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Innovation Expands Cable Media Options

1 May, 2008 By: Response Contributor Response

Tips on mixing media, where to find great rates and the sexier side of ROI.

Return on Investment and Innovation

The best aspect of an integrated direct response media campaign, which might include long- or short-form TV ads, a vanity Web site, some targeted print ads, a radio spot and a stocky direct-mail distribution list, is that every investment decision, where to spend and where to ramp up efforts, is driven by qualified metrics and return on investment. So when new technologies emerge, the questions should be less around which ones to use and more around how one affects the other.

"Our belief is that it doesn't matter where the customer comes from. Our job is to optimize it," says Michelle Cardinal, CEO and founder of Portland, Ore.-based Cmedia. "You have to look at the various channels and treat a media campaign as a living, breathing organism."

Cmedia is one of five direct response companies that comprise Respond2 Communications, a full-service DR ad agency also based in Portland. According to the Infomercial Monitoring Service (IMS), Respond2 produced the No. 1 spot of 2007 (Ab Lounge XL) and the No. 2 infomercial (bareMinerals).

"It's our job to say what's relevant and how it fits into our clients' objectives," says Cardinal. "Where's the time and money best spent? Because ultimately, everybody in DR has to provide a relevant ROI."

Reporting and analytics is essential in achieving the right media mix and ROI. Cardinal explains that although many of the new media technologies, such as integrated messaging and mobile marketing are fascinating, they are still premature and do not offer the sticky analytics needed to really drive successful DR media buying decisions.

"How do you optimize if you're not reporting?" asks Cardinal. For the past five years, she's dedicated her company to integrated analysis. It's called 360-degree reporting, a sophisticated approach to understanding very top-level response rates down deep into conversion rates, continuity and lead generation.

The Halo Effect

Multichannel campaigns remedy a variety of challenges, from targeting the right consumers to overcoming marketing repellants, such as the ad-skipping technology of digital video recorders (DVRs). In fact, a three-year study conducted by Information Resources Inc. (IRI) found that diverse media plans minimize the impact of ad skipping. According to the report, brands that spent 20 percent or more of their media budgets on media outlets other than television had larger sales volume in DVR households than in non-DVR households. Many food brands that invested mostly in TV saw a volume decline of 7.5 percent in TiVo homes.

Yet, despite all the ways in which a multichannel approach compensates for the shortcomings of pure TV advertising, new-media proponents and traditional direct response ROI sticklers will agree that television drives the multi-marketing train.

"We have to remember that the 40-inch TV in the living room is not dead," says Fays. "We know where our revenue is coming from."

Cardinal argues strongly in favor of the halo effect television has on a multi-channel campaign. "You pull back on DRTV spending and all those other things go down," says Cardinal.

She claims that when you track and investigate the performance of a multi-channel campaign in granular detail, TV is always the dominating force. Related search engine traffic, for example, is hugely affected by DRTV. Consumers watch a commercial but will not commit to a purchase until they investigate the product online, and they also like to purchase at their own convenience.

Regarding DRTV spots and infomercials, the IRI study also found that consumers were less likely to fast-forward through network promotions than ads. More than 60 percent watched network promos and 45 percent watched other ads. And DRTV ads were skipped over at a much lower rate because they aired on low-rated programs where viewers were more likely to be channel surfing without the intent of recording a show to view later.

Media Pricing and Availability

Fourth-quarter 2007 spending and early figures from 2008 indicate a somewhat stagnant overall ad marketplace. According to TNS Media Intelligence, a provider of strategic advertising and marketing information and also Response Magazine's short-form DRTV and DR radio research statistics, total advertising expenditures for fourth-quarter 2007 fell by 0.1 percent compared to 2006.

In the report, Jon Swallen, senior vice president of research said: "The ad market remains stalled and is being engulfed by the spreading pessimism about general economic conditions. Fourth-quarter performance was indicative of this malaise and early figures from 2008 suggest the growth rate for measured ad spending has not appreciably changed."

Brian Fays at MTVN has definitely felt the pushback from clients. "It's a challenging marketplace," he says. "The recession is starting to affect advertising budgets."

The good news: among all channels and spending categories, the largest percentage gain was in direct response, up 17 percent to $7.48 billion. Next was Internet display advertising, up 16 percent to more than $11.3 billion. Consumer magazines saw a 7-percent gain, which pushed spending up to $24.4 billion, and cable TV followed close behind with a 6.5-percent increase and $15.6 billion in total spending. Lastly, outdoor advertising went up about 5 percent to hit just more than $4 billion.

The largest advertiser of the year, Procter & Gamble, which owns a variety of DR brands, was up 5.6 percent, with total spending around $3.5 billion.

If the media buying industry is reflecting signs of a recession, Cardinal's clients haven't felt any ripple effects. "This will be my second big recession since I've been in business," she says. "I've always been dubious because when people aren't outside spending, they're at home watching TV and spending."

Even if a recession is eminent, the clients that she works with, including big-ticket products such as Total Gym, are savvy and well prepared. From a budgeting standpoint, she says they're already ahead of the curve.

Media buyers are also getting a helpful nudge from the aftereffects of the writers' strike that occurred at the end of 2007, according to Advertising Age. A TargetCast analysis showed that the average cost of prime-time spots on network TV in the first quarter dropped 12 percent to $125,634.

The average cost of a commercial unit on ABC, CBS and Fox dropped somewhere between 9 and 12 percent. NBC's cost plummeted nearly 25 percent. Since ratings dipped so low, the networks reserved a sizable amount of inventory to satisfy audience guarantees with their clients.

Consequently, it pushed CPMs so high that advertisers went elsewhere leaving available inventory and relatively cheap unit costs. Steven Farella, CEO of TargetCast, predicts that May will be the sweet spot for advertisers to reap these benefits.

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