In one of today’s TechCrunch items it was announced that Windows Live Search has seen a considerable increase in ROI for its advertisers and an overall increase in advertising revenue as a result of its unorthodox “cash-back” rewards system for users who purchased goods discovered through Live Search’s paid advertisements. The system was highly scrutinized at the time of its announcement, but it just goes to show you that zigging when everyone else is zagging can yield success even in a market as uncompetitive as search.

I don’t think Google or Yahoo! will be following Microsoft’s lead. Google doesn’t need to as a result of its dominance in the paid search advertising market. Yahoo! looks like it might be pulling out from search altogether and moving primarily to content / banner advertising.

Either way, it’s interesting to see some movement in terms of advertising dollars in search, but Microsoft’s move has yet to produce a sizable increase in actual search traffic. If the cash-back system ultimately produces a better ROI for advertisers despite the decrease in reach, we might see an interesting “supply-side” shift in search marketing.

If the increased ROI for Live Search advertisers results in a wider, deeper array of bargains and discounts for Live Search users, we might see a number of frugal searchers migrate from Google and Yahoo! to Live Search. Although marketers typically try to avoid bargain seekers, these users would not be bargain seekers in the classical sense; online “bargain seekers” are people who will rarely, if ever, pay for anything online that they can’t steal or substitute with something that’s lower quality but free. These users by contrast are able and willing to pay for goods consumed online but they simply want better deals.

Should the supply of good deals on Windows Live Search attract searchers away from Google it might create an interesting consumer niche for Microsoft, where in effect Live Search’s audience is smaller than Google’s but its audience is composed of the customers that advertisers value most - people who are looking to buy something right now. I don’t see this happening in the next fiscal year, but if the cash-back system is maintained and if it produces significantly better returns for advertisers then it could emerge as a wind shift in search.

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I couldn’t agree more with the sentiment from Harvard Business Review’s John Quelch, who penned an excellent article called “How Better Marketing Elected Barack Obama:”

But, even so, for an inexperienced single term African-American senator tagged with the most liberal voting record to defeat the heir apparent in his own party and then go on to hold off the much-vaunted Republican machine is a truly remarkable achievement. Much of it has to do with Obama’s instinct for marketing.

First, Obama’s personal charisma, his listening and public speaking skills, his consistently positive and unruffled demeanor and his compelling biography attracted the attention and empathy of voters.

Second, Obama converted this empathy into tangible support. More citizens volunteered time and money to help the Obama campaign than any previous presidential candidate. Indeed, he attracted more donors than the entire Democratic or Republican party nationwide. Almost half of Obama’s unprecedented $639 million in funds raised from individuals came from small donors giving $300 or less.

The list goes on, but you get the idea - politics, like business, comes down to a matter of marketing. Barrack didn’t market policies, like traditional politicians of the past, nor did he really market ideology. He marketed himself, and built around himself a remarkable cult of personality.

This truly was a remarkable election, from the point of view of a marketer. Please read the HBR article for the full scoop.

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Rarely, if ever, do I post a simple link to constitute an entire blog entry, but given the past week or so in the financial sector I think this is something that all of you need to read:

New York Times Op-Ed: An Economy You Can Bank On by Casey Mulligan, University of Chicago Economics Professor

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On Thursday I’ll be attending the San Diego Online Marketer’s Summit on the behalf of my employer. It should be some interesting stuff - here are the lectures that I will be present for:

• Morning Keynote: The State of Marketing in a Web 2.0 World
• Complete Website Strategy: SEO & Usability
• Customer Life-Cycle & Loyalty Marketing
• Email Marketing
• Social Media Strategies
• Big Brands, Big Plans Keynote Panel

Should any of you be in attendance (I know that there are a lot of Southern Californians who read this blog) feel free to chat with me - my nametag will identify me by my employer (SmartDraw.)

I don’t expect that any of the stuff that I’m going to hear will be mind-blowing or Earth-shattering, but I think I will be able to capture some working knowledge of how to implement social media campaigns and what the best practices are. I think the conference will allow me to contrast their experiences with mine (which have been interesting thus far) and perhaps it will even move me to try to implement some new stuff at work.

We’ll see - I also want to try to learn some stuff from the other attendees; I’ll probably end up attending the subsequent happy hour following the conference itself.

See you there (hopefully!)

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There are a lot of things that annoy me about Web 2.0 - the lack of sound business models, the buzz-driven approach to investment, the return of pastel colors, but I don’t think anything bothers me more than the cutesy culture that pervades this entire quadrant of the IT sector.

Yahoo and Google started the trend of using cutesy names for multi-billion dollar corporations, a trend which has become so commonplace that it would almost seem out of place for a Web 2.0 company to name itself using words found in Merriam-Webster’s English Dictionary. Google also introduced funny Easter Eggs, like the results when you search for “How Goes Google Work?“

As a result of Google’s success, many shiny new Web 2.0 company has sought to recreate itself in Google’s image, sassiness and cuteness included. While I think cuteness is fine for all of the general service-to-consumer interactions between Web 2.0 services and their users, I think this cuteness comes back to bite those services in the ass when it comes to getting businesses to adopt Web 2.0 services as part of their outbound marketing platform.

Let me share you a quick anecdote:

Over at Working Smarter, the blog I manage for work, we use a number of screencasts that we host with Vimeo, a YouTube competitor. We went with Vimeo because its Adobe Flash player had less compatibility issues than our in-house one and YouTube’s. Well, today we experienced a brief service outage and we were presented with the following error message:

SUCKER

Vimeo drank your milkshake!

This is what greeted all of our customers and potential customers when they came to visit the homepage of our corporate blog; isn’t that wonderful? Even if the majority of our customers have seen There Will Be Blood I don’t think most of them are going to understand right off the bat that this is an error message. It’s bad enough that our customers can’t see our screencasts, but having to show them this silly error message makes me regret giving this Web 2.0 company a chance to begin with. Why? It makes us look just as cartoonish and cutesy as Vimeo, an image which rests in stark contrast to the one that we’ve been trying to build.

So after being the butt of a few jokes by our CIO for my decision to use a third-party service to resolve some of our compatibility issues, I’ve decided that the cost of having this stupid error message rear its head to our customers isn’t worth the benefits of using Vimeo. We’re planning on scaling up our video usage considerably and we drive thousands upon thousands of eyes to our videos each week, which was essentially free exposure for Vimeo. Sucks for those guys.

A bit of downtime I could tolerate - that’s expected from any service, even YouTube, but the fact that we have to broadcast a bunch of cutesy garbage that clashes with our image to our customers whenever something breaks is unacceptable. The bigger lesson I am trying to draw here is that the cutesy stuff might be something that end-consumers appreciate, but a lot of businesses who try to integrate social media platforms into their outreach marketing efforts don’t.

Business Idea: Develop a YouTube, Vimeo counterpart that specializes in hosting corporate videos specifically, like training videos and so forth. Screencast.com is probably the best example of a “closed garden” in this regard.

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You’d have to be an idiot to claim that Wall Street is performing well at the moment; the reality is that we’re in a textbook definition of a bear market. However, for reasons that remain inexplicable, people are knee-jerking to the bad news with shrieks of “WE NEED MORE REGULATION” and “FREE MARKET ECONOMICS HAS FAILED!” I’d caution any person with these concerns to quietly stop drinking from the bowl of panic punch for a second and get their facts straight. I’ve even read some hysterical pieces from respected economists who think that this is the U.S. Government moving towards socializing the country’s entire infrastructure; I guess intellectual objectivity goes out the door as soon as a bloated insurance giant needs to borrow money from the FED.

Look, folks, I’m in the same boat as many of you; all of my savings are tied up in Washington Mutual and my fledging retirement fund is invested mostly in the stock market (I chose an aggressive growth portfolio.) Do you think I’m not concerned? Of course I am - but I’m not shrieking like a moron and demanding more Government control of private business in order to prevent…. more Government control of private business?

Let’s distill some sense out of this hysteria.

The AIG and Bear Stearns Bailouts: Total Steals for the Federal Reserve Bank

Let’s talk about AIG first, since that is on the forefront of minds of Americans this morning. AIG is the world’s largest insurer and in exchange for 79.9% of their equity they received $85 billion in funding from the U.S. Federal Reserve Bank. Here are the point-by-point facts worth noting, taken from this morning’s Wall Street Journal:

• The $85b loan from the Fed to AIG has a two-year duration on it with an 8.5% interest rate - this means that the Fed assumes that there is a reasonable probability that AIG will bounce back within that timeframe.
• The fact remains that AIG is a fundamentally solvent company with $1 trillion in assets and $77.9 billion in surplus capital, but the problem is that a large amount of its cash are tied up in non-liquid assets which cannot be tapped for running the day-to-day operations of the company and that is why AIG is borrowing against those assets from the Fed and elsewhere.
• The loans made to AIG by the Fed and other lenders are secured by the aforementioned $1 trillion dollars in assets.
• AIG’s insurance business is still profitable.
• AIG is not going to be run by a government bureaucracy, which is what everyone seems to think. Since the Fed has taken over the vast majority of ownership in AIG they have since fired the incumbent CEO and replaced him with Edward Liddy, the former head insurer of the Allstate Corporation. This is about as far as the Fed is going to go in terms of getting directly involved with the management of the company - they fired the bozo who put AIG in this position in the first place and replaced him with an outsider who happens to be a successful insurer for another firm. Sounds just like what a private bank would do if they took over a business.

Overall, it looks like this might be a total steal for the Federal Reserve Bank. This time last year AIG direct traded at $70 a share; the Federal Reserve just acquired a 79.9% stake in the company for just around $3 a share. The Federal Reserve just purchased an 80% share of $1 trillion in assets for $85 billion - that my friends, is a steal.

The American tax payer is going to see a net benefit, not a loss, for this bail out. Look at how well the Chrysler bailout of the late 1970s turned out for the Fed: people said the exact same thing then that they’re saying about the AIG bailout, that it was a “return to feudalism.” How did it turn out? Well, read this segment from the New York Times for your answer:

You can draw a clear line from the Chrysler bailout to the recent attempts to steady Wall Street. Back then, Washington insisted on a few pounds of flesh, like a wage freeze for Chrysler workers, in exchange for aid. Mr. Paulson has done something similar by insisting that shareholders of the Wall Street firms benefit little from any bailout.

In 1979, the government structured the Chrysler deal so that taxpayers might earn a profit from it (which they did). This year, the Fed effectively purchased securities from Bear Stearns that it hopes to sell for a gain when the financial markets calm down. While it’s way too early to know if the strategy will succeed as well as it did three decades ago, it’s certainly conceivable.

The NYT goes on to insist that perhaps the Chrysler bailout may not have been that successful because it didn’t stop the U.S. Auto Industry from getting steam rolled by the Japanese beginning in the early 80s. I guess the argument that they’re trying to make would have been that if Chrysler collapsed then there would have been this magical alternative history where Ford and GM would have begun producing hybrids (I’m being sarcastic) beginning back in the early 1980s. Sorry, NYT, but I’ll stick with what actually happened (win-win for the Fed and Chrysler) versus a speculative theory that can’t be tested.

The point I’m trying to make this this: we will see a net profit from the Bear Stearns and AIG bailouts, just like how we did from the Chrysler bail out. The Fed drove a hard bargain and acquired over 1 trillion dollars worth of assets at rate of pennies on the dollar.

“Let them Fail” is a Great Idea, if you Don’t Need a Line of Credit over Next Five Years

HotAir ran an idiotic piece this morning which amounted to “we should just let every mismanaged financial institution fail.” While I’m glad that Lehman wasn’t bailed out (costs outweighed the benefits,) I’m also happy that Bank of America has been snatching up failing institutions for pennies on the dollar and that the Fed bailed out AIG and Bear Stearns. As I demonstrated in the first segment of this piece, the hysteria that has overcome the vast majority of the market has resulted in having a number of major institutions valued well below the reality. AIG has over $1 trillion in assets, liquid and nonliquid, but their market cap is hovering around $6.1 billion - AIG’s liability is large (hence the bailout,) but it’s certainly not greater than $1 trillion (good solvency, poor liquidity.)

When I hear presidential candidates on both sides of the aisle crying “oh no, not another bail out - we should have let them fail” it makes me think that they lack the vision to lead this country, let alone objectively analyze a complex financial market. So what would happen if AIG, Fannie Mae, Freddie Mac, and Bear Stearns all failed? Who knows, but I’ll tell you what hasn’t happened yet: credit hasn’t totally dried up. Sure, it’s contracted as a result of doubts cast over the entire lending industry, but it’s still available for people who need it and have demonstrated good credit practices in the past.

The fact that the government has stepped in and stopped some of these giants from falling helps nip some of this hysteria in the bud - we haven’t seen any more bank runs since the IndyMac disaster (thank you, Senator Schumer, for causing that.) So what would happen if we just let these major financial institutions fail? In some cases the result is just a gut-punch to the stock market, as we saw with Lehman, but when major mortgage houses start going under without any help from the Fed then we can see bank runs nationwide, and that would be a real crisis, like the kind we saw in the great depression.

The lesson here is that the Fed isn’t bailing out these companies for the sake of preserving these mismanaged organizations. They’re doing it to stop the development of a greater widespread panic which can result in healthy financial institutions being seriously harmed, and if that were to happen the entire credit industry would be set back for years upon years. We are a society that lives on credit - imagine a world where confidence in all credit institutions has been reduced to zero and no one wants to lend for anything; no credit cards, no car loans, no student loans, no nothing. Try to tell me that spending a few hundred billion now to prevent that catastrophe isn’t worth it.

This entire crisis on Wall Street is the result of the housing bubble; what the Fed is trying to do now is to slowly deflate the bubble, whereas the idiots who advocate the “let all of them fail” philosophy would rather have the bubble burst in one go over our heads. They get upset because they see the direct cost of the Fed’s bailouts written in the headlines of every major newspaper, so they assume that there must be no cost for the alternatives, right? As I’ve pointed out - that mentality is DEAD WRONG. Every choice presents costs, and the Fed has calculated that the cost of having these institutions fail is too great for our financial system to bear. The pundits who are against every bailout regardless of the situation are not thinking like economists, who weigh costs with risks - they’re thinking like politicians, who have the exact same cognitive outcome regardless of costs or risks.

How is Regulation Going to Solve the Problem? Isn’t the same Government Responsible who Handled Katrina so Well?

Back to the title of the article: regulation - how is it going to solve the problem? We already have regulatory oversight on public companies in order to prevent them from cooking the books, so do we need some sort of regulation for preventing companies from making bad decisions? Because that’s what caused this problem in the first place - a bunch of investors deviated from their long term objectives in pursuit of a bubble that couldn’t possible last and now they’re paying for it. Am I pleased that the mistakes of these investors are responsible for swiftly deflating the value of my fledgling retirement fund? Of course not, but do I think that having the U.S. Government step in and regulate all possible investment decisions is a good idea? Hell no.

First, let me address the fact that Fannie Mae and Freddie Mac were created by the U.S. Congress and encouraged to help lower income Americans purchase homes by offering sub-prime mortgages. Government is as much to blame for the current financial crisis as the lemming-like investors are on Wall Street.

Second, there seems to be this mentality among the majority of people that individuals should come running to the Government at the first sign of trouble; so a bunch of banks end up getting screwed because they did what they were encouraged to do by said Government - this is clearly a complete and total failure of the free market system therefore we must abolish it and have mother Government take care of everything for us. Sounds a bit drastic to me; this government can’t even keep a handful of levees up to code in a hurricane-ridden area, let alone manage the most efficient market on Earth better than it already is.

Third, these companies are not getting handouts - they’re getting high interest loans and are paying a hefty price for them in the form of equity. So when I read articles where authors whine about “how come the citizens aren’t getting handouts?” I want to answer “it’s because the average person couldn’t afford to repay a loan with 8.5% interest in two years without winning the lottery.”

The fact is that people want to point the finger at Wall Street and make it out to be some abnormal failure that merits a total overhaul of the entire system. Get a grip, people - the problem was caused by human error, a liability that, I assure you, can be found outside of free market economies. To say that we can prevent all human errors with the steady hand of Government is a ludicrous proposition, given that the Government is arguably more error prone than any free market organization. Putting the Wall Street into the hands of Government and calling for more regulation isn’t the answer - it’s an intellectually vacant copout.

So what’s the answer to the current financial crisis? The answer is to learn that the assumptions behind major investment decisions need to be challenged in order to avoid pitfalls like the sub-prime mortgage crisis - this entire quagmire resulted from a flawed assumption (that the average retail price of a home would remain above $250k) that was factored into a computer model. That assumption was never challenged and now we’re paying the price. Regulation is not a method to prevent bad decisions, it’s an excuse for politicians who are too timid to accept the blame for helping create the sub-prime mortgage monster.

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I use the word “first” because I’m sure there are other cardinal sins that marketers commit, but at the moment I want to focus on one that is particularly egregious. So what’s the first cardinal sin of marketing?

The first, and arguably most outrageous, cardinal sin of marketing is to sacrifice long-term objectives in order to achieve higher than usual short-term profits.

A good example of this sin would be the recent mortgage meltdown in the financial sector; to quote the Harvard Business Review for a moment:

Arkadi Kuhlmann, ING Direct’s founder and CEO, is one of the most creative business leaders I’ve ever met. But he was able to distinguish between get-rich-quick industry fads and real innovation. “Every person who tries to do real innovation is going to be tempted by money, greed, acceptance, being in the middle of the action,” Kuhlmann says. “But at the core there is one fundamental difference: I know why I’m here. I want to make a difference. If I was into this just for making money, being a big accepted banker, I would have been tempted. But that’s not why I’m here. I am trying to build something that changes the business, that allows me to stay on the right side of the discussion.”

In HBR’s “Why the Mortgage Meltdown Hasn’t Burned These ‘Square’ Lenders” Mr. Taylor enumerates a list of lenders and major financial institutions who were not tempted with the promise of a quick buck, Mr. Kuhlmann of ING Direct being one example.

These “square” lenders are not getting burned by the current mortgage meltdown because they didn’t deviate from their core mission and stuck with their long-term objectives. Sure, these institutions may not have enjoyed the record profits of 2005-2007 like Bear Stearns and Lehman Brothers did, but foregoing those three years of great profits followed by the most infamous spree of financial bankruptcy since the savings and loans crisis seems like a good idea in hindsight, doesn’t it?

The Two Consequences of the First Cardinal Sin

There are two things that can happen to a business when it commits this first cardinal sin of marketing:

1. A company that commits this sin can permanently damage the trust between itself and its customers by deviating from its promises. This makes it increasingly more difficult to acquire new customers and retain old ones.
2. A company that commits this sin can find itself jumping with both feet into a market environment that it doesn’t completely understand. This can ultimately lead a company into a situation where costs begin to overrun expectations and in some instances, revenue.

The second of these two consequences has afflicted the financial sector first. Major financial institutions, like Lehman Brothers, jumped feet first into the sub-prime mortgage market and made a risky gamble based on a flimsy assumption: that the average retail value of homes in the United States would remain above $250,000. The assumption held up for three years and Lehman Brothers had great financial postings during that span of time, but as soon as the housing bubble burst and the average price of housing fell below the assumed level these institutions became insolvent.

As a result of this failure, these same financial institutions subsequently incurred the other consequence of this cardinal sin: the customers no longer trust the firm. Do you think that high-net worth individuals who had millions stashed away in financial instruments owned by the Lehman Brothers are going to reinvest back into that organization even if Lehman restructures following its bankruptcy filing? Hell no.

So let this be a lesson to all marketers out there, regardless of industry: never sacrifice your long-term objectives in favor of short-term profits. It’s not worth it.

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Seth Godin wants us to pretend that if a company employs unethical marketing tactics that customers en masse will recognize it for what it is and turn against said company. Yes, if a customer gets an unsolicited email from a company that doesn’t fulfill its promises he and his friends will drop whatever it is that they normally do and take time out of their day to fight the bad marketer, blog up a storm, and hit the company in the pocket book. Such is the way of things in the platitudinous universe of Mr. Godin.

Back on Earth we have to live with a sad reality: for every one hundred people who get pissed off by bad marketing there’s one schmuck who ends up rewarding bad marketers with his patronage, and that money reaped from that one schmuck is enough to make up for the other one hundred dissatisfied folks. And thus the bad marketer has no real incentive to stop being a bad marketer, so long as there’s always that one schmuck who makes it worth their while.

“Bad marketing” is a phrase that I usually use with “incompetent marketing,” but in this instance I mean marketers who just don’t give a damn about the repercussions of their work.

The extent to which a “bad marketer” is bad is debatable; in some instances they merely invade your privacy, and in others they knowingly deceive you and try to sell you on promises that they have no intention of fulfilling. Really bad marketers, the ones who sell products that end up killing or hurting their customers, end up on the ten o’clock news and lose their customers. What about the bad marketers in between?

What about the social network that captures your email address and resells it over and over again without your permission? What about the SMS info service that violates the national Do Not Call list and spams you with messages? What about the local business that hires door-to-door solicitors who try to interrupt your daily life to get you to sign up for some crappy service? What about niche news sites who plagiarize content from unknown authors? How do customers fight them?

How Have You Fought Them?

Please post your answers here on how you’ve tried to fight bad marketers - it can be anything from writing a letter to the editor of your local newspaper to just referring all of your friends to someone else. I look forward to reading your answers.

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I had a run-in with a bad marketer during my short lunch break today. I’m a big fan of supporting local businesses - they add character to the neighborhood where I work and I simply wouldn’t enjoy working there were it not for these businesses. So today I decided to extend my patronage to a local deli owned and operated by a single family.

My lunch break is the only time I get to spend outside in the wonderful Southern California weather on any given day, so I usually grab an outside table and bring a good piece of reading material with me. I ordered my food and began reading my book at my table outside; after a few minutes of reading someone starts speaking to me.

Bad Marketer: Excuse me, sir!

Aaron: (looks up above the fold of his book, not putting the book down)

Bad Marketer: I’m here to tell you about the local Chiropractic Practice which is offering a free back massage if you live or work in the area. Do you live or work in the area?

Aaron: No. (Resumes reading)

Bad Marketer: (Turning to the person sitting at the table next to mine) Excuse me, sir! I’m….

Yes, I lied to the guy. When dealing with bad marketers I always take the path of least resistance when it comes to getting them to shut up and leave me alone.

I proceeded to watch this guy pester everyone else who was sitting outside. He even went inside and started badgering the people inside the deli, including families with small children, and then he repeated the exercise with a small Mexican restaurant a few doors down. Most offensive of all, however, was when he approached an elderly couple who were just trying to get out of their car; he effectively cornered them between the parking lot’s fence and the other cars.

Maybe I’m overreacting here, but this really pissed me off - not because of what he was trying to sell, but because of these two things:

1. I didn’t appreciate the interruption and I’m sure no one else did either.
2. I felt like I was put on the spot against my will and basically cornered by the marketer; it really felt like an invasion of my physical space and my privacy. That, to me, is unacceptable.

I see people get more upset over spam emails than they do about this kind of marketing; spam emails are annoying, but they don’t invade your privacy or violate your physical space in the way that a solicitor does. I’m having one of my "am I wired differently than everyone else?" sort of moments; do most people assume that this kind of in-your-face marketing is so common that they don’t even react to it? And somehow spam email is less common and thereby more worthy of a negative reaction?

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Preface: This is a post about marketing, not about politics. Should you be inclined to submit comments, please bear this in mind. Political comments aren’t going to get published.

What do Dell, Microsoft, and Governor Palin all have in common? They let their competition succeed at defining them. This is a major marketing problem; short of major PR disasters, like the Jack in the Box E. coli outbreak in the early 1990s, I can’t think of many kinds of marketing/PR problems that are worse than this kind.

First, I think the McCain campaign could have avoided all of this by putting Governor Palin on the entire press circuit and all the talk shows immediately following the Vice Presidential announcement on Friday. Governor Palin was, and to a large extent still is, an unknown quantity to a lot of Americans; this means both significant opportunities and risks for the McCain campaign. Had the McCain campaign gotten Palin to define herself first on all of the talk shows and the traditional press circuit then they could have probably nipped a large amount of the media speculation firmly in the bud. But that’s not what happened.

Instead, the campaign did little to get Palin’s story out through the mainstream media the way they wanted to tell it. So McCain’s opposition stepped up to the plate instead. They labeled Governor Palin as a country yokel; a delicate, fragile woman incapable of standing up to tough questions and scrutiny; a careless mother; and someone who was devoid of any sort of achievement or record. These are the labels that hung in the air prior to Governor Palin’s speech on Wednesday night. It doesn’t matter of they were fair or unfair. So what did she do?

Simply, she capitalized on those low expectations set by the opposition and used the spotlight of the Republican National Convention to surpass them by an order of magnitude that was not to be believed had you taken everything written about her as the gospel truth. That’s all she had to do: demonstrate in a public and prominent fashion that the expectations set by competitors were well below reality.  To quote the National Review Online for a moment:

I would like to thank the US media for doing such a grand job this last week of lowering expectations by portraying Governor Palin - whoops, I mean Hick-Burg Mayor Palin - as a hillbilly know-nothing permapregnant ditz, half of whose 27 kids are the spawn of a stump-toothed uncle who hasn’t worked since he was an extra in Deliverance.

How’s that narrative holding up, geniuses? Almost as good as your “devoted husband John Edwards” routine?

Palin’s nomination acceptance speech last night was a fantastic start for the McCain campaign’s public relations battle in defense of their Vice Presidential selection, but it’s only a start. I expect we’ll see a lot more of Palin on the campaign trail and on the press circuit.

The Parallel to Microsoft and Dell

I see a lot of parallels with this story and the story of Microsoft, Dell, and Apple. A quick passage from Fast Company should serve as a good introduction:

“Nobody messes with anyone in the tech industry the way Apple has messed with Microsoft,” says Enderle. “It’s the first time I’ve ever seen a major national campaign that disparages a competitor, and the competitor just sits back and takes it. If somebody tried to do that to Oracle, you wouldn’t be able to find the body.”

Dell is just as affected by Apple’s marketing as Microsoft is; Microsoft provides the “lame, crappy” operating system and Dell provides the “lame, unreliable, broken hardware.” Apple has, with the help of Microsoft’s own missteps during the initial release of Windows Vista, lowered the consumer expectations for Microsoft products below the level of reality.

Don’t believe me? Watch even one video from Microsoft’s Mojave Experiment - the entire point of that campaign is that the perceptions of Vista fall well below reality and the campaign does a very effective job in challenging and even changing those perceptions.

As the poster in “Eight Years of Wrongness” points out, all of these companies have simply taken attack after attack after attack without offering a substantive rebuttal. The Mojave Experiment is a great start, but that’s all it is: a start. Dell, Microsoft, and other PC vendors should follow Lenovo’s lead and start developing much more direct counter-advertising, like this ad:

So what do I recommend that Dell and Microsoft do? Simply this - take every opportunity to seize the spotlight and directly rebut the expectations set by Apple. Apple’s products are far from perfect and Dell/Microsoft’s aren’t the complete and utter disaster that they’re portrayed to be. Don’t try to set any new expectations or new messages - challenge and correct the dominant ones set by the competition first.

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