Here at the ThirdWay Advertising Blog we are not shy about our opinions. We often tell our readers that companies are wasting money with ad campaigns. However, we have always stopped short of actually throwing down the gauntlet and challenging a company to stop doing something we think is foolish.

That ends today.

There were two big pieces of news out of Microsoft this week, both of which will affect the Microsoft brand. The first (which we covered in our most recent post) was the launch of the new operating system Windows Vista. We commented that the $500mm being spent to launch this product is wasteful and will not help Microsoft or Vista. We base this on the absurd spending levels, recent Microsoft campaigns and previous Windows launches.

We also pointed out that spending $500mm to promote a product that will get 90% market share without a cent of investment is a little batty, to say the least. It seems that Microsoft is really trying to generate excitement around the product and the company, which sounds more like a job for PR to us.

This is where the second big piece of news comes in. This week, a poll by Harris Interactive and The Wall Street Journal ranked Microsoft as the company with the best corporate reputation, ahead of perennial favorite (and our alma mater) Johnson & Johnson. What was most intriguing about this result is that one of the prime reasons for Microsoft’s huge jump in this poll is the work of the Gates Foundation. After years of being considered the ‘evil empire’, Bill Gates has single-handedly changed the image of his company in the mind of the public with his impressive and original contribution to American Philanthropy. The Gates Foundation is not only huge – it genuinely operates like a business and brings entrepreneurial smarts to big social problems worldwide (like malaria) that were not getting adequate funding and attention.

It turns out that philanthropy has been a better business proposition (in terms of corporate reputation) than the $500 million spent on the ‘People-Ready Software’ campaign last year. Ironically, we predicted this (look at the bottom of our post on People Ready Advertising here). And it makes sense that a company which enjoys a monopoly in many markets should benefit more from image-enhancement and a corporate reputation overhaul than traditional advertising.

So here is our challenge to Microsoft. Cancel the ad buys for Windows Vista. Get a microphone and hold a press conference and say that you’re giving the money to the Gates Foundation on behalf of Windows Vista. And then see what happens. We predict stratospheric media coverage, significant improvement in likeability for Microsoft and even a noticeable sales bump for Windows Vista. Yes – we’re saying this would be a good business investment.

Too much money is spent every year screaming at consumers with messages they have either already heard or do not care about. Microsoft is about to add to the din. Wouldn’t it be refreshing to see a company do something genuinely useful and see good business results for it?

We suspect Microsoft will not listen to the lonely voice of one advertising blog, but they will listen to you. If you are reading this and you blog it, the voices will accumulate and be heard. And perhaps we can do something good for everyone – including Microsoft.

Reviewer: David

(This rant refers back to a rant from May 15 called “The Delicate Relationship between Branding and Customer Service)

Why would a marketer tell you that customer service is more important than advertising? Let’s start in your garage.

What kind of car do you drive? What does it say about you? If it’s not the cheapest transportation to buy, the cheapest to run or the absolute safest in its class then the chances are that you have been influenced by branding. Some automobile manufacturer has seduced you and convinced you that driving a Lexus, Hummer, Mercedes or Chrsyler 300 will make a statement about you, let you be the person you dream of becoming.

We’ve had quibbles with some of these advertisers here at the ThirdWay blog, but generally speaking we can say that car manufacturers understand that automobiles are more than the sum of their parts – that they are identity statements for their owners. And car advertising generally reflects the emotional nature of automobile purchases. However, if all of that good feeling is ruined the first time you visit a dealership, the advertising is wasted.

I happen to drive a four-year old Audi. I love the car. It is solid and fun to drive. Of course, to have a car in Manhattan, you have to love it because there is no imaginable financial justification to keep one otherwise, between the rent-in-Tulsa parking charges and sky-high insurance premiums.

In addition to building pretty good cars, Audi does some pretty good advertising, particularly in print. But I will say here and now that they might want to consider stopping. Why? Customer service.

What I’m about to relate probably happens to many of you at many dealerships for many different vehicles. As a society of car drivers, we are so inured to ill-treatment at the hands of dealership personnel (whether on the sales or service end) that we hardly make a squeak any more. But it cheapens the brands and erodes our loyalty.

The last time I brought my car into Zumbach Audi (our Manhattan west-side dealership) I made an appointment for 12:30pm. Knowing my car was going to have to stay overnight I didn’t want to arrive with the rush crowd at 7 or 8am and fight the crowds getting back to the office. It was about 95 degrees outside the day I dropped off the vehicle.

I first entered the dealership and saw a service manager who told me to leave his air-conditioned office and wait outside in the heat with my vehicle until someone could see me. Then he said “we’re on our lunch break,” as if I were to blame for showing up when nobody was around. Why did they give me a lunchtime appointment if there was nobody to help me at that time?

When someone finally came to take my car into the service area, I was hoping I’d be able to get back to the office without walking a mile from 11th Avenue to the nearest subway stop. I had been told previously that “loaner cars are only for undriveable vehicles,” (Undriveable? Isn’t any car that you leave at the shop undriveable by definition?) so I did not bother asking for a replacement vehicle. But Zumbach had proudly mailed out an excellent direct mail piece advertising shuttle service within Manhattan. When I asked about this I was told that the shuttle service ended at 12:00 noon. Instead, I was pointed to a notice on the wall of the service area saying that “Subway Tokens are provided for Transportation.”

I’m not an import-car snob, but I don’t think Audi would really want their brand positioning to be “just as good as the subway”. And I would be surprised if I’m the first person to walk away insulted, not asking for the $2.00 reimbursement. After all, the dealership surely made more money than that from me when they charged me nearly $400 for a new tire (neither mounted nor balanced but simply put into my trunk at my request) which I subsequently found for $220 at a tire store which was also in Manhattan.

All of this is a typical online rant – a dissatisfied customer screaming to the masses, I understand. It is important from a branding perspective because it reflects a larger trend in the industry.

Along with several other manufacturers, Audi is rolling back warranty coverage on its vehicles. Free maintenance may soon be a thing of the past. Yet we’ll still be told that nobody but the dealer is really qualified to maintain and repair our vehicles and given the complex mechanical differences and proprietary diagnostic on-board computers it may be true.

So I will say that as a marketer I think that the money spent on the great advertising (that fabulous viral campaign for the A-3, for example), the money lavished on customer retention programs and the wonderfully designed products are all a waste unless Audi takes back control of the dealer experience. It doesn’t help to get a flyer from the dealership explain the importance of “perfect” customer satisfaction scores and asking me to call them if I wasn’t satisfied. That is a subtle form of intimidation belied by the fact that when I tried to complain to the service manager about being overcharged for a tire while registering my car for the service visit he said “they don’t really listen to me.” At least he was telling the truth.

So for all of you with great brands and great advertising – be careful what you promise. Someone just might be expecting you to deliver.

Reviewer: Eva Lind-Mallo

For those that were at the Thirdway seminar last night, here’s some additional news on TiVo. For those that weren’t at the seminar, David discussed how TiVo is revolutionizing the way marketers and advertisers effectively reach target audiences.

TiVo has just announced that you’ll start getting pop-up ads when you fast forward through the actual ads. Unless you’re using Direct TV.

Link: TiVo Users Could Get Pop-Up Ads

Link: TiVo Adds Ads

Moreover, the government of Japan has gotten seriously involved. With TV ad revenue losses mounting, private broadcasters have started to regard commercials and programs as an all-in-one product. Hisashi Hieda, President of the National Association of Commercial Broadcasters, said: “Skipping the commercials would amount to a violation of the Copyright Law.” The association has designated August 28^th as “TV Commercial Day”, which will highlight the benefits of TV advertising to viewers.

Link: Japan Gets Tough On TiVO

Link: Skipping TV Commercials Illegal in Japan?

Bottom Line: Traditional TV advertising is not coming back. The world has changed and (Super Bowl aside) it has become increasingly difficult to reach target audiences. What does this mean for marketers and advertisers? It all comes back to being laser focused on who your target is, and then working from multiple angles at connecting and communicating with that consumer: building awareness, buy-in, loyalty, in short, creating value for her. An interesting article on converging media and venues to reach our target follows:

Link: Convergence: It’s Becoming a Brave New World

There are a few great blogs focused on advertising on the web which you might check out if you do not already read them:

Adverblog
Adrants
Ad Jab
Seth Godin’s Blog
WhatsNextBlog

Adverblog is smart worldwide advertising commentary from a UK-based account planner. Adrants is the People Magazine of the advertising world, offering witty commentary from a veteran ad guy. Ad Jab is group analysis from the agency viewpoint and Seth Godin offers a thoughtful, quirky take on the world that is marketing. B.L. Ochman’s What’s Next Blog is not limited to marketing per se, but gives you a good tap on the pulse of the blogging world from someone who comes from a marketing and PR background.

RANTER: David

Subject: Why better service is more important than good advertising
The greatest threat to consumer brands today is not bad advertising – it’s bad customer service. I say that in spite of the fact that this blog is dedicated to critiquing advertising and helping advertisers create better ads.

In fact, the biggest single investment that most companies could make to improve their brand equity would be to get rid of automated answering systems and have a person answer and route incoming consumer calls.

Is this shocking? Cutting a $70 million ad budget by a few million and hiring people to answer the phone, lend a sympathetic ear and find the right person for unhappy consumers to talk to? Won’t this just create a new “cost center” that an aggressive former-CFO (now CEO) will be eager to cut?

We are facing an epidemic of bad customer service and it is hurting brands. Right now, I would be willing to recommend any brand that has the common sense to have a real person who is trained and knows the company and its products answer the phone. Making me feel better about the service experience is critical in an era where products are getting ever more complex and all of us experience product failures in many categories from time to time.

This is not just my opinion. The link between good customer service and brand repeat rates (the percentage of consumers who will purchase a brand – whether product or service – again) has been proven again and again. A very good article on this is “The One Number You Need to Grow” by Frederick Reichheld from the December 2003 Harvard Business Review. I haven’t found it online for free, but click here for the HBS version for $6.00. Reichheld showed that the best way to understand brand loyalty was to ask consumers the likelihood that they would recommend the brand to another consumer. The stronger the recommendation, the higher the likelihood that that consumer would return to the brand. This was true of companies across a wide variety of industries.

My point is this – a huge amount of money is being wasted advertising brands that may deliver good product but have terrible customer service. When customers become disillusioned by bad service, they become “Brand Terrorists” who tell lots of their friends not to use the brand. Advertising then serves to remind these consumers that they hate the brand and they spread the message further. Sadly, it seems that “brand terrorists” are even more effective than brand lovers or “brand apostles” in spreading their message. So the maxim “good advertising is the quickest way to kill a brand” may be truer than ever.

I’ll give you a good example of this trend that is staring me in the face – literally. I’m writing this post on a HP Pavillion dv1000 laptop. It is a sweet little machine, but I cannot and will not recommend it to friends or any of you. Why? Because I bought the laptop with an expansion base and a 200gb backup drive that plugs into the base. When the whole deal arrived, everything worked except for that backup drive, which whirred and purred but could not be found by Windows. So I called the HP customer service center. Or more accurately, I called various parts of India attempting to get trained help for my HP.

Don’t get me wrong. I am half-Indian and I think India is a great place. I visited last year. I also don’t think outsourcing is inherently evil. But the idea of randomly delegating the most crucial part of your branding experience (customer service, where you have the chance to take dissatisfied consumers and turn them into brand lovers) to untrained people is absurd.

During the week of my conversations with HP customer service I became absurdly grateful for the GE speakerphone in my office. I also became familiar with a lot of elevator music as I clocked over 7 hours of hold time. My problem was simple – a hard disk drive with a faulty controller. But I couldn’t find a single person in HP support who even seemed to be able to pull up the specifications for the HP xb2000 Notebook Expansion Base let alone understand that I plugged a hard drive into it which did not seem to be working.

My daily routine was something like this. Sit down with a cup of tea and attack e-mail. Call HP customer service. Wade through menu after menu of entering digits. Spend a half-hour or more on hold. Finally talk to someone. Spend a half hour explaining my problem. Get transferred to another number that is busy. Get put on hold. Spend another half hour explaining my problem. Repeat from the begginning.

Finally, at the end of the week, I had a revelation. The sales staff at HP Direct was obviously American and very knowledgable. (It’s easy to see the revenue implications of a poorly trained sales staff.) So I called as if I was going to buy something new. Still had to wade through a stupid automated menu, but when I got a real associate on the line I explained my problem. She immediately shipped out a new drive and gave me a return authorization for my old drive. The new one worked fine. Total time spent: 11 minutes. Tell me that my week on the phone with India cost HP less. It certainly cost them a customer. And don’t go running to Dell. I’ve had similarly awful experiences of late with them.

As a marketing trainer and branding person, I find myself in the strange position of telling customers who come to me for better branding campaigns to either spend less on advertising or hold it altogether until they can get their entire user experience to meet the promise they are making with the advertising. The legacy airlines don’t seem to understand this. We sometimes will post the press release for an ad we are about to critique. Eva Lind-Mallo did this for an American Airlines spot that she hated. Even before she posted her scathing commentary on the ad, however, the press release got picked up by other blogs which attacked it (and us for posting it). That’s how strongly bad customer service can make you feel about a brand. Anybody who has been stranded on the runway by NorthWest, crammed into a middle seat by a surly flight attendant on Delta or had their knees jammed up against the seat in front of them on a “new less-spacious” seat in American just hates those brands. And the advertising just reminds you of the problem.

So here’s my advice to airlines, banks, computer companies and others intent on wasting our time with advertising – good or bad – that we won’t believe. Train your customer service representatives. Give them the power and the decision-making authority to actually solve consumer’s problems. Ditch your five-step interactive menus and have an intelligent person answer the phone and route callers to the EXACT person they need to talk to in order to solve their problem. Accept some fraud in return for no-hassles returns (remember that this is how Nordstrom’s built a legendary brand – by accepting exchanges on things they didn’t even sell). Stop arguing with the consumer even when you are right. We’re tired. We’ve been taken advantage of for too long. We don’t want to have to get our EE degree to use your products or spend our afternoons on the phone to make them work. And as soon as someone else comes along and treats us better, we’ll be gone in a heartbeat. Just ask SouthWest or JetBlue.

I attended the BDI conference here in Manhattan Tuesday “Blogging Goes Mainstream” and met Microsoft Technological Evangelist Robert Scobel, Adrants Founder Steve Hall and PubSub founder Salim Ismael. I should say that the Business Development Institute did a great job putting on an event that thanks to BusinessWeek’s cover article last week quickly swelled to almost 200 people.

As a brand marketer, I found it fascinating to hear Robert Scoble and talk to him afterwards. The man is a true humanist. If Giovanni Pico della Mirandola were alive today and blogging I think he would look a lot like Robert. Even though he is a technologist, he has a marketers intuition for what makes a company tick and a keen sense of how respecting the dignitity and competence of the consumer builds the brand. Take a look at this post from his blog on Target: click here
Target is a great brand, but I bet they will learn something for Robert Scoble.

Steve Hall spoke on a panel discussion and I have to say – no disrespect to the other panelists – he was one of the funniest people I have heard in awhile. A veteran ad guy who “gets it” (you brand folks know what I’m talking about) – he also has a good sense of how to keep people awake. If you don’t already read his blog, you should add it to your list: www.adrants.com

Salim Ismael talked about PubSub. Whether they or Technocrati or some other RSS solution is the answer to the future of information I don’t know, but he did an extremely good job of explaining why blogging has gained so much momentum. One panelist compared blogging to pamphleting in the eighteenth century. I think this is apt (read the first two chapters of Fatal Shore about the founding of Australia and see how much the pamphleteers in London resemble bloggers in their political impact) but misses something critical about information momentum. The dialog that the combination of blogging and RSS creates and the momentum it can generate turns the Internet into a huge democratic machine.

The purpose for this post is this – would you brand folks and agency people like to see these guys back in NYC in August at a ThirdWay seminar to specifically focus on why consumer marketers need to think about blogs and how blogs will affect brands. We can bring them together if there is enough interest. We’ve been going for well-known authors recently (Jack Trout this month and the book release party for Seth Godin next month) but this could be interesting. Let me know.