Issue: Hyundai sales lag in spite of high quality, reasonable prices
Commentary by: David Vinjamuri

Last month at the Jacob Javitz center in New York, Hyundai introduced the Genesis sedan.  This $35,000 sport sedan is an ambitious and impressive challenger to such auto industry heavyweights as BMW, Infiniti and Lexus.

More impressive than the styling of this new car (which looks far less like the odd panoply of competing design themes that defined the Hyundais of the 1980′s) is the expected quality.  In fact, in 2006, J.D. Power’s rated Hyundai #3 in initial quality – above both Toyota (#4) and Honda (#6).  In addition, Hyundai models in the past several years have been regularly recommended by Consumer Reports for reliability as well as value.

In spite of this good news, Hyundai is in a pickle.  BusinessWeek reports that “last year the Korean automaker’s earnings fell 34% … and its operating margin was halved … Hyundai’s sales bank [of unsold cars] has gone largely unnoticed.”    The appreciation of the Korean won against the dollar has neutralized much of Hyundai’s pricing advantage and the brand is under pressure to sustain premium pricing.

Hyundai’s marketing chief, Steve Wilhite (COO of Hyundai Motors America) is struggling to find a recipe to make Hyundai a premium brand.  The current plan of the company lies with an upcoming advertising campaign intended to position the brand as the choice for rational, clear-headed buyers unaffected by marketing hype.

This plan might or might not work in the long-run, but it is an expensive and unlikely way to solve the brand’s woes.  Wilhite’s thinking is one-dimensional, and his impressive resume (helping to lead turnarounds at Volkswagen, Apple and Nissan) points to the reason – he has primarily worked in single-brand environments.

Faced with the same challenge, a packaged-goods marketer might think differently.  Instead of trying to reinvent a failing brand with a stable of good products, why not create a new brand for those good products.

Hyundai consumer research seems to bear this out.  As Businessweek points out, consumers exposed to concepts for new Hyundai models were actually less likely to express purchase interest than when the concepts had no brand attached.  Instead of being a sail for the brand, the Hyundai name is currently an anchor.

Of course, there are good examples of brands which have repositioned themselves in the automotive industry – and Mr. Wilhite has worked on two of them.  Volkswagen was in a brand netherworld before re-emerging with the “Drivers Wanted” campaign and the New Beetle.  Nissan was virtually a commodity when Wilhite helped reinvigorate the brand.

Unfortunately for Mr. Wilhite, both of those brands had underlying heritage which made refreshing the brand more achievable.  Nissan was beloved of a generation of drivers who remembered it bringing real sports cars to the masses with the 240Z – and these drivers were now of an age and family size to require a Maxima.   Volkswagen captured the hearts of the masses with the original Beatle.  Repositioning it as the brand that cared about drivers was more like reintroducing the original concept than arguing with consumers.  (Nissan does of course have a second brand, Infiniti, but more on that later.)

Hyundai’s problem is that it has no brand heritage to look back on.  Hyundai came into the U.S. market much as Yugo did – as a cheap car, cheaply made.  The early Hyundai Accent was a dreadful tinny little car that did not engender much love.

To be fair, there are at least two examples of automakers with questionable initial offerings and poor brand reputations turning into automotive powerhouses – Toyota and Honda.  The first Hondas were also tinpots known more for their propensity to rust than anything else.  Toyotas had a similarly undistinguised brand as an inexpensive Japanese car.

These brands, however, were saved by a divine intervention that Hyundai and Mr. Wilhite can hardly hope for – the OPEC oil crisis of the seventies which forced consumers to re-consider small cars.

These same two companies do offer a more useful model of dealing with entrenched consumer opinions about their automobiles, however, with their Lexus and Acura brands.  Both Toyota and Honda (along with Nissan) faced the difficult question of how to move upscale as their consumers aged.  They also saw a brand opportunity as no domestic or foreign carmaker was able to deliver “reliable luxury” to the U.S. consumer.  They understood that their brand names did not connote luxury to U.S. consumers and might never do so.  So they chose to build new brands at huge expense.  It was an investment well worth making.

For Hyundai, rebranding would be well worth the effort.  Merely renaming the company and the dealerships would be difficult, and consumers might see through the effort.  It might be smarter altogether to launch a new brand and begin to put updated versions of the smartly designed, reliable and clever new cars into this brand.  Over time, the Hyundai name could be retired.

This begs the question of dealer networks.  The U.S. auto market is, unhelpfully for consumers, largely driven by distribution issues.  Most dealerships still distribute only a single brand and consumers are reduced to driving all over town to shop for a new automobile. (Imagine doing the same thing to shop for a dishwasher and the absurdity becomes clearer.)  This is justified by the service end of the business, but at the end of the day it does no favors to anyone.

Hyundai should look at partnering with another car manufacturer needing to penetrate the U.S. market.  This model is already common at the high end where brands like Aston Martin, Ferrari and Lotus lack the sales volume to support independent dealer networks.  Renault might make a good partner as it is gearing up for a re-entry into this market.

There are reams of data to support the fact that consumers don’t like to be argued with.  The path Hyundai is pursuing with rebranding will be expensive and might fail.  Which would be a shame, because the automaker is finally producing some vehicles worth considering.

Issue: As Wal-Mart’s Investigation Practices Hit the NY Times, Wal-Mart Pays a PR Price for Authoritarian Policies
Commentary by: David Vinjamuri

Last Summer, an epic struggle for control of the board of Hewlett-Packard exploded when it was revealed that HP Board Chair Patricia Dunn had authorized pre-texting to investigate its own outside directors. The news cast a cloud over the comeback story of Hewlett-Packard, and the scandal was far worse in PR terms than the leaks the investigation was intended to uncover. As this advertising blog commented at the time, the real lesson of the scandal was that any corporation should understand that treatment of (and trust in) its own emloyees is directly connected to the equity of the brand with its consumers. By that we meant that if a company does not trust its own employees, it should not expect consumers to trust them. Some employees will always misbehave and either break the law or the company’s code of ethics. But when the company fosters an atmosphere of mistrust, it ensures that this mistrust will be transferred down to consumers, either through employees or the media.

Today, a scandal brewing for the past four months hit the front page of the New York Times, virtually ensuring a publicity nightmare for Wal-Mart. The source? In January of 2006, Wal-Mart hired marketing star away from Chrysler Julie Roehm to lead the push for a new agency and new image for the Bentonville giant. On December 7th, Wal-Mart publicly fired her, stating that she had violated company policy by having a relationship with a subordinate, accepting unethical favors from agencies vying for agency-of-record status (most famously a ride in Draft FCB chairman Howard Draft’s Aston Martin) and broke expense rules.

It is unusual for the departure of a senior executive to be positioned as a ‘firing’ (even former HP CEO Carly Fiorina had to insist that her termination be made public as such) and much more unusual for the corporation to reveal the reasons behind the dismissal. To do so courts negative publicity and a lawsuit. In this case Wal-Mart got both – Roehm sued and the story was picked up by the business press.

Wal-Mart has one of the best publicity teams in the World, (run by Edelman PR) but it’s difficult to understand what they thought they might accomplish by treating the termination of Roehm as a war. Certainly any financial loss to Roehm in a lawsuit (or any gain in a counter-suit) will be dwarfed by the negative publicity surrounding the case. Wal-Mart does not carry the presumption of innocence in the public mind, so this kind of story weighs even heavier on them than it might on other brands.

The very public battle over Roehm’s termination created an even bigger risk for Wal-Mart: that it would reveal a pattern of behavior on the part of the retailer that could make for more interesting and more mainstream story for the press. That happened today with the New York times expose piece on Wal-Mart’s surveillance practices.

Whatever the truth of this story, the damage has now been done. And it is clear that what invited this story was Wal-Mart’s aggressive approach to ending its employment relationship with Julie Roehm. Whether or not Ms. Roehm merited this treatment, whether or not Wal-Mart was ‘right’ in factual terms, it has certainly hurt the brand. When senior Wal-Mart employees consider their everyday actions in light of whether they are ‘adding value’ they should consider the health of the Wal-Mart brand and not just the shelf cost of the products.  And, as with the Hewlett-Packard incident, the suspicion of employees – even when justified – hurts the brand far worse than their misdeeds.

Issue: Consumers learn that expensive and store brand pet-food are not very different
Commentary by: David Vinjamuri

One of the most disturbing aspects of the national pet food recall is the illusion of superiority it has shattered for buyers of expensive pet-foods. Processor Menu Foods not only makes store brand petfood for stores as diverse as Wal-Mart, Winn-Dixie and Wegmans but also premium brand pet-foods including two Procter & Gamble brands, Iams and Eukanuba. In all, 53 brands of dogfood and 42 brands of catfood are affected.

Why is this so disturbing to consumers? Not just because Fluffy or Sparky might die from kidney failure. The other bad news from the consumer point of view is that the premium food that they have been lovingly feeding to these extended family members is no different from generic store brands.

How did this happen? A combination of greed and laziness was to blame. For much of the petfood industry, co-packaging (or producing generic products using a third party manufacturer alongside branded products with identical ingredients and a higher pricepoint) has been a fact of life for years. This is greed plain and simple, and the brands engaging in this practice surely deserve the fate they will experience

Procter & Gamble is a slightly different case, however. AdAge quotes a Procter & Gamble spokesperson as noting that “Iams and Eukanuba dry products are not manufactured at Menu Foods and are not affected by this recall. Only a small portion of our wet canned and foil-pouch products for dogs and cats are affected by this recall.”

Iams was popularized by Clay Mathile who purchased the company from its founder in 1970. The brand was sold through veterinarians who promoted it as a scientific solution to pet diets. This vastly increased the strength and credibility of the brand, so much so that it attracted the attention of Procter & Gamble, who purchased Iams in 1999.

The Iams brand survives on the belief that it is the best brand for pet health and further bolstered by the P&G introduction of Eukanuba, which is sold through veterinarians.

All of this has been endangered by the news that the brands are co-packaged with generic pet foods. The question is, why did Procter & Gamble, one of the worlds pre-eminent brand companies, allow this to happen?

Most likely, a brand manager recommended that a wet-food line extension for Iams and Eukanuba be subcontracted out to Menu Foods to spare cost and manufacturing complexity. Nobody watching the brand asked the question – is this manufacturing practice consistent with our brand promise for these premium pet-foods? And now, even though the majority of Iams and Eukanuba branded products were not packaged by Menu Foods, they are going to be tarnished by the same brush.

Issue: Bono’s Red Campaign Has Not Burst
Commentary by: David Vinjamuri

AdAge set off a firestorm this week by suggesting that the RED campaign has yielded just $18mm for the Bono charity which benefits the Global Fund to Fight AIDS, Tuberculosis and Malaria. RED CEO Bobby Shriver fired back that the total number was now $25 million, that there were a lot of other publicity benefits for the charity and that the promotional partners also saw incremental profit and sales from the campaign.

From a brand standpoint, the much more interesting question is this: Why did a campaign with six huge corporate sponsors, dozens of celebrities and an enormous amount of publicity get beat by a simple yellow band promoted by one athlete?

That’s right, that simple yellow band brought in over $50 million for LiveStrong, the Lance Armstrong foundation which benefits people affected by Cancer. One celebrity, one SKU, twice the results.

This advertising blog doesn’t think that is any accident. Lance Armstrong did four things right:

1. Simple – The LiveStrong campaign was easy to understand – pay a buck, take a stand, fight cancer
2. Shareable – The LiveStrong campaign had a shareable message – wear the yellow and join the fight
3. Self-Reinforcing – When a consumer became aware of the campaign, every yellow wristband reinforced the message.
4. Sustainable – With simple execution, low manufacturing costs and no need to keep multiple partners on board, this campaign has been easy to maintain.

The RED campaign hasn’t surpassed the Yellow campaign for just one reason – Execution. RED sounds like a brilliant plan and when it hatched in Bono’s mind, it probably was. But it was compromised in several ways in its execution:

1. What is RED and what is just red? – Because the RED campaign had multiple partners, it was harder to distinguish at a glance which products were RED sponsored and which merely sported a similar color. This created consumer confusion and cost the campaign valuable momentum.
2. Commercial motives – To entice partners, 60% of profits were retained commercially with the remaining 40% going to RED. This compromised the integrity and authenticity of the movement and made it a promotion instead. A movement (as LiveStrong was) has much stronger brand equity than a promotion.
3. Too much noise – Multiple partners and multiple products also racheted up the noise. To understand the promotion, consumers had to pay attention and investigate. The extra work required of the consumer made the campaign much less appealing.

We believe that RED is pursuing noble goals. Unfortunately, the meager results have left the ground open to critics from the nonprofit sector who claim that this is the inevitable result of the privatization of charity. The hurt feelings created by the Gates Foundation stealing the limelight from more established players are resurfacing in this debate. But a privatization of charity and more stringent application of business principles to keep charitable giving effective are desperately needed. The lesson of RED is that it has to be smart business, and strong branding.

Issue: Taco Bell’s insufficient response to rat video compounds earlier e-coli woes
Commentary by: David Vinjamuri

Taco Bell owner Yum Brands this week has found itself on the wrong end of another public health crisis, this one stemming from a video filmed at the Greenwich Village Taco Bell/KFC showing a swarm of rats scurrying around the restaurant. Kate MacArthur at AdAge reports:

No crisis is just a local crisis. The rats running amok at the Greenwich Village eatery were first reported on early-morning TV news by a New York station, WNBC-TV, following a consumer call to its tip line. But by the time Yum Brands put out a statement addressing the issue on its home page and media wires — 2:06 p.m. EST — the stomach-churning video had already raced over the internet and made it to numerous other TV stations.

Taco Bell & Yum’s response to this crisis highlights the problem we have previously addressed with modern crisis management plans: they don’t account for the speed of the Internet and the visceral impact of viral video. The seven hours that passed between the early-morning airing of the video on WNBC and WCBS and Taco Bell’s response allowed the story to run nationally without any expression of regret from the company and made the whole mess look worse.

The response itself was not much more helpful, crafted as it was to stress the isolated nature of the incident and the safety of Taco Bell and KFC cooking in general.

Now, Yum will face further dropoff in Taco Bell business (already down since the e-coli crisis) and continued erosion of the brand. Why? Because Yum has not demonstrated that it really passionately cares about consumers or safety. Showing passion in the response means going beyond dealing with the immediate health issue caused by e-coli or rats and addressing the breach of trust created by this type of adverse event. Taco Bell should have made a more heartfelt statement of distress and then thought carefully about compensation for consumers – what about making the restaurant free for a weekend after reopening?

Just to be absolutely clear, this is our four-step primer for dealing with crises – rodent or otherwise:

To respond effectively to a crisis, brands need to have a plan which can be implemented in a matter of hours. It should include the following steps:

1. Accept Responsibility – Even if events subsequently prove that the brand was blameless in an outbreak or tainting scandal (think of the finger found in a Wendy’s salad which was planted by a customer, for instance), stonewalling will hurt the brand. It is far easier to act as if it is a problem you’ve created and take responsibility for making it right. If later events prove the brand was blameless, its ethical reaction to the problem will increase brand loyalty. If it was the company’s fault then the brand will retain consumers with its forthright, straighforward acceptance of responsibility.
2. Protect the Consumer – Closing restaurants or recalling the product early can limit the damage done to the brand. Stubborn refusal to immediately recall their contact lense solution almost cost Bausch & Lomb its entire ReNu franchise.
3. Find the Truth – Getting to the bottom of the problem is critical, even if it is not always possible.
4. Prevent a Replay – Tylenol returned to the market not when the person who had adulterated the product was apprehended but when Johnson & Johnson could be sure that another person could not do the same thing. This is the best standard for knowing whether its time to step back into the water, and one that Taco Bell has likely failed.

To these we would add “Make Reparations.” Taco Bell needs to clean up and think of a creative way to erase the horror from the minds of its consumers.

Issue: Proposed Sirius/XM Satellite Merger
Commentary by: David Vinjamuri
FCC Chairman Kevin Martin’s comment last week that the proposed $13 billion dollar “merger of equals” between Sirius Satellite Radio and XM Satellite Radio faces “high hurdles” is a disturbing sign that the U.S. government is out of touch with consumers, technology and brand competition.

The primary question the government must answer in any proposed mergers is – will this merger ultimately benefit or harm consumers? Will this create a monopoly or enable more competition? A decade ago, when satellite radio was first licensed, it seemed that satellite radio would be the dominant audio broadcast technology in the near future. Consumers would eventually migrate to satellite radio, shunning traditional radio. Particularly in cars, satellite radio would become the primary entertainment option.

Under these circumstances, it made sense that there should be at least two satellite competitors and that these competitors would not be allowed to merge. Circumstances have changed.

Today’s consumer has a myriad of choices for in-car entertainment and in-home entertainment. In fact, the biggest alternative to traditional radio has come from an unexpected source – Apple Computer. The iPod’s popularity has even forced automobile makers to scamble to accomodate iPod connection to the car radio, after decades when car makers refused to put even a simple external input jack on car stereos.

There is also renewed competition from terrestrial radio in the form of digital radio, which promises similar quality to satellite radio.

Finally, the FCC could not have foreseen that the fierce competition between Sirius and XM in the face of many other consumer entertainment options would leave both companies weak and unprofitable. The bidding war for talent that culminated in the Sirius acquisition of Howard Stern (for a reported $500 million) and NFL rebroadcast rights and XM lockup of Major League Baseball.

The resulting situation is not good for consumers. Sports fans must choose between baseball and football, or the near-impossibility of having two incompatible satellite radio systems in a single vehicle or household. Entertainment fans must side with Oprah (XM) or Howard Stern – not that we suspect they have many fans in common.

If all this seems obvious to the average reader of this advertising blog, it is disturbingly not obvious to FCC Chairman Kevin Martin. Like airline CEOs who never travel in coach or food company chiefs who never eat their own products, we wonder if Martin has spent much time driving himself through rush-hour traffic in the past few years. Does he not see the legions of people fumbling with their iPods in the car (let alone the man we recently spotted eating a bowl of cereal with milk in his Lexus)?

The best thing for consumers, and for brands, would be to allow two weak companies to form one stronger one. Instead of fighting each other they can prepare themselves for the larger challenge of competing against digital radio and MP3 players. They can also spend more time developing their content.

If not, we’ll just sit back and watch the FCC force another VHS/Betamax battle on innocent consumers.

Issue: JetBlue Strands Thousands, Creates Customer Bill of Rights
Commentary by: David Vinjamuri

Watching the media this week, one might think JetBlue is going the way of most of the legacy carriers – becoming a haven for bad customer service and employee discontent. This advertising blog believes that the disaster for JetBlue may instead save the company. Here’s why:

Last week was by all accounts the worst week in the seven year history of JetBlue. The company which has long been a media and Wall Street favorite dismayed consumers, investors and management last week. Jetblue stranded thousands of flyers in a cascading series of flight cancellations apparently caused by poor management decisions around an ice storm in New York on Valentine’s Day. The worst complaints against the airline from disgruntled customers centered around planes that were kept on the runway for up to 11 hours with overflowing toilets and without food as well as swamped customer lines and an apparent lack of a system to reschedule thousands of flight crews during a major weather event.

JetBlue CEO David Neeleman who has been in the media spotlight all week today detailed a new “Customer Bill of Rights” which he believes will move JetBlue to the front of the industry in crisis management and consumer responsiveness. The JetBlue Customer Bill of Rights includes the following:

1. Notifications – JetBlue promises to give customers prior information when it learns of delays, cancellations or diversions and their true causes.
2. Cancellations – If JetBlue cancels a flight more than 12 hours in advance, customers can opt for a full refund instead of rebooking. If JetBlue cancels within 12 hours, customers get a roundtrip voucher as well as rebooking.
3. Departure Delay Compensation – (For “controllable irregularities”) JetBlue will give customers $25 vouchers for 1-2 hour departure delays, $50 vouchers for 2-4 hour delays, 1-way flight travel vouchers for 4-6 hour delays and roundtrip flight vouchers (for the amount paid for the delayed trip) for delays of six or more hours.
4. Denied Boarding Compensation – JetBlue will pay customers $1,000 for denied boarding
5. Ground Delay Compensation – JetBlue will give customers who experience an arrival ground delay compensation identical to the #3 above. JetBlue will give customer who experience an uncontrollable (i.e. weather or air traffic) departure delay $100 for 3-4 hour delays and roundtrip travel vouchers for longer delays.

This ‘Bill of Rights’ is a huge step forward in an industry which seems intent on doing the minimum for the consumer at all times. Firstly, it treats the customers time as something of value – a concept no other airline currently embraces. Secondly it seeks to set up a direct value trade for unexpected wastes of the customers time. Third, it addresses the awful industry practice of overbooking in a way that is certain to satisfy customers and deter over-ambitious airline revenue management programmers. Finally, it shows that JetBlue is taking responsibility for the mess it made last week and owning up to some of the bigger flaws not just in its sub-industry-grade performance last week but in the state of the industry at large.

This is a blessing at a time when JetBlue needed one. It may be exaggeration to say the bloom was off the rose at JetBlue, but increasing departure delays, soaring fairs and more consumer complaints last year opened the question of whether JetBlue could stay special as it became a large, mainstream carrier. Just as with the frog who will sit in a pot of water as it is slowly raised to a boil, JetBlue seemed indifferent to these individual issues because it could not perceive the entirety of the effect on the consumer experience viewed from the outside.

The New York ice storm and the weaknesses it revealed in the command and control systems at JetBlue as well as training gaps were akin to dipping the frog in boiling water from the outset – JetBlue now seems intent on jumping out of the pot.

To be sure, the performance has not been perfect. JetBlue CEO David Neeleman seems harried and unfocused in his video message to consumers. Some of his media performances were good but in others he seemed defensive and vague, as in his call-in session on NPR. CEO’s ought to be taught that every good media appearance during a crisis begins with a specific act of contrition – you need to state exactly what your company did wrong and what the effect was on consumers. This shows that the company is taking responsibility and that the CEO has empathy for the consumer. Then the CEO must explain what mistakes the company made beyond weather and uncontrollable events and detail a plan of action. Only then can the CEO get into the nitty gritty of arguing over whether the government should step in with regulatory action or what compensation consumers should receive.

On the whole, though, we think JetBlue has taken an important step forward. Other media darlings should examine themselves in the cold light of day to see if they are still fulfilling the brand promise. If they don’t, a JetBlue disaster may be their worst nightmare – and their only chance for redemption.

Issue: A slow Super Bowl for new Advertising Ideas
Commentary by: David Vinjamuri

The Super Bowl is the last refuge for destination advertising in America, the last place that people actively seek out television advertising instead of shunning it.

Given that, it’s a shame that advertisers did not make better use of the opportunity this evening. Although there were some interesting themes this year, the strongest trend seemed to be a resurgence of animals in advertising. Although we thought the Blockbuster spot was fairly well executed and the dog spot by Budweiser predictably tugged at heartstrings, the Bud Light Gorillas and Taco Bell Lions were less memorable.

This Super Bowl also cemented a trend that has been growing throughout the year – consumer generated advertising. The two spots, a Frito-Lay and one for the NFL were both interesting and stronger than the average agency-produced spot for this Super Bowl.

Two standounts in the largely undistinguished field were the General Motors “All by Myself” robot spot, touting GM’s 100,000 mile warranties and the Coca-Cola Bottle spot promoting black history month and the historic black coach matchup at the Super Bowl.

Picking the worst spot might be difficult this year, but the spot most likely to damage the career of its actor goes to Revlon and Sheryl Crow, with a tedious and undistinguished ad for hair color. Kevin Federline dreaming of stardom while working at a fast-food restaurant gets an honorary mention.

More to come this week, but these are our first thoughts.

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.

Issue: Windows Vista Ships – Microsoft Announces $500mm Ad Spend
Commentary by: David Vinjamuri
After over five years, Microsoft is shipping a new operating system, Windows Vista.

Just like the Windows launches of yore, Microsoft is trying to make this a big event (remember the Rolling Stones licensing “Start Me Up” for a Windows launch as their first major sell-out to commercialism).

And this time, Microsoft is upping the ante – literally. AdAge reports that Microsoft will invest an eye-popping $500mm to support the Vista launch.

From a branding perspective, this is an obscene waste of money. Why?

1. More frequency isn’t better:
   Microsoft will overdeliver advertising to many television watchers causing ad fatigue and risking a significant backlash against the company.
2. A technology company should spend smarter:
   Instead of creating a clever viral or online campaign Microsoft is blowing the conventional media trumpet and essentially proving that it just doesn’t understand the modern consumer or the Internet.
3. Vista Will Achieve 90% Market Share with $0 Spend Anyway:
   Which makes it incredibly difficult to understand why Microsoft is advertising to begin with. This is a distribution play – Microsoft will ship Vista with every PC sold in the world in just a few months. Companies will be forced to migrate to stay in synch with the market.

Taken together, these three elements make us think that Microsoft just doesn’t understand how the terrain has shifted underneath them in the years since Windows 3.0 originally launched. Even this advertising blog knows it’s not about the operating system any more. Vista is an important release for Microsoft simply because Windows has too many security holes and is giving consumers an excuse to migrate to Apple’s OS-X. Instead of a consumer company, the Windows division of Microsoft should think of themselves as an infrastructure company. The best publicity for this division would be to ensure that the new system works seamlessly, securely and that future releases trim the fat of unnecessary features that add complexity and bleed processing power.