Channel Challenges1 May, 2014 By: Nicole Urso Reed Response
DR focuses on brand creative as social media gets direct.
Leading experts in the direct response industry gathered last month at the annual Response Expo in San Diego to discuss a variety of opportunities and challenges facing marketers today. One of the key topics at roundtable discussions focused on the new frontier of multichannel marketing, where advertising, customer service and fulfillment blend seamlessly to create a singular shopping experience known as “omnichannel.”
Mobile access, and the immediate information that it delivers, has changed the way that people shop. When consumers see a product advertisement on TV, they not only expect to see the same offer online, they expect a similar brand experience. And because there are so many touch points of engagement with a product before it’s actually purchased online or in stores, many marketers say that they are now more focused than ever on developing solid branding and creative to complement the proven methods of measured direct marketing.
“There’s a lot of scientific approach with direct response and, especially, long-form,” says Blaine Rominger, executive vice president at ION Media Networks in Burbank, Calif. “Every seven minutes you repeat the segment, you know when people call and how often you have to throw the number and the offer. That behavioral approach is really important in terms of getting people to respond, but you also need to layer on top of that creative execution that’s going to be compelling and get people to want to watch the commercial.”
Rominger believes that commercials should be just as entertaining to watch as the television shows on which they air. Everyone should aspire to have their Super Bowl moment, where viewers watch TV for the commercials and then watch them again on YouTube because they were just that entertaining. If anyone argues that it’s much easier to create memorable advertising with Budweiser’s Clydesdales or David Beckham running about in his underclothes for H&M — another of the most buzzed about moments of the 2014 Super Bowl — Rominger points out a number of “boring products” with successful creative, such as E-Trade’s talking baby and Geico’s array of talking animals and more.
“I think that if a client is concerned about the commercial being effective, if the client is concerned about their commercial being skipped, it all comes down to creative execution,” he says.
Watch and Wait
Early 2013 warning signs in media billings results discussed in the last round of Response’s Media Buying & Planning Guide (October 2013) came to fruition during the remainder of the year in short-form TV, long-form TV and DR radio. According to Kantar Media’s research, short-form spending totaled just more than $3.5 billion in 2013, losing more than 23 percent from its 2012 totals. Meanwhile, Response’s own research shows 2013 long-form media billings fell 5.7 percent to less than $1 billion total — the first time the long-form DRTV space has failed to hit that milestone since 2004. And radio billings fell 5.4 percent ($568,800) to $10,020,800 in 3Q 2013, the most recent reported results. This was the third consecutive third-quarter drop, although spending remained strong among the top 10 campaigns for the period.
Despite the gloomy reports, Jeff Lazkani, director of business development at Icon Media Direct in Van Nuys, Calif., says that consumer response has been strong, and 2014 is off to a great start.
“There are a couple external factors that contributed to stronger consumer response, one being higher HUT levels due to weather conditions and the other being the Winter Olympics, which favorably affected the marketplace in first-quarter 2014 as the games are estimated to have generated more than $1 billion in advertising revenue, according to AdWeek,” he says. “With such large budgets allocated towards the Games, there was less pressure on cable/network inventory and media opportunities that may not otherwise have been there were taken advantage of by savvy direct response agencies.”
Aside from the familiar explanation of a weak economy, reasons behind these drops in media billings were attributed to some other factors. Long-form media results appear to have slipped because of a shift in time slot spending into cheaper satellite TV rather than national cable. And as for short-form, the sharp decline was due to general market advertisers scooping up most of the inventory, a challenge for the DR space, but a positive sign for the economy overall.
Jon Swallen, Kantar’s chief research officer explained in a note to Response: “Declines in direct response ad expenditure are being driven by cable. Cable DR ad time is down about 12 percent year-over-year and this reflects a stronger market for full-price advertising, leaving less time for DR marketers who buy remnant inventory at discount.”
Swallen also stated that a change in their computation of DR ad prices, which Kantar made in 2012, is why the average price of a spot appears to be down 30 percent year-over-year. Those changes were implemented in fourth-quarter 2012, so results for 4Q 2013, saw some of those declines will level out (see page 24).
Even with the changes in reporting methodology, the struggle in short-form brought about by tough competition from the general advertising market is a trend echoed by advertising executives who have seen the same thing. However, as Rominger explains, the DR market is not getting its due credit.
“So much of what Response tracks, and Kantar and so forth, is the real traditional DR,” says Rominger. “We’re seeing more and more of what we’ll call hybrid — general market accounts — in the DR space, and they tend to pay higher rates than traditional DR, which puts more pressure on access to the traditional DR accounts. So this hybrid business that was traditional general ad now has ventured and found budgets to go into the DR space, as well. Some of that is coming from direct mail and from some of the non-traditional, non-electronic media spends.”
Pharmaceutical companies have been long-time competitors for DR inventory, but now that most advertising tries to elicit some form of response from consumers, whether it is to redeem an offer or to engage on social media, the overlap between general and DR advertising dollars continues to expand and is challenging to differentiate.
Long-Form Still Seeks Solid Ground
In addition to the shift from national cable to less expensive time slots on satellite, a decrease in long-form billings could be attributed to another factor noted by Simon Smith, manager of ad sales for NBCUniversal.
“We’ve noticed some offshoots of long-form advertising towards short-form — the assumption being that traditional DR campaigns require frequency in various dayparts. The majority of paid inventory resides in overnight hours due to affiliate agreements.”
Rominger cites the same trend of long-form dollars moving into the short-form space as a significant reason in why he’s seen short-form rates increase 10 to 15 percent.
Still, the fragile economy as an ongoing factor cannot be ignored, according to Kevin Lyons, president and CEO of Opportunity Media, the exclusive provider of long-form representation for all of the A&E Television Networks and in the United States and United Kingdom. Campaigns that advertise on both sides have been moving some budget from long-form to short-form during the past few years, he says.
“I feel like a broken record to some degree, but I feel like the economy is still a considerable issue,” says Lyons. “Despite that, the media marketplace has been quite strong.”
One of the key factors in determining a healthy marketplace is the entrance of new advertisers who are willing to test fresh media budgets. Lyons is working with several new players. He notes that the five-minute space has been especially strong, and TELEBrands, traditionally a short-form advertiser, has recently been a lot more active on the long-form side.
To find out what works best for a particular product, it all comes back to what DR does best, and that is to test.
“A multichannel approach is absolutely necessary today in terms of marketing in general, but it’s also important to note that video is king,” says Lyons. “Whether that video is on mobile, is online, or is on TV, the power of video and the demonstration of a product is hard to beat. Multichannel marketing is not new, but it’s as important as ever. That’s a huge consideration for anyone entering the marketplace that they’re prepared to operate in a variety of venues, but I think it’s all about video and the different means of distributing it.”
Social Media Gets More Direct
In a major move announced last December, Facebook launched video ads in its newsfeed. The social media network has been slowly integrating more advertising options into its platform, but this is by far the most ambitious — and it’s an attempt to grab a piece of the $66 billion U.S. television advertising market.
The rollout started with a test of a video trailer for the movie “Divergent” that only appeared to a limited number of viewers. The 15-second videos appeared in the newsfeed and began to play automatically, but without sound. Users could tap to expand and un-mute the video or simply scroll past them as they would any other post.
In a company blog post, Facebook says that it’s working with a select group of advertisers to see how users interact with the content.
“To make sure Premium Video Ads are as good as other content people see in their News Feeds, we’re working with a company called Ace Metrix to help us review and assess how engaging the creative is for each ad — before it appears on Facebook,” the post reads. “Ace Metrix will allow us to objectively measure the creative quality of the video in the Facebook environment, and highlight performance indicators for advertisers such as watchability, meaningfulness and emotional resonance. We’re taking this step in order to maintain high-quality ads on Facebook and help advertisers understand what’s working to maximize their return on investment.”
The ads will be measured similarly to what advertisers are accustomed to with TV, and they’ll be measured by Nielsen Online Campaign Ratings (OCR). Advertisers will pay based on what Nielsen measures.
Although many advertisers are excited about this shift from social marketing to traditional push-style advertising, most of them will be priced out of the game. According to Bloomberg, the ads will cost between $1 million and $2.5 million per day for the videos to appear three times in users’ newsfeeds.
On the other side of the social spectrum, Twitter announced in March that it would introduce a click-to-call button specifically for DR advertising. The feature is designed for advertisers who want to generate leads, drive app downloads, collect user information such as E-mails, and of course, get users to respond to special offers. That variety of uses for a click-to-call button within this context would also likely include booking reservations, purchasing concert tickets, or redeeming retail offers, especially since Twitter’s audience is likely receiving the information within a mobile context.
Understanding the context of how consumers will receive a marketing message is key to developing compelling content, and it goes back to the evolution of multichannel marketing.
“Today’s marketers need to understand that we are living in a multi-touch media environment and be aware of each stage of the conversion funnel while also employing the necessary systems to optimize media and attribute response appropriately,” says Lazkani. “Understanding the significance of search optimization, conversion-optimized landing pages, tactical methods for re-engaging consumers online as well as where to find cost-effective platforms for reaching consumers beyond television, are all keys to developing the right media mix.”
Marketers should also step back and see the big picture before delving too deep into the data, especially after short periods of initial testing. Even with traditional DRTV buys, there are significant viewing differences between genres of programming, says Rominger. People watching live entertainment and sporting events will behave differently than those watching taped shows days later.
“The creative messaging is more important than ever,” says Rominger. “It’s more about making sure that you’re not getting lazy about creative execution that’s going to catch people’s eye so they don’t skip through the commercial. The commercial is the content.” ■