Media That Pays to Play on the Shelves1 Apr, 2011 By: Bridget McCrea Response
DRTV shares the spotlight with retail to drive a campaign’s bottom line.
Not all DRTV campaigns are created equal. Some incorporate elements meant to sell as many products as possible via television, while others rely on an integrated mix of selling channels to get the job done.
A third category of these dynamic campaigns relies heavily on retail as the selling point, with DRTV serving as a driver for customers who want to touch and test the products before opening their wallets. These self-liquidating media campaigns find marketers putting less pressure on the DRTV itself, and more emphasis on the number of units sold at retail.
As Seen on TV products are a good example of DRTV’s role as a successful retail driver. These campaigns rely on short-form spots for the Belly Burner, Shake Weight and Pillow Pets, knowing that the 8-year-old who implores her mother with, “Buy me the purple unicorn pillow I saw on TV!” will likely walk out of the store with one of them tucked under her arm.
Retailers have also taken to using DRTV as a way to drive foot traffic to their stores. Anna’s Linens, a Costa Mesa, Calif.-based retailer of home fashions, has been using the strategy for a couple of years, according to Carie Doll, senior vice president. Using a “sell steak cheap, not cheap steak,” motto, the company provides merchandise at “extreme value” to its customers via 271 stores in 19 states and the District of Columbia.
The firm uses a hybrid advertising strategy that includes both direct response and fixed techniques, Doll says. “We aim to strike a balance between our recent frequencies, while also having the flexibility to buy in a targeted manner,” Doll explains. “We have such a broad reach and appeal that we’re able to increase our advertising spend and span a variety of mediums with our marketing.”
During the time that Anna’s Linens has been using DRTV to drive store sales, Doll says the company has learned “a lot about the efficiencies you can gain” through direct response, particularly when campaigns are integrated with Web, phone and other sales channels. “We’re still relatively new on TV,” says Doll, “but we find that DRTV is very effective at driving customers to use the Web and/or pick up the phone to get directions to our brick-and-mortar stores.”
According to Doll, Anna’s Linens has a concentrated group of stores in the each of the DMAs that it purchases DRTV media in. In markets where that concentration is low or non-existent, the retailer relies more on print advertising to get the word out. Doll says that strategy is based on intensive market research, and careful planning and tweaking of advertising campaigns.
“We’ve conducted a lot of research into how we spend our advertising dollars, always ensuring that we have a set point for our analytics,” Doll explains. “That way, we always know that we’re getting the ROI that we need in a fast-paced media environment, where analyzing the spend in real-time is critical.”
Doll says that review process is tantamount to “always looking out the rear window and the windshield” while driving a car, knowing that a peril or opportunity could present itself at any minute. “It’s pretty fluid,” she continues, “We can adjust two weeks out, and we use our initial plans and daily sales to make tweaks as we receive our (reports).”
While Anna’s Linens’ DRTV media buying strategy is well thought out, it doesn’t always produce the desired results. “Our biggest challenge is getting the (advertising) mix correct,” Doll explains, noting that DRTV tends to be less targeted than other advertising media, and requires close tabs on measures like foot traffic to be most effective.
“We have traffic counters in every store,” says Doll. “We’ve become very numbers driven in terms of exactly what is being advertised, what the traffic is for every store is, and the conversion rates and sales numbers for those locations.”
The company, which recently launched a Customer Relationship Management (CRM) system in order to glean even more information about who is shopping — and spending money — in its stores, plans to continue using DRTV as a retail driver. “It’s working pretty well for us,” Doll says.
Look at some of the top DRTV shows on air today and you’ll see that a high percentage of them are designed to drive retail sales. The strategy works for a wide range of products, including former DRTV hits that are reconstituted and put on the shelves of stores like Walgreens, Wal-Mart and Target. All of these products are tapping the power of self-liquidating media and creating retail branding efforts that recoup media spends on the retail floor, rather than via television sales.
Doug Garnett, president at Atomic Direct in Portland, Ore., is a big believer in DRTV’s role as a retail driver. While a certain number of viewers are sure to pick up the phone and order a DRTV product or service from their living rooms, a much higher number will either schlep down to a local retailer to get a closer look, or randomly pluck the item from a display endcap during a routine shopping trip.
“Regardless of whether you’re talking about DRTV or general TV commercials, its really all just television advertising,” explains Garnett, a member of the Response Editorial Advisory Board. “With this in mind, you produce a DRTV ad, put it on the air, and wind up influencing a much larger audience than will buy directly from you.”
Garnett estimates that for every 10 customers who respond directly to a short-form spot or an infomercial, another 1,000 are influenced by the show. Every one of those individuals is a potential customer who, upon seeing the product on a retail shelf, will pick it up and put it in his or her shopping cart.
Knowing this, Garnett says smart marketers focus more on building future customers through retail channels, rather than recouping their entire DRTV media investment via telemarketing or Web sales. “A lot of DRTV shows are still focused on the direct sale; it’s all about profit on TV,” says Garnett. “The problem is that [DRTV] can only deliver about one-thousandth of the impact.”
Shift the strategy around to include a retail-centric approach, however, and the other 1,000 potential customers suddenly come into focus. And while the profits generated via television remain a critical component of the campaign, they aren’t the only revenue streams. “When you look at the total picture, instead of just at what’s happening on television,” says Garnett, “you quickly realize that the profits generated at retail are so much better than what you’ll make off of TV.”
Garnett points to Braun’s handheld blender campaigns from the early-1990s as just one example of how brand marketers have tapped the power of retail-driven DRTV campaigns. “Braun never made money on TV,” he says, “but it sold a lot of its blenders at retail using the self-liquidating model.
The Internet also plays an important role in the self-liquidating media equation, which benefits greatly from the added boost of online sales. “Pretty much any time your product is available through multiple selling channels, you wind up with DRTV media that’s self-liquidating,” Garnett explains, noting that industry numbers show that just one in 20 DRTV campaigns succeeds as a standalone entity. “Include multiple channels in the mix, and your risks for failure drop tremendously.”
The concept of self-liquidating media isn’t new, but it is cyclical in nature and often driven by the success of individual products. When items like the ShamWow and Slap Chop hit it big on TV, for example, then the DRTV-to-retail trend tends to slow in favor of direct selling.
But without such huge hits gracing the Jordan Whitney rankings (whose short-form list at press time included Proactiv Solution, Vibrating Touch, Chef Basket, Space Bags and Ab Glider, all of which are available via retail), self-liquidating media comes back into style as marketers squeeze as much as they can from every media dollar.
“Selling directly from TV is great if you’re making as much money as the ShamWow guys are,” says Garnett, “but in reality it’s the self-liquidating model that works for a broader range of products.”
No Magic Bullet
Consumers love products that solve problems, but they also love the occasional gimmick. TELEBrands of Fairfield, N.J., has come to master both sides of that equation with products like the Chef Basket, Jupiter Jack, PastaBoat and Aluma Wallet. Its success with self-liquidating media dates back to 1987, when president and CEO A.J. Khubani produced three short-form commercials: one for the Easy Cycle, one for an ultrasonic flea collar, and one for AmberVision sunglasses.
The AmberVision infomercial skyrocketed the product to success, selling more than 15 million pairs. Many more products would follow in that item’s footsteps over the next 24 years, with a high percentage of them earning their stripes through retail sales. “About 95 percent of our business comes from selling through retail chains,” says Khubani. “We use DR as a marketing tool first to test out the products, and then we run enough media to drive retail sales.”
Khubani says the model works well because it allows TELEBrands to get a good handle on which television stations are performing better than others. “It helps us to tailor our media better because we can gauge response from individual TV stations,” he explains, “versus having to use the more traditional manner of blanketing the media and buying gross ratings points (GRPs).”
With more than two decades of retail-driven DRTV buying under his belt, Khubani says the underlying logistics of such campaigns are pretty straightforward, but adds that they are also very scientific in nature. “There’s little guesswork involved in driving retail sales with direct response,” he explains. “Basically, we just figure out what we need to do to create those retail sales based on the television response rates, the latter of which help us gauge how much we can spend on media.”
A new TELEBrands campaign, for example, would find Khubani and his team hitting the ground running with a broad media schedule, “just to figure out which markets, viewers and demographics are responding better than others, and which stations are (performing) the best,” he says. The company then narrows those choices down to the best-responding stations, comes up with a “comfortable” media spend and determines if that amount is enough to drive retail sales.
Not all campaigns pass muster. “If we can’t spend enough to drive retail in a cost-effective manner, we will drop the item,” says Khubani. “Unlike infomercial companies like Guthy-Renker and Beachbody, our whole play is retail. If the numbers don’t make sense, then we drop it and move on.”
As companies like TELEBrands and retailers like Anna’s Linens have already learned, self-liquidating media is an effective way to generate sales without having to rely too heavily on consumers to pick up the phone and place an order.
The strategy not only allows DRTV marketers to spread their risk, says Garnett, but also helps to create more profitable campaigns via multiple sales channels. “The use of self-liquidating media will continue to expand,” says Garnett, “because it’s a survival strategy for the traditional DRTV marketer.”