Perhaps I’ve simply been too gullible, but for years I have been led to believe that Raisin Bran is like health food, with the high fiber content and all, but it’s the “all” they never told us about. Now I come to learn that it’s also loaded with sugar — a whopping 19 grams, the equivalent of five teaspoons of sugar in an average serving.

Companies attempting to build brands on trust may want to rethink advertising strategies based on deception, especially in today’s customer-centric marketplace where confidence in the integrity of Corporate America has been severely compromised.

Kellogg has been one of the more blatant cereal offenders with a history of misleading advertising practices. Last year the FTC pressured them to stop claiming that its Frosted Mini-Wheats product is clinically proven to improve kid’s attentiveness by 20%.  Earlier this year the FTC again forced them to stop advertising that Rice Krispies will strengthen children’s immune systems.

But Kellogg is not the only culprit. In May of last year the Food & Drug Administration slapped General Mills with a stern warning that claims on Cheerios packaging suggesting it is “clinically proven to help lower cholesterol,” are a “serious violation of federal law.”

To say that advertising has lost credibility would be an understatement, as is evident from numerous consumer surveys that show trust in advertising continues to erode, while trust in the opinion of other consumers is on the rise.

It stands to reason then that companies are reallocating marketing budgets from media advertising to social media. What remains to be seen is whether they’re promoting brands or listening.

That’s what Amazon paid for Zappos last fall. So, how did a company that sells shoes online get to be worth that kind of money? And what did they do differently than other companies doing the same thing?

In his new book Delivering Happiness: A Path to Profits, Passion and Purpose, Tony Hsieh, founder and CEO of Zappos, tells us the simple answer is that he never considered himself to be in the shoe business, but rather in the customer service business. It would stand to reason that in a service economy, companies would want to be in the service and not the product business, but I guess the business world is just getting to that.

Hsieh has created quite a stir with his salient yet easy-to-read book that has quickly climbed to No. 1 on the New York Times Bestseller List.

The Harvard student turned entrepreneur recounts the story of how he founded LinkExchange and sold it to Yahoo in 1999 for $265 million, then went about incubating a number of start-up techie companies, losing the bulk of those investments when the dot-com bubble burst and putting one of the most promising of his ventures — an online retail shoe store — at financial risk. It was saved when he leveraged his remaining equity and an eleventh-hour loan.

For me, the interesting aspect of this modern day Horiatio Alger story was the cultural — not the tech entrepreneurial  — aspect of what he did. Hsieh and his team created a unique corporate culture that was clearly aligned with a market in transition, shifting from push to pull. While others in the industry were focused on pushing products through traditional and online distribution channels, their primary focus was to engage and empower employees in a unified mission of delivering happiness though satisfied customers with a valued workforce.

Having purchased shoes from Zappos on a couple of occasions, I’d say the experience was satisfactory, though I’m not necessarily any happier.

“Is the fish fresh today?” I asked the guy behind the meat counter at an upscale grocery store here in Minneapolis.

“Fresh this morning,” he answered cheerfully.

So I bought a pound and headed home to throw it on the grill. As soon as I opened the package, the smell about took my head off. It was so strong and foul that I threw it out immediately and opened all the windows — the place still smelled like rotten fish the next day. Obviously it was not fresh.

I’m sure he figured he was doing the right thing, loyal employee that he was, helping the company reduce spoilage and thus financial loss by moving the last of the old inventory before putting out the fresh stuff. The problem is that he may have lost a loyal customer who has shopped there for many years, because I can no longer trust the integrity of the store. He blatantly lied to me. Now I’m telling others about my bad experience.

After boycotting the place for some time I eventually stopped back to pick up a few things, fish not being one of them. I did stop by the meat department and the same guy was working the counter, so I told him what had happened, that it wasn’t the first time, and I really do not appreciate it.

He said that’s unfortunate and told me next time I should bring it back, like most people do. Next time? Most people? I asked why they’re selling rotten fish in the first place and he didn’t have an answer, so he just shrugged and asked if I wanted anything. No.

Marketing 101: brands are built on trust. And trust is earned over time with every interaction and customer experience, reinforced by experiences shared by others. The most impactful interactions are those encounters with employees, on the front lines. So companies looking to adapt to more customer-centric business practices should start with their own employees, ensuring they are trained, reinforced and rewarded for the right behavior, that of creating satisfied customers — not moving inventory and generating profit.

That requires strong leadership at the top with the right organizational focus and priorities. As they say, a fish rots from the head down.

For most companies, the most challenging aspect of business is articulating exactly what business they are in. Such is the problem with business speak; it often becomes so hackneyed and overused that it no longer means anything to the customer.

When the company is a service provider the problem seems even more pronounced, as the offering is intangible and so is the descriptive language, making it difficult to differentiate.

For example, a quick search on Google for a “full-service solutions provider” yields a harvest of 47,000 companies (as opposed to a partial service provider I assume).  A search for “end-to-end solutions” yields 95,000 results (as opposed to solutions with no end?). A search for “value-added services” results in whopping 600,000 matches.

In his recently released book Rework, Jason Fried, co-founder of a software company called 37signals, challenges companies to rethink the way they look at the antiquated and hackneyed ways they go about business. This is not your typical business book as Fried challenges much of the conventional wisdom we have been led to believe. Too much time is spent talking and not enough doing, he says. Meetings are toxic, ASAP is poison, long-term business planning is merely guesswork and learning from mistakes is underrated.

Nearly every company relies on the written word to woo new customers and to communicate the value of goods and services provided to existing customers, he concludes, so why is it that most businesses communicate so poorly? “Business writing is bad, boring and hopelessly hackneyed, devoid of nutrition, bland and over-sold.”

His book is none of those things because it’s not business writing — it’s straight talk.

Recently I received an offer for a new personal productivity application called “RescueTime” that claims to help me better manage my time by tracking my everyday activities, at work and in my personal life, thus making me a more productive person.

I’m all for self-improvement but this seems a little invasive, like self-imposed Big Brotherhood, looking over my shoulder at everything I’m doing.

For example, if I’m sitting at my computer and my mouse doesn’t move for more than two minutes a window pops up asking what I’m doing and directing me to check one of several options to explain my little downtime — in a meeting, on phone call, doing offline work or off to a bathroom break. It also monitors what computer programs I’m using and which websites I’ve visited.

At the end of each week I get an email with a productivity report including a detailed summary of my daily activities, with nice charts and graphs and all.

According to the company, also called RescueTime, it’s a web-based time management tool that doesn’t require data entry. All we have to do is install a “doohickey” (I hate it when they use technical terms) and the application tracks my computer. I can even assign a point value to different activities if I want.

Company co-founder Tony Wright, who according to his bio spends “a mess of time speaking about productivity,” refers to it as “the time management equivalent of a cholesterol test; we can tell you you’re not quite healthy but we can’t do anything to help you.”

Well if it can’t help manage my time and can only tell me when I’m wasting it, it’s not really a time management tool is it Tony? And in spite of its name the tool can’t really rescue the time I am wasting. Having invested the time to review their short demo (five minutes) I conclude it’s not a particularly useful application; in fact, it’s the last thing I want in my life. I’ve got better things to spend my money on.

Oh, it’s free. Well, I’m thinking that once installed on my computer I’d happily pay to have it removed. As ineffective as I may be, I’ll keep track of my own time thank you.

BTW — it took me 45 minutes to research and write this blog.

Companies engage in these types of intrusive advertising practices at their own risk.

Dropping cookies onto user’s hard drives is not a new practice, though it is one disdained by most consumers who consider it to be predatory and invasive. Retargeting allows companies to install cookies that monitor web surfing activities and patterns, then tailor ads for certain websites visited based on past behavior and specific product views.

Two companies offering these services are Fetchback and AdRoll. The latter offers a service called Roundtrip that allows companies to manage their own retargeting programs. Google’s Adword offers a similar service.

The Federal Trade Commission continues to investigate the use of online behavioral advertising. A 2009 report by Peder Magee, a senior attorney with the FTC’s division of Privacy and Identity Protection, found no illegal activity, as of now, though Magee concludes that this is potentially a highly risky practice for companies as it pushes the limits of privacy infringement — an issue that has gained considerably more momentum over the past year. The report calls for more transparency and consumer controls.

Ultimately, this could be a quick and easy way to permanently damage a brand, as consumers may well resolve never to buy from those companies that have yet to comprehend that the customer rules.

I’ve also read several books on the subject and found some of the information to be of interest and value, though not enough for a book. There’s a lot of redundancy, generalization and opinion supported by anecdotal evidence but not much in the way of hard data to show that companies have been able to monetize social media by linking it to new revenue streams.

There is clearly a bandwagon effect going as social media is being socialized and marketed on many fronts, and though I don’t fully understand the business implications I do know it’s something business cannot ignore. More companies appear anxious to jump on board, whether driven by opportunity or fear. The thing I don’t know is whether these companies are making money in doing so.

A recent survey released by eMarketer reports that 65 percent of companies that have implemented social media tactics believe their organizations have not realized any return on that investment to date. Maybe it’s because they’ve jumped into media tactics without a viable business strategy. Or, maybe it’s simply that social media was never intended for business but rather as a public utility — one still largely being subsidized.

I’m clearly no expert on social media — my kids know far more than I do about it — nor do I profess to have any new insights regarding this social phenomenon from a marketing perspective, so I’ll have to wait for someone smarter than I to figure out how to make money on it. But like others, I do have some broad observations, though not enough for a webinar or white paper, and barely enough for a blog entry:

• Social network sites are not channels; they are media that companies can control. The challenge for business is to find new ways of joining in conversations without trying to initiate them; then to move those conversations to buying channels without over-stepping privacy concerns, social etiquette, or resorting to traditional push tactics. It could be the most valuable use of social media is listening, not talking.

• Perhaps companies would be better served by employing a customer strategy rather than a media tactic: before jumping into social media in hopes of finding a customer, better to follow the customer.

Case in point #1: CDs vs. Digital Downloads

Even though more people are digitizing their music libraries for MP3 players and can manage playlists with incredible ease, not to mention the fact that we can purchase and download songs or albums for far less money than we used to pay for physical discs, people are still buying CDs. One has to wonder why this is.

Those who study the psychology of these kinds of consumer behaviors suggest that even in the digital age, physical products that people can touch and feel still have greater perceived value, even at a considerably higher cost. In the case of CDs, which have been around since 1982, it’s just a matter of time before consumers accept the real value of digitized music, but for now the adaptation curve is well behind that of other technologies.

According to stats provided by the NPD Group, a market research firm that tracks retail trends, 65% of all music sold in the US over the past year was still in CD format. Digital downloads accounted for 35%. Granted that’s a marked increase from 2007 when only 20% of music was downloaded, but in today’s fast-changing world of digital electronics, with the relatively high market penetration of iPods and MP3 players, this ratio is astoundingly slow. European countries are even further behind as consumers there still largely prefer CDs.

Music industry predictions relative to this shift have continually fallen short. The International Federation of Phonographic Industry (IFPI) now projects that revenue from digital music should be equal to physical media sometime in mid-2016.

Case in point #2: Printed Books vs. E-Books

Even with the advancement and promotion of e-reader products such as Amazon’s Kindle, the sale of digital downloads is still a mere fraction of total books sold in the US, increasing at a snail’s pace.

I have no doubt this migration will continue to progress, but the adaptation curve will lag because we are reluctant to give up our physical products.

R.I.P. – Retention of Income Potential

There’s big profit potential and relatively low risk in managing dead celebrity brands, as evidenced by Iconix Brand Group‘s purchase of the Peanuts brand this week for a reported $175 million. Iconix owns the rights to several notable brands like Joe Boxer underwear, but this is its first venture into character-based brands. They figure they can pump some new life into the Schulz characters and generate as much as $75 million in annual license fees.

According to Mark Roesler, CEO of CMG Worldwide — one of the largest managers of intellectual property rights and owner of several dead celebrity brands including Marilyn Monroe, Mark Twain and Babe Ruth — consumer interest in famous people tends to increase even more once they’re dead. As a result, the earning potential of those brands is often far greater than when they were alive. Posthumous brands are definitely more stable and easier to manage without the scandals or career ups and downs, so there is less risk.

Roesler is a recognized authority on dead celebrity brands, having recently been enlisted to help calculate the future value of Michael Jackson. He also was retained as a subject matter expert in the O.J. Simpson civil trial to help estimate his future earning power for settlement purposes — a dead brand that is out-lived by its celebrity.

The Peanuts brand has actually dropped in the standings over the past couple of years, according to the Forbes list of top-earning dead celebrities, due largely to the addition of a couple of bigger hitters to the dead celeb circuit: Michael Jackson and Yves St. Laurent. Interestingly, Albert Einstein finally cracked the top 10 on revenue generated from his bobblehead promotion in McDonald’s Happy Meals — there’s some marketing genius.

Here’s the 2009 Forbes list of posthumous brands with the highest estimated annual earning potential (you can see the full list, and find lists for past years, here):

Yves St. Laurent–$359 million

Rogers & Hammerstein–$235 million

Michael Jackson–$90 million

Elvis Presley–$55 million

JRR Tolkien–$50 million

Charles Schulz–$35 million

John Lennon–$15 million

Dr. Seuss–$15 million

Albert Einstein–$10 million

Michael Crichton–$9 million

Doing a quick bit of research I learn that the term evolved from Procter & Gamble back in the 1950s, when they were attempting to qualify and manage how ad agencies charged for their services. Agencies made so much commission on media buys that they often did the creative and production management work for free — so, in premise, everything above the line was free and everything below the line was paid for out of media commissions.

That trend has long since been reversed as fees charged for creative and production management more often support lost or greatly reduced revenue from media commissions. Above the line (ATL) marketing has been redefined broadly as mass-market advertising through traditional or online media, with the intent of building brand identity and awareness. Below the line (BTL) encompasses more direct, non-media customer engagement such as point-of-sale promotions, direct marketing, trade shows, search marketing or other lead-generation activities that have a more measurable link to revenue. So, below the line is closer to the bottom line. That makes sense.

Carrying the logic forward then, ATL marketing is still largely subsidized by BTL marketing. Care to guess what side of the line I want to be on?