When I think of affiliate marketing I automatically think of all of the people in the “business opportunity” sector who tell you that you can make $250,000 a year working only part time from your home with no computer skills. These people are dead wrong! Affiliate Marketing is just like any business, there is no such thing as a quick buck. In order to succeed you will need a business plan that is strategic in nature and built around some competitive advantage that will keep smarter and more well, funded affiliates from stealing your business

The first step to crafting a business model is to stop thinking about the quick buck and start thinking rationally. Succeeding in business takes a degree of objectivity and rationality that is not conducive to acting on whims and hunches. When you are thinking about your business strategy in the affiliate world, think Warren Buffett, who has mastered the art of objective investing. Stop thinking like a day trader that is trying to make a quick buck.

Warren Buffett is someone who follows the mantra, “Invest in what you know”. That is how Buffett creates a portfolio and “bubble-proof”…he only invests in businesses that he knows are so solid that even if an idiot were running them, that they would be successful. That is how you should learn to pick your affiliate niche. See: Picking a Profitable Niche

One misconception that people have when they think about the affiliate marketing world is that you can just put up a slick landing page and then buy a few search keywords. How sustainable is that? If you make that your business plan then almost anyone can come in and steal your business model. You need to come up with a defensible business model that leverages some sort of competitive advantage.

Start with a SWOT Analysis

A SWOT analysis is a very simple business analysis performed by businesses as they are evaluating a business market. It evaluates their internally controlled strengths and weaknesses and their externally controlled opportunities and threats. When you are evaluating a specific niche market to get into with your affiliate business, you must evaluate where you lie in the competitive landscape by doing a SWOT analysis.

Here are some Strengths, Weaknesses, Opportunities, and Threats you should be looking at as you evaluate your affiliate business plan

Strengths

• More usable site
• More In-depth content
• More Product Selection
• You are a product/service expert
• You have a difficult site to replicate

Weaknesses

• lack of technical skills
• Lack of design skills
• Not a good writer
• You don’t know as much as your competitors
• You don’t have the money to execute the plan

Opportunities

• Market trends
• Sales Increases
• Lack of Competition
• Competitors weaknesses
• Macroeconomic factors

Threats

• Savvy competitors
• Your angle is already covered
• Your Site is too easy to relicate
• Macroeconomic Factors

After you have completed your SWOT analysis, then you must ask yourself if it is still worth your time to do it. If you find that you are an expert in dial-up internet and you know the customer better than anyone in the world and you have all the skills to make a great website…do you really think that you could be successful? Understanding all of the components of your market, both internally and externally, is key to being successful at affiliate marketing

Market Study

After you have done your SWOT analysis and you have decided that it is worth your time to get into your niche, then it is time to ask yourself the following questions:

Can you produce the site

do you have the programming and design skills, do you have the necessary software, do you have the time and budget? All of these questions need to be addressed. And, if you do not have the right answer to these questions, how can you learn the necessary skills, outsource the project, or obtain the capital to get what you need?

Who are your competitors?

Learn all that you can about your competitors, perform a SWOT analysis on them if you have to. Understand what their key value proposition is, where they do and do not meet the market’s needs, and how you can offer something unique and valuable to your customers in light of what they offer.

Is there enough demand

Use the Google Keyword tool. to understand search volume and map out potential keyword volume.

Look at print publications. If there is a print publication built up around your product then there is enough demand for it on the internet.

Do you know your customers

Type in some of your anticipated keywords and find the places where your niche community of buyers hangs out. What products do they like, what features are they looking for, what are the most commonly asked questions that they have. Do all that you can to get into the mind of your customer

Is your angle unique

You need to ask yourself if your particular angle towards selling the product is unique, if it adds value to the online community, and if you have clear key differentiators from your competition,

Get Feedback

Once you have formulated your business plan, come up with your key differentiators, performed a SWOT analysis, and then performed an in-depth market study, it is time to get some feedback. You never know what you have missed until you have bounced the idea off of somebody who has a different perspective than you.

Seek out trusted colleagues, subject matter experts, and anyone else who may be able to add a fresh perspective to your idea. Also, don’t worry about people stealing your ideas. Most people are too busy and lack the resources to steal an idea from you.

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I know there are a lot of blog posts about how to start an affiliate business, but I am going to concern myself primarily with how to actually start a legal entity and deal with the tax considerations that come with it.

If you are smart then you will treat your affiliate business like a real business and cover all of your bases from a legal perspective. So in order to have a fully functioning business here are the things you will need to consider.

What Type of Legal Entity to Use

The first thing that you want to take into consideration when you start your business is the type of legal entity you want to use. This is important because the type of legal entity that you choose can affect how much you pay in taxes as well as how you protect yourself should somebody choose to sue you.

The three main types of legal entities that apply to an individual or a group of people who are setting up an affiliate marketing business are the sole proprietorship, the LLC (limited liability corporation), and the S-Corporation (Small business corporation).

Self Employment Tax

The government taxes both individuals and employers for your contribution to Social Security and Medicare (even though both will more than likely be bankrupt before you ever pull out a penny). When you are self employed you are taxed once for your personal contribution, and then once again for your employer contribution. The current self-employement tax rate is about 15.3% of your income. Each of the three entities deals with the self-employment tax differently.

Sole Proprietorship

A Sole Proprietorship is just that, a one-man show. It is great because you do not need any formal setup other than saying that you are a sole proprietorship. Everything that you do just gets added to your personal income statement that is associated with your social security number, and taxed at whatever rates are typical at the federal and state levels plus self employment tax.

The downfalls of this particular type of business structure are that it offers no liability for your personal assets. For example, if you are sued for a business action, the court can go after any and all personal assets that you may have in a settlement. This is VERY risky. This particular reason is why I would never recommend using a sole-proprietorship.

LLC

An LLC, aka limited liability company, can either be used in a one man show or a partnership. It has many forms and can be very complex, or it can be crafted to be a very simple business entity. How you are personally taxed depends much on how you structure the LLLC.

There are typically two types of partners in an LLC, there are active and passive partners. If you are a passive partner you have to pay yourself a salary and you are thus subjected to self-employment tax. If you are a passive partner then everything you pull out of the partnership can be paid out as a draw or a dividend, and is not subject to self-employment or payroll taxes. There must be at least one active partner in an LLC at all times. One way to get around this is to set yourself up as an active partner and then set up your spouse as a passive partner (if you have one)

The main draw of setting up an LLC over a sole-proprietorship is that it protects your personal assets should you go out of business or get sued. Once again, if for no other reason, this reason alone should persuade you to set up an LLC. You may not think this is a big deal until you get sued for something silly…it happens! People can be greedy, litigious bastards.

S-Corporation

An S-corp. Is a small business corporation that is very similar to an LLC, the primary difference comes in the fact that you can have more shareholders in an S-Corp. (up to 99) and there is also a little bit of a loophole for getting around the self-employment tax.

With an S-Corp, the IRS allows you to pay yourself a “reasonable” salary, and then take everything else out as a draw or a dividend. For example, if you make $200K from your business every year then you may pay yourself a reasonable salary for a professional in your field, lets say, $50K. That $50K will be subject to payroll and self-employment taxes, but everything else will just be taxed at the marginal income tax rate. It’s pretty nice. Just remember, a “reasonable salary” is a very subjective term, and it is always best to error on the side of conservatism. i.e. $1 is not a reasonable salary.<./p>

Which business type is for you?

There are three types of affiliates that I will mention. For a small affiliate business with one owner, it is probably best to go with a single member LLC, just for the sake of simplicity. For a partnership, it is always best to go with an LLC. If you are a single owner Affiliate business making a sustainable income, it is probably best to go with an S-Corp. because of the tax benefits.

How to Set Up a Business

Setting up a business is actually pretty easy these days and it can be done relatively inexpensively. The following are the steps you must take to set up a business entity.

1. Form an Entity

   Setting up an LLC or an S-Corp can be done one of two ways, go to a licensed professional and pay a lot of money for a very simple document, or go online and draft it up for cheap. If you have very sticky partnership deals and a complex structure to your business then you should probably go to a lawyer to do it, otherwise, the Internet is probably your best option.

   There are places like LegalZoom.com that will set up your business for pretty cheap, but to be honest, most states have an online form to do it for free. Go to your state’s website and see if you can do it there, all you will have to pay for is the licenses, etc. That is what I did when I set up my LLC, and it was only around $100.

2. Get a Tax ID

   When you use a sole proprietorship you are taxed under your Social Security number. However, when you register an LLC or an S-Corp. you will need to get an Employer Identification Number, or EIN. Never pay for this, you can get it for free at IRS.gov

3. Get a business license

   Most states require you to get a business license from your local municipality, sometimes you can get them online, but most times you actually have to go to the city center to apply for one. I got mine for pretty cheap, it was only $60 and it took me under an hour to do it.

4. Get a Bank Account

   While this is not a legal must-have, if you want a place to keep your business’ money then you really need to have a bank account. Most banks require the following:

   • Approved Articles of Incorporation
   • Federal tax payer id…SSN or EIN

Bookkeeping

Here is the quick and dirty on bookkeeping. Get something like quickbooks and keep track of all of your bank statements, credit card statements, and cash receipts. Keep track of all of your expenses and you will not get screwed come tax time.

Better yet, I cannot stress how much bookkeeping sucks. I did it to pay my way through college and I HATE it. It is tedious and time consuming, so the best thing to do will be to outsource it to a bookkeeping company. If you hire a CPA then they will charge you $100’s an hour to do something that a smaller bookkeeping company will do for about $200-$300 a month. A lot of people may tell you that you need a certified public accountant, but unless you are a public company and you need to be audited for accrual based accounting, you need to be audited, you are much better off with a non-certified accountant, it will save you a lot of money. Even still, hiring someone to do your bookkeeping may not be worth it if you are a small company, but as soon as you can afford it…DO IT!

Tax Planning

This is another situation where I would highly recommend consulting a professional. Hiring a tax professional will allow you to legally avoid paying taxes and they will often save you more money than they cost you. Dicking around with your own taxes is only a hassly that will be costly for you in terms of time, frustration, and possible audits and fines if you screw up.

The one thing that I will say about planning for taxes is that you should put away 40% of your profits in a business savings account that you do not touch. Taxes are always more than you expect them to be and if you don’t put away a reasonable amount of your profits into a saving account it will be very difficult to meet your tax requirements.

Good God that was boring, but necessary. If you want to be a success in your business you have to cover your ass legally. The US Court system and the IRS are two institutions you do not want to mess with…regardless of the outcome, you always come out getting effed. So if you cover your bases from the start it will be hassle free and you will be able to actually focus on your business.

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Today I was surfing the net and I came across a link on a blog for what seemed like a great article about Rick Rubin’s take on the music industry. I love music, and I have the utmost respect for what Rick Ruben has to say, I think he is a pure visionary. Needless to say, I clicked on the link and was met with this Internet monstrosity.

There is no easier way to piss off your readers than to force them to register to see your content. I know that it is free, but I do not want to go through the hassle of registering and logging in whenever I randomly stumble upon a link to an article on the New York Times. Let’s be serious.

I thought that most respectable sites threw out this practice years ago when they found that it only pissed people off and led to a decline in online readership. I know that they are just aching to have my personal information because it can be very useful for marketing purposes. But if I never enter their site because I don’t want to deal with registering (even if it is free) doesn’t that effectively ruin their business.

If I never enter the site then I will never view their ads, and the last time I checked ad-impressions are the life-blood of any media site. So I am hoping that they will realize that this is a huge mistake and stop hassling me for my personal information whenever I want to read one of their articles and provide them with precious ad-impressions.

I am not opposed to giving information to marketers. It’s not like the media is some evil empire trying to take all of my personal information and “1984” me…or are they? I just don’t want to deal with the hassle of registering all the time. I have so many passwords and logins I have to remember, and it’s not like I am such a regular user of the NY Times’ website anyway. Most of the time I just follow links there from Digg, Reddit, or other news portals.

However, from a business perspective, The NY Times needs to recognize that I have so many choices in media. If I run across a barrier to entry on a website, chances are I will just click the back button on my browser and find the next interesting link to follow. There are plenty of websites that are dying for my traffic…don’t make it difficult for me to visit your webpage.

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This is an Executive Summary of Punk Marketing, by Richard Laermer and Mark Simmons. It is completely objective and only contains the annotated main ideas of the authors. Feel free to leave your comments, ideas, or critiques regarding the book in the comment section!

Punk Marketing is an in depth look at the way the changes in the communications landscape of mainstream American society are altering marketing. No longer can companies put an ad on network television and hope to completely penetrate their target market. Richard Laermer and Mark Simmons have put together Punk Marketing as a resource guide for anyone seeking to master the new marketing.

They eschew conventional marketing and advocate creative ways to master the onslaught of new advertising mediums such as the internet, product placements in movies and television, video games, text messaging, etc. Ultimately, they promote the idea that the age of corporations dictating their message to a herd of lemming-like consumers is dead. Instead, customers are now hyper-informed and distrusting of traditional advertising. The only way to survive is to become part of the conversation and “Join the Punk Marketing Revolution.”

Prologue

The book starts out under the premise that there is a revolution taking place in the marketing world today. Back in the glory days of the 1990’s agencies were paid based on how much they spent. They were given a 15% cut of the marketing budget. Which means there was only incentive to spend a lot of their client’s money.

Then marketers began holding ad agencies accountable for their time and billing changed to represent actual work done on the account. Sooner than later, the ad business began to lose the allure and sexiness it once had because all of the profit and perks were being taken away.

Also, media is becoming so segmented and the TiVO and DVR are ruining the 30 second TV spot. Suddenly, in order to sell a product you had to do more than buy a spot on a popular network television program. Here are some of the forces at play:

• The internet has made it possible for consumers to share information at more rapid pace and in a much broader format. Not to mention teenagers are spending more time on the internet than watching TV

• Satellite and Cables television have fragmented TV into hundreds of smaller channels all competing for the audiences’ time. Making it more difficult to reach your target market.
• DVRs and TiVo make it possible for television viewers to skip commercials if they so choose

• Enron and other corporate scandals have made consumers lose trust in corporations and anything they sold.
• 9-11 has made our culture re-assess our values and social norms

ultimately, the marketing industry has refused to keep abreast of the change in cultural zeitgeist. Marketers have assumed that all of the changes in the consumer landscape are an aberration and that they will go back to normal. They are not. Also, marketers are losing respect for the consumer. Consumers can no longer be treated like morons, they are too smart for that.

The ultimate trend that must be noted in this changing landscape is that power over the marketing message has shifted from the corporation squarely into the hands of the consumer. They have the ability to switch out and tune in to whatever they want to…in short, if they don’t like what they are hearing, they will not listen and not buy.

Convergence between commerce, content, and consumers is becoming the norm, and in order to keep up, boundaries between the companies that make products, the media outlets whose content drives commerce, and consumers who purchase goods and services need to be taken down. Marketing is now a world where communications are trumping pre-defined business boundaries and changing the game.

Chapter 1: The Punk Marketing Manifesto

Article 1: Avoid Risk and Die

taking risks is necessary. You cannot always count on the consumer to know what they want, you must take a proactive stance and take a risk every now ant then. Make sure that you are communicating with all of the stakeholders in your risk, but take risk nonetheless.

Article 2: Why Not Ask, “Why Not?”

Assumptions are not true. Assume that anything you assume is only half truth or a generalization that may or may not apply to your specific situation. Don’t be afraid to break paradigms

Article 3: Take a Strong Stand

trying to be everything to everybody will make you mean little to anybody. Pick something to stand for and then build a brand around it, don’t worry if people don’t like you, just as long as your loyal customers still do.

Article 4: Don’t Pander

Asking people what they want is not the answer. People don’t know what they want, as Henry Ford said,”If I asked my customers what they wanted they would have told me a faster horse.” Build your product and brand and tell people what you have to offer.

Article 5: Give Up Control

Consumers now conrol brands. The unspoken contract that media provides content and consumers listen is now over. Media is more conversational and everyone has power to influence now.

Article 6: Expose Yourself

If you are dishonest or not transparent in your marketing you will get caught. The internet has made it possible for instant communication between unhappy customers. Honesty is no longer a point of differentiation, it is a requirement for entry.

Article 7: Make Enemies

In order to survive you need to position yourself against an alternative. Create an enemy and boldy go after them

Article 8: Leave them Wanting More

Don’t blow your wad telling your customers how great you are all at once. Let them figure it out slowly, master the art of the tease.

Article 9: Outthink the Competition

Nobody wins in a war of obvious marketing measures. Outspending on ad budget and lowering prices is no good for anyone. Instead, be smart and play for hype and PR. Master the art of guerilla marketing

Article 10: Don’t be seduced by technology

The media is not the message anymore. The message is still the most important part, not the medium by which it is communicated. Don’t be fooled, blogging may be all the rage, but a bad message on a blog is still a bad message.

Article 11: Know Who You Are

Understand what you are good at and stick with it. Don’t forget what made you popular in the first place. E.g. Von Dutch was a cool, underground brand and then they grew too fast and branded everything in site and once they hit the mass market, they were no longer a cool, underground brand.

Article 12: No More Marketing Bullshit

marketing should make things more simple for everyone. The job of a marketer is to make everything glaringly simple before choice paralysis comes into play

Article 13: Don’t Let Others Set Your Standards

Being mediocre is worse than doing nothing. If you have mediocre ads you are just adding to the noise of intrusive ads that are ruining marketing. If you are clever and don’t insult your audiences’ intelligence they might actually go out of their way to view your advertisements.

Article 14: Use the Tools of the Revolution

Create your own punk marketing manifest. Also, don’t fall into the trap of being driven by data. Not everything can be quantified, so stop trying to do it. Avoid the trap of being anesthetized by data that does not always tell the whole truth.

Chapter 2: Kill the Middlemen

With the advent of user-generated content and the democratization of digital technology, you will often go on the internet and find advertisements that are created by individuals that are just as good or better than those that are created by ad agencies.

If you are a smart marketer you will learn to harness that, just like converse did when their ad agency put out a call for independent film makers to create their own ads for the converse brand. The “amateurs” submitted the short films and they were placed online, the winners were given $10K and their ads were shown on television.

Converse was genius because they were able to start a marketing conversation, instead of just dictating the message to the masses. Also, they were given loads of content for free. The $10K prize was a fraction of what they would have paid to create the same content with an ad agency. The message is that there should be no more one-way messaging in marketing

You can go overboard, though. Not everything needs a “conversation”. The limiting factor is that your product has to be something that people personally identify with. You cannot have a web 2.0 site revolving around laundry detergent and expect people to blog about how much they like doing their laundry with Gain. It is like an unpopular kid at school trying really hard to be popular, it will never work.

Not only are agencies getting caught in the crossfire between consumers and middle men, but so is the mainstream media. Blogs are coming of age, and now bloggers are being treated with just as much respect as members of the powerful mainstream media.

Monitoring blogs is important because they can be the brokers of buzz. Many companies are successfully deciding which trends to jump on based on blog chatter and other user generated content.

The best way to use blogs is to get in front of them and take a proactive stance. Start blogging yourself, remember transparency, though. Also, make advertising deals with prolific blogs. There is a lot of money for bloggers and for advertisers that are using blogs.

But buyer beware, user generated content is not the complete answer. Once again, just because it is User generated does not make it good. There are good blogs and there are bad ones, there are good videos and bad ones, only align yourself with the good ones and let the bad ones fade away into the noise

If what the teenagers are doing is any indication of how things are headed, Social media sites will be the new Viacoms and Time Warners of the future. They are becoming the replacement to the shopping mall of the 1990’s and are the place where young people go to socialize and make themselves heard.

Utilizing social networking is important for brands that want to capitalize on cool. You can’t bypass it and create your own buzz, but you have to be seen as enabling kids in getting what they want. Like coke sponsoring a CD give-away on Myspace. Companies need to be able to harness the power of social networking without interrupting the social commentary if they want to be successful.

Chapter 3: Brand, Not Bland

There is so much advertising (especially bad advertising) that it near impossible to rise above the white noise of me-too products that bombard consumers. Being part of the noise is not important, rather, you should learn to be different.

Beauty Sells

One of the biggest ways that you can differentiate is through design. Look no further than Apple to see how design can transform a company. Take something as simple as a portable music player and incorporate a sleek, sexy design and you suddenly have a cultural icon. Quality in design is the new key differentiator.

Also, the razr from Motorola turned the company around because they shifted from, here is the technology, now lets put a package around it, to, here is what the consumer wants, how can we get the technology to make it. There ar some very innovative companies in the world who have built an entire business around design that challenges the ugly status-quo.

Make Yourself Scarce

Design is what the fashion industry is built upon, but what they use to create desire is scarcity. Many fashion brands keep demand strong and long-term profitability up by simply restricting their supply.

The more scarce your products are the more you can charge for them and the more people want them. For example, a British skate brand only lets its doors open for groups of 20 at a time and then restocks the shelves afterward, creating a sense of extreme exclusivity. A brand called bathing ape in Japan uses the same sense of scarcity to sell T-shirts for $400.

Taking the Mass out of the Market

There are pros and cons to brand ubiquity. Coke is in reach of all in sight, but they cannot create scarcity and reach out to individuals the way that Jones Soda does by publishing limited runs of customers on their soda bottles.

Likewise, Krispy Kreme donuts were a big hit because they were scarce and you had to drive 20 miles to find the nearest one to catch it just as the “Hot” light came on. But now franchises are everywhere and you can purchase old, crusty donuts at almost any gas station or grocery store.

One way to expand without losing the idea of scarcity is to manufacture a sense of uniqueness in your offering. Like Buca Di Beppo who as they went national made local advertising to make it seem as if they were a local restaurant, not a national chain.

Mommy, I want one

Toys use the idea of scarcity as well. Every season there is a new batch of must have toys that everyone scrambles to buy. For example, beanie babies were the must have toy of the late 1990’s for a very simple reason, they were scarce.

Ty Warner, the maker of beanie babies discovered on accident that if you “retire” a model, it becomes a collectible item and people will pay large sums of money for them. He rode that wave for a long time and was named the 65th richest man in the world in 1999

Who is Eating Your Lunch?

Capitalism is based on the idea that there is somebody out there waiting to steal your customers. Any marketer needs to avoid complacency and not fall into the trap of assuming that they are either too big to deal with a small competitor, or to small to compete with a larger business. The best situation is for a company to act small while thinking big.

Being big has its advantages but one of the problems with being big is that big business is associated with an anti-consumer sentiment. Big businesses employ children in developing countries to save a few pennies and suck every last dollar from the consumer…or so is the perception. Being big also makes you the target of every upstart who hates big business and wants to take down the establishment

Acting Tiny

Virgin industries is famed for taking on the established contender in the market. They have diversified businesses adding up to $8 Billion a year in sales, but every time they enter a market they always position themselves as the underdog…and win.

Being big is not bad, but being viewed as the big, lumbering corporation is not. That is how the American big 3 auto makers lost their strangle hold on the US car market.

GM, Ford, and Chrysler had a lock down on the American car market until the likes of Toyota, Honda, Nissan, Hyundai, and BMW began to eat away at their market share by focusing on the smaller market segments that were not being focused on by the big 3

The point is that companies can no longer afford to be everything to everyone. Consumers demand to be treated as individuals, not as masses of walking demographics. There is no more mass in the mass media, in order to win you must learn to find and dominate niches.

Growing Pains

Small companies turn profits by keeping up strong appeal for their products among a dedicated and loyal customer base. There are a few things that can happen that can spoil this situation

First, a larger company can notice that a smaller company is making a lot of money in a niche market and they will swoop in and use their resources to swoop in and conquer the niche. Second, a larger company will just buy the smaller brand like Nike did to Hurley in 2002. Third, people will just get sick of you. Fourth, a brand ma grow beyond a core of loyal buyers.

When you become well liked by your core group of loyal customers there comes a decision as to whether or not you want to stay small and forgo future growth or alienate the core group of customers who made you popular. Short sidedness would tell you to grow, but that often represents a rape, burn, pillage strategy for long-term profits.

Chapter 5: The Sell Phone

The cell phone is a device that went from luxury only a few years ago to a necessity of today. Almost everyone has a cell phone and have a love-hate relationship with their mobile device. Either way, marketers are trying to find a way to successfully tap into the marketing potential of the cell pone.

The cell phone is also the most personal of devices. It is our real life partner. It is often used as a way to avoid uncomfortable silences and to send a signal out to the world that you are important and that you have people who need and want you. Because of the personal relationships we have with our mobile devices. Piss off mobile users by being intrusive and you will lose big time.

The key to SMS messaging is opt-ins. The best way to go about it is like any lead generation technique, give a present in exchange for a valuable database of individuals who have “opted-in” to your marketing message. Once you have their info, it must be relevant and never exceed one message a week so as not to piss off your customers and become a nuisance.

If done correctly, marketers have found that less than 1% of those who opt-in ask for their names to be removed from the database, and response rates hover around 15%, which is exponentially higher than direct mail.

Entertainment, Go!

Mobile devices are also being used as entertainment devices. They can be used to watch video, play games, take pictures, send emails, etc. Even though mobile devices will never replace plasma screens and xbox 360’s, we are all in search of convenient way to get our fix of entertainment as we are constantly on the move.

As a result of the interactive multi-media inherent in cell phones, some marketers are catching on with some very groundbreaking new campaigns. For example, GM had a contest where people had to send in pictures of a new Pontiac G6 on their camera phones to win $1 Million. Qwest communications sponsored a picture scavenger hunt where winning schools were awarded prizes. And Burger King introduced a music recognition service where people played music over their cell phone and they were told the artist and song they were listening to.

Likewise, old media conglomerates like Viacom and Disney are entering into revenue sharing agreements to provide wireless content to service providers. You can now get a Disney mobile phone, and watch clips of The Daily Show with John Stewart on your cell phone.

One thing for marketers to be aware of is that even though streaming video does not allow users to skip ahead of ads that does not mean that advertising should be boring and unengaging, just because you can. It may not long before technology comes along that allows you to bypass streaming commercials.

Chapter 6: The Captive Consumer, Callous Corporations Con Customers

Many businesses view marketing’s end as the point of the sale. Wrong! The sale should be he beginning of a beautiful friendship. Too many businesses like credit card companies, ISPs, Banks, Health Clubs, etc. reel you in with false promises and then lock you down with an ironclad contract that prevents you from leaving. Once again, this may lead to short term revenue, but it will kill the long-term viability of your business.

Big monolithic airlines used to think that they had their customers locked into flying with them because of frequent flier miles. Then, all of the sudden, airways like JetBlue and Southwest Airlines began to offer low-cost alternatives that allowed them to eat into the bigger airlines profits. Suddenly, the big airlines were the ones who were trying unsuccessfully to copy smaller airline’s strategies.

When you use any other means than better service or better product to keep members you are royally screwing your brand. People begin to get pissed off at you and you lose business to companies that are willing to give their customers what they want.

the consummate example of this marketing practice is cellular companies. They lock people into 2 year contracts and then charge egregious fees to people who want to get out of their contracts. So instead of improving its customer service and investing in infrastructure, they continue to hide behind contracts

Walmart also thought that it had a strangle-hold on the American consumer because of its obscene buying power and its even more obscene labor policies. Then Target moved in because they began to give customers what they wanted. They realized that winning in their space was more than just giving the cheapest price and stuffing your store with products from the floors to the rafters. They employed talented buyers who found appealing products and their stores were stylishly laid out with only products that their core group of consumers would appreciate. That is why Target is starting to eat Wal-Mart’s lunch!

Chapter 7: Now It’s story time

Every brand has a story to tell. More than just running 30 second spots on television, a brand needs to weave a story throughout many different types of media to effectively tell its story. Short films released on the internet such as what what Mercury did with the release of its new Mariner are a prime example. They released a series of films that only briefly featured the Mariner that was geared towards younger women and it was a surprising advertising success.

Another way to captivate audiences and create a story is to gradually unveil pieces of the story as you go. Slowly unveiling pieces of your story helps people to question their assumptions and gives them things to talk about.

Another marketing technique being employed that helps to tell a story is that of the Alternative-Reality Branding, which creates marketable tales that play out over the net and in real life. One example is the Art of the H3ist campaign that Audi used when releasing the new A3. The whole premise was to fake an art heist pulled off using stolen A3’s and show “surveillance footage” and have people on the internet help to locate the A3’s and art. People are drawn into the story and they can interact with it as well; thus, creating an alternate reality.

Ultimately, there are some lessons to be learned from ARB…that is, the product does not need to be front and center. If you have creative enough paid marketing you can leverage unpaid publicity, if you open up your marketing to the community you will inevitably lose some control.

Chapter 8: Leave Me Alone Will Ya!

When you walk into a grocery store to buy toothpaste you will inevitably find a paralyzing amount of choice. There are all sorts of different varieties of toothpaste with such miniscule differences that it really does not justify the existence of a new product line…e.g. is their any difference between colgate brilliant white and sparkling white toothpaste?

In an attempt to offer more variety to consumers, companies are making a paralyzing amount of differentiation in their product lines that are making it difficult for consumers to really make a choice. Studies have shown that in cases of premium brands, less is more. Offering less variety and limiting product lines to only products with a tangible difference will lead to higher sales overall. The converse is true for value brands such as store brands where there is a perceived lack of variety.

The same is true for advertising. During primetime the average network will play 52 minutes of advertising during the 8-11 pm hours. The barrage of advertising is so daunting that most people who own a DVR watch only 8% of advertising shown on television. When it comes to advertising, less is more. So stop creating advertising for the sake of advertising and make something that rises above the marketing noise. In other words, Simplify!

The Marketing Power Charter

1. Consumers are looking to us to simplify their lives
2. Consumers have the right to expect clear and easily understood labeling
3. We are responsible for keeping the number of choices to a minimum
4. Each product variant should be distinctive from any other, and it should meet a real consumer need
5. Me-too products that copy competitor items without trying to offer a distinct point of differentiation represent lazy thinking
6. We need to use marketing responsibly and only when we have something meaningful to say
7. Marketing foisted itself upon consumers is offensive…it will only create antagonism
8. There are no-go places marketing professionals need to respect at all times. i.e. The bathroom
9. We need to do more listening and learning from signals we get from consumers about their feelings towards marketing
10. As marketers, we will take the high ground and be a champion for consumers

Chapter 9: Lies Lies Lies, The Truth about Truth and Factoids about Facts

Consumers distrust marketers. Treating customers like a herd of morons who will summarily do and believe anything you tell them will never work. If a customer detects any dishonesty in your marketing, they will ignore it. The only way to win back your customers is to be completely honest

One of the main causes of dishonesty in business is the pressure to meet shareholder expectations. Often times quarterly profits and losses are more important than your customers overall happiness. Is it any wonder why most customers, and for that matter, employees do not like companies!

Take a hint from Richard Branson. If you make the focus making your employees happy, and then help them to make your customers happy, quarterly profits will follow

Opinions from customers will no longer be kept quiet. Customers will complain to many people at the first sign of a negative experience. 1/3 of dissatisfied customers will complain on the internet. Blogs, podcasts, and consumer websites can be your worst enemy or your best friend. The key is to not take everything so personally and take a page from Bill Gates: “Your most unhappy customers are your greatest source of learning.”

Punk marketers use honesty to differentiate themselves from their competitors. The justification that “everyone else is doing it” will no longer fly with consumers. Being honest will win you the other guy’s customers.

Chapter 10: As Seen on TV

DVR’s allow people to skip television ads, and now that almost everyone has one, companies are forced to evaluate if buying television ads are really worth the skyrocketing prices. That is why companies are looking at ways to get their products into the entertainment, instead of being the easily fast-forwarded through portion between the entertainment.

Movie deals are a great way to place your product. E.T. is the classic example of this…when M&M refused to pay to be placed in the movie, the producers contacted Reese’s Pieces and marketing history was born. Hell, marketers are even paying for movies to make their competitors look bad in movies. And even if you do not contact the producers, sometimes inadvertent mentions are something you should capitalize off of and support. E.g. Harold and Kumar go to Whitecastle.

The best way to get into movies is to get with talent agents, media buyers, or anyone with a Hollywood connection.

Product placement on TV has been booming with the advent of “reality” TV. Willingness by executives to hand out too much product placement can make a reality show look like a glorified infomercial, so beware. TV people often use product placement as a blunt instrument to generate more revenue, so do not leave it to them to subversively mask your attempt to “integrate” your product into the show.

Brand integration for television is crucial. If your brand does not add to the plot of the on-screen action, then you become a disturbance. That is why all product placement should be relevant. For example, integrating on the Apprentice is an easy choice, or Banana Republic integrating on a fashion show is also an easy choice, but if glade plug-ins wanted to integrate on a fashion show it would be horrible.

Content is king, if the show sucks then your placement efforts will be utterly ruined and you will be associated with a really bad show.

You also need to get a marketing program built around the product placement. If you have a product placement then you need to have mentions of your placement on your website and in-store advertisements featuring the tie-in. Otherwise, you lose the repetition and self-aggrandizement that gets customers attention.

Chapter 11: At Last, a Job in Hollywood

It is difficult to get a TV program developed around a brand to air on any respectable network. Everything needs to line up; from the creative people, to the marketers, to the network executive, etc. Needless to say, it is very difficult.

One of the reasons why it is so hard to get programming developed around a brand is that people hate it. If a brand is just thrown in and plastered around a show so that it looks like a commercial, people will treat it like a commercial and tune out. If you get creative and be subtle, like Grey Goose with Iconoclasts and BMW with their series of short films then you will be successful

Retailers are also getting creative by “doing deals” with content producers so that they get exclusive rights to distribute media. Target sells exclusive music from popular artists like John Legend and Rob Thomas, Best Buy sold an exclusive DVD set from the Rolling Stones, and Wal-Mart sold DVD companions to Kanye West’s latest release.

There are also deals that are the absolute reversal of the old advertising model. Where entertainers and producers of content are paying money to be featured on the packaging of popular brands, like coke cans.

Chapter 12: Game On, No One is a Loser

Newsflash! Video games are no longer just for socially awkward teenage boys. In fact, the majority of video game players in the U.S. are now over 18, and 40% are actually women, when you shift that number to include casual online gamers, the number dramatically swings in the favor of women. That being said, video games are as pervasive of a medium for advertising as television and movies are.

A new advertising phenomenon has been the rise of in-game advertising. It used to be that video game makers had to beg to use brands in their games to give it a more realistic feel, now the tables have turned, with companies shelling out big dollars to get their brands placed in popular video games.

Another trend to watch is corporate sponsorship of video game tournaments and those who participate in them. Video game tournaments are gaining momentum as a viable “sports-entertainment” venture. As more television networks pick up gaming events watch for corporate sponsorship to have a bigger role in the field.

Aside from sponsoring existing titles from the big name video game makers such as EA and Activision, marketers are also commissioning “adveragmes”. These games are produced at a fraction of the cost of a 30 second commercial, and are hosted on either the companies corporate site and/or on large internet gaming portal sites. These games have been effective at drawing large numbers of visitors to the website and garnering a lot of brand recognition.

Finally, one huge trend to pay attention to is the introduction of large virtual worlds. For example, Vivendi makes over $60M a month from subscription fees for its World of Warcraft. Worlds such as Second Life also allow people to create products and advertise just the same as if they were in real life. They also allow people to keep all intellectual property rights to anything they create in the game, making it a prime location to do test marketing or to pre-screen a product before being introduced in the real world.

Chapter 13: It’s More Than Just Us, Hard as That is to Believe

There are many agencies that have bought into the punk marketing manifesto. They are media agnostic, meaning that they do not view one media channel to be more important than any other, all are equally effective at communicating creative ideas to people.

Alongside being media agnostic, it is imperative that marketers take risks to bring about the “impossible”. Like taking out seats at a sports stadium and putting a mini cooper in their place, or building an island in the middle of a concrete jungle…these are all ideas of punk marketing.

One of the biggest ways to get rid of the old-school marketing paradigm is to create an environment at work where people can actually work and be creative. Collaboration is key, the agencies that are embracing collaboration are the ones that are creating the most memorable and effective advertising.

”Creative” needs to be a word that is used in the marketing process from the onset of developing a product, not just an after thought that is relegated to agencies. The more creative you throughout the whole process the more you will be able to push beyond boundaries and produce something awesome.

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When you are an affiliate market, one of the most important decisions you will make early on is what niche you want to take on. One of the first rules of marketing is that you cannot be everything to everyone, or you will soon find that you mean nothing to anyone. So when you take on the task of becoming an affiliate, then you really need to find a way to provide a unique value proposition to your customers or you will find yourself getting blown out of the water with affiliates with bigger budgets and better resources.

You Can Make Money in Any Niche

You really can make money in any niche, the caviat being that in order to do so you need to be willing to take a small, targeted slice out of a sometimes large and competitive pie. Never assume that just because a market is too competitive that you cannot do well in it. Remember, it is competitive because there are people who are actually making money doing it.

The one thing that you must be able to do though, is to target a specific sub-section of your niche and provide a unique value proposition to them that will make them buy from your affiliate site rather than another.

The School of Hard Knocks

There is a proverbial school of hard knocks when it comes to affiliate marketing. Most affiliates come into the game and really want to go where the money is, regardless of their expertise in the field or their past experience. Following an online guru or working in categories that you have no experience with are sure fire ways to fail in affiliate marketing.

The best way to find a niche is to find a particular category of products that you have experience or interest with and then match it up with an online community that is willing to buy. The more specialized the better. Beyond the whole, “doing what you love and following your passion” bit, you must have some experience in your chosen niche because if you don’t then you will never know how to market to your customers.

For example, if you have been married for 30 years and never experienced or even thought about online dating, how could you expect to propose a unique value proposition to a 20 something who is looking for an ideal online dating service?

Qualities of Successful Niches

• Good Selection of Merchants:

  In order to survive you will need to have a quality selection of merchants who have the resources to close sales. If you have a merchant with a poor product or that has a poorly designed website, then you can spend a lot of money sending traffic to their site that they will not convert on…leaving you high and dry.

• Clear Advantage for Buying Online:

  If it is more beneficial for somebody to buy something in a brick and mortar store than it is to buy online then getting into that niche may not be a good move. Products that require testing it out before you buy it or that require fitting or customizations may not be a good niche to get into. i.e. Shoes, Clothing, automobiles.

• Instant Gratification:

  If somebody can purchase online and have instant gratification then it represents a clear advantage to buying online. For example, I can download music, movies, software, etc. online and have instant gratification.

• Only Available Online:

  If a product is only available online then it can be very easy to provide a compelling reason for someone to buy through your website.

• Lead and Trial Offers:

  If all that a customer has to do for you to get paid is to fill out a form for a free offer or to be contacted later by a sales representative, then conversion rates are higher and you can get paid more.

Characteristics of Bad Niches

• Market Needs are Already Met:

  If your unique value proposition is already being fulfilled within the buying community then you will have a hard time breaking in

• Products with high return rates:

  Some products like clothes have a very high return rate and you could work really hard for a sale only to watch it get returned because it didn’t fit right, etc.

• Poor Selection of merchants:

  see Good Selection of merchants above.

• Low Volume-Low Priced Items:

  With any business, you have to watch the numbers to make sure you are turning a profit. If you have a product that does not sell well and does not give you an adequate commission then you will find that you can quickly lose a lot of money. Low volume, High priced products are okay, as well as high volume, low price…but the combination of low price and low volume can kill your business.

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I started my first business the summer after I graduated. I was accepted at law school and I wanted to do anything but go to another 3 years of school. I was working at an accounting firm and I was making $10 an hour doing something that they were billing out at about $200 an hour. It didn’t make sense to keep working for them.

I worked all the numbers in my head, I came up with improved business systems that leveraged some simple and cheap technology that my employer was not currently using, and I was ready to start making money.

I got partners bought software, set up a banking relationship, and got my billing system in place. The only problem, no customers! I thought that simply opening up for business would put people in my lap, but I was wrong. I forgot the key rule of business, if you do not have customers you do not have a business.

Why My Business Failed

I tried lots of things, I put up a website that I didn’t market and nobody ever visited, I went door to door at local businesses and wondered why I got rejected so often, and I hired a sales guy that I put on straight commission and handed a copy of the phone book. I was wondering why in the world I could not find customers. Suddenly, the partnership got antsy to start making money and we took what little profit that we had made and we went out of business.

I learned very quickly that if you do not have a system to get qualified leads and then convert those leads into sales then you will eventually go out of business. So how do you get leads and how do you convert those leads.

Finding Qualified Leads

The first step is to find qualified leads. Qualified leads are those people that are willing and able to purchase your product at a price point that makes it profitable for you to stay in business. You could spend a lot of time cold calling people to find qualified leads, but that would waste a lot of time and money, and you would soil your brand reputation by bothering countless people.

Rather than interrupting and sifting through random people who may or may not be in your market, why not place targeted advertisements in places where your likely customers congregate?

This could mean either real life congregations such as trade organizations, conferences, and trade shows. It could also mean placing ads in the newspaper, Craig’s list, Yellow Pages, or buying keywords on a search engine. Just remember that in order for you to be successful you need to be in front of your customers.

After you have gotten into your customers line of sight you must be willing to give something to them to hook them in and capture their information. What you are really doing is buying their personal contact information for something of value to you.

For example, software companies have free trial versions that time out after 30 days, a remodeling company may give out free consultations, a restaurant may give coupons for a free dessert, etc. Either way, what is important is that you find some way to get the customer into your database of potential customers. The key being that you may not be able to get them to buy based off of a single viewing of your website or newspaper ad, but if you can get their information and start a relationship with the customer then conversion rates go up significantly.

Customer Relationship Marketing

After you have secured the lead and their information is in your database, the name of the game is to simply follow up with them on a regular basis without annoying them. You can do this by taking on a consultative role and trying to help them. Don’t worry about closing the sale that very second. When the customer is ready to buy they will buy, you just need to be in the forefront of their mind when they make that decision.

Had I known the value of obtaining qualified leads when I started my first business I may not have gone out of business. Too many people think that the sales process is a case of making a ton of cold calls until you find that 1 in 1000 person who is interested. The smart way to do it is to make a very attractive offer that will draw qualified leads to whom you can sell to. You will find that your brand will be stronger from not participating in interruption marketing, and you will find that your success rate goes up exponentially.

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I currently work for an open source company and one of the questions that I get all the time is, “If your company is open source then why do you charge for your product.”

I don’t mind answering questions like this, because the open source business model is actually quite amazing. I think that it really offers the best of all worlds to every level of software users.

First of all, to clarify a few misconceptions, open source is not by definition free. While it is often free at some level, open source really means that when software is delivered to the end users it is accompanied by the actual source code of the software. This allows the user to customize and alter the source code however they wish to.

GNU General Public licensing

There are several types of licenses that dictate how open source works. The most widely known type of license that is used by open source companies is the GNU General Public License. The GNU GPL has the following stipulations.

• The software is free and open to the public.
• In order for the software to remain free, users must submit any improvements they make to the software back to the general public.

This is what people typically think of when they think of open source. This type of software license is amazing for anyone who wants high quality software at a great price, and who is willing to contribute to the open source community.

The main benefit of open source is that development of software is based on the needs of the user community, not necessarily based on what the makers of the software choose to put in. Its like a reverse funnel of development that makes it possible for software to be custom fitted to the needs of the collective body of users.

Enterprise Licensing

The main problem with the GPL licensing model is that Enterprise Users typically cannot take advantage of this solution for several different reasons.

First, Stability. Because of the nature of open source, it tends to end up being a potpourri of development. Depending on who worked on the solution that was submitted to the community, it could be very user friendly and stable, or it can crash your system. While most open source software is good, large businesses often cannot afford the risk of using a community product across a larger scaled enterprise deployment.

Second, support. Because the community usually acts as its own support, and developers are often hobbyists without a 1-800 number to call, support and implementation consulting are not typically offered in conjunction with products licensed under the GNU GPL.

Third, Competitive advantage. While a software hobbyist may not have a problem submitting their improvements on the software back to the community, enterprise users’ improvements and customizations often represent specific competitive advantages that they cannot afford to release back into the community. It would be foolish for a company to spend thousands to develop a custom solution only to release back into the community for its competitors to have for free.

For these reasons, many open source companies also offer an Enterprise License that offers support on the product, Tested and Stabilized Source code that is scalable for a large, enterprise scale deployment, and the ability to keep their custom solutions proprietary.

For example, at my company they will take the community version and stabilize the code and benchmark it to make sure that is the software is stable and scalable, following that we will sell it as the enterprise code, which we then package with support and various options for consulting and development help.

Enterprise licenses allow large companies the ability to combine the best of proprietary and open source software to help them better run their business.

Enterprise licenses are great because they allow companies to have software that is on par with anything produced by the larger, proprietary software companies at a fraction of the cost. On top of that, they receive the ability to customize and develop on top of the source code however they see fit.

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Last week the TiVo recorded a show called Burn Notice as one of its suggested recordings. I was bored so I watched the episode, and I ended up loving it. So I went to the computer and started watching a few episodes on surfthechannel.com, then I got tired of watching poor quality, Asian-character subtitled versions of the show so I went on iTunes and downloaded the season for $20 bucks. I have been consuming it at a rapid rate ever since.

The whole point of this story is that I had never heard of the show previous to having it randomly recorded on my TiVo and within an hour or two I had purchased the whole first season without ever having watched it live on television or viewing any of the advertising that justified its existence.

TV’s Busted Business Model

Laptop computers, wifi, p2p file sharing and bit torrent technology, user generated video sites, DVR’s, and a myriad of other technologies have busted wide open the old school television conglomerates’ business model.

Gone are the days when network executives decided what you would watch and when you would watch it. I am not alone when I say that I have not watched a television show at its regularly scheduled hour in years. I almost always TiVo my favorite shows, and if for some reason the TiVo misses an episode I will catch it online.

The big draw for me is not avoiding commercials, it is the freedom to watch what I want to watch when I want to watch it. I enjoy watching a few television shows, but I definitely do not enjoy any show to schedule my life around their programming schedule.

The problem with this is that television networks start to lose a lot of money when viewers like me come into the picture. Their business model, as antiquated as it may be, is that they deliver free programming, and in return we watch advertisements from their sponsors. Until now that has been a great model. But technology and consumer behavior are changing, making this model quite obsolete.

The same types of problems are true for the music, radio, and film. Executives and industry advocates are now spending their time trying to fight against “freeloaders” like myself by litigating and otherwise moaning and bitching about the declining value of their advertising slots.

How to make TV work again

I understand the importance of copyrights…I get it. But what it comes down to is that Internet pirates, TiVo, iTunes and others just understand marketing a lot better than the networks. Marketing is all about putting the right product at the right place at the right price.

Television networks have not had to worry about the “place” as much because they have had had a single distribution method with no other viable alternatives. But technology has increased the distribution channels for media and instead of adapting and providing content across all different types of distribution, they have whined, bitched, and litigated while competitors did.

The simple solution is that networks should just stream ad-supported feeds of all of their shows sell higher quality, ad-free downloads via iTunes or their own store. Then they wouldn’t have to worry about people pirating their content. Simply put, if networks would worry more about giving people what they want than they do about making sure that people do exactly as they say, then people wouldn’t have to pirate and they could control the revenue that came from it.

I know that most networks already put a limited selection of their shows online, but they limit the number of shows they put up and rarely post entire seasons, instead opting to post only the most recent episodes. What I am suggesting is that networks follow the example of Southparkstudios.com where you can find every episode of South Park ever made.

Some networks and production companies are making steps in the right direction, but until all networks stop being greedy and ready to litigate at the drop of a hat, they will not win back their “freeloading” customers with alternative consumption patterns.

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Tonight I was watching American Idol and I must admit that I voted…quite a bit. That says a few things about the ubiquity of American Idol as well as my declining ability to care how cool people think I am (I am getting married in three weeks, who do I need to impress other than my fiancé who got me hooked on “Idol” anyway).

Needless to say, I noticed something quite amazing. As I was furiously texting “Vote” to 5702 to vote for David Archuleta I found that I was only limited by the number of times I could press send on my phone and vote via text message. On the other hand, one of our close friends who has a service agreement with T-Mobile had a hard time connecting to the phone lines and could not vote!

The point of the story is not to complain about voter disenfranchisement, but to talk about how good at marketing AT&T really is. They have mastered the art of creating ridiculously beneficial marketing partnerships. I realized this when my friend who has a service contract with T-Mobile (who has far better service in our area) said, “man, you are so lucky that you have AT&T.”

It got me thinking that even though AT&T may not be known for the best service, they are a force to be reckoned with because they have made their product desireable by aligning it with must-have phones and seeking out amazing sponsorship deals.

Here are 3 cases of how AT&T (including it’s previous incarnation as Cingular) have leveraged some amazing business partnerships to make their cell phone service a winner despite mediocre quality.

American Idol

American Idol is a downright cultural revolution. Anytime where you have almost as many people voting to determine the winner of a reality television show as you do for the American presidency, you have a serious cultural phenomenon on your hands

AT&T has managed to become the enabler of millions of American Tweens who must participate in order to feel like a part of the movement. Many may not understand the significance of it, but I cannot tell you the number of teens I know who are sincerely jealous at the fact that I am on AT&T and can text in my vote rather than having to call in and wait for the line to pick up.

And for anyone who doesn’t understand the attachment that teens have to text messaging, find a local junior high or high school and see how many teenagers are walking around in a text-message induced stupor, not bothering to even look up see where they are going.

AT&T has used its relationship with American Idol to be viewed on a very personal level as a brand that enables teens to more actively take part in something they care about. Even if it is something as seemingly silly as being able to vote more for their favorite American Idol contestant via text message.

the Razr

When Motorola needed to cut into Nokia’s market share they tried a novel approach to marketing. They determined what the market wanted and then created technology to fit around it. At the time, consumers wanted to get away from the bland phones being offered up and move towards phones that made a statement about them.

Motorola made the Razr, which was the first phone to be viewed as a fashion statement rather than a communications device. Everyone HAD to have them and the only carrier that you could get them through was…you guessed, it, Cingular.

Cingular, now AT&T, did not need to have the best service when they had the coolest phone that everyone had to have. Once the ability to port numbers across carriers came about, people had no problems switching over to AT&T to get a Razr!

The iPhone…aka, the Jesus Phone

When the success of the Razr wore off and it became cliché to own one, it was no problem for AT&T to ditch the Razr as its flagship phone and copy its success with the next must-have phone.

When Apple came out with the iPhone, hordes of Apple devotees had to have it. Guess who came up with the exclusive rights to sell the phone? That is right, AT&T. Once again, AT&T rode Apple’s coat tails right to financial heaven.

Who needs to have the greatest data network when you have the iPhone…definitely not AT&T. They have arguably the worst data plans of all of the major carriers, yet millions are switching to them so that they can own an iPhone.

What is the lesson in all of this? The lesson is that in marketing there are so many better ways to differentiate yourself than on quality or price. Fools assume that those are the only two ways to compete, and when you fall into that trap you get pigeon-holed into price wars and quality hassles.

I am not saying that you should not make quality products, but high quality at a fair price are expected in today’s market place. Why would you differentiate yourself on an issue that is considered the bare minimum of things that must be done to even enter the game?

Smart marketers like AT&T look for ways to change the game to fit their strengths. In a world where your wireless service is almost a commodity, AT&T has leveraged some pretty strong marketing partnerships to become a de facto fashion icon. Who cares if you drop a call or two, as long as you have a phone that makes a strong statement about you and you can say that you voted for David Archuleta 200 times while your friend on another network was only able to get through 10 times.

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What is marketing? I work in marketing and I am not sure what it really is. A lot of people try to tell me that marketing is just manipulating the general public into buying stuff they don’t need. That is 100% true, but people need to stop making it out to be such a villainous thing. I have a close friend in college who tried to tell me that I was a bad person for studying marketing. He told me that marketers made people buy stuff they didn’t need and couldn’t afford and that they were the cause of the rampant plagues of commercialism and consumer debt.

Despite my friend’s claim, pretty much everything that a person buys is something they don’t need. As long as I am not walking around naked and I have a little food in my belly, I will undoubtedly blow money on things that nobody should ever claim to “need”. In fact, if it came down to it, I might even sacrifice clothing myself if there was a good enough deal on Steven Segal flavored energy drinks, that’s just how I choose to divide up the slices of my economic pie.

Supply and Demand…bitch

To understand marketing further let us examine the fundamental laws of economics which state that if I have a supply of money I will demand to spend it. What I spend it on depends completely on my personal tastes and preferences. My individual tastes and preferences are as follows: priority one, that which is absolutely essential to survival; priority two, that which is utterly absurd and ridiculous.

The sad and awesome truth of marketing is that my tastes and preferences are strikingly similar to everyone else’s tastes and preferences. Why is that? Not because marketers told me so. Please, give me more credit than that. I am not a pawn of Madison Avenue. Rather, my tastes and preferences are instinctual, and have been since the dawn of time.

Cavemen and Shiny Stuff

Back when we were cave men I have no doubts that as soon as the hunting and gathering was done men chose to spend their time collecting useless shiny things, staring mindlessly at cave paintings of beautiful stick women, and scratching themselves. Women fell for this trick because they felt that in order for a man to be able to spend so much time staring at cave paintings he had to be a great hunter/gatherer. And if that was the case, they wanted in, and they wanted to pass those skills on to their children. That’s why men spend so much time trying to get shiny things and why women spend so much time trying to look like the stick figures on cave walls.

If men weren’t so busy uselessly spending their time and money it wouldn’t have taken us so long to come up with important societal advances such as plasma screen TV’s and titanium anything. My sneaking suspicion is that these advances came only after women stopped falling for the original “cave paintings and shiny objects” trick and demanded newer and better useless stuff to command their attention.

Buying Shit Makes Me Look Like a Bad-Ass

Therefore, it is evident that saving money or putting it towards constructive purposes is just plain idiocy. I need to buy stuff because if I don’t I will look like a little nerd who cannot provide for a family, and as a result I will never ever get any girls. I know I may sound like a genius for figuring this all out, but it’s nothing more than science, common sense and shiny stuff.

So yeah, of course I will spend $200 dollars on jeans that are more worn out than the $20 dollar pair I could buy at Wal-Mart. You better believe I will buy a Ronco food dehydrator for 7 easy payments of $99.99 because making my own jerky sounds like an amazing idea. I am Ron Popeil’s bitch. And good Lord, you know I will buy a Steven Segal Energy drink for $2.99 when water is free and is probably much healthier for me. Why? Because these things make me look tough, they impress women, and all of them are a whole heck of a lot cooler than saving my money, giving it to charities, or putting it towards any asset of any kind that appreciates in value.

Evolution is Responsible for my Maxed out AMEX

Is it some marketer’s fault that I choose to spend my money this way? No. It is the fault of cavemen who were so good at hunting and gathering that they had plenty of time to spend their resources to buy shiny things that impressed cave-women. Secondly, it was the fault of those cave-women who fell for the “shiny object” trick and in turn perpetuated the world’s problems by passing their genes on to me. I can’t fight nature, and neither can the world’s most heartless marketer. It’s just the way things are. Marketers don’t create demand, cavemen create demand, and there is nothing you can do about that buddy.

When you look at marketing from that standpoint, you come to understand that marketers are not trying to force you to buy anything that you wouldn’t buy in the first place; however, they are just trying to get you to buy more useless junk from them than from some other dude who is also trying to get you to buy completely useless junk.

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