The 77th annual academy awards as marketing

One of my partners here at Blackfriars, Joe Butt, used to direct movies and music videos as well as being VP of marketing for some companies in the New York area. He often refers to the Academy of Motion Picture Arts and Sciences as being the epitome of marketing. Why? Because as he puts it:

In what other industry can you get a billion people around the world to watch a show that consists entirely of an organization giving awards to itself?

Another events note, this one in the Wall Street Journal

Lee Gomes writes today contrasting two of this month's conferences, Demo and CodeCon. Not surprisingly, they are geared to difference audiences (Demo is more about how to make money with tech, CodeCon is an open source), so they were markedly different events. But I think his best line is the closing one:

In short, spending a few days at both CodeCon and Demo offered a handy way to visit both the top and the bottom of the technology food chain. I will, though, leave it up to you to decide which conference was which.

Indications the events business is picking up

One of the bits of data that came out of Blackfriars marketing research in the first quarter is that events are making a comback. For the first time in several quarters, events spending is the third largest category in business marketing budgets for 2005. Well, today's New York Times had an interesting supporting article to that trend today. It notes that Esther Dyson is organizing a commercial space flight conference to run in parallel with her PC forum conference in Scottsdale, AZ. Her best quote:

Nobody's holding a space conference, so I decided to do one," she said in an interview. "It's not that there aren't space conferences, but nothing as tacky and commercial as we want to be."

The fact that a conference impresario is starting a new category of conference is notable in itself. But the fact that Ms. Dyson plans to use the conference to influence business investment just shows the power of face-to-face communication, especially in this era of the tyranny of too much. Scottsdale in March certainly sounds like a pleasant way to spur some creative thinking, especially for those of us looking at another winter storm bearing down on us tonight.

Sizing US Marketing -- Update for 2005

Marketing

Update: We have had so much interest in this topic, that we have released an entire market research report on it titled "Sizing US Marketing." Look for it at the Blackfriars eStore. You can read the press release for the report here.

Late last year, Blackfriars sized marketing spending in the US at $867 billion for 2004. So what about 2005? We just updated our analysis based upon our January survey of senior executives. We now project that corporations will spend $930.1 billion on marketing in 2005. We also adjusted our sizing for 2004 downward to $845.3 billion based upon the fact that marketing budgets were not fully spent last year and that Q4 advertising budgets were slightly higher than projected for the 2005.

Blackfriars derives these projections from the data we collect from senior executives in our quarterly surveys, which sample marketing budgets, attitudes, and spending in a broad sample of US corporations. We can make these projections because our sample is roughly representative of US business overall as measured by the 2001 US Census of business. We combine the data about marketing mix spending with advertising projections made by Universal McCann.

The drumbeat for software warranties goes on

Today's Wall Street Journal has an article on companies wishing to hold software companies liable for flaws, security and otherwise. One notable quote:

"I'm paying the bill. Other companies are paying the bill," says Ed Amoroso, AT&T's chief information-security officer. "The software companies are not paying the bill." Mr. Amoroso says AT&T spends roughly $1 million a month just to patch its existing software. Testing and installing a single patch across AT&T's network can require as many as 30 people working full time for several days.

Mr. Amoroso calls "absurd" provisions of Microsoft's license agreements that hold Microsoft harmless for damages caused by software defects, even when Microsoft knew about the flaws.

These are customers speaking, not pundits. Sounds like something Microsoft could apply its $50 billion warchest to. But rest assured, this marketing embarrassment -- namely the failure of software companies to provide any warrantee to their products whatsoever -- is going to become a bigger problem until the software industry does something about it. And as the article points out, if they don't, there is the chance that the government will.

The Register chimes in on Microsoft security

I knew that Windows security was still pretty poor. But this article points out how some of the security problems in Windows are actually design decisions that can't easily be reversed. The sad part: some of these vulnerabilities (like implied searches for executables) were in computer science literature 20 years ago as being security design decisions that programmers should avoid.

Marketing versus IT spending

Marketing

Update: We have had so much interest in this topic, that we are releasing an entire report on it on June 1, 2005, titled "Sizing US Marketing." Look for it at the Blackfriars eStore.

A couple of articles hit over the weekend that I found interesting. One, from eMarketer, noted that there are a variety of analyst estimates for the rise in IT spending this year, ranging from 2.5% to 8%. Second, George Colony, CEO of Forrester, was interviewed by the New York Times and cited a similar number of 7-8% (nice interview, George).

So what? Compare those numbers with our data from our January 2005 survey of senior executives about marketing budgets, which are going up 20% this year. Which business sector -- IT or marketing -- do you think will see more change this year? If nothing else, that data should tell you why Blackfriars is in marketing consulting, training, and research and not in IT.

Oh, one other thing. in his interview, George believes that one of the three challenges that will face Google is that Google operates in an HTML, page-oriented world. Clearly he hasn't seen some of the new Google services like Google Maps and Google Suggest. And Google Desktop certainly puts the company squarely in the realm of Internet-enabled software, not just Web sites. All of those services are decidedly interactive and deliver rich content in exactly what Forrester calls X-Internet style. In fact, I'd argue that Google is exactly the type of company that is bringing X Internet to mainstream users.

Bottom line: despite George's three challenges, Google demonstrates a clearer understanding of modern issues like user interface, tyranny of too much, and security than old-guard software firms like Microsoft ever did. Google is going to be an innovating force to be reckoned with for years to come.

Microsoft in Quandary Over Virus Security

The Associated Press is now running an article quite similar (although less dire) than the one I wrote last Friday about Microsoft's security struggles. The irony of all this: The very first report I ever wrote for Forrester in 1996 was about security issues, and how they would reshape the Internet software market. Amazing how little has changed (and how little Microsoft has changed) in the following nine years.

Trackback links added

I have added Haloscan commenting and trackback services. I'm hoping this service will connect us more directly to the rest of the blog community.

Anyone got a dictionary for Karl Rove?

I was amused to read this article in this morning's Boston Globe about Karl Rove's speech at the Conservative Political Action Conference in Washington. Why? This was the line that got me:

He also described conservatives as agents of change....

Clearly, Rove had not looked up the definition of conservative recently. It just shows even professional communicators make mistakes in word choice because they know what they mean and don't necessarily hear what they say.

Software accountability and the future collapse of Microsoft

It's Friday, and I've been mulling over the headlines and articles coming out of the RSA Security Conference all week. Here's a rather long and I hope sobering take on what's been going on with security and Microsoft and what it means.

Richard Clarke, former counter-terrorism advisor and author of the book Against All Enemies: Inside American's War On Terror had a fairly pointed comment on Microsoft yesterday at the RSA Data Security Conference:

"Given their record in the security area, I don't know why anybody would buy from them," the former White House cybersecurity and counterterrorism adviser said yesterday, when asked for his thoughts on Microsoft's forthcoming line of security software.

Blackfriars has previously noted the unique lack of accountability for all software companies in a previous opinion piece, but we would have to agree with Mr. Clarke that Microsoft is one of the worst offenders in this area. After all, it is now 2005, and Bill Gates declared security to be Microsoft's highest priority in 2002. In that period, almost nothing has changed, except spam is now more prevalent, viruses arrive in mailboxes every day, and worms are now an urgent and ever-present threat to Windows users. And it is only this year that Microsoft even started considering issuing a new version of its non-standards-compliant Internet Explorer. Three years without a version update despite numerous security threats isn't complacency, it's outright neglect.

So what does Microsoft do? It doesn't fix the problems in Windows. instead, it buys companies that sell add-ons for Windows and makes users download and install them. Worse, in some cases, it adds DRM restrictions to ensure that these products only are downloadable by people who it can confirm have the latest version of Windows and have valid license keys. While this is very nice for Microsoft's business model, it doesn't do much for overall Internet security. And it leaves customers feeling that the company cares more about its billions in profits per quarter than about its customers.

We're not the only ones who have noticed this. Gartner Group has slammed Microsoft for tying security to upgrades. Michael Malone writing for ABC News has made a call that he can smell the decay that comes with dying companies, and that he is beginning to get some whiffs out of Redmond.

This is one of those tipping-point branding problems. HIgh-profile brands can take a lot of punishment without the business going south because consumers remember what the brand stands for instead of the news. Johnson and Johnson handily survived its Tylenol scare because it communicated to consumers what it was doing about the problem quickly and clearly, and then followed up with quick action. But what is happening with Microsoft is that for the past five years, it keeps claiming it is addressing its security and quality problems, but by the time it follows up, there are just more problems. The brand is accumulating tarnish faster than it can get rid of it. And now you have both anti-terrorism experts like Clarke and entire government agencies like some of those in Brazil asking, "Why should we buy from a company that just doesn't care?"

You can already see the cracks in the brand getting wider. Forrester CEO George Colony wrote an apology letter last year saying he always thought Apple was an also ran, but that Jobs was delivering on the promise of a digital future better than the mainstream PC world was. And Charles Cooper over at CNET just switched from Windows to a Mac this week and claims he will never look back. If died-in-the-wool, typically-Microsoft-defending PC users are abandoning Microsoft, who is going to stand up for the company? Who will buy its products? Who will buy its stock?

On the products side, lest you think products like MSN or the XBox will save the company, forget it. Microsoft makes nearly all its profit off two products: Windows and Office. Everything else breaks even or loses money. So if there's no security for Windows and Office, MSN and Xbox won't matter. They are rounding errors on the margins of the other products.

When people start asking those questions, that's when the house of cards collapses. And when you look at the last question -- who will buy its stock -- the stock market already has an answer. Microsoft's stock price is less than half the price it was five years ago (aside: compare that with the stock price of Apple, whose death has been predicted 26 times over the last several years and whose stock price tripled in the last year). Microsoft has 11 billion shares outstanding, or nearly two shares for every man, woman, and child on earth. At some point, people will decide they have enough Microsoft stock, and when they look at the tarnish on the brand from poor quality products, bad security, and outrageous business practices, they will decide to sell it. And with 11 billion shares outstanding, even Bill Gates won't be able to keep the stock price up. And millions of people will be hurt by the collapse of Microsoft stock, because it is a core holding in nearly every US mutual fund, and many international ones.

Brands matter. Bad business practices hurt brands. Consumers and companies ignore those rules at their peril.

Language is technology

Yesterday's Connection on NPR had a wonderful show with Scott Huler, author of the book, "Defining the Wind: The Beaufort Scale, and how a 19th Century Admiral turned Science into Poetry." He says at the beginning of the show:

Language is technology. Language has a job to do. A word is just a tool for getting an idea from inside your brain into my brain.

He goes on to talk about Strunk and White's dictum about eliminating excess words, and notes that the Beaufort Scale raises that dictum to a fine art by describing all the various speeds of wind in just 110 words. Huler goes on to say that these are "the best 110 words ever written" because they allowed non-technical people to objectively define wind speed when shipping depended on wind to transport goods to market and people to destinations.

The show is worth listening to, even if you only hear the first 10 minutes when Huler reads the Beaufort Scale. Today's technology businesses, scientists, and marketers would do well to study this 19th century admiral and his poetry of technology.

Some data about the tyranny of too much email

Marc Eisenstadt, President and COO of Corante, has an interesting analysis of his email received since 1997 and specifically the implications for how he spends his time. His statistics about his email provide good grist for our claim that the tyranny of too much is starting to seriously affect how we do business.

Some of the comments make the claim that we should simply "turn off" our attention on occasion. The sad part is that going offline is no cure because typically you simply end up in a tyranny of too much of a different media type, such as TV, radio, or magazine advertising or even the stress of a messy desk. But it is great that people are thinking about this problem in serious ways.

New Blackfriars Marketing Index today

Today was publishing day, which is always a bit busy, what with Web site updates, press releases, and the like. If you haven't looked at www.blackfriarsinc.com today, we've set the Q1 2005 Blackfriars Marketing Index to 128. That number comes from our January survey of senior business executives about marketing budgets, attitudes, and spending. It indicates that companies plan to spend about 128% of what they spent in an average quarter in 2003 on marketing. The number is actually a bit stronger than it appears, since 2004 marketing spending actually came in under budget (companies spent only 93% of their 2004 marketing budgets on average). Bottom line: marketing looks strong for both this quarter and the year.

One other bit of data from the survey: marketing attitudes are now the most positive we've measured. But at the same time, there is growing concern about the tyranny of too much advertising and media clutter. That effect even showed up in some of the quotes from respondents, which is the first time we've really seen that. I don't expect the tyranny of too much phenomenon to crest until three to five years from now, but there is no question that it is becoming a trend.

Quick pitch: If you want to read all the great data we collected and analyzed, buy our report at the Blackfriars eStore at its new, more affordable price of $495.

An ad designed to get you to watch another ad

Based on our marketing research (quick pitch: the new Blackfriars Marketing Index comes out on Tuesday, February 15), Blackfriars has hard data that shows that companies that use objective data to measure their marketing results have higher satisfaction with their marketing AND get bigger marketing budgets. It just makes sense: if you can prove that a dollar spent on marketing gives you company a 5% increase in clients or a 3% improvement in customer satisfaction, spending money on marketing becomes a simple business decision for the CEO instead of an act of faith. But only about two-thirds of firms measure their marketing results, so there are still a lot of companies winging it.

Here's a symptom of one of those companies: today's Sunday New York Times has a full page ad on page 14 (the back of the front section). In this ad, Revlon pictures a group of models and encourages people to watch their new ad campaign on Desperate Housewives tonight.

So let me get this straight. Revlon spent several hundred thousand dollars on the NYTimes ad to drive people to their $300,000 per 30-second-spot TV ad? Said another way, what is the return on investment (ROI) for that full-page ad?

My opinion: this is a great example of an agency spending media dollars without any accountability for results. If I were Revlon, I'd be asking for the data that shows that this full-page ad actually bought them results. I believe the agency would be hard-pressed to provide such a number. But I'm willing to be convinced; if anyone out there has hard data that shows ads for ads work, I'd love to see it.

Ducking the question with the passive voice

Like many editors and writers, we here at Blackfriars hate passive writing because it leaves unanswered the question of who is behind the action. We cringe when we see sentences that say things like, "It is said that" or "Results were obtained" because the reader doesn't know who said the quote or who created the results. Therefore, it was a bit of a shock when we read this headline in the Boston Globe yesterday morning:

FAA received many warnings on Qaeda before 9/11 attacks

Your eighth-grade grammar teacher may not classify this sentence as passive, but it certainly does beg the question of who created the warnings. Out of curiousity, I looked over at the collection of headlines on this story at Google, where I found a large number of headlines that were similarly passive. For example:

Fort Worth Star Telegram: FAA was warned of al Qaeda

The Olympian: FAA warned of network plot before attacks

Minneapolis Star Tribune: FAA was warned of possible hijackings

The interesting thing about all these passive voice headlines is that nearly all of the 544 stories avoided the unasked question: who warned the FAA 52 times about Al Qeida? The New York Times answers that question today on their editorial page by saying:

The F.A.A. got the reports through a 24-hour liaison
it maintained with the Central Intelligence Agency,
the Federal Bureau of Investigation and the State Department.
It's not clear from this latest report,
or at least the portion the White House thought fit for
public consumption, whether those agencies passed
on the warnings to the White House.

OK, so imagine you are the analyst sitting in the CIA writing your 10th or 20th warning to the FAA about the fact that there's an organization with a plan to use commercial aircraft for suicide missions. After 20 tries, do you think you might pass on the same data to someone else, say, maybe the National Security Advisor, to get more attention? We'll drop the story at this point, since there is an article in the same issue of the Times about Richard Clarke writing then National Security Advisor Condoleezza Rice a memo with that exact warning. But there's a point here: the stories with the passive voice headline made the FAA look like the evil government agency that ignored the warnings. But if the headlines had been written in the active voice, a lot more questions might have been asked of the FBI, the CIA, and the White House about their roles in these 9/11 warnings. Passive voice allows subjects to duck accountability unless you have some dogged reporters -- or a picky writing vigilante like me.

The moral of this story? Next time you see passive voice in the headline, ask yourself who did the action being described. You might get some surprising insights.

Why clear simple communication is so important: we're easiy distracted

Wait a sec, I have to reply to this email.... OK, I"m back.

One of the principles that Blackfriars teaches in our communications courses is Finnish Professor Osmo Wiio's first law of communication:

If a communication can fail, it will.

There are a lot of psychological and physiological reasons behind this statement, but one of those is the fact that we as humans are easily distracted. Well, today's New York Times Circuits section notes that the productivity-enhancing computers that we use at work actually are now major causes of distraction and poor productivity.

While the article offers some hope for research that might help people concentrate longer, we here at Blackfriars have another suggestion: make your messages short and clear enough than people can understand them before they get distracted.

Be right back. Someone just IM'ed me.

HP's communication failed, not Fiorina

Today's Boston Globe has an article (as does almost every other newspaper) on the ousting of Carly Fiorina from her job as CEO and Chairman of Hewlett Packard. But what I found most telling was not anything about Carly (whom I met at a dinner a few years ago and found to be extremely capable and persuasive), but was a comment made by board member Patricia Dunn:

''This is not a change related to strategy," said Dunn. ''It is a change related to the desire to accelerate that strategy."

Who talks like that? This is exactly the type of communication that used to come out of HP before Carly arrived, and I'm sad to say it hasn't changed. Is it any wonder investors, business partners, and customers might feel unsure about doing business with HP? Those two simple sentences don't convey strength and unity of purpose; instead, their passive nature makes HP sound vague and wants to avoid accountability.

Dunn should have said something like more like this:

''We aren't changing our strategy," said Dunn. ''We simply want it to go faster."

These active statements are much stronger (and more quotable), even though they mean the same thing. Objectively, the first quote has a Flesch readability score of 65; the second scores 78, meaning it is understandable by a much wider ranger of listeners.

Just one more point on the HP story. Most of the articles noted that HP's stock price has declined since 1999 when Fiorina took office and point to that as one of the reasons she was ousted. I'll point out that one other high-tech company has had even worse performance in their stock during the same period and they aren't getting rid of their CEO or their Chairman. That company is Microsoft.

You can see the proof of that statement at CNET.

Google launches another killer product: maps

Google has launched another one of those "how did I ever live without that?" kind of services today, with maps.google.com . As usual, it is a beta test version, but the thing that makes me really like it is their decluttering algorithm; they seem to find just the right amount of detail to show. And many little touches, like shadows for the endpoints, one-line address entry, and animated scrolling of the map just make the service a joy to use. I've been a big fan of one of the more obscure mapping sites for years, Mapsonus, which was originally developed at Lucent/Bell Labs. But I am now a convert for ordinary directions. I will, however, have to return to mapsonus when I need latitude and longitude to feed by handheld GPS....

My big question through: where do they (or will they) put the ads?

Napster bombs

Just to return to a topic from last week, the Napster ad aired yesterday on the Superbowl. According to USA Today, it ranked dead last. But we really can't crow too much because it wasn't the tyranny of too much that made it rank last. It was just a bad piece of advertising, with a static image on the screen for at least 10 of their 30 seconds. You can watch the ad yourself at iFilm.

Napster To Go doesn't understand the tyranny of too much

The now-legal Napster service is attempting to make a big splash this weekend with a Superbowl ad promoting its subscription-based music services. The new wrinkle: they are using Microsoft's Janus technology to allow subscription tracks to be downloaded to Windows Media Player-compatible music players such as those made by companies like iRiver. This new service is named Napster To Go, and it will be promoted using an ad called "Do The Math" which compares the cost of filling a portable media player using Napster and iTunes:

We've written about the poor marketing behind the Janus technology underpinning this service previously. But regardless of the technology issues (of which there are several), will consumers buy the new service? After all, won't people see that it is cheaper to spend $15 per month to load their media players with whatever they want instead of thousands of dollars at the iTunes music store?

Our call: this new service will not make any significant inroads into iTunes market share. Why? Because this new service assumes that consumer choice of a million tunes to load your music player will drive subscriptions. But that process of choosing music you don't already know and love requires the user make choices among the nearly a million songs they could load. As we've noted in previous tyranny of too much opinions, this amount of choice is actually demotivating. By pushing excessive choice onto the consumer, Napster is actually creating customer dissatisfaction.

Want an analogy that drives the point home? If easy access to large libraries was a big driver of subscription services, we'd see for-pay libraries popping up in malls and near the local Wal-Mart instead of Borders Books or Barnes & Noble stores. When consumers find content they like, they want to make the choice once and own the content, not continually have to subscribe to it.

We predict a number of customers will try the service, but will rapidly cancel their subscriptions once they realize they spend way too much time trying to figure out what they want. Add the dissatisfaction that will spread when those same subscribers realize they lose access to all that music once they cancel their service, and we believe that Napster To Go will rapidly mirror the performance of other would-be-iTunes-killers such as Buymusic.com, Wal-Mart.com, and MSN.com. And this is without adding in the frustruation that users have with Microsoft's technology, which often doesn't work with players that are supposed to "Play For Sure."

As an aside, why doesn't iTunes have this problem? Because Apple actually understands the tyranny of too much and provides services that reduce the amount of choice that users have to deal with. Services like iTunes Essentials, public iMixes, Billboard Charts, and Most Popular lists allow consumers to buy what other people recommend without having to choose amoung a million different songs. And of course, because they control both the on-line and the iPod experience, they are able to make the buying process easy and seamless.

So while you are watching the Super Bowl ads this weekend, try asking yourself, "Does this product or service add to the tyranny of too much choice or does it add value by limiting choices to good ones?" That process will change the way you look at advertising.

More Google...

Just one more note on the Google front: they did just announce a seven-fold increase in profits on a doubling of revenue. One can't argue with results like that.

Google now a domain registrar too

One other data point about Google and branding: Google now is a domain registrar, which means it will have the ability to sell domains to its customers. Why will that matter? It will certainly please users of Blogger, to whom Google will probably offer domains of the type www.myblog.com instead of its current myblog.blogspot.com addresses. But it also proves that Google knows the power of Internet brands -- and wants to make sure that it has a part to play in building those brands.

The business results of marketing well

We have written a bit about some of the companies -- Apple and Google being two of them -- that we think market themselves and their brands well. Apparently, we're not the only ones. In a 2004 survey of global brands conducted by BrandChannel, those two brands actually topped their list of the most powerful global brands. The people who voted were not random; by and large, they were marketing and branding people, so recognize that these results may, or may not, differ from the general population.

Does strong branding and marketing really matter that much? Well, in the year that these two companies' brands rose to their zenith. Google's stock is up about 100% since its IPO six months ago, and over the last twelve months, Apple's stock increased about 250%. Good marketing and branding may not have been the direct cause, but it certainly hasn't hurt them either.