Microsoft Live Search CashBack: Cold, Hard Truth on Cold, Hard Cash-- by Nate Winter

Microsoft has announced Live Search CashBack—an ecommerce rebate program that will drive its next big initiative in search advertising. Instead of search advertising’s traditional pay-per-click model, marketers who participate in CashBack decide on a pay-per-sale rate for each of their products sold through Microsoft’s Live search. However, instead of keeping the money itself, Microsoft will pass the full pay-per-sale amount on to the customer in the form of a rebate. Thus, products with higher rebates will make attractive options for buyers looking to save money and only Microsoft's Live Search will offer it.

While this is a revolutionary idea for search, it’s based on a tried-and-true brick-and-mortar commerce model of manufacturers and sales distributors. In some ways Microsoft's CashBack program turns Live Search into a high-volume online retailer, similar to Amazon.com, except Live Search will send interested buyers to the marketer's site to complete their transactions. And for providing this service, Microsoft profits nothing.

The prevailing speculation is that CashBack is an attempt for Microsoft to better compete with Google and Yahoo! in the search space. Statistics from ComScore Networks show that Google accounts for roughly 60% of all searches in the U.S. Yahoo’s share is about 20% and Microsoft’s is around 10%. What's more, Google gains share month to month at the expense of both Yahoo! and Microsoft. Microsoft’s ill-fated attempt to acquire Yahoo! earlier this year was its first dramatic strategy for taking on Google. CashBack appears to be plan B.

Will CashBack Succeed?

Usability
Without a doubt, Microsoft’s CashBack will attract searchers to Live Search. But in order for those searchers to become repeat purchasers, it MUST be easy. Already, the user will have to create a CashBack account and most likely an account with the online retailer—these two steps alone could be a tall order for infrequent e-shoppers or purchases that promise only a minimal rebate.

And the transaction coordination between CashBack, the e-tailer, and the buyer had better be seamless. CashBack will have to be versatile enough to successfully interface with all of the ecommerce softwares used by today's e-tailers. Otherwise there will be an army of disgruntled consumers burned by CashBack and unsure of whom to contact about a glitch. The blogosphere will make a highly visible home for a CashBack Backlash™.

Participation
The way consumers perceive CashBack will depend largely on marketer participation and how generous their rebates are. Microsoft needs multiple, big name marketers in the most popular shopping categories to make the program seem legitimate to new users. Only with the participation of name brands and high-demand products can CashBack drive prices down through competition and ultimately woo buyers.

The Business Model
In this period before CashBack launches, the profitability of the business model poses the biggest question mark. Ads through Live Search CashBack initiate transactions that save consumers money and yield more sales for marketers. And Microsoft will turn no profit on the sales. Even if marketers must pay to participate in CashBack, the fees can't be much if Microsoft hopes to attract marketers en masse.

A business model in which Microsoft makes no profit doesn't sound like the Microsoft so many know and hate, which is an immediate cause for suspicion. This kind of benevolence sounds more like Google, and with good reason.

CashBack appears to be Microsoft’s answer to the vast number of Google products that are free to users. There is a key difference, though. Many of Google’s free products are non-commercial in nature, which allows Google to embed text ads within the product interfaces in an uncompromising way. CashBack, on the other hand, is a purely commercial product already based on advertising, which means there is no other way for advertising or sponsorship to monetize it without cannibalization.

It begs the question: if not on the ads, where will Microsoft make money? The most likely answer is pay-per-click search ads.

While CashBack applies only to ecommerce searches, the publicity and promotion behind the new program will increase traffic to Live search across all search categories, at least for a short time. Microsoft has to be hoping that CashBack will make Live search the default search engine for users who currently prefer Google or Yahoo. This increase in overall traffic, if steady, could drive more pay-per-click advertising in non-ecommerce search categories, which would help Microsoft offset the cost of CashBack. If the traffic increases to Live Search are only temporary or don't extend beyond ecommerce, Microsoft could be sunk.

If CashBack doesn't turn profit somehow, Microsoft might be forced to retain part of the pay-per-sale amount for itself. However, doing so could cause rebate dollar amounts to decrease, making a CashBack Backlash™ from both marketers and consumers a real possibility.

It also remains to be seen how profitable CashBack's full rebates will prove to be for marketers. Substantial rebates will requires high sales volumes to compensate for reduced profit margins. Furthermore, online retailers who also rely on brick-and-mortar locations could see their in-store sales erode as a result of sales through CashBack at prices their stores can't match.

Prediction
This is a tall order for Microsoft. Live Search CashBack has to be easy to use, offer high-demand products with solid rebates, and somehow turn a profit. Between these three crucial factors, something will go wrong and the blogosphere will bury it in bad reviews.

Frankly, the whole thing reeks of desperation. At its wit's end, Microsoft must resort to paying consumers to use its search engine. While this is a potentially powerful offer, Microsoft must follow through on it while also offering all the other features that have made Google and Yahoo! the search leaders. Perhaps that is the tallest order of all.

-- Nate Winter

Branded Idea: InterKinetic >> InterConnected -- Nate Winter

InterKinetic >> InterConnected is a philosophy on interactive design that functions as a branded idea related to touch screen design. Focusing on the morpheme "inter" meaning "among" or "between," this terms shows the relationship between interactive design and engaged participation by users. Using the word "kinetic" meaning "movement," InterKinetic refers to mutual movement between two things, i.e. interactivity between a user and a brand. InterConnected is used to signify a meaningful connection between the user and the brand. Thus, InterKinetic >> InterConnected means that when people and brands interact together using touch screen technology, a meaningful connection is made. This type of branded experience is extremely valuable in a market where brand building is such a high profile topic.

Example of website or brochure copy explaining InterKinetic >> InterConnected:

Movement implies active participation. When a business and its customers move together interactively, they connect. That's InterKinetic >> InterConnected.

-- Nate Winter

Branded Idea: IdentiShape-- by Nate Winter

IdentiShape is a branded idea intended to promote a collection of design services for a design firm. A combination of the words “identity” and “shape,” IdentiShape hits at the core of design's role in shaping identity.

To clarify its meaning, IdentiShape can be coupled with the positioning statement, “Where Business Identity Takes Shape.”

The concept of “taking shape” is appropriate for design firms on a number of levels. The common idiom “to take shape” means to create in a general sense, which is pertinent to a design firm’s multiple creative services. But, understood literally, “to take shape” means to give physical shape to something—i.e. to build. This meaning is unusually profound for a company that designs and builds physical spaces such as retail environments, restaurants, museums, etc.

Adding to the idea’s strength, IdentiShape is a customer-focused idea. It is a design approach that shapes the identity of a customer’s business or product. In this way, IdentiShape can help a design firm position itself as customer-centric and service-focused, perspectives that customers favor.

IdentiShape as a MarketingTool

At its core, The IdentiShape Design System is a marketing tool. It’s a method for organizing and explaining a design firm’s services as a singular, branded entity.

Copyright-Friendly

The full title “IdentiShape Design System” obeys legal rules of proper trademark, using the trademarked term as an adjective to an understood noun.

Example of usage:

The IdentiShape Design System™
Where Business Identity Takes Shape

* * * * *

color
curvature
environment
form
function
imagery
light
lines
materials
photography
shape
sound
space
structure
texture
typography

Experience them as one with IdentiShape

* * * * *

What is it about the intangible experience of a space that excites and inspires?

When can the unique interplay of textures, colors, and architectural presence improve business?

How can a sales environment elevate the perception of an entire product or company?

the answer is IdentiShape

* * * * *

The IdentiShape Design System establishes…

• Verbal Identity
• Logotype Identity
• Web Identity
• Interactive Identity
• Print Identity
• Simulated 3D Environment Identity
• Environmental Graphics Identity
• Exhibit Identity
• Interior Identity
• Architectural Identity
• Advertising Identity
• Press Identity

and collects them into a single, cohesive brand that communicates the client and its product together.

-- Nate Winter

Business Myths Debunked: The Family Business -- by Nate Winter

America is in love with the idea of a family business. In one sense, the best way to learn and run an honest, successful business is to grow up in it. But it goes deeper than that.

The idea of a family business is almost a trademark of the American dream. Building something yourself is a sign of the self-sufficiency and rugged independence vital to the American consciousness. Working with your family members translates to family values, another big one for Americans. Throw in an apple pie and you've got a big old American cliché staring you right in the face.

The romantic aura surrounding family businesses harkens back to a simpler time before big corporations, shopping malls, and chain restaurants. The heart of America was in small towns and city neighborhoods—tightly knit communities where everybody knew and supported each other. We find comfort in that notion of America, which is precisely where the family business comes from.

And the family business always starts small—- America loves that. Having been the David that beat Goliath in the Revolutionary War, America loves to root for the little guy, the under dog, Rudy. This leads us to the crux of the American Dream: people who work hard can make their own success. The family business is a powerful manifestation of this idea.

But, above all else, the family business is about closeness. A family working together to succeed can't help but be extremely close. It usually indicates that the younger generation respects its elders and maintains the strong morals they've been taught. This, again, is extremely reassuring that the traditional values America espouses are alive at well.

But, despite all these heart-warming emotional associations with family businesses, they are simply a bad idea. Speaking purely from a business perspective, a family business is dangerous because it mixes business and pleasure. The emotional interests of family present an inherent conflict to the rational, logical sense it takes to run a business. Making business decisions with regular, non-family employees is difficult enough. Adding an extremely personal and unavoidable family dynamic into the mix can make things even worse.

It can cause undue toleration of under-performing employees. Aging executives might not be as competent as they were in years passed and young employees might lack the responsibility or dedication necessary to perform adequately. To do what's best for the business would be to let these employees go if their performance doesn't meet acceptable standards. However, the emotional motivations of family might allow an incompetent older employee to continue working for fear of hurting his pride or to keep a careless younger employee in an attempt to teach her responsibility. In a large company, these employees wouldn't be tolerated, however family businesses tend to be small and run informally. This means there is no outside pressure (say from investors) to tighten up the ship.

There are myriad other conflicts that could arise based on a family business from power struggles to mistrust to complete dissolution of the company. However, boiled down to the heart of the matter, a family business makes critical business decisions difficult, which compromises the optimal functioning of the business.

While this inherent conflict comes as little surprise, the promise of a family business remains a siren song for a handful of cultural reasons. Resist it if you can, or work with family at your own peril.

-- Nate Winter

Branded Idea: Design Transparency -- Nate Winter

Design Transparency is a philosophy on design that functions as a branded idea for a design firm. It speaks to the business aspect of design. While the purpose of art is to simply please the eye, commercial design must please the eye while also serving a higher purpose of communication. That is to say, the design should be transparent in order to allow the design piece's commercial message to take the lead. This helps to pacify a concern among businesses that their designed marketing pieces look great, but ultimately don't deliver a return on investment.

Example of website or brochure copy explaining Design Transparency:

Design is the way to communicate a message; design is not the message itself. interactive design should communicate business ideas first and be noticed for excellent design as a close second. That's Design Transparency.

Business Myths Debunked: The Renaissance Man -- by Nate Winter

While originating in the European Renaissance (1450-1600 C.E.), the notion of a Renaissance Man lives on today referring to those with a variety of interests and talents as applied to career as well as vocations. While admirable in its own right, the Renaissance Man ideal still idolized today in business is a misplaced role model.

In my Culture/Ed article "IKEA, Opiate of the Masses" from 2.22.07, I discuss how modern business is moving rapidly toward extreme specialization. It begs questions like, “Does the term ‘renaissance man’ apply to a guy who can change my break pads and replace my air filter?”

Today rather than having a few people that can build an entire automobile from start to finish, business maintains an assembly line mentality where each person does one small part of the larger process. That's specialization. It's cheaper to hire people because the necessary skills are so rudimentary. And most importantly, it's faster.

The inherent business problem with Renaissance Men, especially the entrepreneurial types, in today's business world is that they make the corporate brain trust too small. They become the hub for all ideas and decisions within their many skill sets. They don't distribute responsibility to others and the bottle neck effect of this centralized organization slows progress. The Renaissance Man values being at the center of every decision and won't relinquish that control to others.

With a Renaissance Man mentality, it can be difficult to establish an organization of distributed responsibility. The Renaissance Man is inevitably dissatisfied with the work of others compared to his own. Rather than invest time and energy into finding or training the proper employee to take on part of his responsibility (a strategy for long-term growth), The RM becomes easily frustrated and chooses to do the work himself. This short-sighted behavior keeps the business from making the progress it would enjoy under a business model of distributed responsibility.

There is a prideful component to the Renaissance Man, who is, by nature, a person who rarely relies on others. He views such reliance as a sign of weakness in himself. He thinks, "Why tolerate others doing something I can do better myself?"

The primary short-coming of the Renaissance Man is that it runs counter to the widely accepted business axiom, "time is money." Doing it all yourself takes more time. This is why Renaissance Man businesses grow to a moderate size and then either remain moderate in size or try to continue growth under a flawed business model and collapse.

The farther our culture and economy goes on reinforcing specialization, the greater our interest will be in the idea of the Renaissance Man. The likes of Leonardo DaVinci, Benjamin Franklin, and Thomas Jefferson who possess a multitude of talents will continue to captivate us.

History is littered with famous specialists, but few of them, if any, have been recognized for their incredible focus. The position of specialist is a thankless one.

One exception is fictional detective Sherlock Holmes-- a notorious specialist. In one adventure Watson stands in disbelief at his intellectual idol's lack of even basic knowledge regarding astronomy. Unfazed by an accusation of unintelligence, Holmes states that he has no interest in astronomy. He prefers to have intimate and exhaustive knowledge of a select number of subjects rather than cursory knowledge of many.

A logical argument from a successful, if purely fictional, figure.

While the Renaissance Man ideal is a noble one, modern business based on specialization should not espouse it. Rather it should apply an opposite adage for the Renaissance Man, "Jack of all trades, master of none."

-- Nate Winter

Business Myths Debunked: Sales People ≠ Marketing People -- by Nate Winter

Sales and marketing are powerful forces that undeniably require collaboration in today's world of business. Marketing develops overarching strategies to make products and services competitive and appealing. Sales then uses those strategies to actually acquire new customers and generate new business from existing customers. These two disciplines must work in tandem to achieve success.

Because of this close relationship, sales and marketing are often coupled as a single entity. While this coupling is certainly convenient in many cases, it creates an unhealthy potential to overlook the important differences between sales and marketing and the people responsible for each.

Marketing People
These are the strategic-minded. They develop brands, campaigns, and other tools for a wide array of media that rely on consistency and longevity. It is their job to create and distribute product messages that are original in order to attract customer attention, but also consistent so as to not confuse the customers they've attracted. Marketing is a discipline of coordination and consistency driven by big-picture, long-term thinkers.

Sales People
These are the execution-minded. They use the marketing plan and make it happen it on the ground level, winning sales one by one. They deal with a wide variety of customers who have different sets of needs, attitudes, motivations, and budgets. Good sales people know that every potential customer is different, so they react to the uniqueness of the customer in order to close the sale. Sales is a discipline of distinction and adjustment driven by detail-focused people who see the world one customer at a time.


Right here we have identified some key characteristics that make Marketing people and sales people very different. Neither set of traits is objectively superior to the other. Each set of traits is vital to the goals of its discipline. Marketing people need to create big ideas that work across media and extended timelines. And sales people need to focus on the unique needs of the customer in front of them to win sales.

The challenge is that, when sales and marketing people are lumped together to make decisions, the boundaries between best marketing practices and best sales practices begin to blur. This causes frustration between team members and dysfunction in the sales and marketing program.


Why Marketing People Don't Make Good Sales People

Marketing people play the numbers and look at the whole picture. If research shows that a certain marketing plan will appeal to 75% of the target audience, that's a good plan and should be implemented. Marketing people don't think of the remaining 25% who are left out of the plan. They view those people as a small loss that enables a focused effort toward the significant gain of the 75% target.

In a sales environment, a marketing person faced with a challenging prospective customer would chalk that prospect up to one of the 25% that can’t relate to the marketing plan. They wouldn't devote their full efforts to win that prospect. They'd just say, "This is how we're promoting our products. If that doesn't appeal to you, there's nothing I can do about it. I'm sorry I couldn't help you today." The prospect would walk out the door empty handed. Over time you'd find that sales are lower than forecasted because the fervent salesmanship of a true sales person wasn't there. Marketing people believe that marketing ideas can sell the product almost entirely on its own and tend to discount the value of strong sales techniques.

Why Sales People Don't Make Good Marketing People

Sales people tend to look at the sales process anecdotally in terms of opportunities lost. When they do all they can to win a customer and it still doesn't work, they are affected. It makes them doubt their sales abilities as well as the marketing program overall, even though the marketing plan only intends to reach 75% of the target audience. Commission-based incentives are also a powerful factor here, as a lost sale means lost money. In order to avoid the disappointment of lost sales, they want to adjust the marketing program so that they can sell to more of the people they're not converting. As people who specialize in adjusting themselves to what the customer wants, they expect the marketing plan to adjust in order to back them up in any situation. What they fail to see is that adjusting the marketing plan to appeal to the missing 25% removes focus from the primary 75%. Over time you'd find that sales are lower than forecasted because the focused marketing message that appeals to 75% of the target market is no longer in tact. At that point a sales person would suggest another adjustment to attract another subset of the target audience. This means changing the marketing plan again, a large task considering the goal of a marketing plan is for many small efforts to coordinate cohesively.


The different motivations and personality types inherent to sales and marketing are what allow each discipline to function successfully on its own, but can also lead to downfall when not kept in check. The key to a successful sales and marketing program lies in striking a healthy balance between powerful, strategic marketing and agile, tactical sales.

-- Nate Winter