I was on the phone with someone this morning who I should have talked with a month ago.  I had kept putting the conversation off.  Not because I didn’t want to talk with them, but because I couldn’t get myself organized to have a productive conversation.

She said, You must be very busy.

Not in any unmanageable way, I answered.

What I explained was that the restructuring process that we are undergoing at NCI is progressing in an orderly and productive fashion.  There isn’t an unreasonable amount of time that needs to be spent on it, and the key issues are well-defined and being advanced by a team of very capable professionals who do this kind of thing all the time.

But it does create a distraction.  In the face of uncertainty you spend time thinking through the different possible outcomes and waiting for the next development, which help you narrow that range of outcomes.

We brought the top management together this week to talk about where we are.  I outlined my belief that as a company we’d come through two critical phases:  the first, where we reacted to the economic downturn; and the second, where we created new frameworks for recovering.

We were now at the third phase:  The selling phase.  And, I observed, we weren’t moving with as much purpose and effectiveness as I wanted.

The problem, I think, is that we still believe we are mired in uncertainty.  The questions “When will things improve” and “Will things get any worse” are central to our conversations.

That has to change.  The real questions need to be “What did we do this week and how did it work?” and “If things didn’t work the way we expected, what should we change?”  And then, we have to make the changes.  The only way to have these conversations is to track, report and discuss specifics.  Otherwise, you end up mired in generalities.

The challenge is to really demonstrate the mental fortitude and discipline to face forward.  I acknowledge it’s hard, but boy, it’s necessary.

Yesterday we announced that our company,  Network Communications, Inc. , had opened conversations with its creditors in order to restructure its balance sheet.  The  development was reported in Business Week and has appeared in numerous news outlets across the web.

The Business Week reporter did a balanced job in describing the situation.  I think one quote sums it up pretty well.

“It’s not a company with a fundamentally broken business model,” McCarthy said. “It’s a company that’s gone through a radical adjustment in size.”

I’m not going to comment on the restructuring process.  A lot of media companies, such as  Reader’s Digest and Freedom Communications,  have gone through restructurings the last two years, emerging successfully as viable businesses with manageable capital structures.

Right now we’re focusing on communicating clearly with our core constituents about what the announcement means for our business.  The short answer is, It’s business as usual.    NCI is in the enviable position of generating more than enough cash to fund its day-to-day operations.

To help spread that message, we sent out copies of our press release and a detailed Q&A to our employees and business partners.  I’ve held a series of webinars to review the materials and address any specific questions.  We’re also reaching out to our key vendors and customers.

I’ve also focused on another message:  Our future is what we make of it.

The difficult market conditions of the past two years have driven us to be more disciplined, more resourceful and more innovative.  This approach has borne tangible business results:  We have expanded our customer relationships, we have built new products, we have strengthened existing products and we have managed in such a way that we’ve been able to sustain our business model.  We’ve been able to do this because of the remarkable focus and commitment of the people who make a difference every day:  The employees and independent distributors associated with the company.

Right now we are facing two basic facts.  Unquestionably, an economic recovery is underway.  Unquestionably, our customers have been shocked by the changes in their business and are reluctant to increase their marketing spend.

To rebuild our business, we need to help resolve the contradiction between those two facts.  We can do this three ways:

• We have to be in front of our customers and help them see that market has improved enough for them to feel confident that they will get a return on increasing their marketing spend;
• We have to be fluent in explaining why our traditional businesses continue to provide value to our customers, in terms of visibility, leads and business results.
• And we have to be energized in showing our customers how our innovative new services, particularly in Internet and social media marketing, can give them powerful ways to expand their brand footprint and build their business.

Executing on these three activities is the most important thing that we can do right now.  That is how we will make our future.

A note:  I have closed comments on this post because of the sensitive nature of this dialog.  If you have any questions you can e-mail me at dmccarthy@nci.com.

Last week my colleague Todd Dubner was at The Kelsey Group Marketplaces Conference talking about our DigitalSherpa service.

You can see his summary of his comments and some of the reactions on his blog Being Present. It’s an interesting read.

After about 9 months of selling, we have about 1000 clients to our DigitalSherpa services, so we’ve been learning a lot about what works, what doesn’t and how to communicate effectively with clients. We’ve taken our lumps and have had some remarkable success stories, all part of launching a brand new business.

Todd does a good job of describing our core premise with the service in this quote:

Here was the premise of the presentation was that local media has always been about high touch service at an affordable price. We can look at NCI’s history with The Real Estate Book to see that in action. In the early days we were not just a media provider, but truly a full-service provider. Our interaction with our customer often began with taking photos of a house, included production of a 4 color advertisement and concluded with printing and targeted distribution of a magazine – an awesome value, priced today at ~$400 a page.

Now we are offering a local social media marketing tool that is designed in the same light. Our customers recognize that there is likely to be value in establishing an active presence in Facebook and Twitter and understand that having a current, active, blog-like web presence is better than an old (dusty) static web page.

You can see Todd’s entire presentation below:

Over the past year, the team at NCI has been developing a social marketing service under the umbrella of Digital Sherpa for local advertisers. The service was launched commercially into the multi-family market last August and into the home design market in December.

Our attention over the past months has been focused on executing on our value proposition for our clients. The core of the proposition is to leverage social media tools and content creation and curation in order to expand a customer’s digital footprint. The outcome is increased web traffic through improved Google juice and increased connectedness with their community of interest.

To execute these propositions at a low monthly price to our customers while delivering measurable results, we’ve been building and fine-tuning our business processes and bringing on board a group of talented and enthusiastic professionals excited to pioneer the next wave of internet marketing.

Our activities attracted the attention of a leading analyst in the local media space, Peter Krasilovsky, who heads up the Marketplaces advisory service at The Kelsey Group. Peter asked to look under the hood and has issued summary report about DigitalSherpa.

Here’s how he framed the report in his alert to clients:

Will vertical advertising be replaced, in whole or in part, by search engine optimization? That’s the question companies are grappling with as they consider that many leads are coming from articles and other media that rank high in search results.

NCI, the publisher of The Real Estate Book, Apartment Finder and other publications, isn’t waiting to find out. Throwing worries of cannibalism to the wind, it is building social media content for its advertisers, placing highly contextual articles, abstracts, photos and video on advertiser blogs, Facebook and Twitter.

In his report, Peter poses 5 key questions about the Digital Sherpa service:

1. Will “content” be a compelling proposition of potential clients, even though the big SMB bets for 2010 are reputation and presence management?
2. Will DigitalSherpa experience the same high churn that other local internet ad services have experienced with SMB’s?
3. Can DigitalSherpa develop effective content?
4. How much content does a service need to develop in order to deliver results to its clients?
5. What impact will creating DigitalSherpa have on our core customer relationships?

These are great questions. I’m not going to take a stab at answering them now. With close to 1000 clients currently, we’ve going to have data-driven answers to the questions in fairly short order. That will be the time to see how things shake out in this social media marketing experiment.

The Kelsey Report advisory alert is available to subscribers here. If you have questions for Peter, you can find him at his blog, The Local Onliner.

Over the past year, I’ve been encouraging our teams to have gain expertise about social media and have conversations with their customers about how these new tools can help them in their business.

Where I’ve met resistance is from people who ask, Why? Our business is advertising, and we’ve got print and internet products to sell. Talking about social media is off-point and doesn’t help.

My counter is that if we know a lot about something that our customers care about, we can help them, and that’s going to help us get into more conversations and have better relationships. And, I know from all my conversations that our customers and prospects are fascinated and perplexed by how to use social media tools in their business.

I found a useful passage in the conclusion of an industry report from Borrell Associates about real estate advertising that helps drive this point home.

Local media companies that can demonstrate a commitment to understanding their local markets more deeply than their competition, and a willingness to share that knowledge with local advertisers in a consultative relationship that is built patiently, with trust and respect, for the long term, will have the best chances for success. When a business is hearing from half a dozen ad media reps every month, it will take unprecedented focus, effort and resources to stand out.

Reading that made me ask myself, How many of our market representatives see the same value in sharing knowledge? And, how many of them feel confident about their own command of the information to share it with customers and prospects?

In the midst this great media shift to online and interactive, my company continues to distribute close to 10 million printed catalogs of homes for sale and apartments for rent every month.

outWe get two tangible points of confirmation for continuing with our print distribution. First, the printed copies get picked up. More than 90% of the copies we put into racks each month are getting used by consumers. Second, the printed copies drive business activity for our advertisers at a higher rate per instance of use than our online product.

As a lead-generating business, our focus is on creating the most cost-effective ways of creating leads for our customers. Print distribution is still an effective and essential channel to driving a volume of leads.

One of my regular reads, PurpleMotes, had a post today about a pile of yellow pages directories that was dropped off at their apartment community recently.

From PurpleMotes:

The traditional mass distribution of yellow pages print directories isn’t effective where I live. In my 148-unit apartment complex, stacks of new yellowbooks were recently placed outside entryways during the day on Thursday. At about 7pm that evening, 146 yellowbooks remained. The next evening, 139 remained. The following Tuesday morning, 134 books remained. Later that day, apartment staff recycled those remaining books. Hence apartment residents picked up only about 10% of the yellow pages directories placed in entryways.

What’s different about the printed catalogs that we distribute at NCI and the traditional yellow pages?

Freshness: We distribute a new book each month. While it’s not as timely as the Internet (an understatement), the printed catalog changes and gives a quick overview of the market.

Convenience: The printed catalog is designed to be convenient for someone who is out and about looking for a home or apartment. It’s small, reasonably well-organized and easy to read.

Purpose: The purpose of the printed catalog is very similar to catalogs that you get in the mail. The merchant isn’t showing you all of their inventory, just that selection that is relevant because of season, style or price. The proposition is similar for the real estate agent or property management company that is using our printed products to make an impression on consumers.

These three characteristics of our print product are vastly different from the printed yellow pages, which is designed to be a reference directory for products and services in your geographic area.

These characteristics are a big reason why consumers continue to use our local printed catalogs, despite the ubiquity of the information online and on their mobile device. Then catalog is one more tool in a discursive search the occupies multiple dimensions of time and space.

That’s why we continue to invest in our physical distribution, even as we have built out our online distribution. Because we know that it is an effective source that consumers continue to use.

Wishing everyone a safe and healthy Happy New Year. A special thank you to everyone at NCI. In 2009 you demonstrated remarkable strength, perseverance, energy and good spirits. My wish for all of you is that in 2010 your labors bear fruit. I hope that we all remember the lessons of the past year and that we are put in a position to help others grow, build and recover.

As the year winds down, I was curious which posts over the course of the year were the most popular. I was pleased to see that the posts that had resonated the most with all of you were ones that I felt like I’d achieved some clarity around an idea that I’d been working through. (It’s also interesting that these posts are among the most frequently accessed through search.)

The number one post was from March: Social Media Can be A Marketing Platform. This was when we were taking Network Communications into its Project Massive Network, an effort to get every person in the company using social media to broaden and intensify their professional connections.

Through the year, I kept meaning to come back to the concept of Evangelist. The word too easily connotes intense passion, while I believe that the most effective Evangelists are the ones who have completely integrated their nature with their passions, so that they communicate a relaxed enthusiasm that inspires and attracts others. Evangelism is too often associated with a mania and mono-focus that can be off-putting.

The number two most-popular post was a very detailed case study that I did in June about migrating our marketing strategy at Apartment Finder to a social media focus. My intent with this post was to demonstrate each of the steps that we had taken to extend our communications with the multi-family marketplace to multiple platforms, and our efforts to modify and adapt our messaging to the unique attributes to the platforms. This effort continues today and deserves a follow-up: the most challenging aspect of the initiative is maintaining continuity and assessing its effectiveness. Despite our intent focus, we have areas of spotty execution with our own program.

The third most-popular post was my first attempt to consolidate the thinking that I’d been doing about how a traditional publishing content workflow needed to adapt to accommodate the inclusion of social media platforms. In Thoughts on Evolving the Content Strategy in Publishing to Leverage Social Media I outlined the Sharing Model of content creation. This model outlined here as served as a framework for developing new processes at our regional home design brands, and in some instances we’ve seen significant impact on audience and enthusiasm. The process is a living work in progress.

The fourth most frequently viewed post is an down-and-dirty analysis of State Farm’s presence on Facebook. This was a period when I was trying to understand the challenges that face traditional marketing departments when implementing social media programs. The post was published in April and is one of the two most-frequently accessed posts through Google search. I recently re-visited the State Farm Facebook sites and little had changed.

In the Spring, I was doing a lot of work to try to quantify the impact of the economic decline on consumer spending, marketing outlays and media allocations. In an early April post, I pointed out the contradiction between industry research showing the effectiveness of TV and magazine advertising and the steep declines in revenue. The point: When marketing budgets shrink, the most expensive media goes first.

I’m kind of proud that a self-serving post doesn’t show up until the number 6 spot. Over a period of 6 months, we radically shifted our traffic strategy at ApartmentFinder.com in order to leverage what we percieved as our core strengths. This shift was rewarded in April when Comscore reported ApartmentFinder was solidly in the top 5 destinations for apartment shoppers on the Internet. Our work put us solidly in the consideration set for online-only marketing in the multi-family industry, and we did it despite being heavily outspent on search engine marketing traffic by our competitors.

The seventh most-popular post, from July, demonstrates how powerful social media can be. I described a disappointing customer service experience with American Express. A couple of days later, I heard from the Chairman’s Office. It doesn’t match Jarvis’ Dell experience, but it was an instructive moment in the new age of marketing and media.

A May post reporting on research that shows how effective print advertising is in driving web traffic came in at number 8. Despite multiple instances of independent research like this, many people insist of maintaing a very simplistic “Print Is Dead” position. At this point, I just shake my head and wonder why the concept of using multiple platforms to intersect with consumers to drive business activity is so hard to accept. [I very accepting of marketers who say they don't have the money to invest in premium marketing choices, whether they are online or offline. Then we can have a conversation about how to leverage their marketing resources to build their business. Just sitting around arguing about living or dead media gets old very fast.]

An October post made the top 10 and is a big search favorite: The Current State of the Economy in 5 Pictures. I realized doing this analysis that I should update the post in January to reflect the fourth quarter results. Lesson: People like pictures.

The number 10 position is taken by a post where I ranged outside of my limited sphere of knowledge to speculate about how social media platforms would change the way that people searched for information. The premise was that “human search” would develop through the filtering of content by overlapping social graphs. This is happening on Twitter and is expressed by many as crowd-sourcing. I had fun thinking about the problem and putting together the schematics. The post attracted a broad readership and started many conversations. I’m sure that those followers soon dropped off as I returned to my more mundane noodling about business models, business processing and marketing approaches.

I visited the National Association of Realtors convention in San Diego last week.

The show was markedly different than the year before. The footprint was smaller, but the energy was higher. Fewer vendors were serving the market, but the vendors that were present focused on very specific utility that would produce benefits for brokers and agents.

Talk with agents and you heard a firmness in their tone and a positiveness in their approach that was absent the year before.

The market isn’t bouncing back anytime soon, they said, but there was consistent activity and the opportunity to make money.

My colleague Todd Dubner had many of the same impressions, which he shares on his blog Being Present.

Todd was particularly struck by the approach of the entrepreneurs he met during the show:

Creative vendors are getting their mental juices going. At NCI, we believe in the intelligence of the entrepreneur. We pay attention to what innovative thinkers are chasing and try to find where people are showing signs of profit. There was just more of that at the show this year than last. The ideas that were being shopped felt more concrete and actionable with a clearer value proposition than those in the past. No one was doing the, “if I could get 80% of agents to give me a dollar” math that never works out.

We’re hearing more positive reports from the field across our company as well. More is a relative term: for the past 18 months, positive reports have been few and far between in our real estate media business. I sat down with one of our business partners in the northeast over the weekend. He’s been with our company for more than 15 years, and the anxiety that he had expressed a year ago had been replaced by a confidence that the market was recovering, slowly and fitfully, but consistently.

These are anecdotal and ground-level reads. As such, one should be cautious to not get swayed by isolated instances of positive emotion. But, the repetition of these instances, in the face of continuing negative macro conditions, suggests that the pace of business activity is picking up in such a way that people who make their living from it are feeling like they are going to be able to make their living better.

At different points in my life, as I’ve begun to work through a problem that I find particularly engaging and energizing, I’ve been fortunate to stumble across people who have by-passed confusion and moved straight to the actions that create the new and exciting thing that I’m only beginning to see.

The most recent time this has happened was late last year, as I began to explore how social media tools could be used to create effective and measurable marketing programs.

My starting point was trying to understand how real estate agents were leveraging social media to help drive their market footprint; this inquiry took me to the multi-family space. And exploring the multi-family space, I found the most practical and effective solution I could imagine, implemented by a property owner in Royal Oak, Michigan — Eric Brown.

I went to school on Eric’s approach, from his foundation premise of building value around customer experience to his marketing strategy of driving community and connection using social media tools in order to build search traffic and drive referrals. Finally, I reached out to Eric and flew out to Michigan to visit with him. I wanted to learn more about the process he had gone through to arrive at a solution that I admired as elegant and practical.

We had just launched the first of our DigitalSherpa line of products at NCI, the CommunitySherpa service for the multi-family industry, and Eric and I talked a lot about the further extensions of the social media marketing service that we were developing at our company.

That conversation sparked a series of discussions that made it clear that our organization would be enriched by Eric’s enthusiasm, experience and effectiveness.

I’m excited by the relationship we’ve structured. Eric has joined NCI as our chief Social Media Strategist. You can see the announcement here. Eric writes about his enthusiasm for the new opportunity here.

The Social Media Space is changing and evolving, and the floor has started to shift. More and more folks are further understanding the potential of Self Publishing and Shared Content. We have been yapping about the benefit of blogging and Social Media Marketing, and the effect that the Urbane Life Blog has had on our numbers at Urbane Apartments for some time now. The Direction of Marketing Has Changed

We’ve attracted more than 600 clients to our DigitalSherpa offerings since first launching CommunitySherpa in July. The process has been exciting and challenging and the amount of learning that we are accumulating every day is impossible to measure. To continue to respond, to chart a path that is flexible and adaptive, you need to have smart people with a practical disposition challenging each other and connecting with the customers. Eric is that kind of person. I’m really looking forward to working with him.