I wrote a while ago that the attempt at humor had fallen flat precisely because Microsoft’s “The Powerbroker” archetype had been so deeply entrenched, almost literally burned into the mind of the consumer for decades. Did things get any easier from there?

The next salvo a few months ago featured the “I’m a PC” ads which cast Microsoft (by way of its supposed users) as a strange mixture of proud/aggressive and defiant/sulking. It was pointed out then that “Microsoft as Victim” just doesn’t really work. And again, the archetype branding explains why: You cannot be “The Powerbroker” and still garner much sympathy for supposedly having been wronged.

This same theme was picked up once more recently with the “not cool enough for a Mac” ad featuring a girl named Lauren, which really was meant to focus on price as an angle to attack the notoriously premium-priced “Mac” products. In theory the idea of highlighting one of your competitor’s weaknesses (price) is workable, especially during a severe recession. But you cannot do it while violating your core archetypes.

If Microsoft had said something like, “we are the largest software company on the planet, and because of that we can create economies of scale in the production of PCs and their loading with software that much smaller competitors like Apple just cannot match, thus saving you money”, it would have made some sense.

But not with this passive-aggressive jabbing built in. It confuses people. Instinctively, no one takes it seriously when the 800 pound gorilla complains about having “unfairly” been called “not cool enough”.

And then Microsoft recently launched another ad in the series that went all wrong yet again. Silicon Alley Insider explains why:

Jackson [the kid] mentions offhand he wants “a good gaming computer.” This is a fantastic line of attack for Microsoft: The Mac has a tiny library of professionally produced games compared to what’s on PCs [...] But Microsoft fumbles the ball, and doesn’t follow through with what’s arguably their best anti-Mac selling point after “PCs are cheaper.”

Instead, Jackson’s mom makes an incredibly off-target anti-Apple smear: Checking out the Macs, she says “they’re kind of popular with this age.” Umm, no. Kids can’t afford Mac prices or appreciate Mac build quality. Far better for Microsoft to stick with [...] Macs are kind of popular with hip adults, but expensive.

So the theme of hurt feelings clouding Microsoft’s positioning and marketing continues. In truth, as the incumbent and still near monopolist (85-90% share despite Apple’s recent inroads) in the personal computer market, Microsoft would do better not to mention “Mac” at all.

“The Powerbroker” archetype by definition can choose to ignore the much smaller competitor. Reacting to any perceived slight only makes people wonder what is going on.

But the branding confusion gets even more pronounced with the recent launch of a new series of Microsoft ads featuring a strange mixture of low key scrap-booking and CEO interview voice-overs, punctuated by a slogan of “Microsoft – The People Ready Business”:

First, scrap-booking is not exactly associated with CEOs. And the overall informal tone of the ads only heightens the confusion. While we can understand in principle where they were trying to go with this, softening up the image, making CEOs cool somehow as they are buying into the “people ready business” message, it just doesn’t work.

Why? Again because it violates “The Powerbroker” archetype attributions of which our mental image of a CEO is a prime example. It will never really fit with “The Loyalist” archetype (buddy/friendship/etc.) that is being angled for here. Your CEO will never quite be your buddy, unless you are on the board of directors or something like that (or maybe work at Zappos).

What’s the end result? Ads that don’t work, that don’t “stick” in your or anyone else’s mind, because they are just too confusing. Microsoft has tried a number of times in the past to bring “The Loyalist” archetype into its marketing (MS Office as your buddy brand at work, etc.), and it never really worked too well then either.

So what’s the solution? 1) Figure out who you are first, what archetypes make sense for you, what you truly want to stand for. 2) Communicate that consistently, without fail. If you did your homework in step 1), it should in fact be HARD to get step 2) wrong.

In Microsoft’s case, it should simply embrace that which it already is, “The Powerbroker”. It has served it exceedingly well in the B2B (Business-To-Business) realm, because “The Powerbroker” is something virtually every business person understands and intuitively respects.

Notice that most of its software has been sold to other BUSINESSES first, even if it ends up on the consumer’s home PC, or their computer at work. Why mess with that out of a sense of hurt corporate ego?

Then an interview by Silicon Alley Insider’s Peter Kafka with Cuil’s CEO  Tom Costello today reminded us of everything that went wrong with the would-be Google competitor’s lauch, as well as everything that is still wrong with it.

While apparently the outages of the first days have subsided, many of Cuil’s search results are still low on relevancy, and still juxtapose seemingly random images from other websites with a given search result (prompting some cries of copyright violations).

There was much discussion over on FriendFeed involving Robert Scoble and others as to whether this "launch" was done just to position them for a buy-out by e.g. Microsoft for the technology. I tend to agree, given how obviously poorly everything was executed.

They had to have known results weren’t going to be very good, even more so about the sometimes outright embarrassing "false image" issues.

If they didn’t, this would constitute a formidable case of group think, against which one would think there should have been at least some push-back/reality-checking from the venture capitalists that put $33 Million of funding into Cuil.

Then again, they let Mr. "I’m Irish, it seemed natural enough, and works for me" Costello get away with naming the thing "Cuil".

When prompted about the questionable brand naming choice, Mr. Costello attempted a weak defense by saying "[i]t’s hard to find a four letter name…". Why did it need to be a four letter name? Were they trying to defeat Google through shortness of the domain?!?

(Incidentally, very short domain names haven’t really worked out particularly well for anyone, just ask Ask.com, Buy.com, and others.)

Too-cute-by-half "Cuil" comes across like a development code name (like "Longhorn" for Vista, etc.), not like the final product of a well-thought-out branding exercise. Which of course would lend further credence to the idea that this "launch" may have simply been a "buy us already" plea.

It gets even funnier now that a number of sites have posted strong evidence that the Gaelic word "cuil", while leaving the company open to all manner of misspellings and mispronunciations, really doesn’t mean "knowledge" (as still claimed by Costello and Co.) after all.

Given all of these "shenanigans" (sorry, couldn’t resist… and who did these guys have for Gaelic teachers anyway? :), it comes as little surprise that Cuil has now apparently lowered their target from Google slayer to Google backup:

it’s not supposd to be better than Google – just an alternative…

Another similar "crime against branding" name for a start-up recently went to the "deadpool": News personalization site Thoof.com. Their CEO probably also thought that the name was intuitive and "worked for them"…

But even more problematic than the apparently relatively poor search results and availability outages (Cuil had after all boasted of a larger search index than Google), were the crimes against branding it committed with its "Cuil" (they want you to pronounce it "cool" or "kewl") name:

1. It’s already been pointed out that there are at least 5 alternative pronunciations, misspellings, and… shall we say "problematic"… meanings of "Cuil".
2. Apparently the company decided to change the name from "Cuill" (with two L) very late in the game, with some of their press releases apparently still having the old spelling. While the old version did nothing to help with spelling or pronunciation, just the fact there would be such a late change does bode ill for their understanding of branding strategy (which would be to get completely clear on your branding first as an integral part of your Unique Selling Proposition – USP).
3. While "cuil(l)" supposedly means "knowledge" in Gaelic, and is in fact pronounced similar to "cool" in that language, such a play on words, while it might have seemed clever to people inside the company, violates one of the first rules of branding: That the name or message must pass the "Telephone Test" (remember the "message whispering chain" game you used to play in kindergarden?). If you have to explain the product, spell it, and explain the pronunciation all at once, it’s game over baby.

But the Cuil ex-Googlers aren’t the only ones cooking up cases of "too cute by half". Google itself has been hot on their heels with it’s new "Knol" offering, a sort-of competitor to Wikipedia, as well as Seth Godin’s Squidoo.com and Hubpages.com.

(Knol may actually become yet another case of Google ranking its own properties highly in its search results, thus making it a potential spam haven a la Squidoo. It has also elicited hand-wringing from Mahalo’s Jason Calacanis as the entry of Google into the content space.)

"Knol" is supposed to stand for "unit of knowledge" (whatever THAT means), and the name is plagued by almost the same level of confusion as "Cuil":

Too short to really carve out mental real-estate, oddly distasteful to say (yes, the underlying emotional state in saying a name does matter), and mixing it up with the real word "knoll" – a small, natural hill according to Wikipedia. As in "the grassy knoll"…

Google has a long history of producing very odd-sounding (Orkut and Froogle come to mind) or overly generic names, few of which work well as brands. Many of them also commit the cardinal sin of brand dilution (attaching additional, unrelated meanings to your core brand, as in "Google Checkout", which is predictably hardly a blip in the payment processing space).

Notice that Google’s brands other than its core search service have worked best when they avoided these pitfalls: Gmail, Adwords and Adsense – which were strong enough names to stand on their own and thus became detached from "Google Adwords", asf.

YouTube should have been another lesson to Google (and companies everywhere), that a unique name always works better than a brand extended/diluted one: Google Video, which is also a generic, never got any real traction vs. YouTube.

Of course Google "solved" that problem by acquiring YouTube for $1.6 Billion. Getting better branding advice for their own offerings from the start would almost certainly have been a lot cheaper…

At least they then got it, and resisted renaming YouTube. Had Microsoft bought it, with their branding track record, they would have likely renamed it "Windows Live Video Tube".

So bad have things gotten that this fact was acknowledged in no less than MSFT’s internal email on how to get its listing Internet division to profitability:

… 4. Fix our online branding – Our brands are fragmented and confusing today, and we recognize a need to clarify and align our online branding . We are now driving forward to address this opportunity.

Ironically, in that same May 18 email MSFT’s Kevin Johnson was pre-announcing their latest attempt at search "disruption", "Live Search cashback" (yes, the lowercase ‘c’ is intentional, someone at MSFT must have thought that it was "cool").

Let’s examine why "Live" is such an unfortunate choice for branding Microsoft’s search offering along with a slew of other properties:

1. Since "Live" was from all appearances originally conceived to refer to an online version of Windows and Office products (e.g. "Office Live Small Business", etc.), it draws an implicit comparison back to those products as being NOT "Live", or, in other words, "Dead". And that can only be considered to be unfortunate.
2. By matching the term "live" with a slew of other terms across many different properties, there is brand dilution built right into the naming "methodology".
3. "Live" is also a well-used, one could even say well-worn term in a context of "real, live, as in not recorded events" in entertainment and media, while browsing the internet is not really considered "live", unless we are talking about live streaming of audio or video. And so things get particularly confusing when paired in ways such as Microsoft’s "Craigslist killer" attempt "Windows Live Expo", which conjures up images of a real-life trade show or other similar events in most people’s minds. So it comes as no surprise that Live Expo never got any traction and is now being decommissioned.
4. "Live" may actually also be generally too generic a term to capture any real mindshare: "Live Search", "Live Expo", "Live _Anything_" do not carve out enough of a unique mental real estate in the way that newly minted terms, and/or terms with novel usage such as Amazon, Yahoo, Google, and eBay can. Ask yourself if there is a reason that just about none of the internet companies built on "generic" domain names ever really took off. Buy.com, Shop.com, etc. etc.
5. Oddly enough, single syllable terms may also be too short to, except for a very small number of exceptions, create enough naming differentiation and rhythm: One syllable is like one single "beat", when the majority of successful brand names (not necessarily companies) are two or sometimes three syllables long, with the stress typically falling on the first syllable: INtel, BEbo, iPhone, Gmail, Windows, YouTube, Meebo, Facebook, MySpace, eBay, PayPal, Kayak, iTunes, iPod, craigslist, Wordpress, Blogger, Apple, flickr, twitter, Yahoo, Netflix, Google, Netscape, Drupal, Hotmail, Amazon(3), Firefox(3). Add your own favorite non-techy examples here.

The bottom line is, brand names need to be memorable first and foremost. And by being easy to say (using rhythm and even rhyme), you and I and everyone else are more likely to repeat them – out loud or to ourselves. Add uniqueness that ideally carves out a new spot in our mental real estate (a "category label" – think Q-Tips, Xerox, and yes, Google, as in "to google someone or something"), and that is NOT confusing, and you’re there.

To bring it back to Microsoft, "Windows Live Hotmail" isn’t it. Hotmail (not originally created by Microsoft) was actually a very good brand name, which accounts among other things for it’s wide, "viral" spread throughout the world.

Bizarrely enough, Microsoft in it’s tortured branding forays and strict insistence on spreading around its still powerful "Windows" brand , had considered dropping the "Hotmail" name entirely in favor of "Windows Live Mail".

Windows incidentally was always a decent brand as long as it is reserved for naming an operating system, anything past that was needless brand dilution. I have discussed previously where the strong but mistaken urge toward brand dilution stems from: Corporate hubris and misunderstanding of branding fundamentals.

Today, Microsoft apparently walked away from a Yahoo deal more thoroughly than they previously had, which in itself makes little sense and proves how much Ballmer and Co. have kept themselves in suspended animation during this ongoing saga.

Now, as far as Yahoo was concerned, we knew that they wouldn’t get a lot done given the continued wheeling and dealing by billionaire investor Carl Icahn. Despite Jerry Yang’s pleading with the troops to keep their noses to the grindstone, there is simply no way that Yahoo has not been deeply affected:

I was at Sprint in a former life at the time when the proposed merger with WorldCom was going on, which ultimately, and it turns out mercifully, was blocked by the DOJ. And I can tell you from that experience that very little of substance beyond basic maintenance mode happened inside Sprint for well over 6 months.

All eyes, minds, and water-cooler conversations were cued on the proposed deal and its ramifications. And that was under relatively amicable circumstances mind you.

So, with the pronouncements by MSFT today, Yahoo’s stock taking a big hit, and Yahoo in turn announcing that a deal to outsource search ad serves to Google may be happening as soon as today, someone might be tempted to say: The nightmare is over.

Or Is It?

Despite all of the "titillation", the Icahn back-and-forths, the rumor, the innuendo, and the inflated/bruised egos, let’s take a step back and look at the fundamentals of this:

MSFT + Yahoo = Still Can’t Compete

As Henry Blodget of the Alley Insider has previously argued (and I agree with him on this), the Micro-hoo deal as originally proposed does preciously little to make the combined entity more competitive against Google. MSFT has amply proven as much recently by having to resort to touting their "Live Search Cashback" gimmick as a "game changer." NOT a good sign. (I was in the middle of putting the LSCB discussion into this post but will save it for later).

You see, entrepreneurship is fundamentally concerned with arbitrage, that is, putting resources towards their highest and best uses. And combining MSFT’s money and inferior technology together with Yahoo’s inferior technology and user eyeballs does NOT a winning combination make. Period.

If you combine money with eye-balls, what have you got? A waste of $ and a combinatory nightmare.

I previously said that

joining the two juggernauts into one operation is the equivalent of having two huge battleships collide at about a 45 degree angle and hoping that somehow during the collision they will weld themselves into one aircraft carrier. Ain’t… gonna… happen.

And MSFT has proven with each of its Internet moves in 12 long years that it is very adept at actually driving AWAY eyeballs despite all of its supposed and real advantages (its installed browser base, money, influence, etc.).

Part of this is their extreme misunderstanding of branding and the resulting branding mess that I have been reporting on here several times already, and their failure to understand the internet at a fundamental level.

So if Yahoo moves to outsource the ad serves for its search to Google, in entrepreneurial terms, they are doing the right thing. Take the money now and gear up to fight another day on NEW battle-fields where it can actually WIN.

Remember that Google’s monetization advantage is somewhere between 50-100%. Now that is a combination that actually makes economic sense: Leading eyeballs to instantly higher monetization, something that Micro-hoo might well have never achieved.

While it is true that Yahoo shouldn’t completely get out of the search game, instead of playing also-ran, they need to innovate on a massive scale. Keep the R&D going in the background, and use the newfound money to do something worthwhile.

Which is by the way what MSFT should be doing rather than continue to try to throw its weight around. It hasn’t worked on the internet in 12 years. In this context it is ironic that MSFT might now be trying to push for regulatory protection against a Goo-hoo outsourcing deal. THE monopolist of the late 20th/early 21st century crying foul… that would be so rich…

Even more ironically, if MSFT hadn’t been able to stop the DOJ proceedings against it through the arrival of the Bush admininistration, and had been broken up into say three smaller, more nimble, more hungry units, both those resulting companies and all the rest of us might well be better off today:

Vista might have been less of a failure, the Office company might have actually innovated in the "productivity" space, and the Internet division would have been free to "get" the internet unencumbered by other interests.

Back to the Goo-hoo outsourcing deal

Critics of this scheme are right that this can only be seen as a short-term fix to boost Yahoo revenues. If it’s not accompanied by very serious efforts to innovate and therefore outflank Google or create new markets that Yahoo can take a leadership position in, then it does hurt them in the long term. Their capabilities would definitely erode.

This was described in some detail by Mahaney in the TechCrunch interview, where he recounted the developments at AOL. (The full text of the interview is really a must-read for anyone interested in this entire situation.) But of course it would be up to Yahoo with how they spend that money.

If they invest it in serious innovation instead of mee-too projects, they might have a shot. As it stands now, there is very little in terms of core competencies that they have really kept even or led on.

Whatever they have going for them up to now is largely a hold-over from its successes during the Web 1.0 phase. That is predominantly the user eye-balls, people who became accustomed to using Yahoo services circa 1996-2000. They have since bungled almost everything else they touched, from search ads (where they should have led with Overture), to the rise of social networking and web video (where they largely missed the boat).

So again the critics are partially right in that Yahoo’s search share will likely keep declining over time (not rapidly though), simply because they will fall further behind in search development as well. UNLESS they make a very serious effort to come up with a next generation of search that somehow bypasses what Google is currently doing. Otherwise, they would of course be more and more dependent.

Of course, it’s Google that is hard at work figuring out the next steps in search… while MSFT and Yahoo just wasted another 4+ months on this diversion. And who knows, maybe Ballmer or Icahn will do it all over again in a few months.

Several times last week I was tempted to write this post, only to hold off for a while longer because I wanted to write something for my readers that would go well beyond a news rehash.

As I said in previous posts, it is easy to lose sight of the essentials in the dizzying onslaught of "Steve said, Jerry said…" titillation, investor and market timer stock price considerations, and "what’s the next step" agonizing. Instead let’s go back to Business Mind Hacks basics:

I have argued that the deal was never a good idea in the first place, and that this should have been the first and foremost question on anyone’s mind. Even now, there appear to be major Yahoo stockholders such as Carl Icahn, who are attempting to employ corporate board machinations to force the deal after all.

And of course there has been plenty of speculation that Microsoft would come back with the same or lower offer after having Yahoo’s stock price pummeled for a little while (incidentally, it didn’t go down quite as much as some had predicted, possibly a sign that the market viewed the deal was as in fact much less of a clear winner).

None of it would really matter as far as the fundamentals of the deal: That Google is the uncontested market leader in search and paid search ads, that neither Yahoo nor Microsoft have been able to compete effectively, and that they are falling further behind every day. (Notice recent earnings data showing Google’s search revenue is on track to surpass Microsoft’s flagging Windows/Vista revenues some time in 2009!)

There are several reasons for this, some technical, and some Branding/Positioning related and hence much more basic than the complex issues relating to e.g. paid search optimized monetization. I will further discuss the latter in another post. Let’s go with the branding issues for today.

A recent article in The Economist picks up on the same theme I have been "hammering" in a few recent posts:

Mr Ballmer [...] has invested billions trying to make Microsoft an internet and advertising superpower. But it seems not to matter. According to Danny Sullivan, a web-search analyst, Microsoft “literally has no brand” when it comes to its online services—nobody has ever been advised “to Live” or “to MSN” a recipe or a cute classmate.

But it gets better. While The Economist article was an overview piece on the break-up of the negotiations, ReadWriteWeb wrote a post entitled: "Microsoft’s Brand Confusion Runs Deep". And I couldn’t agree more with the tenor of it, and if you care about branding/positioning issues at all you should by all means read the full post. Here is a sample:

[...] slight differences in design may not be a very substantial issue, it is indicative of the confusion Microsoft has created around their Live brand. [...] Live was sometimes used to brand services, sometimes to brand desktop products, and sometimes destination sites. Worse, at times single products have had multiple names and sometimes the Live branding resulted in very clumsy product titles, such as "Windows Live Search for Windows Mobile."

And in all of this, ReadWriteWeb didn’t even point out the widespread but perennial corporate sin of brand dilution: While it is easy to see how large, powerful companies would prefer to engage in a sort of "brand hubris" and try to spread their brand-around to everything in sight, this just isn’t how things work at the level of the customer’s/consumer’s mental circuitry.

Ries & Trout made it abundantly clear in their seminal works on the matter, and data of decades’ worth of branding studies back it up: Once you have been lucky enough to establish your brand in a category/niche, you should avoid trying to stick it on other categories like the plague.

Because it confuses people, it quite literally messes with their mental mapping of names and what they stand for. It is quite noteworthy in this regard that the ReadWriteWeb post mentions that even Microsoft’s own employees appear at times confused about what "something-something-Live" really stands for!

If you think about it, as far as catching Google is concerned, Yahoo hasn’t been able to do it with moderate resources, but even worse, Microsoft/MSN/Live hasn’t been able to do it with nearly unlimited resources. Why?

Because the Windows/Microsoft brand acts as an albatross around the neck of any Internet play that they have attempted: Henry Blodget over at the Alley Insider already pointed out the unfortunate renaming of Hotmail into "Windows Live Hotmail", and they were even seriously considering ditching the Hotmail brand alltogether.

Horrible idea… and it truly makes you wonder about what might have happened to the (not perfect, but still much preferable) Yahoo brands in the case the Micro-hoo deal had gone through (or still might in the future).

Again, Ries & Trout point out that large companies are always in danger of, from the inside out, hastening their own brand dilution. This is because of the fallacy of the "we’re a big/strong/important brand" mindset, which makes "add-on-naming" things with your existing brand so seductive and almost impossible to argue against in say a company meeting. Nobody wants to be seen as arguing against their own brand, their own "tribe".

As I said, unfortunately it is wrong from a psychological perspective of how brands work in the minds of the consumers. It’s all about "tip-of-mind awareness" for a category. Simply ask "What is a ____?" If the answer is unclear, your brand is already diluted.

Kraft is a good example of this form of brand dilution. Incidentally, their only #1 brand is the one that they resisted naming "Kraft": Philadelphia Cream Cheese (by Kraft). Everyone knows the answer to the question "What’s a Philadelphia?" (in a food context). But "What’s a Kraft?" has no such clear answer.

A company that has done it right is Proctor & Gamble. Each one of their products tends to be built up as its own brand, and typically is the category leader commanding a serious premium: Tide, Dawn, Bounty, Duracell, Gilette, etc. (see the full list of P&G brands here). 

Test it, you’ll likely know the answer to almost each question: What’s a ____?

So Microsoft should create a new internet product that is for once NOT named MS or Windows, because frankly, the internet thing has little or nothing to do with Windows. It appears that it’s their built-in (maybe even unconscious) resistance to the internet that is always at play.

Which is another bad idea. You can’t let your ego get in the way.

What became the leading Web video site? "YouTube", and NOT "Google Video", and even less some theoretical monstrosity like "Windows Media Player Web-Edition Live Video Sharing… Site". :)

But Google had the good sense to let it go and simply acquired YouTube, while resisting the temptation to meddle with the brand. Their reward: A brand name that is already firmly anchored in the minds of consumers as THE video sharing site. "What’s a YouTube?" has a crisp and clear answer. Which is as it should be.

I rest my case… for today… more to come soon.