'Marketing Is About Inspiration': CMO Leadership Talk With Telefónica/O2's Nina Bibby

What makes a successful marketing leader? In this interview series, I’m meeting up with leading CMOs to discuss the secrets of marketing leadership: what works, and what doesn’t. This time: Nina Bibby, CMO of Telefonica UK (O2).

Thomas Barta: Hi, Nina. I always like to start off with a simple question: What’s great about being a leader in marketing?

Nina Bibby: At its best, marketing is about inspiration: inspiring customers to choose us, buy from us, stay with us and recommend us. It is also about inspiring colleagues behind our customer offer. We are storytellers. Of course, we need to craft that story and ensure there is a compelling fact base behind that story — but we are storytellers. And marketing leaders need to be chief storytellers, engaging and aligning the entire organization behind delivering our best for the customer. It’s very exciting to inspire your colleagues to get behind an ambition. That’s one of the reasons I love marketing.

Barta: Can you share a story that helped you energize your colleagues?

Bibby: Just after I joined InterContinental Hotels (IHG) as senior VP for Global Brand Management, I was handed the massive task of relaunching Holiday Inn globally — the biggest hospitality relaunch in history in terms of number of hotels, number of countries, etc. I was new to the industry and I was new to the company. So, getting the engagement and the belief from many colleagues was pretty hard. This wasn’t just about engaging people at IHG but also about energizing the many franchisees. The way we engaged people was by retelling the story of Holiday Inn from its inception to the current time. We used many quotes from customers about what they loved about the Holiday Inn brand. Those stories and the link with Holiday Inn’s heritage are what helped us win the hearts and minds of all staff involved.

Barta: What’s marketing’s reputation inside your C-suite?

Bibby: We’ve got a firm seat at the top table. We’re fortunate that marketing has P&L accountability at O2, so we are accountable for revenue and for profit. We’ve got pricing within marketing, products, promotion, of course, insights and analytics — it’s very comprehensive. Both on the Executive Committee and on the Management Board, marketing is present. Equally important, our brand is a great source of pride internally, and the organization feels almost a sense of responsibility to do what is best by that brand. Our former CEO used to say, “We are a brand that runs a business, not a business that runs a brand.” Marketing, brand, and customers are up front and visible, and acknowledged to be the most important drivers of our success.

Barta: How do you manage the tension between what customers want and what your CEO wants?

Bibby: I have a simple mantra: “We have to create value for our customers in order to create value from our customers.” It’s got to be a win–win. At O2, for example, we have a digital loyalty program called Priority, where we give people early access to unforgettable live experiences in rugby, entertainment, or music. The program is one of the reasons people choose us and stay with us. But I’m also clear about the value Priority creates for us. We’ve known exactly the loyalty and churn benefits — and the financial impact. We’re creating value for our customers, and we’re creating value for the business.

Barta: Has leading marketing changed from the time when you started to today (if at all)?

Bibby: Because of the ubiquity of digital channels and social media, it’s a more transparent world. As marketers, we have to understand that we’re not going to control all the conversations or all the narratives, and it’s become more challenging for brands to cut through the noise. As we’re a service business, consistency and excellence of the experience is paramount because every interaction is a representative of the brand experience. In fact, everybody who works here is delivering the brand experience, and therefore, I go back to my earlier point that it’s so important to inspire all colleagues. If you can’t inspire your colleagues, you’re not going to be able to inspire your customers. Inspiring colleagues, having them all understand the importance of what we’re trying to do for the customer, making sure everybody’s pointing in the same direction is more vital than ever before.

Ubiquity of digital also brings opportunities, of course, such as the ability to have more personal interactions with customers. I want to create value for customers through every interaction. In order to do that, we use data-driven customer insight to power personalization, ensuring a consistent O2 experience that delivers to customers’ needs.

Credit: Telefonica / O2

Barta: In our research for “The 12 Powers of a Marketing Leader,” we’ve learned that successful CMOs don’t just talk about customers — but get their hands dirty and go to the frontline. Do you agree?

Bibby: Absolutely. As a board, we’ve committed that we go to as many of our stores as we can. We talk not just to store leaders but to all the store colleagues or the people in our contact centers. That way, we hear firsthand what customers are saying, what’s working, what’s not working. Last summer, one store manager told me, “How come you do so much research amongst customers, but you don’t do research amongst us?” I thought, “Yeah, that’s a really good point.” We have a permanent panel of customers to test ideas quickly, why not for frontline colleagues. So, we’ve launched the equivalent panel for our retail and contact center staff because they are hearing and seeing what works every single day. Just yesterday, I did store visits in the west of the country again. I think that’s absolutely critical, for marketing leaders to leave the office!

Barta: What’s going to be your biggest future leadership challenge?

Bibby: For me, I guess there’s a couple of things. Leadership was always about having the right team, the right people. The team is number one, two, and three of what I’ve got to get right. This means to make sure we have the right people at the table, that we’re developing them, that we’re coaching them, and let them go to another role when the time is right. Also, the workplace is changing, and therefore, peoples’ expectations are changing, too. Because of digital, we all have the ability to work more flexibly today. In fact, flexible work options are a huge part of what O2 offers. The other challenge on the horizon is the convergence of customer expectations across sectors. Customers expect to receive the same level of service, the same immediacy of fulfillment across their transactions. Why wouldn’t they? We have to continually innovate and re-engineer to ensure we are meeting these expectations.

Barta: Nina, in your organization, what makes you a role model?

Bibby: I’d say I hope I’m a positive role model. First off, I’m a working mother, which is still perhaps too rare on executive committees and boards. I strive to make life work. I love my work. I’m passionate about it; it excites me. Of course, I adore my family, and I’m passionate about them and devoted to them. These are not mutually exclusive things. I’m not trying to balance them. I want to embrace them, and I want my team to see and feel it’s about making life work versus work–life balance. And I think that’s a really important message — getting away from the guilt.

I guess the other thing is customer first. I am always the one who is loudest, strongest, most vocal about “Where’s the customer in this?”

Barta: What’s the most important leadership advice you’d love to give to other people?

Bibby: If you want to get true “engagement,” you’ve got to really invest time. People value your complete attention and focus on them as individuals. It’s about letting people know that you’ll support them. You are only going to grow if you encourage risk-taking. And if you take risks, mistakes will be made. That’s just a fact. Your people need to know you’ve got their back. Mistakes are going to happen, and that’s okay.

My other advice: Let go of your ego. Don’t be afraid to show your vulnerability, to say, “I’ve been there. This is how I learnt. This is how I grew from that position.”

Barta: Nina, many thanks for your thoughts.

Marketing leadership expert and keynote speaker Thomas Barta is a former McKinsey partner and the author of the new leadership book The 12 Powers of a Marketing Leader (with Patrick Barwise).

On Shania Twain's 'Life's About to Get Good,' We Have No Choice But to Take Her Word for It

There’s something just so inherently delightful about the prospect of a brand-new Shania Twain single, from an upcoming brand-new Shania Twain album, in 2017. The last time Shania released an album, LeBron James had yet to even make his NBA debut, and after endless false-start rumors and reported delays, it was starting to look like she might not release another until well after he retired. It’s not an exaggeration to say there’s been no substitute for her barnstorming country-pop while she’s been gone, either: No star to appear in her wake has matched her effortless charm, her global ambition and her absolute sledgehammer hooks.

This is all to say that “Life’s About to Get Good,” released Thursday (June 15) as the first taste from Now, due in September, didn’t have to actually be all that good to still be a welcome presence in our lives, especially going into the warm-weather months. Luckily, it is anyway; a rollicking anthem of folk-pop perseverance with a gently throbbing pulse, a sing-along-by-song’s-end chorus and an inscrutable, almost quacking hook on the verses that sounds like it should be marking a Naked and Famous song. It’s marvelous, it’s irresistible — it’s Come on Over-worthy, which 20 years later is still pretty much the highest compliment you can give to a song of its ilk.

It is also — rather quietly — completely devastating. If you don’t know about the drama Twain has undergone in her personal life since she’s been gone, a quick summary: She separated from superproducer husband Robert “Mutt” Lange after nearly 15 years of marriage, with Lange alleged to have been having an affair with Twain’s best friend, Marie-Anne Thiébaud. Shania bounced back quickly, however, and within two years she was remarried — to Frédéric Thiébaud, former husband of Marie-Anne. It’s the kind of stuff that would’ve been deemed over-the-top even in a classic country song, and it’s unignorable context when considering the alternately heartbreaking and heart-filling lyrics of of “Life’s About to Get Good.”

Despite the song’s sunny sonic demeanor and Twain’s unwavering delivery throughout, the verses are a pretty big downer from the opening lines: “I wasn’t just broken, I was shattered/ I trusted you so much, you were all that mattered.” The second verse gets even more brutal: “The longer my tears fell, the wider the river/ It killed me that you’d give your life to be with her.” And then the absolute killer at second verse’s end, as the singer resolves to move on despite her wallowing instincts, declaring “It was time to forget you… for-e-ver.” The pause before the final word and way she extends it to emphasize all three syllables sounds like she’s still considering pulling it back at any second, and it’s spine-tingling just to hear her reach the end of it.

Shania Twain performs on the Toyota Mane Stage during day 2 of 2017 Stagecoach California's Country Music Festival at the Empire Polo Club on April 29, 2017 in Indio, Calif.

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Shania Twain Announces New Album ‘Now’: Listen to the First Single

But that’s where the chorus comes in, and thank heaven. The refrain is such an instantly familiar affirmation that it threatens to overwhelm the nuance of the preceding verses, as Twain rhapsodizes (with sturdy backing-vocal support), “Life’s about joy/ Life’s about pain/ It’s all about forgiving and the will to walk away.” She soldiers on with newfound determination: “I’m ready to be loved/ And love the way I should/ Life’s about, life’s about to get good.” It keeps the song from ever becoming a drag — Shania would never, not with a lead single — but has just enough lived-and-learned bruising to steer clear of being pat, either.

And when it comes to the chorus… she would know, wouldn’t she? It’s always dangerous to read too much real life directly into pop music, but with a story like Twain’s it’s pretty hard not to, and the music and delivery sells both the hurt and the healing with such crackling alacrity that it almost seems insulting not to assume she knows exactly from what she speaks. It’s exactly what fans would’ve asked for from a Shania comeback single, and it makes its title one of the year’s most gleeful self-fulfilling prophecies.

4 things nobody tells you about blogging

A lot of people don’t recognize and hardly understand the intricacies of blogging. Some go as far as dismissing it as some kind of hobby, rather than recognizing it as the business it is. Jumia Travel, the leading online travel agency, shares 4 things nobody tells you about blogging.

Blogging is Not Some Get Rich Quick Scheme

It’s nice to hear about blogs that charge thousands and hundreds of thousands for publicity or adverts of any kind. But what most people don’t get is that blogging is hard and it takes a lot of time and patience to be read widely enough to get noticed by firms, corporations and companies for publicity and advertisements. Most of the widely read blogs today took months, even years of consistent and tireless effort to get to where they are today and have the kind of recognition they have. Blogging is hardly a get rich quick scheme.

Blogging is Not That Easy
There is a general belief that running a blog is what you do when you either don’t have a job or don’t have anything better to do. Many believe it’s easy and requires little or no effort. That’s inaccurate. Aside having to constantly come up with interesting and engaging content for your blog (almost every hour of the day if yours is a news blog), you also have to consider the mails, questions and comments that you always have to attend to, to help drive engagement on your blog. Eventually, as your blog grows, you’ll realize it’s hardly something you can do on your own.

A Blogger is Not Only a Blogger

As a blogger, especially when starting out, in order to grow your readership you are going to feel the need to be a web designer (trying to find the right web layout that will be attractive and user friendly), a social media strategist (ensuring you use social media to get as much publicity for your blog as you can), an SEO specialist, a web marketing guru and an amateur photographer all at the same time! It’s a lot. You might not exactly be a professional in all the above mentioned areas, but you have to be able to handle them well enough not to suck at it and to help grow your blog’s readership.

The Business Side

Many people tend to underestimate or don’t understand the business side of blogging. They either start demanding for money too soon or are completely clueless about how sponsored content works around the policies of the corresponding firms, corporations and companies. A good number of people don’t realize that some brands or companies have payment terms of ninety days; meaning even after doing publicity for them, you might not get your payment until after three months. Some brands also have you working on sponsored content and you will have to send them draft upon draft till they like what they see. Since you’ve likely already signed a contract with them, you really don’t have much of choice. It is important to recognize the business side of blogging and try to understand it before going into it.

Uber Director Bonderman Resigns After Making Joke About Women at Company Meeting on Sexual Harassment

HIGHLIGHTS

  • David Bonderman has quit Uber after he made inappropriate comments
  • The comments were targeted towards women working at Uber
  • He later sent an apology along with his resignation

Billionaire businessman David Bonderman, a member of Uber’s board, resigned Tuesday after making what he called an “inappropriate” comment about women at a company-wide meeting that was aimed at addressing the harassment of women and other unprofessional conduct within the company.

The comment came as an interruption of fellow board member Arianna Huffington, who was explaining the benefits of having more female representation on Uber’s board.

Uber Director Bonderman Resigns After Making Joke About Women at Company Meeting on Sexual Harassment

“There’s a lot of data that shows when there’s one woman on the board, it’s much more likely that there will be a second woman on the board,” said Huffington, according to several people who heard the remarks.

“Actually,” Bonderman interjected, “what it shows is, it’s much likely there’ll be more talking.”

“Oh, come on, David,” Huffington said, in between awkward laughs. Addressing the crowd, she added, “Don’t worry, David will have a lot of talking to do, as well.”

In an email that was sent later to company employees, Bonderman said, “I want to apologize to my fellow board member for a disrespectful comment,” calling it “inappropriate.”

Bonderman, the 74-year-old co-founder of a private equity firm, also apologised personally to Huffington.

“David has apologized to all Uber employees for a remark that was totally inappropriate and against the new culture we are building at Uber,” Huffington said in a statement.

A few hours later, Bonderman resigned and released this statement: “Uber is examining the issues with its culture, and making significant changes and working to right what has been done wrong, which is extremely important for the future of the company. I do not want my comments to create distraction as Uber works to build a culture of which we can be proud. I need to hold myself to the same standards that we’re asking Uber to adopt.”

Huffington also issued a statement praising Bonderman for his decision, “I appreciate David doing the right thing for Uber at this time of critical cultural changes at the company.”

The incident came as Uber sought to move past a leadership crisis that has led to the departure this week of chief executive Travis Kalanick for a leave of absence and the exit of his close ally and confidant Emil Michael, a senior vice president at Uber.

Kalanick’s return date was not specified, and his responsibilities will undergo “review” to possibly shift some duties to other executives. He also faces the likelihood of reduced clout on the board, which is adding new “independent” members and creating an oversight committee to monitor efforts to improve corporate ethics and diversity.

 

“The ultimate responsibility, for where we’ve gotten and how we’ve gotten here rests on my shoulders,” Kalanick wrote in an email to employees. “There is of course much to be proud of but there is much to improve. For Uber 2.0 to succeed there is nothing more important than dedicating my time to building out the leadership team. But if we are going to work on Uber 2.0, I also need to work on Travis 2.0 to become the leader that this company needs and that you deserve.”

In describing reasons for the leave, Kalanick also cited the death of his mother and serious injury of his father in a boating accident last month, saying, “I need to take some time off of the day-to-day to grieve my mother, whom I buried on Friday, to reflect, to work on myself, and to focus on building out a world-class leadership team.”

Tuesday marked the release of recommendations from a report by former US attorney general Eric Holder Jr. on Uber’s workplace culture. Holder had been hired by Uber to address mounting criticism of the company. The full report is being withheld from the public and the bulk of the company’s 14,000 employees worldwide.

The 47 recommendations, which are sweeping and touch virtually every aspect of company management, were released at an employee meeting at the company’s San Francisco headquarters Tuesday after being accepted by the board at a marathon meeting Sunday.

Under the proposals, senior managers will undergo mandatory leadership training and Uber’s current position of head of diversity will be renamed as the “chief diversity and inclusion officer” and report directly to the chief executive or chief operating officer. Uber also will adopt the equivalent of the National Football League’s “Rooney Rule” requiring that when the company is filling a key job, at least one woman and one minority candidate be interviewed before the hire can go forward.

The report called for employee complaints to be handled using a comprehensive process and for upgrades to employee benefits, including equal family leave time for male and female workers. There also is a newly imposed ban on sexual relationships between employees at different levels of the staff hierarchy, and there are new limits on the consumption of alcohol and illegal drugs during the workday and at company events.

Uber also announced Monday that it was adding a new member, Nestle executive Wan Ling Martello, to one of several empty seats on the board. She is expected to bring financial expertise while representing another high-profile female addition to a company criticized as exemplifying Silicon Valley’s male-dominated “bro” culture.

“This is a hugely significant event,” said Michael Useem, a management professor at the Wharton School at the University of Pennsylvania, said of the corporate overhaul.

The list of recommendations reads like a textbook from “Leadership and Management 101” and, if implemented effectively, could serve as a model for other Silicon Valley companies grappling with diversity and harassment issues, Useem said.

The public mood toward Uber began to turn when Kalanick joined an advisory board for President Trump and appeared to undermine a New York taxi strike related to the president’s controversial effort to impose a travel ban, sparking the #DeleteUber movement.

A scathing blog post in February by former engineer Susan Fowler, who reported that an unwanted sexual advance by her boss was ignored by company management, triggered a wave of denunciations of the corporate culture at Uber.

Everything You Think You Know About AI Is Wrong

Robots are coming for our jobs. Terminators will soon murder us all. There is no escape. Resistance is futile.

These doom-laden predictions probably sound familiar to anyone who’s read or seen any movies lately involving artificial intelligence. Sometimes they’re invoked with genuine alarm, as in the case of Elon Musk and Stephen Hawking warning against the danger of killer automatons. Other times, the anxiety comes across as a kind of detached, ironic humor masking the true depths of our dread, as if tweeting nervous jokes about #Skynet will somehow forestall its rise.

AI raises unsettling questions about our place in the economy and society; even if by some miracle 99 percent of employers agree not to use robots to automate labor, that still leaves many hardworking people potentially in the lurch. That’s why it’s important to talk about the impact AI will have on our future now, while we have a chance to do something about it. And the questions are complicated: Whose jobs will be at stake, exactly? How do we integrate those people back into the economy?

But the more I learn about artificial intelligence, the more I’ve come to realize how little most of us – myself included – really understand about how the technology is actually developing, which in turn has a direct impact on the way we experience AI in the real world. It’s one thing to get excited about Siri and chatbots. It’s something else entirely to hear that certain fields of AI research are progressing much more rapidly than others, with implications for the way that technology will shape our culture and institutions in the years to come.

Everything You Think You Know About AI Is Wrong

Killer robots may be much further off than you think
For something like the Terminator to become reality, a whole bunch of technologies need to be sufficiently advanced at the same time. What’s really happening is that AI researchers are making much greater progress on some ideas such as natural-language processing (i.e., understanding plain English) and data analysis, and far less quickly on other branches of AI such as decision-making and deductive reasoning. Why? Because starting in the mid-to-late 2000s, scientists achieved a breakthrough in the way they thought about neural networks, or the systems that allow AI to interpret data.

(Also see:  Pentagon Says No Plans for Killer Military Robots)

Along with the explosion of raw data made possible by the Internet, this discovery allowed machine learning to take off at a near-exponential rate, whereas other types of AI research are plodding along at merely a linear pace, said Guruduth Banavar, an IBM executive who oversees the company’s research on cognitive computing and artificial intelligence.

“What is not talked about much in the media is that AI is really a portfolio of technologies,” said Banavar. “Don’t just look at one field and assume that all of the remaining portions of the AI field are moving at the same pace.”

(Also see:  Scientists Ponder How to Create AI That Won’t Destroy Us)

This doesn’t mean scientists won’t make breakthroughs in those other AI fields that eventually make killer robots possible. But it does mean, for now, that the limits of our research may be putting important constraints on our ability to create the fully sentient machines of our nightmares. This is vital, because in the meantime, the other advances we’ve made are pushing us toward creating very specific kinds of artificial intelligence that do not resemble the Terminator robot at all.

For instance, consumers are already seeing our machine learning research reflected in the sudden explosion of digital personal assistants like Siri, Alexa and Google Now – technologies that are very good at interpreting voice-based requests but aren’t capable of much more than that. These “narrow AI” have been designed with a specific purpose in mind: To help people do the things regular people do, whether it’s looking up the weather or sending a text message.

Narrow, specialized AI is also what companies like IBM have been pursuing. It includes, for example, algorithms to help radiologists pick out tumors much more accurately by “learning” all the cancer research we’ve ever done and by “seeing” millions of sample X-rays and MRIs. These robots act much more like glorified calculators – they can ingest way more data than a single person could hope to do with his or her own brain, but they still operate within the confines of a specific task like cancer diagnosis. These robots are not going to be launching nuclear missiles anytime soon. They wouldn’t know how, or why. And the more pervasive this type of AI becomes, the more we’ll understand about how best to build the next generation of robots.

So who is going to lose their job?
Partly because we’re better at designing these limited AI systems, some experts predict that high-skilled workers will adapt to the technology as a tool, while lower-skill jobs are the ones that will see the most disruption. When the Obama administration studied the issue, it found that as many as 80 percent of jobs currently paying less than $20 an hour might someday be replaced by AI.

(Also see:  Robots to Cost 5 Million Jobs by 2020)

“That’s over a long period of time, and it’s not like you’re going to lose 80 percent of jobs and not reemploy those people,” Jason Furman, a senior economic adviser to President Obama, said in an interview. “But [even] if you lose 80 percent of jobs and reemploy 90 percent or 95 percent of those people, it’s still a big jump up in the structural number not working. So I think it poses a real distributional challenge.”

Policymakers will need to come up with inventive ways to meet this looming jobs problem. But the same estimates also hint at a way out: Higher-earning jobs stand to be less negatively affected by automation. Compared to the low-wage jobs, roughly a third of those who earn between $20 and $40 an hour are expected to fall out of work due to robots, according to Furman. And only a sliver of high-paying jobs, about 5 percent, may be subject to robot replacement.

Those numbers might look very different if researchers were truly on the brink of creating sentient AI that can really do all the same things a human can. In this hypothetical scenario, even high-skilled workers might have more reason to fear. But the fact that so much of our AI research right now appears to favor narrow forms of artificial intelligence at least suggests we could be doing a lot worse.

How to live with your robot
The trick, then, is to move as many low-skilled workers as we can into higher-skilled jobs. Some of these jobs are currently held by people; other jobs have yet to be invented. So how do we prepare America’s labor force for work that doesn’t exist yet?

Part of the answer involves learning to be more resilient and flexible, according to Julia Ross, the dean of engineering and IT at the University of Maryland Baltimore County. We should be nurturing our children to interact with people from different backgrounds and to grapple with open-ended questions, teaching them how to be creative and how to think critically – and doing it all earlier and better.

“How do we get people to understand and embrace that concept?” said Ross at a recent event hosted by The Washington Post. “That you need to be a lifelong learner, that the things that you’re learning today may be obsolete in 5 years – and that’s okay? You can get comfortable with that idea if you’re comfortable with your capacity to learn. And that’s something we have to figure out how to instill in every student today.”

Soon, teachers themselves may come to rely on narrow AI that can help students get the most out of their educational experiences, guiding their progress in the way that’s best for them and most efficient for the institution. We’re already seeing evidence of this in places like Georgia Tech, where a professor recently revealed – much to the surprise of his students – that one of his teaching assistants was a chatbot he had built himself.

Making artificial intelligence easy for regular people to use and love depends on a field of research called human-computer interaction, or HCI. And for Ben Shneiderman, a computer science professor at the University of Maryland, HCI is all about remembering the things that make people human.

This means giving people some very concrete ways to interact with their AI. Large, high-definition touchscreens help create the impression that the human is in control, for example. And designers should emphasize choice and context over a single “correct” answer for every task. If these principles sound familiar, that’s because many of them are already baked into PCs, smartphones and tablets.

“People want to feel independent and like they can act in the world,” said Shneiderman, author of “Designing the User Interface: Strategies for Effective Human-Computer Interaction.” “The question is not ‘Is AI good or bad?’ but ‘Is the future filled with tools designed to supplement and empower people?'”

That’s not to say narrow AI is the only kind researchers are working on; indeed, academics have long been involved in a debate about the merits of narrow AI versus general artificial intelligence. But the point is that there’s nothing predetermined about general AI when so much of our current research efforts are being poured into very specific branches of the field – buckets of knowledge that do more to facilitate the use of AI as a friendly helper rather than as the object of our undoing.

Competition Commission gets facts wrong about drug companies

The Competition Commission is investigating Pfizer for charging excessive prices for a lung cancer drug in SA. On Tuesday‚ the commission stated it was investigating three pharmaceutical companies for “excessive prices” for cancer drugs.

But the commission made several mistakes‚ including getting the name of Pfizer’s drug wrong.

The commission did not note that all drug prices are approved and signed off by the medicines pricing committee within the Department of Health. The commission also said it had information that gives “rise to reasonable suspicion that Pfizer has and continues to engage in excessive pricing conduct in provision of crizotinib”. Pfizer confirmed that crizotinib is not registered in SA.

Picture: RUSSELL ROBERTS

Picture: RUSSELL ROBERTS

An unregistered drug cannot be sold in the country and will not have a price. The commission complained about its R152‚000 price saying it was in possession of information that this treatment was “unaffordable”. Pfizer denied this price.

Wits oncology professor Paul Ruff explained that a handful of patients accessed this drug using a special Section 21 permit to buy it overseas and import it, because it is not available here. Medicines only get a set price after they are registered in the country‚ he said‚ so crizotinib has no local price or supplier.

The European Commission is investigating Aspen for a 1‚500% increase for a 50-year-old leukaemia drug in the UK and a 4‚000% increase in Spain. On Tuesday, the commission said it would also investigate Aspen saying it was in “possession of information that Aspen had engaged in the same conduct locally”.

However‚ it failed again to note all price increases for all drugs are set annually by the department of health.

Aspen confirmed that the drugs under investigation have increased, on average, 6.25% since 2009 when Aspen bought the drug portfolio from GSK. The commission said Aspen’s drug prices may be “excessive”. The drug used for leukaemia‚ Leukeran‚ costs between R2‚800 and R4‚800 a month per patient.

Myleran‚ used for a blood cancer‚ costs an average of R2‚086 a month but the dose and price will drop after a few months if the cancer goes into remission‚ said Aspen’s spokesman Stavros Nicolaou.

The commission also took issue with Roche’s cancer drug which costs R500‚000 in the private sector for a year’s course. The commission said people couldn’t access the drugs and charged Roche with “exclusionary conduct”. But this drug is to be provided to state patients at one of the lowest prices in the world within months‚ two sources close to the Roche and department of health negotiations said.

Roche said recently it believed a deal with the department on supplying this drug to state patients was “about to be finalised” saying negotiations were “advanced”.

Two sources also confirmed that the commission didn’t even call the department of health to get its views on the matter or check the commission’s facts. All three pharmaceutical companies learned of the investigations through the media statement.

The commission also charged Roche with “price discrimination” because it has a state price and a private-sector price for cancer drug Herceptin. However‚ the Medicines and Related Substances Control Act allows the prices for medicines for state patients and private patients to differ and‚ in fact‚ a high private price is used to subsidise very low state prices for nearly all medicines in the country‚ two industry sources confirmed.

The commission did not respond to requests for clarification.

In a Sens statement on Tuesday, Aspen said all the drugs under investigation for excessive pricing sell for less than R3m a year combined.

 

If You Care About Small Business, Keep the Home Mortgage Interest Deduction

President Obama’s budget reform commission proposed eliminating the home mortgage interest deduction. This idea has analysts scurrying to estimate the proposal’s economic impact.

Unfortunately, our lawmakers often forget the law of unintended consequences when offering up changes to policies. In this case, our elected officials need to consider how making mortgage interest non-tax deductable will impact small business credit markets.

While policy makers might not see the connection, the mortgage interest deduction is linked to small business credit. That’s because the deduction helps to prop up housing prices. With 25 percent of those running small companies using home equity to fund their businesses, a drop in housing prices would mean that small business loans and lines of credit would be harder to come by.

Mortgage Interest Deduction

Getting rid of the mortgage interest tax deduction will have a sizeable effect on small business credit markets. Analysis by the National Association of Realtors indicates that home prices would drop 15 percent in the absence of this deduction. A study I conducted with Mark Schweitzer of the Federal Reserve Bank of Cleveland shows that each one percent decline in housing prices lowers the value of home equity loans (HELOCS) by 1.33 percent. Combined with the estimate of the home price decline from no longer being able to deduct mortgage interest from your taxes, this shift would mean a 20 percent drop in the value of HELOCS.

That’s a lot less small business credit. A report by the New York Fed put the dollar value of outstanding HELOCs at $700 billion in the beginning of 2010. Thus, we should expect to see a $140 billion decline in outstanding HELOCs if the home mortgage interest deduction were eliminated.

A sizeable chunk of this decline would be borne by small business owners. Analysis of the Federal Reserve’s consumer finance survey shows that business owners accounted for one quarter of home equity loans in 2007, the latest year for which data are available. Thus, dropping the deductability of mortgage interest would shave $35 billion from small business owners’ home equity loans.

While we don’t know for sure how much of small business owners’ home equity borrowing is financing business operations, the amount is sizeable. Analysis of Fed consumer finance survey data indicates that households with businesses had median home equity debt that was 50 percent more than that of households without businesses in 2007. If the difference in debt levels between the two types of households represents the portion of home equity borrowing the business owners are using to finance their companies, then one third of the small business owning households’ home equity borrowing is being used to support business operations.

The reduction in housing prices estimated to come from dropping the deductability of mortgage interest would lead to a projected $11.7 billion decline in home equity borrowing by small business owners for business purposes. That’s about 16 percent of the $71.8 billion in loan originations made to small companies (businesses with less than $1 million in annual sales) in 2009, the latest year for which data are available.

And that’s just the effect of eliminating the mortgage interest deduction on small business owners use of home equity loans to finance their companies. Any effect of the eliminated deduction on other types of loans used to tap home equity for business purposes would be on top of this.

Our elected officials need to consider the law of unintended consequences when they debate eliminating the mortgage interest deduction. Doing so will cause a contraction in the small business credit market that could lead small businesses to cut back on capital investment and hiring.

What you need to know about Apple’s new podcast analytics

The world’s biggest platform for podcasts is going to shed new light on the state of advertising in the space. On Friday, Apple announced it would soon begin offering podcast creators some rudimentary audience analytics.

Here is what you need to know about Apple’s announcement.

The state of podcasting:
• Podcasting started as an Apple-dominated medium, and it remains one. Nearly 80 percent of all podcast consumption happened on Apple devices in 2015, according to research by Clammr, though Google Play and Amazon’s Echo devices, among others, are eating away at that market share.

• Apple remains a dominant hosting platform for podcasts, hosting about 70 percent of all available podcasts, according to Adopter Media. Because of this, the analytics features teased last week won’t affect everybody in the industry, but it will affect the lion’s share.

• Measurement has been a persistent problem for podcasting as a medium. Podtrac, which compiles monthly statistics on show streams and downloads for creators including “This American Life” and HowStuffWorks, is limited to data creators offer voluntarily. This means some prominent podcast publishers, including The Ringer, aren’t counted.

• Podcasting has steadily marched into the mainstream. By the end of this year, more than a third of all Americans will listen to podcasts on a monthly basis, up from 20 percent in 2016, according to forecasts from Bridge Ratings Media Research.

• Because podcasts are a niche product and because of measurement limitations, podcasting remains a small market, about $200 million in the U.S. It is projected to grow to nearly $500 million by 2020, according to Bridge Ratings.

• The lack of audience data has also profoundly influenced the kind of advertising that supports podcasting. Ninety percent of all podcast ads have a direct-response component, according to Adopter Media.

• These analytics are likely being made available because more people are listening to podcasts immediately (77 percent), rather than downloading the files for later listening (27 percent), per Edison Research.

What it means:
While many podcast creators, including Recode cofounder Peter Kafka and Gimlet president Matt Lieber, see Apple’s announcement as a big deal, it still doesn’t put podcasting on the same plane as most other digital media for advertisers.

“There still won’t be good targeting data available,” said Karl Rosander, the founder and CEO of podcast platform Acast. “To really help publishers, Apple needs to share (i.e., get the data through an application programming interface for all verified shows) data with the hosting provider, not only through the publisher’s platform.”

The data that Apple will provide creators will be anonymized, which means that Apple-hosted shows still won’t be able to target people with the kind of audience data that ad buyers expect when using Facebook, Twitter or Google.

But as creators and advertisers accumulate more data about listens, it could wind up having profound implications for how shows are shaped. “Think of all the new jobs for audience dev folks in audio,” Hot Pod creator Nicholas Quah tweeted on Saturday.

As for whether it unlocks the brand advertising dollars that podcast producers have coveted for years, that remains to be seen.  “We are probably a year out from knowing what sort of meaningful audience data this will yield,” said Glenn Rubenstein, founder of Adopter Media. “It remains to be seen if this listener data will sway any of the larger advertiser holdouts who have supposedly been ‘demanding’ it.”