Brand Central Station

There is no question that innovation is important. The participants in our BCS polls agreed (as we suspected they might). More than 80% of the companies we surveyed said their businesses were more innovative than they were just one year ago.But why?

“It’s the key to being competitive,” explained Denise Dorman of Write Brain Media in Chicago. Dorman works with a variety of clients located around the country, helping them to spot the innovative and creative, then bringing it to people’s attention.

Her statement was echoed by several others survey participants. “Change can bring success on many fronts,” wrote one manager from a national retail chain. “Merchants, marketing and our stores have the responsibility (for innovation).”

But businesses must be careful to avoid innovation without reason. Product innovation without suitable backing of customer insights can lead to some unpleasant consequences.

Consultant, author and speaker, Reva Nelson puts it this way:

“… what happens with innovation gone wrong, innovation for its own sake?

It forgets its roots, it moves too far away from the main trunk, it tries to disconnect and communication gets shot to hell. There are some consultants, managers and CEO’s who forget about connection and communication, and think innovation is an end to itself. It’s not. All innovation, like all change, must be well-communicated. It needs to take its time, and stay connected to the source.”

Nelson uses the example of downsizing as a perfect example of innovation run amok. The backlash from losing some really good people and vital institutional memory can quickly erase the financial benefits of the business decision.

It’s also possible for technological innovation to outpace the ability of the users to learn and adapt. The result is frustration, a loss of productivity and the possible loss of talent due to frustration.

The key to making innovation work is to make sure there is plenty of communication both internally and externally. Expectations need to be set and managed and, most importantly, benchmarks need to be clearly set so those living with the innovation can recognize the progress they’re making.

Technorati Tags: Marketing, Advertising, Branding, Brand, Leadership, Client Management, Innovation, Creative Thinking

This information is (c) 2006, Brand Central Station, all rights reserved. If you are interested in receiving news and analysis directly from BCS, please log onto our website.

If there’s one, key distinguishing factor between big companies and small ones, it’s the amount of time, effort and attention the large companies dedicate to market research. Market research, as most companies view it, can be an expensive undertaking even when managed by the most proficient of facilitators. In the wrong hands, the combined costs of lost opportunities, incorrect conclusions drawn from data and inept management of the research process can force client companies to re-consider doing any research at all.

That may explain why in a recent poll conducted by Brand Central Station, barely more than half (50.3%) of the corporate communicators participating in the survey said their companies conducted marketing research projects frequently or all the time. “It helps us to manage our brand structure, the advertising messages and images and it allows us to connect our advertising to our sales teams,” explained James Lauteri of Mellon Financial Corporation in Pittsburgh.

“We are able to focus our time on developing products with a high probability of success as opposed to blindly developing products that don’t fit our customer’s needs,” wrote the San Antonio Express News’, Merrell Ligons.

Clearly, you have to establish the value of the information gained in order to justify the cost and time associated with conducting research. But while management may understand the benefits of research when it comes to developing new products or clarifying the relationship between advertising and sales, there are far greater costs managers need to consider when they decide to forego market research.

Adam Hayes, owner/manager of AH Digital FX Studios conducts his own market research in order to stay one step ahead of the competition. “Without feedback from the market you will never adapt quick enough to changes and new challenges in the marketplace,” he says. “Staying ‘ahead of the game’ is critical in our business.”

One of the major obstacles most companies face when it comes to research is cost. And big research costs are most commonly associated with primary research. Understanding the difference between primary and secondary research could save your company a bundle.

Primary research is best described as information that comes straight from the source. If you want to know what customers think, you ask them; document their responses and then draw your conclusions. It’s as simple as that, really.

Secondary research is best described as information you collect and the insights you draw from other peoples’ primary research. There are many sources of secondary research materials to draw upon ranging from your local library to your favorite media representatives. In fact, your regular media vendors can be a wealth of information on market trends, competition and more.

Realizing you have several sources of information to draw upon, it’s vitally important to clearly define what you want to know at the end of your research project. This may take some digging on your part, but keep in mind that the better the job you do defining the problem at hand, the more likely the research you conduct will identify solutions.

If you’ve never conducted a market research project before, here’s a handy guide that tells you what to do. There are also hundreds of research consultants who can help you walk through the process as well. And, I suppose, this is as good a place as any to suggest you visit the Brand Central Station web site and check out our new Market Research Inventory Page. It’s a page full of links to helpful “hacks”, service providers and consultants. It’s as good a place to start as any.

Good luck.

Technorati Tags: Marketing, Branding, Market Research, Customer Relationships, Vendor Relationships, Employee Training, Sales Training, Informed Decision Making

This information is (c) 2006, Brand Central Station, all rights reserved. If you are interested in receiving news and analysis directly from BCS, please log onto our website.

It seems like common sense, doesn’t it?

As social creatures, it would seem that people should work together in a group rather than alone. Division of labor and all that. Synergies. Sparking ideas. Great chemistry. We’ve heard it all before.

So, then why does it take so many people so long to “get” collaboration? Why don’t people want to work together?

“Collaboration is key to making everyone in the organization better,” explains Adam Hayes, of AH Digital FX Studios in Idaho Falls, Idaho. “Everyone has specific skill sets that they possess and are thus beneficial in improving the overall quality of any given product.”

When we interviewed corporate communicators and business leaders and asked them about the collaborative capabilities of their new employees – those employees hired with the understanding that today’s workplace calls for collaborative skills – over 40% of those incoming employees were rated at or below average ability. Is that setting ourselves up for failure?

After looking into this problem, the short answer is that we are often too hard on ourselves. Collaboration is not easy. Some cultures have a greater difficulty with the concept than others – but the fact is much of what it takes to be a great, collaborating organization is counter-intuitive to accepted business practices.

Today’s business environment – the one that calls for greater collaboration – faces serious economic challenges that requires each employee to be more productive and requiring less oversight. In short, we are asking people to be more autonomous and more collaborative at the same time. This apparent contradiction works thanks to advancements in communications technology.

We know the traditional communications channels (e.g. meetings, call reports, e-mail) won’t cut it any more. Some take too much time, others are not easily modified to meet the needs of multiple recipients easily and efficiently. Still others are one-to-one communications that quickly become confused and inefficient when shared with parties outside the original relationship. Instead, co-workers need to find the best ways to communicate and collaborate that combine technology and technique.

The management challenges of structuring a more autonomous and collaborative workplace are signficant. Believe it or not, management’s success boils down to its ability to communicate and it’s willingness to trust employees. More on that here.

Ironically, we may already be training our workers on the new collaborative processes of the future through online entertainment and other media. While blogs, wikis and other social media has been stealing the thunder in the business workspace, online games like Second Life and other social interaction role-playing games have been teaching people how to work together without even being in the same time zone.

The secret for success in the coming generation of employees may lie in an ability to identify those prospective employees with the greatest collaborative training. “Identifying this skill (collaboration) in potential new hires is a skill in itself and our capabilities here could be improved,” says one corporate marketing director.

Finally, there is one last area of collaboration that has been long-recognized as being a high-value practice among businesses: collaborations with customers and suppliers. The economic benefits of collaborations in these areas (whether they are joint ventures, preferred customer/supplier relationships, etc.) are fairly obvious. There are marketing disciplines growing up around this phenomenon (i.e. word-of-mouth marketing, customer evangelism, etc.). You can read more about that in our Brand Crafting blog (re: consumer collaborations) and our Business of Business Marketing blog (re: supplier/customer collaborations).

And, of course, because this is a blog, please feel free to contribute to this discussion at any time.

Technorati Tags: Marketing, Branding, Collaboration, Partnership, Hawthorne Effect, Customer Relationships, Vendor Relations, Leadership, Culture

This information is (c) 2006, Brand Central Station, all rights reserved. If you are interested in receiving news and analysis directly from BCS, please log onto our website.

For the past few weeks, I’ve been working with a client on matters concerning their “corporate vision.” It’s all a part of the brand development process outlined in our BrandCrafting blog – but the point I wanted to relate here is that this client (and many others, I assume) needed to understand the relationship between “vision” and “value” before he would move ahead with this project.

It’s not as obvious as it sounds, I think.

Creating a “corporate vision” sounds pretty loose and fluffy. Not a lot of implied value and plenty of “naval gazing” (as my dad would have called it). But to easily dismiss the visioning process is to close out real opportunity to formulate consensus among corporate management when it comes to setting a direction and a general plan for growth and development.

Personally, I opted for “vision” work like this years ago. As a cultural historian of sorts, I can see plenty of examples where things worked better when there was clarity of vision at the top. As a result, I’ve always worked with clients to help them identify their own personal version of success – and that’s the trick.

By getting clients to define where they want to be it becomes much easier to talk in concrete terms about potential stumbling blocks like budgets, deadlines and obligations for success. Arrangements are easier to make with vendors if the company has a clear idea of what kind of products it’s going to produce. Prospect lists are culled more easily once there are some rules in place that will help qualify and quantify sales leads.

But even though a clear vision can impact operations and customer relationships, its biggest impact is on the perceived value of the brand. Exactly how that value is imparted on the brand may surprise you.

Brand value improves not due to the boldness or uniqueness of the vision, but rather because everyone involved in adding value to the brand is informed and in agreement on how the brand will be successful. The lesson is simple and obvious: if everyone works together to make the brand what they agree it should be, the brand will be more successful than the alternative (of not working together).

There is another aspect of “vision” work that I enjoy. You see, when you develop a corporate vision, you have to take the time to make sure you understand how each constituency (i.e. market) will interpret and value that vision. As a result, the messages created to convey the vision (and its related values) are developed and targeted to specific markets and through specific media channels. The “promise making” part of brand equity building becomes much more precise and deliberate.

The result of all this sharing and communicating is the clarification of the “mission” so often overlooked by employees today, from the rank-and-file to the C-level executives. The corporate mission statement – once a bastion of bad grammar, convoluted buzz words and jargon – can now be distilled to one simple phrase:

“Live up to the promises we make and turn our vision of the future into a reality.”

It’s a clear and simple challenge that requires a fresh start every day. And with a healthy investment in a clear and succinct “visioning” process in place, mission statements don’t come much easier to understand than that.

Technorati Tags: Marketing, Strategic Planning, Corporate Vision, Brand, Brand Equity, Branding

Why do we get the inspiration for innovation? I think it may be part of the human condition – that we’re always trying to make things better. Sometimes it’s a personal challenge to see if we can outdo what’s been “done” before. Other times, it’s a more practical reaction to a need expressed by someone we care for … a customer, a co-worker, a family member.

My concern, however, is that sometimes we seem to innovate without thinking about the consequences.

Look back on “breakthroughs” like New Coke, the Apple Newton, the DeLorean and others and the effect of innovation on brand value is pretty obvious. But innovations inside the enterprise can have just as dramatic impact on the brand without all the public whoopla that typically follows a new product introduction or a brand extension.

The innovation process
Inside the organization, innovation typically emerges in the persona of a “champion” (one of those unfortunate 90′s, corporate buzzwords that has stuck with us). Whether it’s a change to internal processes or a strategy for entry into a new market, the champion begins the campaign process in an attempt to create a breakthrough that could impact the company.

In the best case scenarios, the champion has taken time out to evaluate the various business issues surrounding the innovation. Is it something customers need? Is it likely to fit within the business’ production capabilities? Does it open up an under-performing market? The answers are likely to be a mix of positives and negatives.

Sometimes, however, the negatives go unheard.

In her HBJ article on “When Bad Ideas Won’t Die”, Isabelle Royer writes that bad ideas often result from “a fervent and widespread belief among managers in the inevitability of their projects’ ultimate success. This sentiment typically originates, naturally enough, with a project’s champion; it then spreads throughout the organization … reinforcing itself each step of the way.”

Innovations require more than just a great idea, however. The viability of the innovation must be reviewed and reaffirmed at each step in the development process. And for those companies who don’t innovate (either themselves or their products) on a regular basis, a development process may be completely absent.

Paul Graham (bio), one of the co-creators of ViaWeb, provides some insights into how to spot winning ideas. He suggests the following:

1. Make sure your idea is something people will pay for.

2. Don’t go with the first idea that comes to mind.

3. Don’t be timid when it comes to taking your idea to the market.

The relationship between innovation and brand value
It’s important to understand how innovation can effect the perceived value of your brand. Done right, innovations can keep your brand fresh and relevent to those people who already know and understand it. Innovation can also open your brand to new market opportunities.

So how do you take advantage of them? Go back to what built your brand’s value in the first place – stay on message.

In fact, it’s the need to stay on message that most often vexes brands. The natural tendency is to brag about the innovation – and why not? It’s new. It may be newsworthy. But what happens, in many cases, is that brands foresake everything to tout their new development.

This matters because in a marketplace of millions of messages, your brand needs to stand as tall as it possibly can – and the only way to do that is to use the awareness, knowledge and goodwill it’s accumulated over the life of your external marketing efforts. Taking off on a new message, look and feature/benefit could (in a worse-case scenario) be no more than an unintentional “launch” of a new or competitive product in the market.

In cases where brands introduce more significant innovations to their product or service/support package, a brand re-alignment or re-positioning might be in order. This is a significant change with very real (and measurable) implications to the bottom line and should not be taken casually.

Connecting the innovation to the brand
Most innovations are, in some way, related to how the brand currently relates to its customers and those people who interact with the brand on a regular basis. The most important thing to do when introducing the innovation, then, is to understand how these relationships will be impacted and plan accordingly.

In short, you have to establish clear and obvious connections between the innovation and the brand.

You might find it helpful to break the brand and the innovation down into their core/basic values and then look for the overlap. Those overlapping values are your points of strength – harmony between the innovation and the brand – and will give you the foundation you need for your external and internal messaging efforts (whether they consist of advertising, PR, conferences, etc.).

For grins, you might want to check out some of these innovations that did little, if any good, for their brands. Go here, here and check out a book on the subject.

Later.

This information is (c) 2005, Brand Central Station, all rights reserved. If you are interested in receiving news and analysis directly from BCS, please log onto our website.

I used to be sold on Gateway computers.

For years, I used to buy their top-of-the-line products, make sure I had comprehensive warranty coverage, provide positive feedback to employees whenever possible and vehemently defend the company whenever my computer-savvy friends would disparage them.

In short, I was a cash cow for Gateway.

Then began the ordeal that has been the past fourteen months. Around the first of last year, I made a fairly significant purchase of Gateway products – a big, desktop station and sleek laptop for the office and a Media Center for my wife. The Media Center purchase was critical – the snazzy, all-in-one unit was for my wife’s use. It seemed perfect: easy-to-use, not a lot of parts, wireless and, best of all, you could watch tv on it while you worked.

Almost immediately, I had problems. The delivery of the desktop system was going to take a while but, somehow, no one in billing had been told that so I started receiving charge statements and demand letters for payment before the system had even arrived at my home. Every time I’d get the problem straightened out, some new third-party collection service would get in on the act and foul everything up. We straightened everything out once I had all the equipment and wrote a check to wipe out the balance (on which they continued charging interest for two months until someone in charge managed to rectify the situation).

Shortly after the snags were worked on concerning the purchase, things started to go wrong with the equipment. First, the desktop station failed on me, literally days after loading the last of my 500+ CD collection onto it. A mild set-back, I was disappointed when I was told I would have to install the new hard drive myself.

Soon after that, the Media Center started to have problems. The monitor started to flicker and the speakers made random pops and groans. A quick trip to the Gateway Country Store seemed to solve the problem, though. Gateway’s service policy had come through for me before and did again this time. Their reputation, although bruised in my eyes, was still in tact.

All that was about to change.

I rue the day Gateway decided to close their retail locations. Sure, I understand why – but what most people don’t know is that when the Gateway Country Stores closed, I’m convinced a “stupid” virus must have been released inside the company’s CRM (customer relationship management) system. Coinciding with that was a decision made by both my laptop and the rouge Media Center that they would work together to test the limits of the lemon law in my state.

It’s been nearly a year now and hardly a month goes by when my wife and I haven’t made two or three phone calls to Gateway’s tech support. The people are great: nice, sincere, well-meaning … the same qualities I enjoyed in the employees at the Gateway Country Store. But it’s the little things (along with my computers’ continued misbehavior) that have just about bankrupt my reserve of Gateway Brand Equity.

For example:

1. How can you send a computer in for service and have it arrive back at your home, packed exactly the way you sent it, with no documentation and none of the repairs performed?
2. Why does the automatic receptionist for the tech support line require you to enter the serial number of the equipment you’re calling about and then the live operator have to ask for the same serial number when he/she answers the phone?
3. Why does the company give you three or four reference numbers (e.g. invoice number, account number, serial number, incident report number) but when the tech support person looks up each number, they are unable to find a record of your last call?
4. Why do the tech support people ask for your phone number every time you call in – after you’ve given them the serial number on your computer and they’ve confirmed your account information?
5. Why don’t tech support people call you back when you get disconnected, knowing that if you wind up calling tech support again, you’re likely to get someone completely new and have to start all over again?

The list could go on and on, but I won’t let it. See, I like the people at Gateway and I know it’s not all their fault. The problem is inside. Really inside. Like inside the way they try to meet service customers’ expectations and needs.

And that’s my point.

If you want to build long-term brand equity, you have to remember that what you say (we call it promise making) is only part of the equation. The tough part is meeting the expectations you’ve set (that’s the part we call promise keeping).

That means taking a closer look at every point where customers interact with your brand – from product development to customer support. And don’t just look at your people and how they’re trained. Look at the systems they rely on to meet customer expectations and build brand value.

If you do that, you could raise an entire herd of cash cows of your very own.

Later.

This information is (c) 2005, Brand Central Station, all rights reserved. If you are interested in receiving news and analysis directly from BCS, please log onto our website.

This is never going to get easy.

Politicians are trying to face down a signficant problem when it comes to running free and fair elections here in the USA. It’s laudable – but their response is predictable and problematic.

To paraphrase the piece that appeared on AdRants today, The Federal Elections Commission is looking into what modifications need to be made to the Bipartisan Campaign Reform Act in order to make sure online advertising in support of candidates are regulated.

Much of this appears to be in response to the use of the Internet as a media to launch attack ads against opposing candidates (as reported in detail on C|Net’s News.com). Nobody wants to stand up for the Internet – after all, every candidate has been the victim of an attack or two – but because there is no defense being presented, politicians have only themselves to listen to when it comes to proposing solutions.

And those solutions are, typically, ill-conceived and inadequate. Two factors that proposed remedies seem to ignore are the increasing international interest in US domestic politics and the obiqutous nature of the medium itself. Here’s my point:

1. From my conversations with clients and colleagues abroad, one of the things that they don’t understand is the apparent narcissism of the American public when it comes to our politics. They can’t understand why Americans don’t realize how important our elections are to everyone else in the world. In the words of one of my close friends from The Netherlands: “When you elect your President, you’re really electing the president of the world – that’s why we care.”

Of course, from my point of view as one who constantly deals with cross-cultural branding and marketing/communications issues, I see this situation a little differently (and, I hope, objectively). Most Americans don’t really understand the role we play in the world and how many of the hopes and dreams of people outside our country depend on our ability to succeed and manage our own business efficiently and peacefully. The political roller-coaster we’ve been on since the Clinton presidency has caused internal, political extremism inside the US and, more importantly, created substantial doubt in the rest of the world on our own ability to work things out.

I am much more optimistic about our future, but that’s a rant for a different blog.

2. The nature of the Internet fosters international discourse, partnership and communication. That much we know. Heck, 80% of the time, I manage international business transactions through Brand Central Station from my home in Davenport, Iowa (that’s in America’s heartland, for those of you who are a little more geographically-challenged).

This fact may be useful for those of us who want to foster business between cultures and countries. But for the FEC and those people trying to keep a handle on how political speech is used during a Federal Election, it presents a signficant problem.

Don’t believe me, look at the proliferation of off-shore, Internet gaming sites that prey on US consumers. It’s worth millions (if not billions) of dollars a year. And what can the US government do to regulate it? Not much.

All it would take is for off-shore interests to start interjecting, hosting or sponsoring political attack sites focusing on US elections and the best intentions of the McCain/Feingold Act could be in jeapordy. And before you dismiss the idea that foreign interests would have better sense than to mess with a US Presidential election, check this out.

Although this went mostly unnoticed in the US press, it presents a snapshot of what could be done in a widespread and organized way – with or without advice or urging from political parties inside our own country. It’s messy and maybe my concern is a bit premature, but I think it deserves to be discussed.

Let’s talk.

Later.

Online Political Ads May Face Regulation

I like to work. A lot. In fact, I spend more time reading, looking at websites, talking to clients, etc. than I probably should. In management consultant terms, I’ve let my “work life” bleed over into my “home life.” But it’s been my choice and I enjoy both immensely.

Unfortunately, that’s not the case for most people. Historically, we’ve been able to keep some kind of separation between the two – maybe we see different people socially than those we see at work. Maybe we have rules about what we can and can’t talk about outside of the office. Maybe we hang out with our work-friends, but avoid spending time with the boss.

All of those have been successful strategies in the past, but now thanks to advanced communication, a broadening geographic scope for many businesses and an increasingly demanding and responsive consumer base, one gets the feeling that things are going to change pretty dramatically. And not necessarily for the better.

In fact, I think we’ve seen the first signs of significant change just in the first month and a half of 2005.

Case 1: Things best left unsaid …
This article, found on the CNN/Fortune website, is an interesting piece on the impact blogs have had on a number of employees and their relationships with their employers. In these incidences, the employees lost their jobs for revealing information their employer thought was inappropriate.

Was the information important or vital to the business of the employer? You might be able to argue “yes” in a few cases, but not most. Was the information damaging to the employer? I think we could say “at the very least, embarrassing” in almost every case. But “damaging”? It doesn’t appear so.

In fact, much of what these bloggers published to the Internet is what they might have told a few close friends over a beer after work; shared with a spouse or family member; or written into a journal or diary. But by posting it to a blog, the author is opening up these “dirty little secrets” to millions of people who don’t know or respect the intent or interests of the author.

You have to wonder what people are thinking when they post that kind of information to a blog? Are they expecting to get fired? Do they think they can’t get fired?

I believe the easy answer is “yes.” In fact, many of these people think their right to be openly critical of their employer is a 1st Amendment Freedom guaranteed by the Bill of Rights. The problem with that, of course, is the first Amendment to the Constitution merely prevents government from intruding on your speech – it says nothing about your employer.

As a result, employees who talk bad about their boss or co-workers run the risk of getting canned. That risk goes up substantially when the talking is done in front of literally millions of people (online) and in a form that can be easily shared and sent to the employer.

Honestly, why does some of this need to be shared in a weblog to begin with? Isn’t a little discretion called for here?

Clearly these employees are not thinking about the possible ramifications their “inside glimpse” might pose to the brand for which they work. Consumers aren’t so good at discerning between the sardonic wit and the whistleblower when it comes to brands they may find remotely appealing or tentatively suspect. Bloggers need to keep in mind the first rule of disclosure: “Assume everything you say will be used against you.”

That seems to go double for your brand.

Case 2 … Where there’s smoke, there’s unemployment.
Plenty of businesses have smoke-free environments, no smoking policies, Employee Assistance programs covering smoking, etc. But, as this article from WXYZ TV/Detroit points out, smoker’s addictive habits count at home as well as at work.

Under Michigan law, it looks like a practical argument can be made that these firings were legal. But looking on a broader sense, it may be that this ruling signals a signficant change in the influence employers have in the “off hours” lives of their employees.

All in the name of brand value, no doubt.

I’ve spoken plenty of times about the whole new level of intimacy the new marketing paradigm brings to the brand/consumer relationship. Well those rules of intimacy change in the employer/employee relationship as well.

As expectations of product performance go beyond features and benefits and start focusing on brand value, there are several things employees need to do – constantly – to maintain brand value. How smoking fits into that mix remains to be seen, but we don’t doubt it will play a rule at some time, either in this Michigan case or some other time down the road.

How employees and employers figure out the new responsibilities of living the corporate brand’s values at work and at home remain to be seen.

And it should be quite interesting to watch.

Later.

I can’t tell you how many times as an agency president, I used to bang on in staff meetings about the importance of documenting your time and keeping accurate timesheets. We weren’t a law firm, I’d explain, but if we don’t get accurate timesheets from people, there’s no way we could really know what it takes to do a job and that hurt our ability to estimate jobs accurately, fairly and (most of all) profitably.

Four weeks would go by and we’d have reams of unbilled (and unbillable) WIP (work-in-process) sitting on account managers’ desks. My CFO would begin to sweat uncontrollably and I’d start pacing the halls. Eventually, we’d have another staff meeting and I’d cue up another “timesheet” lecture.

Believe it or not, we actually got to be pretty good about timesheets. All I had to do was tie year-end bonuses to them and the problem was (almost) instantly solved.

Imagine my surprise then when I read about the latest lawsuit involving WPP Group’s Ogilvy & Mather, the Office of National Drug Control Policy (ONDCP) and – what else – timesheets. This is the mother of all timesheet disputes. ONDCP has filed an 11-count indictment against O&M and two of their senior managers accusing them of making false billing claims.

Today’s online version of Ad Age reported that experts testified on Wednesday, saying O&M’s timesheets and vouchers were “sloppy” and were either incorrectly filled out or missing altogether. “There were an excessive amount of timesheets that were scribbled on … (and) there were also uses of correction fluid and correction tape,” said Wesley Mandler, an accountant hired to audit the $700 million media advertising contract and supporting documents.

The prosecution is expected to continue making their case that O&M intentionally inflated the number of hours spent on the ONDCP account in order to “close an anticipated revenue shortfall on the account.”

What’s that mean?

In all likelihood, it means that in order for O&M to justify the commission they were taking on media and other related expenses, they had to “pad” timesheets to generate enough hours to warrant the fee. Those of us on the inside of the business know this happens – more often than we like to admit. And, typically, it’s the result of gross income generated by mark-ups and commissions that can’t be directly traced back to “billable” activities and services provided by the agency.

The root cause of this fraud is the same reason timesheets are so important and why agency personnel need to understand the essential value an agency brings to the client in the first place.

Commissions and mark-ups are a historical legacy for ad agencies and other marketing companies. They existed to compensate agencies for representing the services or products of a third party to a client. In fact, in the early days of the ad agency business, agencies used to purchase ad space from magazines in advance and then re-sell the space to clients at a “gross” rate that included their profit margin. The margin was essential because the agency didn’t always sell all the space and would pay for unused space with retained revenues left over from other sales efforts.

As clients have become more sophisticated, they’ve taken more and more of the responsibilities formerly held by agencies and moved them in-house. As a result, the traditional mark-ups and commissions on third party services (like media or printing, etc.) have become harder and harder to justify. But ad agencies and PR firms are slow to change – a hard reality in a business that drives change in their clients – and rather than re-thinking the rationale for these service fees, some firms have taken to “justifying” them by providing timesheets that match hours spent on a client’s behalf with the income generated through these alternative methods.

It’s a big shell game and clients know it.

When the president of a small agency tells me that all she does to price a television spot is double the quote of the production company, I know that agency doesn’t have a clue what it really takes to produce the spot (or service their account, I’ll bet). When the manager of a PR firm tells me they charge 24% compounded interest on overdue accounts and build it into their revenue forecasts for the year, I know they have problems that go way beyond accounts receivable aging.

If agencies kept accurate records of all the time spent by all their people during the course of the year, they could see why some clients should pay a larger commission on media purchases or higher mark-ups on outside purchases than others. Some clients need more attention, are slower to pay their bills, are inconsistent in their relationships, etc. But other clients are great pay, fair minded and easy to serve. These are usually the more profitable clients, no matter what the total revenue generated by the account.

Timesheets and accurate record keeping are essential to knowing where you stand. Courage, honesty and transparency are the keys to getting clients on board with a fair compensation program for your company.

Later.

This information is (c) 2005, Brand Central Station, all rights reserved. If you are interested in receiving news and analysis directly from BCS, please log onto our website.

It’s Super Bowl Sunday and the game is over. Now come days of evaluation, Monday-morning quarterbacking, tough questions and cliche answers. We’ll hear all about it on the morning talk shows and entire magazines will be dedicated to what happened today.

And I’m not even talking about football.

I’m talking about where the real money gets spent. Advertising.

In fact, those of us in the advertising industry have it worse than the chronic sports fans out there. At least they had a fake college football championship to argue over and some legitimate NFL playoffs to watch in January. Those of us in the advertising industry roll right into the Super Bowl season as soon as the figures come out on holiday retail traffic.

It’s positively pathetic. The first Super Bowl related news stories broke as early as November 30, 2004. And the drumbeat just keeps getting louder until the day of the big game. But why do we put so much importance on this event?

You have to understand the history of the Super Bowl to really appreciate it, I suppose. The Super Bowl is an interesting cultural phenomenon because for the first thirty or so years, it wasn’t really that fun to watch. The games were generally boring and the outcomes fairly easy to predict. As a result, we had to rely on something else to keep us entertained. After all, it was cold outside and this was our last, official glimpse of the “true” national pastime until next fall.

Then Apple Computer, Ridley Scott and Chiat/Day changed it all. They introduced a new concept to us in a way that had tongues wagging for weeks. 1984 presented the Macintosh computer to us in a dramatic, arresting presentation that literally stopped conversations about the non-game going on that evening. From that point forward, the bar kept getting raised. The ads were fun to watch (none as interesting as the Apple spot, but still enjoyable) and the games remained boring.

This went on for ten to fifteen years – that’s nearly a lifetime in advertising years – and was assumed (at least by our industry) to be the way things were meant to be. Then, all of a sudden, the NFL had the audacity to put teams into the Super Bowl that actually played a game worth watching. Tonight’s game was one of them.

Imagine the nerve of these people. Just who do they think they are? Interrupting the flow of the ads with their petty game playing during the breaks. I just don’t get it.

Truth be told, I’m glad the game is there. The ads on the Super Bowl have been pretty dreadful the last few years. This year, the hyperbole has been the worst I can remember. We’ve even had advertisers who have tried to gain the spotlight by not running ads in the Super Bowl (Budweiser’s Janet Jackson ad comes to mind as well as the sophomoric attempt by Miller Beer to pick yet another fight with A-B).

As for the ads that ran in the game, I personally enjoyed the Ameriquest spots (but I’m a little twisted), the Budweiser Clydesdale spots and some of the Cadillac work. Most of the spots were pretty average or below average. And the spots for Go Daddy, Subway and Lays made me wince with their badness. Leonard Pinth-Garnell would have been very please. They were truly bad.

Let’s get past this nonsense and on with the business of making ads.

Later.

This information is (c) 2005, Brand Central Station, all rights reserved. If you are interested in receiving news and analysis directly from BCS, please log onto our website.

The message boards were buzzing about this last week and I just couldn’t bring myself to write about it. Then again, it’s been a while since I’ve been able to bring myself to write about much of anything, but it’s the new year, so what the hey.

Have you seen this circumspect ad for the VW Polo? The slogan says “Small but tough” and the creative “execution” (if that’s what you want to call it) provides a very crude and insensitive demonstration of that fact. For those of you who haven’t seen it and don’t have the patience to load the streaming video that comes with the link, the spot shows a young man (who looks like he’s of Arab descent) hopping into his new VW Polo and scooting off to park near a European, outdoor bistro.

It’s at this point in the commercial when we realize the young man has explosives strapped to his body and, after a brief moment of reflection/prayer, he pushes the button and sets off the explosives. To our amazement and, no doubt, the terrorist’s disappointment, the explosion remains contained inside the Polo with nobody sitting on the nearby sidewalk the wiser.

Our first reaction in my office was laughter. That nervous kind of laughter when you see something really unexpected and really inappropriate. A few of my co-workers wanted to see the spot again and a couple even walked away saying “That’s great.” But a day or two later, nearly everyone agreed the spot was not only a bad idea that would never see the light of day but that even as a viral campaign, it may have crossed a line.

Volkswagen claims they didn’t authorize the ad and that they, of course, are “outraged”. According to the trade pub, MediaGuardian.co.uk, things aren’t quite so cut and dried. It’s been revealed that the spot was shot on 35mm film and cost around 40,000 Pounds (Sterling), approximately $60 – 70,000. According to Agenda, Inc.’s Live Feed, the producers of the spot insist the commercial was produced to show “people in the industry” what they could do.

No matter what you may think about the ad or the guys who created it (Lee And Dan of the United Kingdom), you have to wonder just how far is far enough in the quest to make great spots that get noticed.

It seems appropriate to bring this up the week before the Super Bowl. That event is the biggest show on earth … and I’m not talking about circus acts or even football. I’m talking advertising. Ever since Chiat/Day and Ridley Scott produced a killer ad to introduce the Macintosh computer, the Super Bowl has been holy ground for ad agencies and the creatives who work there.

Of course, not all spots are 1984. Remember the cannon shooting rodents for eTrade (that was it, wasn’t it)? Or sock puppets or clowns drinking beer through their butts?

Yeah, they’re not all winners. In fact, the harder we try to make great ads that stand out, the more likely we are to have it blow up in our faces. And now, thanks to the Internet, streaming media, bigger pipes offering more bandwidth and the viral nature of many campaigns, good taste may have seen its final days.

All I can ask is that you try not to be part of the problem but rather a part of the solution. Make ads that mean something and appeal to regions above the belt – ideally above the shoulder. Keep the concepts simple and uncluttered.

And, by all means, don’t produce things that look great in the book and don’t do squat for the client. Remember, without the client, you’d be creating art … and starving.

And please, don’t chop the heads off of any more cats with sunroofs, blow up terrorists, rip off other peoples’ music or use Michael Moore. He’s a crank, he’s fat and he’s not funny.

Later.

VW’s Exploding Terrorist Ad

In the world of marketing, there is an almost obsessive focus on “traditional” advertising – television, magazines, newspapers, radio and outdoor. But highly targeted media, specifically online media, is getting more and more press.

That’s why it’s interesting to see a usually unconsidered media, like junk faxes, break through in a news story that, I think, has implications for other medias down the road.

Fax.com (who’s website no longer works, by the way), was fined over $5 million for auto-dialing phone numbers throughout California in an attempt to identify which numbers were answered by fax machines. By accepting the fine, Fax.com agreed to stop its auto-calling operations and is now facing a larger civil penalty when the State of California takes action against them.

Of course, all of that gets in line behind Jankfax.org’s $2.2 trillion dollar lawsuit which is still pending.

In fact, Junkfax.org has provided quite a bit of information about junk faxing – a technique that annoys businesses and consumers alike. And now, those of us on the receiving end have started to fight back. Junkfax’s case status report provides a run-down of a few cases along with horror stories, news stories and even instructions on how to sue faxers.

So is sending unsolicited faxes worth the risk? Apparently. As a marketing strategy, these companies seem to have a relatively high rate of success when compared to other “annoyance marketing” tactics like e-mail spam, boiler room calls, etc.

And even though the federal government is working on revised/more stringent legislation, it appears tougher reform is still a year or so away.

It’s interesting to note that the fax marketing companies we looked into, like FaxAd Express don’t even mention possible privacy concerns, lawsuits or legislative issues related to their profession. Instead the focus on the “bells and whistles” of their technology and hide behind third party service providers, a Las Vegas business location and a dodgy legal disclaimer.

All this smells bad to us to. And the implications for other, more conventional, forms of media are what concern us. After all, if this were to go to the extreme and every commercial communications relationship required some kind of “opt-in” before it could take place, how would you ever break the ice? (Then again, maybe that’s the next great business opportunity.)

The way it’s worked out, telemarketers, e-mail spammers and companies like Fax.com are like the kids in the back of the school bus who won’t sit down and so the rest of us have to suffer the consequences. Their persistent disregard of personal space and invasive haranguing is enough to raise the ire of the one group who can really do something about all of this – voters.

Yeah, not politicians. Voters.

You see, when the voters get annoyed, they take it out on the politicians and it doesn’t matter how much special interest money is involved. If passing a law that only hurts a faceless company is all it takes to get the voters off your back, there isn’t a politician on Earth who will be kept off the bill.

The problem, of course, is that special interests are starting to see how this all works and have co-opted voter angst and rage in an attempt to get their special legislation across. And what are they using to do it?

Unsolicited e-mail, telemarketing calls disguised as political opinion surveys and, I would assume, broadcast fax messages sent to whoever they think can make a difference.

Ironic, isn’t it? Thanks to ill-informed political marketing and media consultants (most of whom don’t have a commercial credential that’s worth a damn), politicians have become the next “niche annoyance” marketer. They could learn a thing or two if they thought about how their actions speak louder than their sound bites.

Later.

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