This is the Latest Edition of the Urbach Letter. Check it out.

Getting Paper Out of Your Life
Paper Stack Misery Are you ready to start living a paperless life? Even if you don't go all the way, it's now quite easy to eliminate 90% of the paper that's clogging up your home and office and life. Not only will you regain tons of storage space, you'll also become much better organized in the process. This short article will show you what one person (me) is doing to eliminate unnecessary paper.

It's in Your Head
The major obstacle to going paperless is mental. After a lifetime of conditioning, it's really hard to let go of the paper security blanket. Indeed, there's something very reassuring about getting that cancelled bank check or portfolio statement in the mail. It's "real" and permanent and "official." There's also a feeling (although actually an illusion) of security knowing that your tax returns, old invoices, receipts, and other documents reside in a file cabinet or box somewhere.

You have to let go of this! It's holding you back from making some very positive changes in your lifestyle and workstyle. As an example, remember when you booked an airline reservation and got "real" paper tickets? It wasn't that long ago. When e-ticketing started, it felt really strange to head out to the airport with nothing in your pocket. Nowadays, nobody bothers with paper tickets anymore. It's easier to show your ID and get a boarding pass at the counter or kiosk. I can assure you that it's very much the same when you change over from printed bank and brokerage statements, bills, and receipts. You'll feel like something's missing at first, then quickly enjoy the convenience.

Why Paperless is Better
Let me count the ways... (1) reclaimed storage space, (2) less burden on the environment, (3) cost savings, (4) increased ability to actually find what you're looking for, and (5) better safety. Whoa, better safety? What could be safer than the "original" paper copies of everything? Digital storage, that's what. The problem with an original is that, by definition, there's only one of it. However, once that document has been scanned, we can create multiple images that can be safely and securely backed-up in a variety of ways. Moreover, in this digital age, scanned receipts and almost every kind of document are just as officially accepted as the paper versions.

Bankers BoxesReclaiming Space
Depending upon your level of pack ratty-ness (mine is extremely high), and your age, you may have been accumulating paper for many decades. Before I saw the light, I kept bankers boxes in my basement filled with twenty-year old phone and water bills. That's just one silly example. Multiply it by every other piece of paper that came my way over the years and I ended up with scores of boxes. Madness! Last year I decided it was finally time to reclaim all that storage space. It was a bit painful and took a full weekend but I was able to toss 90% of the boxes. There is simply no need to refer to a Cablevision bill from 1992 ever again. In the same way, I was able to go through dozens of office file cabinets and purge the non-essential files. Try it. You'll be amazed by how much stuff you're now keeping that you totally forgot about and will never ever need to look at again. Storage space is always in short supply and it's a wonderful feeling to declutter your life.

Paper is Not Green
Paper is an ecological nightmare. Producing virgin paper involves cutting down trees, and that's just the beginning. Processing (even recycling) paper requires a huge quantity of fresh water and employs toxic chemicals, especially chlorine to bleach out the natural brown hue. That SINGLE sheet of bright white copy paper upon which you just unnecessarily printed your last email used 13 ounces of fresh water to produce. Americans dispose of more than 72 million TONS of paper every year. That's 144 BILLION pounds of waste. If you stacked all the office and writing paper disposed of in the U.S. in just one year, you could build a wall of paper 12 feet high stretching all the way from Manhattan to Los Angeles. No wonder this planet is in trouble.

Cost Savings
Sure you can go buy a case (5,000) sheets of office copy paper for under $40, which is less than a penny a page. That's cheap. But printing some text on that page will cost five to ten times as much using a home inkjet or color laser printer (considering the high cost of replacement cartridges). Big black and white office printers and copiers use cheaper supplies but there's still a significant cost per print. And that's just on the production end. The greater costs relate to organizing and storing all that printed material. High end office space in major metro areas is leasing for $50 per square foot per year and up. Considering that a single lateral file cabinet can occupy 8 square feet of floor space, that's $400/year right there. But there's an even larger cost if we consider the human factors. According to a white paper published by PriceWaterhouseCoopers, the average worker spends 40% of his or her time managing non-essential documents. International Data Corporation (IDC) estimates that information workers spend 20% of their day looking for information in hardcopy documents and 50% of the time, can't find what they need, at a cost of $18,000 each year per employee in lost productivity.

It Gets Worse
According to a Compulink Management Center report, the average office:

* Makes 19 copies of each document.
* Spends $20 on labor to file each document.
* Loses 1 out of 20 office documents.
* Spends $120 searching for every misfiled document.
* Spends $250 recreating each lost document.
* Spends $25,000 to fill a four-drawer file cabinet and $2,000 annually to maintain it.

On the other hand, as of this writing, a 500 gigabyte plug-and-play external hard drive costs less than $150 and can store upwards of 2 million scanned pages. For a bit more money you can buy a "RAID" drive enclosure with two redundant drives inside for extra immediate data security (you'll still need to back up however).

Climbing Paper Stack

If You Can't Find It, What Good is Having It?
That important document you're seeking may reside in a folder or pile somewhere. It physically exists... but if you can't locate it, that's actually worse than if the document was never printed. Searching for an errant document is a huge waste of a knowledge worker's time. That's why I'm a big, big fan of electronic document storage. We're so used to Googling for everything on the Internet, "search" has become second nature to us. Why shouldn't the same rules apply to finding all our own "stuff?" Modern desktop search tools make this incredibly easy.

Safety in Numbers
Ask anyone who's suffered through a fire or flood: the "security" of storing paper documents can be a tragic illusion. Sometimes that loss is unrecoverable. FEMA says 40% of small businesses never reopen after a disaster, often because critical business information has been irretrievably lost. However, when you "go digital" and incorporate an intelligent backup process, full recovery will always be possible. For details, I refer you back to my December 2007 article: Tomorrow is Going to be a Really Bad Day.

How to Get Started
If you work in a big office, your company may already have the technology in place to archive your documents for you. New "Multi-Function Copiers" have scanning features built-in. It's then a question of learning how to use these scan and store abilities. There are so many variables in the big-company scenario, I can't be of much help there. Therefore, what follows is more appropriate for the home or home office or small office setting.

A "Must Buy" Item
First thing you do is go buy yourself a Fujitsu ScanSnap S510 scanner.

ScanSnap

Trust me, even if you have a "regular" flatbed scanner for photos, you need this one too. It's not super-cheap at around $420 but worth every penny. Plus it includes a full copy of Adobe Acrobat Standard (which sells for $265 separately), an essential bit of software for the 21st Century office.

The ScanSnap will become the hub of your paperless wheel, rapidly converting all the random paper clogging up your life into neat electronic files. It's fast, at 18 duplex pages a minute (duplex means it scans both sides of the paper at the same time), and has a 50-page document feeder. Just dump your stack of papers in the hopper, push one button, and walk away. It'll scan in color and create a tidy word-searchable PDF for you. Nice. Included software (ScanSnap Organizer or Rack2Filer) will help you get your files organized too. The S510 will scan everything from business cards up to legal-size docs, even oversize "tabloid" documents when placed in a special carrier. There are other, similar scanners on the market but I can personally recommend the Fujitsu. Don't hesitate. Just buy the darn thing. You're not going to be successful at ridding your life of unnecessary paper without it.

Creating Less Paper in the First Place
The best way to have less paper in your life is to create less of it. (Duh.) It's time to break the habit of hitting the print button so dang often. Continually ask yourself, "Is it really necessary to print this?" You'll find, more often than not, the answer is "Not really." First, use the "Print Preview" option to see what the doc is going to look like. Next, if you need to archive something or send a copy to someone else for review, Portable Document Format (PDF) has become the de facto standard. Personally, I don't want people sending me printed stuff anymore. It means I have to scan it. I'd MUCH rather receive a PDF via email, and pop it into my virtual file cabinet. Granted, sometimes there's no substitute for printing on real paper. As an example, I laser print a draft this letter before it's mailed out to you, so I can better proofread and annotate it. Likewise, certain business correspondence must be done on paper, but I've been able to reduce at least 90% of it in the past year.

Office 2007 LogoIt's absurdly easy to create a PDF. If you're using Microsoft Office 2007, get this free Add-In: Microsoft Save as PDF or XPS. For all other programs, Adobe Acrobat (not the free Acrobat Reader, but the paid Adobe Acrobat Standard or Pro versions), or a number of other PDF creation tools install as a "printer" on your computer. Creating a PDF is as simple as hitting the print button and giving the file a name. Boom. It's done.

An Empty Mailbox
For years, your bank, cable company, insurance company, and every other company that sends you bills or statements has been BEGGING you to switch to email delivery. It's high time to take them up on their offer. Not only will you save trees, you'll also streamline your bill paying workflow, particularly if you couple e-statements with direct-debit of your bank account. You'll also reduce the chance for identity theft as an empty mailbox provides no documents to physically steal. For many great how-to tips on removing administriva from your life, read "The 4-Hour Workweek" by Timothy Ferriss. Highly recommended.

Catalog Clutter
I enjoy leafing through a good catalog as much as the next guy, but things have gotten out of hand. Some days a dozen catalogs arrive in the family mailbox. I know that many companies base their business model on catalog sales but enough is enough. I've decided to eliminate about 95% of the catalogs I receive. A new, free service called Catalog Choice makes it very easy to opt-out of catalog mailing lists. Also, the DMA Mail Preference Service helps remove your name from those infernal "pre-screened" credit card offers and other junk mail lists.

A Pox on Faxes
It's no secret that I abhor faxes. I pulled the plug on our fax machine years ago. When people say, "Can I fax it to you?" My response is "No you can't!" Most of the time, whatever it is can be emailed instead. However, I do maintain an eFax account for those Neanderthals that still insist on faxing something (usually a doctor's office). eFax is somewhat of a ripoff at $17/month but still better/cheaper than having a dedicated inbound phone line. In case you don't know, an eFax line is a regular phone number that converts the inbound faxes into a PDF and mails it to you. By the way, your Fujitsu ScanSnap functions nicely for outbound "faxing" (where your PDF is emailed to their system, converted to a fax, and sent on to its primitive destination).

Where to Keep it All?
All those PDFs need to go someplace, but where? You'll want to make an intelligent choice about this. You can store the files on your internal "My Documents" hard drive, an external drive, or networked drive. The key thing is to be 100% sure you have a good backup system in place. Check my December 2007 article (Tip #3) for help here. As a reminder, the Internet backup service Mozy (www.mozy.com) can be a great option for your home or business.

Getting Organized
The working world is divided into two types of people: those who carefully categorize everything, label everything, organize everything... and those who just dump the whole lot into one big heap and deal with it later. Fortunately, the paperless office can accommodate both work styles. While I think there's value in the former approach of creating a virtual file cabinet on the computer, with a careful hierarchy of nested folders and well-named files, it is possible to dump stuff in and still find it later.

That's where a good desktop search program comes in. Many people like the free (of course) Google Desktop Search but my favorite is "X1 Professional Desktop Search Client." Also free, it provides a more structured way of searching than does Google, and is extremely good at searching Outlook emails and contacts. I use it CONSTANTLY.

I'm sure there are other good desktop keyword search programs out there, and if you already have your favorite, stick with it. Anything is better than the lame search built into Windows XP. Mac OS and Vista are miles ahead in this respect.

There's More
As with many Urbach Letter articles, I can only scratch the surface of this topic. While I've provided some "get started tips" that'll be very helpful in the small office environment, enterprise solutions are much more complex. As a side note, after publishing an article like this one, I invariably get an email from an expert in the field telling me I didn't address this or that arcane subtopic... Nonetheless, I've hopefully pointed you in the right direction and provided some motivation to get unnecessary paper out of your life. And if I save a couple of trees as a result, I'll feel very good about spending a rainy Sunday afternoon writing this article for you.



Shameless Self-Promotion

About The Urbach Letter
With the exception of this special self-serving area, The Urbach Letter doesn't relate much to what I do for a living. It's mainly a vehicle for me to keep in touch with my business colleagues and friends. I strive to create something original each month that you'll enjoy and benefit from, not to promote my business. Even though several thousand people now receive my letter, I still write it with the same "voice" it had when the Urbach Letter only went out to a few dozen of my closest contacts. Therefore, occasionally I'll (inadvertently) offend somebody, but there isn't any editorial oversight to this publication. I just write it and send it out. So... if something in here rubs you the wrong way, please know there wasn't any evil intent on my part.

About the Optran Group
The Optran Group (www.optran.com) is a business transaction advisory firm serving owners of mid-market companies. Our clients are entrepreneurs who've built successful companies and now wish to cash out and/or substantially improve their personal financial security. Optran specializes in sell-side investment banking, ESOP's, and other liquidity transactions.

About Altegis
Altegis is a new company with a specialized program for very large professional partnerships and corporations. Our proprietary approach is directed to "rolling succession" issues, typically when senior partners and executives exit and others move up to fill their positions. My partners and I have invented a new type of "financial technology" and developed an innovative retirement benefit program for highly-compensated key employees and partners at major organizations.


Administrivia

That's all for now. More next month. In the meantime, please drop me a note with feedback, suggestions, or attaboys. I'm very reachable at victor@urbachletter.com.. I hope you liked this issue of The Urbach Letter. If you didn't, you can change your subscriber preference).

Read More from Victor Urbach at www.UrbachLetter.com

All About The Annual Report

I found this cool article online about annual reports. Thought it might be interesting to some of you.
- Tom

The Annual Report: The annual report is a document released by companies at the end of their fiscal year which includes almost everything an investor needs to know about the business. It generally contains pictures of facilities, branch offices, employees, and products [all of which are completely unimportant to making your investing decision.] They are normally followed by a letter from the CEO and other senior management which discusses the past as well as upcoming year. Tucked away in the back of most annual reports is a collection of financial documents. Most of the time you can go onto a company's website and find the Investor Relations link. From there, you should be able to either download the annual report in PDF form or find information on how to contact shareholder services and request a copy in the mail.

The 10K: This is a document filed with the SEC which contains a detailed explanation of a business. It is reported annually and contains the same financial statements the annual report does, in a more detailed form. The benefit of the 10K is that it allows you to find out additional information such as the amount of stock options awarded to executives at the company, as well as a more in-depth discussion of the nature of the business and marketplace. Sometimes you will find that a company has no financial statements in the 10K, but instead has written, "incorporated herein by reference" This means that the financial statements can be found elsewhere [such as in the annual report or another publication]. Even if this is the case, it is still worth it to get a copy. You can find this by contacting the company, visiting their website, or going to FreeEdgar (freeedgar.com) or SEC.gov.

The 10q: The is similar to the 10k, but is filed quarterly [four times a year - normally the end of January, June, September, and December]. If the company is planning on changing its dividend policy, or something equally as important, they may bury it in the 10q. These documents are critical and can be obtained in the same way as the annual report and 10k.

You will want to get a copy of all three documents for the past year or two from the company you are interested in investing in. Most of them can be found at http://finance.yahoo.com - type in the ticker symbol of the company you want to research and then click the "financials" link. This will bring up a copy of the latest quarterly financial statements. (For all good purposes, I would recommend you first analyze the annual balance sheet, which can be found by clicking "annual data" in the upper right hand corner.) Another excellent source of financial statements is The Street. As always, it is best to get the information directly from the company.

What is a Balance Sheet?

Pretend that you are going to apply for a loan to put a swimming pool into your backyard. You go to the bank asking to borrow money, and the banker insists that you give him a list of your current finances. After going home and looking over your statements, you pull out a blank sheet of paper and write down everything you have that is of value [your checking and savings account, mutual funds, house, and cars]. Then, at the bottom of the sheet your write down all of your debt [the mortgage, car payments, and your student loan]. You subtract everything you owe by all the stuff you have and come up with your net worth.

Congratulations, you just created a balance sheet.

Just as the bank asked you to put together a balance sheet to evaluate your credit-worthiness, the government requires companies to put them together several times a year for their shareholders. This allows current and potential investors to get a snapshot of a company's finances. Among other things, the balance sheet will show you the value of the stuff the company owns [right down to the telephones sitting on the desk of their employees], the amount of debt, how much inventory is in the corporate warehouse, and how much money the business has to work with in the short term. It is generally the first report you want to look at when valuing a company.

Before you can analyze a balance sheet, you have to know how it is set-up.

Assets, Liabilities and Shareholder Equity

Every balance sheet is divided into three main parts - assets, liabilities, and shareholder equity.

* Assets are anything that have value. Your house, car, checking account, and the antique china set your grandma gave you are all assets. Companies figure up the dollar value of everything they own and put it under the asset side of the balance sheet.

* Liabilities are the opposite of assets. They are anything that costs a company money. Liabilities include monthly rent payments, utility bills, the mortgage on the building, corporate credit card debt, and any bonds the company has issued.

* Shareholder equity is the difference between assets and liability; it tells you the "book value", or what is left for the stockholders after all the debt has been paid.

Every balance sheet must "balance". The total value of all assets must be equal to the combined value of the all liabilities and shareholder equity (i.e., if a lemonade stand had $10 in assets and $3 in liabilities, the shareholder equity would be $7. The assets are $10, the liabilities + shareholder equity = $10 [$3 + $7]).

Current Assets

The first thing listed under the asset column on the balance sheet is something called "current assets". This is where companies list all of the stuff that can be converted into cash in a short period of time [usually a year or less]. Because these assets are easily turned into cash, they are sometimes referred to as "liquid". They normally consist of:

Cash and Cash Equivalents

Cash and Cash Equivalents is the amount of money the company has in bank accounts, savings bonds, certificates of deposit, and money market funds. It tells you how much money is available to the business immediately. How much should a company keep on the balance sheet? Generally speaking, the more cash on hand the better. Not only does a decent cash hoard give management the ability to pay dividends and repurchase shares, but it can provide extra wiggle-room when times get bad.

There are some cases where cash on the balance sheet isn't necessarily a good thing. If a company is not able to generate enough profits internally, they may turn to a bank and borrow money. The money sitting on the balance sheet as cash may actually be borrowed money. To find out, you are going to have to look at the amount of debt a company has (we will be discussing this later on in the lesson). The moral: You probably won't be able to tell if a company is weak based on cash alone; the amount of debt is far more important.

Short Term Investments

These are investments that the company plans to sell shortly or can be sold to provide cash. Short term investments aren't as readily available as money in a checking account, but they provide added cushion if some immediate need were to arise. Short Term Investments become important when a company has so much cash sitting around that it has no qualms about tying some of it up in slightly longer-term investment vehicles (such as bonds which have maturities of less than one year). This allows the business to earn a slightly higher interest rate than if they stuck the cash in a corporate savings account.

Perhaps the most legendary cash hoard in the business world right now is Microsoft's - the company has $5.25 billion in cash and $32.973 billion in short term investments.

Receivables

Also sometimes known as "Account Receivables", this is money that is owed to a company by its customers.

Here's how it works: Let's say Wal-Mart wants to order a new DVD which is being released by Warner Brothers. Wal-Mart orders 500,000 copies for its stores. Warner Brothers receives the order, and within a week, ships the DVDs to one of Wal-Mart's warehouses. Included in the shipment is a bill (let's say WB charged Wal-Mart $5 per DVD for half a million copies - that's $2.5 million). Warner Brothers has already sent the movies to Wal-Mart, even though Wal-Mart hasn't paid a penny. In essence, Wal-Mart is buying on credit and promising to pay WB's the $2.5 million.

The $2.5 million would go on Warner Brother's balance sheet as receivables.

Generally a company that sells a product on credit sets a term. The term is the number of days customers must pay their bill before they are charged a late fee or turned over to a collection agency (most terms are, 30, 60 or 90 days). If Warner Brothers sold the DVDs to Wal-Mart on a 30 day term, Wal-Mart must pay its bill during that time.

While accounts receivable are good, they can bring serious problems to a business if they aren't handled properly. What if Wal-Mart went bankrupt or simply didn't pay Warner Brothers? WB would then be forced to write down its receivables on the balance sheet by $2.5 million. This is what is called a delinquent account. Normally, companies build up something called a reserve to prepare for situations such as this. Reserves are set amounts of money that are taken out of the profits each year and put into an account specifically designed to act as a buffer against possible loses the company may incur. (Reserves are touched on in Part 29). When customers don't pay their bills, companies can take money out of the reserve they had built up to pay back suppliers.

Receivable Turns

Common sense tells you the faster a company collects its receivables, the better. The sooner customers pay their bills, the sooner a company can put the cash in the bank, pay down debt, or start making new products. There is also a smaller chance of losing money to delinquent accounts. Fortunately, there is a way to calculate the number of days it takes for a business to collect its receivables. The formula looks like this:

Credit Sales (found on the income statement - not the balance sheet)
-------------------------(divided by)---------------------------
Average Receivables

Let's look at an example.
H.F. Beverages Balance Sheet (Excerpt)
2000 1999
Receivables $1,183,363 $1,178,423

Income Statement (Excerpt)
Credit Sales $15,608,300

H.F. Beverages* is a major manufacturer of soft drinks and juice beverages. It sells to supermarkets and convenience stores across the country on a 30 day term. To see if customers are paying on time, we need to look for the income statement. It is normally found within a page or two of the balance sheet in the annual report or 10K. With the income statement in front of you, look for an item called "Credit Sales" (if you can't find it, there is an item called "Total Sales" which is acceptable but not as accurate).

In 2000, H.F. Beverages reported credit sales of $15,608,300. If we look at the excerpt from its balance sheet (above), we will see that in 2000, it had $1,183,363 in receivables and in 1999, $1,178,423. We need to find out the average amount of receivables H.F. had in 2000, so we would take $1,1873,363 + $1,178,423 and divide it by 2. The answer is $1,180,893.

Plug the two numbers into the formula.

Credit Sales = $15,608,300
------------(divided by)--------------
Average Receivables = $1,180,893

The answer, called "Receivable Turns" by financial analysts, is 13.2173. This means that H.F. Beverages collects its accounts receivable 13.2173 times per year. Once you calculate this number, finding out the number of days it takes for customers to pay their bills is simple. Since there are 365 days in a year and the company gets 13.2173 turns per year, take 365 ÷ 13.2173. The answer is the number of days it takes the average customer to pay (in H.F.'s case, we come up with 27.61).

This means the company is doing a good job managing its accounts receivable because customers aren't exceeding the 30 day policy. Had the answer been greater than 30, you would have been wise to try to find out why there were so many late payments, which could be a sign of trouble. (Keep in mind you will need to read through the company's reports to find out what its collection deadline is. Not all companies require their customers to pay within 30 days).

*A Fictional Company for illustration only

From Joshua Kennon,
Your Guide to Investing for Beginners.

An All Too Convenient Truth: Many Marketers Pollute the Web

Earth Day is around the corner and a lot of marketers are thinking about the sustainability of our planet. Some are recognizing that doing good also helps business. Edelman's Good Purpose study found that 73% of consumers are prepared to pay more for environmentally friendly products.

However, it's not just the environment that is endangered by toxins. The atmosphere we breathe online is too is being threatened by pollution - from marketers. The all too convenient truth is that it's very easy for advertisers to pollute the web with their garbage. Most often, that's not their intent. But it's the end result and it's reaching an epidemic proportion. Now business needs to take the same approach online as it has done offline through corporate social responsibility (Jason Calacanis echoed a similar theme recently.)

First let's look at the the obvious ways marketers poison the web. These all intend to game the system ...

* Spam: 94% of all email is spam (Postini)

* Splogs: 53% of all blog pings is spam, including 64% of those in English (UMBC)

* Click Fraud: Increased last year by 15% (Click Forensis)

Still, there's more. In subtle ways marketers are contaminating the Internet without even knowing it by spewing millions of meaningless messages across thousands of sites. This may be contributing to the slow down. They're not adding value to your experience or working to help you meet your goals in a very meaningful way.

Consider these popular techniques ...

* Banner Ads: A lot of money is going here but click-through rates remain abysmal and their overall branding value is being questioned. Many of them just litter the web and get in the way of what you want to do. Eye-tracking studies in the past have revealed "banner blindness."

* Social Network Advertising: eMarketer predicts advertising on social networks will reach $2.2 billion this year. However, traditional display approaches to date have not performed. As Ian Schaffer from from Deep Focus noted, marketers need to dig in and figure out how to make the experience better. This means what does work is creating authentic content, widgets/applications and more that people pull because they add value to the community. (Note: MySpace, a major social network, is an Edelman client.)

* Social Media Optimization: This needs to be watched like a hawk. As I have said before, if you participate and add value you are rewarded with Google Juice - and so much more. If you just set up sites and spam social nets to get links, then I am sorry, you're bad.

Despite all the money that's flowing online, most marketers completely miss the boat on what the web really can do for them. As I have talked about before, the Internet isn't just a communications medium. It works best when it's used as a platform for open collaboration. This means taking a PR-centric approach.

This means companies and consumers need to partner toward shared outcomes. This can be as simple as "we want to be entertained" to "we want to find the best world-changing idea." The latter is what American Express will unleash again later this year with its Members Project.

The web is facing it's own global warming crisis as marketers continue to pollute it. Consumers are voting with their clicks and eyeballs by engaging with authentic content that adds value, while ignoring the rest. That's good news that shows maybe we'll solve this crisis, even as business continues to tackle the larger issues that impact our planet.

A Billion Dollars in Internet Advertising is Wasted

Advertisers continue to plow a ton of money into Internet advertising, even in the face of an recessionary environment. At the Forbes Online Brand Summit this weekend, Citi projected 20% year over year growth. eMarketer is calling for a 23% increase.

Search remains the big daddy. According to eMakreter it will account for 40% of the $25 billion that marketers will spend online this year. Right behind it at 21% (or $5.1 billion) is display advertising. However, according to a new study, a giant percentage of these ads are wasted because they fall below "the fold"

The Eyetools/MarketingSherpa eye tracking study, released last week, found that about 60% of web site visitors see the ads that are 100% visible and "above the fold." Below the fold - e.g. the part of a web page where users are required to scroll - the situation is grim. These ads are visible to roughly 70% of web users, but only about 25% actually see those ads.

Let's do some back of the envelope math here. Assuming that all of the above data is accurate and that 50% of display ad impressions fall below the fold (this is a conservative guess - it might be significantly higher) that means that nearly a billion dollars in online advertising - $937M based on these calculations - is below the fold and ignored by 75% of web users.

The situation is actually be a lot worse when you factor in trust. A Nielsen study released late last year found that only 26% of consumers trust banner ads. So even if your display ads are visible and seen, they're not trusted by the vast majority of the public. That aint good news.

The conventional wisdom is that online display ads are good for branding. Well, this appears to be a myth for lots of impressions. Now factor in that they also continue to be a disaster when it comes to direct response.

This is a train wreck waiting to happen. Scoble called it back in 2006. And it further illustrates that marketers are polluting the web.

What this means - especially in this climate - is that at least $1B of what's spent on online advertising is completely wasted and is unsustainable. Advertisers are going to eventually wake up and recognize that unless it's a highly visible placement, banners get you largely nowhere.

Reported by Steve Rubel

Who Says All eNewsletters Are Created Equal?

All of us get and receive mountains of email everyday. In this fog of constant inbox stuff, I actually have found an eNewsletter I look forward to getting. It comes from a Gentleman named Victor Urbach. He is a fellow I met at a meeting of the IMA (Institute of Management Accountants) which is an organization I belong to primarily attended by CFO's and accounting professionals.

Victor put me on his list and I have found his features are fun and full of wit. This issue I just received was all about the history of batteries. Did you know you can power a small device with a Potato?! Victor explains how in this issue.

Victor is the principle of a company called The Optran Group(www.optran.com) which is a business transaction advisory firm serving owners of mid-market companies. Most of his clients are baby boomer entrepreneurs who've built successful companies and now wish to cash out and/or substantially improve their personal financial security. Optran specializes in sell-side investment banking, ESOP's, and other liquidity transactions.

Beyond the plug for Victor, his eNewsletter is truly allot of fun to get. Check it out at www.UrbachLetter.com