Strategy Posted: 23 Feb 2014 03:14 PM PST Posted by StephanieChang The online marketing community is often abuzz with excitement whenever we discuss the latest trends within our industry, such as omni-channel marketing, new and clever ways to leverage mobile, or the advent of changes in user behavior such as multi-touch/multi-devices. We all want to be on the cutting edge of technology/innovation and no one wants to feel as if they're lagging behind. Unfortunately the reality is there are hard resource constraints we all face, whether it be time or money. Simply put, no one has time to do it all. The real obstacle we all face is how do we prioritize any online marketing activity in a world that constantly demands more? How do we develop a consistent and integrated framework/workflow process in an increasingly complex ecosystem? These are the challenges that, as marketers, we are all facing. Coming from an agency background, I can completely relate to the feeling that the right approach is to do more (offer more marketing channels/provide more specializations). Having worked on a variety of clients stemming from diverse backgrounds, whether it be huge enterprises, VC-backed start-ups that have to provide monthly reports to their board, or working within a heavily regulated industry, it doesn't seem like anyone is looking for more options. Too often this results in scope creep, extended timelines, and going massively over-budget. In actuality, most of us are looking for a simplified approach and a means of appropriately prioritizing the right activities in an industry that wants to pull everyone in too many directions. Some of the biggest wins I've gotten for my clients was when I took a step back and focused on the fundamentals, like what goals should be targeting and how can we develop proper reporting to gain attribution for our work, where are we being inefficient with our existing resources and how can we streamline the existing workflow process, and how can we do more of what we're doing right? In order to be successful, it's not about doing more work, it's about doing more of the right type of work. The purpose of this post is to help marketers determine how to start and execute an integrated online marketing strategy - how to simplify the process and make sure you're prioritizing the right type of activities to help you meet your overarching marketing objectives. Step 1: Ask the right questions (Gain an in-depth understanding of how marketing fits within the organization) This is the most important step when developing an integrated online marketing strategy and plan. Without a clear and in-depth understanding of why marketing is important for the business, it's nearly impossible to prioritize the different marketing activities and determine whether or not you've hit and/or exceeded meaningful goals for the organization. Depending on the type of business and where the business is at, there are different functions for marketing. Is the goal building brand awareness, developing product awareness, creating product market fit, increase in visibility, or is it another means of lead generation/revenue generation? At Distilled, we've determined that the best way to gain clarity on the goals of an organization is to undergo a discovery phase. We've established this discovery phase based on our previous experience working with clients where we executed marketing strategies and reported on KPIs that we later discovered were not as meaningful to key stakeholders as we had anticipated. Depending on the client, I have sat down with the VP of sales, head of product, head of events, the CTO, the CFO, head of marketing, and account managers to gain an in-depth understanding of their priorities and their pain points. Ultimately, in order to focus on the right type of marketing activities, we need a 360-degree view of what would have the most impact to the business from different perspectives. Sample questions: High-level financial perspective (for CEOs/CFO/high-level directors) Is the company self-funded or VC-backed? What implications does this have on our engagement together or the financial milestones we want to hit over the next 12-24 months? Is the company profitable and, if so, how long has it been profitable? What is the company's annual revenue? High-level business perspective (for CEOs/CFO/high-level directors) What is the business's unique value proposition? What are the overall business goals and objectives that we want to hit over the next 12-24 months? What are the overall infrastructure and resources that would be required to hit these goals? High-level growth perspective (for CEOs/CFO/high-level directors) How does your company set goals and strategy around growth, expansion, and optimization of your business? Who dos this and how often do you revisit it? Who sits in on this conversations from the marketing department? How does your business determine how much money each year is invested into the growth/expansion of the business? Has the amount you've invested into growth fluctuated over the years or has it stayed consistent? Why? How much of your marketing budget do you invest into offline vs online per year? Why? Has the amount fluctuated much year to year and if so, what do you attribute the fluctuation to be due to? VP of sales Discuss what the normal sales cycle looks like Discuss who on the sales team has the deepest understanding of the product and customer needs Discuss main objectives the sales team has when making a sale and how they qualify a lead Discuss trends and demands of products/services Discuss strategic partnerships the company has and creative ways to leverage them Head of marketing Review marketing team roles, KPIs, and get a better understanding of the roles the team is currently hiring for Overview of different digital marketing channels, activity performed over time across these channels, and overall market performance Discussion of overarching marketing objectives/goals and the opportunities for growth Are there marketing channels you are currently not investing into that you want to be investing into? What's kept you from investing in those channels to date? What are your highest margin products/services? What are the lowest? What are the products/services that attribute to the largest revenue drivers for the business? Do you have any new products/services that you are trying to bring to market? Why? What are the challenges/opportunities you see in bringing this new product/service to market? Step 2: Identify the problem statement and the meaningful goal(s) the marketing team can/wants to impact Once we have an in-depth understanding of the client's, department's or businesses's overarching goals and objectives, we should then be able to explicitly identify the problem the organization is facing, as well as the meaningful goals we can and want to impact. It's important to make sure that we aren't spreading ourselves too thin by trying to accomplish/impact too many goals/objectives, but sticking to the ones that would be most meaningful to the overall business based on the information we received from step 1. For this specific post, I'm going to provide a sample scenario to make this entire process a little more concrete. Let's say, hypothetically, I have identified that the problem is a successful organization wants to enter into the online marketing realm, but doesn't know where to begin. However, we do know that the immediate and most meaningful goal for the client's overall business would be to increase the number of leads the company receives. This specific objective is one I've commonly come across with either B2B companies or any service-oriented organizations (like agencies or firms). To put it succinctly, the problem statement for the organization would look something like this: Problem statement: "In order to continue the company's current 5-year trajectory, the organization needs to discover other methods of garnering leads to support the company's growing market share. These channels need to (1) be effective in targeting the company's core audience of small and medium sized businesses (generally less than 200 employees) (2) become an effective framework for ensuring that these channels have the potential to generate good leads for the company's sales force and (3) that we are consistently aware of the need to develop mechanisms for reporting, so that the organization as a whole has a deeper understanding of how much budget they should be allocating to which departments in the future." The sample goals for such an organization that would help support the problem statement could be: Specify the appropriate marketing channels/platforms that will help the company increase the number of leads generated. Once we have identified these channels and launched campaigns on these platforms, we will need a process to put together stretch growth projections. Once we have met these stretch growth projections, we need to establish a very clear framework of what resources it would take to continue investing in these channels. Most of the organizations you're currently working with have previously invested into different online marketing channels. As a result, the goals for your organization may distinctly differ from the ones listed above. In situations where a company has previously invested into online marketing, before you establish concrete goals for the organization, you should first analyze the performance of these channels and identify areas that can be used to improve its performance , such as improving the integration between different marketing channels, identifying methodologies to improve the conversion rates of those channels, or having stretch goals we want these channels to meet. Step 3: Develop a methodology for identifying the appropriate marketing channels/activities to invest in The next step to develop an integrated online marketing strategy/plan to determine the appropriate channels to invest in based on the overall problem statement and the already established goals/objectives. For instance, in the example scenario established above, we've already deemed that our primary goal would be to increase the number of leads generated. Based on the fact that our sample has no clear foundation in online marketing, it would seem unwise to invest too heavily at the beginning on online marketing activities that don't establish a clear feedback loop. In addition, because of the company doesn't have an understanding of what are the key metrics they need to hit, we need marketing activities that help us establish a strong foundation for reporting. As a result, for a company such as the one mentioned above, I would start off investing more heavily in paid channels, such as paid search, display advertising/retargeting, and possibly the development of affiliate advertising. Based on the successful launch of these channels, the goal is that overtime, we would develop an understanding of the core audience we want to target, the type of copy that would resonate with this audience, as well as which type of keywords that would convert best. This is not to undermine the long-term benefits of more inbound channels, like content strategy and SEO, but at this point in the company's online marketing strategy/plan, we simply don't have the immediate resources to invest and prioritize heavily in these channels. Image Credits: Google: Think Insights That being said, understanding the type of ad copy and keywords that perform well in paid channels is a really important finding for the company's potential future work in other marketing activities, such as SEO and content strategy without needing these type of channels to complete redundant work. Understanding the type of marketing findings from a particular marketing activity that are fundamentally important to other marketing channels is the beginning stages of developing a cohesive integrated marketing campaign. Step 4: Develop core objectives for the specific channels we would invest in Once we've identified the specific marketing channels we want to be investing in and our goals, we want to outline some very core objectives that we want to achieve for each of these channels. This will be instrumental in helping the individuals who are responsible for execution to develop a strategy that will help support the overarching objectives. Example goal: Launch the company's paid search account For Q1, our objectives for the account might be to: Objective 1: Gain an understanding of the type of ad copy, keywords, and landing pages that have successfully worked for your competitors Objective 2: Put together a clear keyword hierarchy, ad copy tests, landing page tests, and overall bidding strategy for the paid search account For Q2, our objectives for the account might be to: Objective 1: Based on the re-launch of the paid search account, set and meet specific targets for budget and CTR/CPA goals in Q2. Since we're just starting the account and don't have a clear understanding of an ideal CPA or even the lifetime value of a customer, we are going to use generic targets for our initial foundation. These would include: Meet the industry standard of achieving a 1% CTR In terms of cost per acquisition, given the simplified formula that CPA = total cost/number of conversions, we'll put together the initial goals as: First goal is to hit breakeven point After achieving this first goal, the second might be to increase the profitability of conversions If we achieve the second goal, our third goal is to determine how to increase the amount of budget going to these channels without affecting overall profitability. For Q3, our objectives for the paid search account might be to: Objective 1: Review initial targets and determine: If we met these targets, the creation of new stretch targets. If we didn't meet these initial targets, develop a clear understanding of what it would take to meet these stretch targets and execute upon the strategy. Step 5: Put together a brief and an efficient/integrated workflow process for marketing activities One of the most important takeaways I've learned when developing and executing an integrated marketing campaign is the value of putting together an extremely clear brief. Writing a concise, well-thought out, and clear brief is challenging, but proactively putting one together will ultimately save everyone money and time. A clear brief makes it explicitly clear whether or not the outcome met the overall objective and if an activity/channel was successful or not. This is especially important when a marketing manager/director is juggling multiple balls in the air and can't manage the day-to-day execution of these activities. Below is a fantastic video from The Skool Rocks that describes in-depth what makes a great brief, how to use it, and how to develop a brief for different audiences, such as internal teams and designers vs. developers. The audience for The Skool is targeted towards creatives and web designers, but this video has tons of key takeaways that are also directly applicable for online marketers. Once the brief has been put together, it's important to work with the team to develop a very efficient/integrated workflow process to execute upon these marketing activities. Having a clear understanding of the specific activities and in what order they will be executed upon to meet clearly defined goals gets everyone on the same page. A carefully thought out workflow will eliminate any confusion, will take into account the different dependencies and when certain individuals should be checking in/having meetings with different departments, and have carefully set expectations for communication and meeting deadlines. For instance, if the site needs to create new landing pages, the ideal scenario would be for the paid search/SEO/content/brand teams to work together to prioritize the overall layout and copy of the page. Otherwise, having the paid search team create PPC landing pages, then the SEO team create another set of landing pages, while the content team creates a third set of landing pages can be deemed overly redundant, which can lead to massive inconsistencies and scalability issues that may pop up on the site. That being said, there are clearly scenarios of which it is necessary for different sets of landing pages to be generated. The overall goal is of course, to reduce redundancy whenever possible. Step 6: Report and reassess results and then expand or reallocate resources as needed Once different marketing channels/platforms have been launched and there is ample data to be analyzed and reported on, it's important to reassess this information and determine whether the channel/activity has adequately performed and more importantly, if the channel has potential to grow given its existing performance. It's also important to consistently and strategically evaluate whether given the overarching business goals/objectives for the organization if budget and resources have been adequately allocated. If not, we need to determine whether any of it needs to be reallocated or further developed (example: making hiring decisions). At the same time, it's also important to reevaluate when it is appropriate to start initiating other marketing activities/platforms that have previously not been as big of a priority and how to properly integrate existing marketing activities with these new channels to ensure there is little to no redundancy taking place across platforms. One other aspect to consider is to determine whether the incorporation of other tools/resources will make the entire process more efficient. Ultimately, compiling an integrated online marketing strategy/plan can definitely be overwhelming, especially given the wide-range of different platforms/channels that currently exist within our industry (not to mention the continuous technological advancements that increase the number of platforms/tools that are available). It's important to develop a framework that ensures the resources (such as time, money, head space of individuals) is focused on the right set of activities that will help support the company's overall business vision, goals, and objectives. This type of framework is initially time-consuming, but in the long run, can save a lot of confusion, when the complexities within an organization's marketing team increase. Having very clear objectives of why you're investing in a specific channel and for what specific purpose not only aids with reporting, but also ensures that everyone on the team (both internal and external resources) have a clear understanding of appropriate targets. As the ecosystem of our industry becomes ever more complex, establishing a very clear framework for how to simplify the process and execute on the important marketing activities becomes increasingly more important. As marketers, let's embrace these new challenges and begin the process together. 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