Media Buying & Planning Guide: Winning Campaigns1 Oct, 2012 By: Nicole Urso Response
Media buyers navigate the unpredictable ups and downs of a fragile economy and an inventory squeeze from the upcoming presidential election.
It’s a game of strategy and precision planning, calculated decisions and smart investments. As the 2012 presidential election heats up, direct response media buyers must find a way to achieve winning campaigns by making their voices heard in a crowded marketplace.
“We are seeing increased political activity in September, which is impacting how much DR inventory is available — and its pricing,” says David Savage, executive vice president and managing partner at R2C Group, and a member of the Response Advisory Board. “Typically, the stations we see most affected by politics are the ones with the highest-rated newscasts. They are the first to tighten up, and it’s not uncommon to see DR rates double, or they simply stop selling to DR as they don’t have the inventory. From the long-form perspective, we expect to see local broadcast rates increase due to decreased availability. Markets with hot contests will likely reduce the number of paid avails to make room for local spot leading up to the election.”
In the last round of Response’s Media Buying and Planning Guide (May 2012), media executives at major broadcast and cable networks reported that short-form media prices were already on the rise and rebounding from the weak economy. According to Maria Kennedy, senior vice president of direct response and paid programming at Discovery Networks and Response Advisory Board member, most of the networks at Discovery experienced “best-ever” ratings performance in first-quarter 2012 with high demand across all networks. However, political spending has not yet been a major contributing factor to rate fluctuations on national cable.
“The presidential election and related campaign ad spending is not having a significant impact on DR media buying as the bulk of short-form DRTV clears on cable networks, while campaign spending is primarily concentrated on broadcast spot TV in local markets,” says Jon Swallen, chief research officer of Kantar Media.
Likewise, long-form media buyers are not yet feeling the effects of political campaign spending. “We haven’t seen a significant impact on long form to date,” says Tony Besasie, president of Cannella Response Television in Burlington, Wis.
However, as Election Day nears, media buyers will likely experience the trickle effect of competitive pricing and lack of inventory on the short form side.
“On a local level, political spending started affecting short-form rates and inventory as early as the second quarter, particularly in all news properties,” says Peter Koeppel, president of Dallas-based Koeppel Direct and member of the Response Advisory Board. “DR rotations are no longer clearing in news areas at the rotator rate, unless advertisers isolate these programs and pay sellout rates. This has driven the news rates up by 50 to 75 percent for early news, noon news, evening and late news. Those most affected are the ABC, CBS, NBC and FOX affiliates. In addition to spending by the candidates, in some markets like California, spending on issue campaigns will also be heavy, which will further push up rates. For long-form, certain markets and stations have been less willing to preempt programming and open new avails/non-traditional opportunities for infomercials due to strength of the spot TV marketplace because of strong political spending. We expect this trend to continue through the election.”
Late 2011 and the beginning of 2012 showed mixed results that pushed hopes for an improving marketplace. While short-form sales rebounded, long-form struggled to recover.
Kevin Lyons, president of Opportunity Media Inc. and a member of Response’s Advisory Board, contended in Response’s May issue that the long-form marketplace was improving. Lyons oversees paid programming for the Lifetime and A&E Networks. He noted that new advertisers entering the space drove business and, most importantly, response rates had improved, which is a good indicator of continued growth — something borne out in Response’s 2Q long-form media billings research (see page 14).
Lyons also predicted that the improvements that he started to see at the end of 2011 would be sustained through the beginning of 2012, and that the increase in political spending would benefit long-form recovery. He said that short-form advertisers who did both formats might move additional budget into long-form because of the scarcity in broadcast inventory.
It’s too soon to see the full impact of the election year on long-form sales and what the ripple effect from short-form will be, but there is positive news. According to Response’s own data, long-form media billings increased $40 million in the first half of 2012, with the total number of time slots purchased reaching record heights.
First-quarter 2012 short-form media billings held steady and looked very similar to 1Q 2011. Although there was a slight loss of $8.9 million in total spending, a 0.8-percent decrease, average campaign spending increased more than 18 percent.
“There are many factors that impact DRTV response rates,” says Savage. “In addition to a tough economy, we are coming out of one of the highest-rated Summer Olympic Games. National broadcast ratings were very high, pulling viewers away from national cable, an area where a lot of DR business occurs. In the short-form marketplace, we saw a relatively soft and open third quarter, even starting in mid-June. So the prognosis would be cautiously hopeful for improvement.”
According to Kantar Media, second quarter short-form DR ad spending was up 11.9 percent compared to 2Q 2011 — a $125.9 million increase — totaling $1,183,800,000. Compared to the first quarter of 2012, 2Q was up $122.7 million, an 11.6-percent jump.
Despite growth in the short-form market and a few stand-out products and product categories that consistently perform well even under economic pressure, Koeppel agrees that overall response rates throughout the summer months have remained stagnant, and he points to contributing factors such as ongoing unemployment and uncertainty tied to the upcoming election.
“The two bright spots in the economy have been the stock market and housing prices,” says Koeppel. “Experts are uncertain why stocks are up without any data to support that trend. Housing prices have begun to rise in certain markets, due to a lack of supply. However, I don’t think these factors are enough to improve response rates, so I would expect that response rates and the economy will remain stagnant until after the election. At that point, there should be more clarification related to government policies moving forward, which may help consumers feel more confident about the economy.”
Top Products & Categories Remain Stable
Several of the top-ranked IMS long- and short-form products are familiar ones. Guthy-Renker Corp.’s Proactiv Solution has claimed the No. 1 spot in short-form beauty almost every month this year, and Beachbody’s Insanity has held the No. 1 spot in the long-form health category consecutively since May.
Pillow and sleep-aid products have also been top-performers.
“The sleep category seems to be doing well,” says Besasie. “My Pillow and several snoring devices, plus mattress manufacturers, appear to be spending more.”
My Pillow from LifeBrands Inc. has been one of the top five household products in both long- and short-form IMS rankings over the past several months. Total Pillow from Hampton Direct consistently ranks in the short-form personal category. And Dream Lites, a children’s light-up Pillow Pet, has remained in one of the top spots in the short-form entertainment category.
Health and beauty products continue to dominate even in the down economy.
“Health, beauty, medical and financial products that target seniors and baby boomers continue to perform well,” says Koeppel. “In addition, health and fitness, beauty and certain household products targeted at the mass market have showed strength during the past few months. When the economy is bad, people will invest more in home fitness programs and products and cut back on gym memberships, and they will also look for less expensive ways to maintain their beauty, such as utilizing a home hair-removal system or hair-care products versus going to a spa or salon. We’ve also noticed that there’s been an uptick in the number of hunting, fishing, vacation destination promotions, seminars and automobile-related shows.”
Seasonal products are also performing well outside of their annual popularity.
“In recent months, we’ve seen diet continue to spend at high levels despite being outside of the typical diet season, and dating websites also seem to be spending more in the timeframe after Valentine’s Day and through the summer,” says Savage. “On the general-hybrid side, we’ve seen a lot of spend from the automotive and insurance categories, especially on the larger cable networks. In long-form, specifically, we saw fitness products last longer into the summer months than in years past. In addition, housewares and beauty continue to dominate the industry rankings.”
Audience fragmentation and the ever-evolving media landscape have experts continuously adjusting their media mix to optimize DRTV campaigns. Viewership of the London Olympics this summer provided insights for marketers about the power of mobile and social audiences. For the first time, viewers could live-stream all Olympic events, a total of 3,500 hours of programming. It was also an interactive experience. According to Twitter’s U.K. blog, there were more tweets in a single day at the London Olympics than there were throughout the entire 2008 Beijing Games.
Granted, four years ago, the iPad had not yet been invented, and smartphone penetration, according to Nielsen, was only 10.3 percent in 2008 compared to 49.7 percent today. However, the strength and growing number of mobile users is undeniable, and something that Besasie believes is very important to consider when building a marketing campaign.
“The phone, and more specifically the 800 number, has been the lifeline of DRTV,” says Besasie. “While the phone remains the primary device of communication for the consumer, the method of interaction is evolving away from 800 number and toward the Web, including mobile Web and mobile search. As far as advice, work with a mobile expert. There is more to mobile than simply optimizing the E-commerce website.”
Web and television are also merging to become a singular experience. Online content can be streamed and viewed on the living room television just as television programming can be streamed and viewed on a personal computer, tablet or smartphone.
“Although it is growing, the number of IPTV or connected TVs remains a small percentage of the entire household universe. Thus any opportunity will be very small in the near future,” says Besasie. “The more important takeaway is that the media landscape continues to fragment. As media options become more diverse, the landscape becomes complex to navigate. This requires marketers to participate in multiple channels to reach the consumer, which can become overwhelming for a marketer that is already handling a multitude of duties. This makes it more important to rely on partners that are keeping pace with emerging technologies who can assist in implementing tests.”
On-demand features and integrated marketing opportunities also provide new ways for DR advertisers to take advantage of emerging technology that puts viewers in control of what they watch and when they’re watching.
“Shorter length spots can be utilized to drive consumers to the Web to further educate them about a product or service through on-demand video content,” says Koeppel. “By integrating Web videos into the campaign, the Web conversion can be higher than through the phone, which can eliminate the need for a call center. As more consumers are going online to research and educate themselves — and ultimately purchase products and services — we are seeing shorter length drive-to-Web spots and Web videos being produced and utilized simultaneously, in order to capture more customers and sell more product online.” ■