Media Buying & Planning Guide: Sales on the Upswing1 May, 2012 By: Nicole Urso Response
Short-form DRTV makes a comeback while long-form picks up momentum.
As 2011 came to a close, DRTV sales showed continuing signs of rebounding, and network executives reported optimistically that although long-form sales were slow to recover, the short-form market was back on track. Direct response TV as sales continued to deliver positive results and hope that new DR advertisers and consumers would surface in the coming months. So far, the first quarter of 2012 is proving to be the comeback story that everyone wanted.
“Prices have increased going into first-quarter,” says Maria Kennedy, senior vice president of direct response and paid programming at Discovery Networks, and a member of the Response Advisory Board. “Q1 is usually the most responsive quarter of the year. I believe it has been a good quarter for both the long- and short-form markets.”
One year ago in Response’s Media Buying and Planning Guide, DRTV sales executives reported strong short-form and mixed long-form sales heading into the second quarter. At Viacom Media Networks, long-form inventory was even pulled back and sold as short-form instead.
According to Kantar Media, short-form media billings continued to improve throughout the year. In the second half of 2011, billings increased 10 percent, up $198 million compared to the third and fourth quarters of 2010. While much of that increase occurred in the third quarter, the fact that fourth-quarter results also showed a slight rise was important to the gaining momentum of the marketplace.
Another sign of better times to come may be noted in the categories starting to make a comeback as well as the number of new advertisers. There were 26 newcomers to the top-40 rankings in third-quarter 2011 alone, and one of the most-improved categories, which took a hit during the recession, was “Automotive and Travel.” It was up 79.8 percent in 3Q 2011 short-form billings.
“The Discovery Networks had a record upfront last year and the ratings across most of the networks are strong,” says Kennedy. “Most of the networks are experiencing ‘best-ever’ ratings performance in Q1 2012. There is a very high demand for short-form direct response inventory across all networks.”
According to Jordan Whitney’s monthly infomercial and spot rankings report, popular categories during the first quarter were predominantly personal care, exercise and housewares. Radiancy’s no! no! hair removal device has ranked as either the No. 1 or No. 2 spot since January.
“We see the DR marketplace really picking up since Q4 2011,” says Amy Leifer, vice president, direct response and paid programming sales, at DirecTV. “It seems the economy has stabilized and with it our DR business. We have a great handle on our inventory and that gives us the ability to offer DR advertisers unique opportunities.”
While short-form sales are off to a strong start in 2012, long-form sales have not been as quick to rebound. “It has recovered a bit from where it has been in the last year, but not as strong as in the past,” says Kennedy.
The second half of 2011 was a mixed bag in long-form DRTV, as a 3.7-percent decline in the third quarter (the $235.5 million recorded was the lowest third-quarter in seven years) was offset by a solid 6.2-percent jump in fourth-quarter results. Overall, 2011 saw the total long-form market dip 3.9 percent, a slight stabilization from the 4.9-percent fall experienced in 2010.
Kevin Lyons, president of Opportunity Media Inc., and member of the Response Advisory Board, says that despite discouraging numbers, the marketplace is improving. Lyons now manages paid programming for both Lifetime and A&E networks.
Last year Lyons began to notice an improvement in response rates, and as a result, a “double-digit” increase in paid programming prices.
“The improvements that we began to see last year have been sustained and increased further going into the first quarter and remain healthy,” says Lyons. “The important part is that underneath the improvements, there are response-level improvements — the bedrock of the rates and everyone doing better.”
He’s also noted business driven by new advertisers entering the DR space. “One of the things that’s driving the improved marketplace is new shows and advertisers,” he says. “There’s a lot of discussion of newer folks entering the business, and I think this year will be very important in that regard. Some of the bigger corporate players in the U.S. will continue to put their toe in the water in terms of direct response, certainly with regard to long-form. That’s a continuing trend of newer players and traditional media coming into the fray as well. It’s happened in short-form and it continues to happen in long-form.”
Housewares products, such as Keurig’s single-cup coffee brewing system, have performed well in recent months, according to Lyons. Beauty, personal care and fitness also continue to be top categories, but with the improving economy, Lyons expects demand for these types of products to increase.
“When you look at beauty, fitness and housewares, those will also do well from pent-up demand, especially in things like fitness and beauty where people are looking to improve themselves. There’s a feel-better factor there. When people have been through difficult times, when a product can make them look better and feel better, it’s likely to benefit from that effect,” he says.
2012 Forecast: Partly Cloudy?
One of the most dramatic effects on media buying this year will be the influx of political spending as the country heads toward the 2012 presidential election in November. In a time of uncertainty, media buyers can count on candidates buying up large amounts of inventory and driving up short-form pricing, especially on broadcast television.
“We expect the marketplace to continue to heat up between the political race and the Olympics over the summer,” says Leifer. “We feel we have great momentum moving into Q2.”
Political spending may have a ripple effect and help drive long-form sales as well.
“In terms of the long-form arena, political spending this year, which will be huge, will actually benefit long-form in my opinion,” says Lyons. “I believe it’ll cause some of the short-form advertisers that do both formats to possibly move additional monies into long-form because of the scarcity in certainly broadcast inventory.”
Many advertisers are preparing for the upcoming events by purchasing media ahead of time.
“Our DR opportunities remain in high demand, and I expect that demand to continue in second quarter,” says Jason Baron, vice president of Turner Direct Response. “We’ve seen a lot of money coming in early and a lot of plans being prepared. We’re well-positioned in the marketplace and will garner our fair share in scatter and some multi-quarter business.”
However, Lyons warns that there are still factors that may impede the burgeoning growth. “One of the risks that presents itself in terms of this improved marketplace and improved results is rising gas prices,” says Lyons. “We’re certainly concerned about that because if the rise continues to happen, that could have a negative effect on the consumer behavior.”
Emerging networks and interactive content features are also stimulating industry growth and making media buys more targeted than ever.
“Velocity has been our latest success story, which launched October 4,” says Kennedy. “This is in the top-20 fastest-growing cable network category. We have seen incredible ratings growth since the launch, and male-skewing advertisers are seeing great success on this network.”
Velocity identifies itself as an upscale male lifestyle network. Its programming includes new and returning series in automotive, sports and leisure, adventure and travel. “Wheeler Dealers,” for example, follows Mike Brewer and Edd China as they buy and restore classic cars and try to sell them for a profit.
OWN, Discovery’s joint venture with Oprah Winfrey, which launched in January 2011 and struggled to find ratings during its first year, also has reason to celebrate. It reported first-quarter growth across all key demographics in primetime and total day ratings, with primetime up 14 percent among women ages 25 to 54. In March, primetime ratings were up more than 50 percent. The announcement came after a recent restructuring and the cancellation of Rosie O’Donnell’s talk show.
Discovery Communications is also introducing new DR buying opportunities in the form of video-on-demand (VOD). “We are expanding our VOD platform to allow direct response advertisers the opportunity to advertise in this space,” says Kennedy. “We have had great success, as the platform is available in 50 million households. This gives direct response advertisers the chance to get into our best prime series that might be sold out on the regular network. Viewership for this service has increased dramatically in the past year.”
Engaging consumers with interactive content is one of the main advantages of media buying on the nation’s largest satellite provider, DirecTV, according to Leifer.
“Buying commercial time through DirecTV allows agencies to reach 20 million homes across many networks at one time by targeting a specific demographic,” says Leifer.
Advertisers can purchase nationally or at the local level directly through the satellite provider versus shopping on individual networks. “We are one-stop shopping for small agencies that don’t have the time to go network-by-network, and DirecTV has always been a highly interactive viewing experience so our audience is very receptive to interacting with their TV and responding to DR campaigns,” Leifer adds.
With DirecTV’s Interactive Advertising Channel, which runs 24 hours a day, seven days a week, consumers can access branded video content through a 30-second spot and other entry points as they are watching regular programming.
With the variety of interactive features and hyper-targeted programming, DRTV advertisers now have more options than ever to speak directly to their audiences and make the most efficient return on their investment — another reason why many believe that 2012 is shaping up to be a promising year for the industry overall.