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Direct Response Marketing

'O, Christmas Tree …'

1 Dec, 2013 By: Thomas Haire Response

Thomas Harman’s Balsam Brands got its start in the artificial Christmas tree space in 2006. This season, the online retailer unwraps the gift of DRTV.

“With the proliferation of media consumption online, the TV industry has experienced a vastly changing landscape during the past few years,” says Thomas Harman, founder and CEO of Balsam Brands, the Redwood City, Calif.-based parent company of Balsam Hill Christmas Tree Co. “Through our experience thus far with TV, we have learned the importance of having an integrated marketing strategy that spans beyond just traditional TV. That we can generate brand awareness and sales from our efforts in the direct response TV space shows that direct response can be catered to an audience that is not ‘stereotypically’ direct response.”

The 37-year old Harman started Balsam Hill in early 2006 with an idea of creating ultra-realistic artificial Christmas trees and retailing them exclusively online. By mid-January 2007, Harman was still the company’s only employee — but he’d made nearly $3 million in revenue after the website opened on Oct. 1, 2006.

Between then and today, he’s built out Balsam Brands — which also operates such online retail businesses as Backyard Ocean (above-ground pools, pool toys and supplies), Hinkley Lighting Gallery and Kichler Superstore (both in the lighting space), and a dozen Web stores in five countries — with entrepreneurial finesse and a true belief in the importance of company culture in a growing business.

Still, Balsam Hill remains the company’s flagship brand and, entering its eighth holiday season, Harman believed it was time for the business to add a serious look at DRTV — after a muddled attempt a year ago — as both a driver of sales and branding.

“In 2012, we tried to take a video asset that had not been created for TV and modify it to make it work as a direct response TV campaign,” Harman says of the company’s first foray a year ago. “We were disappointed with the results, but the experience certainly gave us a lot to reflect upon as we refined our DR strategy.”

Learning from experience and perfecting the process is something innate in Harman, reaching back to his early childhood. So it’s no surprise to see Balsam Hill’s DRTV campaign for this current holiday season making big strides.

‘Life’s Too Short …’

Harman’s days as an entrepreneur began at age 3, when he started selling used tennis balls to neighbors. At age four, he started a business growing and selling decorative gourds. Soon thereafter, he opened a lemonade and popcorn stand — but when he noticed he was on a low-traffic street, Harman did what any five-year old would: he loaded up his Radio Flyer wagon with his product and went door-to-door!

That drive pushed Harman through Williams College in Massachusetts and into a job as a consultant with McKinsey & Co. But that’s where the story takes its first true turn. Harman’s father owned a 50-year old manufacturing company in Cleveland when he suddenly passed away. Harman was just 24 when he took over the company — as a second job while staying on with McKinsey. The amount of work it took to turn around a failing family business while working as a consultant — and subsequently enrolling in Stanford University’s M.B.A. program — led to Harman’s guiding business philosophy.

“Life’s too short not to enjoy one’s job,” he says. “I learned it not only from losing my dad, but other family members and friends too early in their lives due to tragedy. I’m from the blue-collar side of Cleveland, and I realize that not everyone is blessed with a choice of how to earn a living. However, my colleagues and I have been blessed that we do have options.”

Harman has been able to put that philosophy to work in building Balsam Brands — and, perhaps more importantly, the Balsam Brands culture.

Building Balsam’s Culture

Harman’s first eight months of building Balsam Hill in 2006 were an unequivocal — if tiring success. Amazingly, Harman had gambled on an artificial tree business in a market where such items remained unsuccessful against live trees. Additionally, he had no experience in décor design or online retail — yet he set up a fully functioning retail business, including manufacturing and supply chain, in just four months. Finally, he made a massive personal investment to purchase dozens of containers of plastic Christmas trees — products that had a three-week selling season.

With $3 million in revenue, though, Harman faced perhaps an even tougher test as 2007 unfolded: build a long-lasting company from this early success — one with the team and culture that he envisioned.

“Company culture is critical, and very hard to change,” he says. “As a McKinsey consultant, I had the opportunity to witness many corporate cultures. I then took over a family-owned business with 50 years of cultural history, and learned how difficult it can be to make changes. I have seen high-performance cultures, fast-moving cultures, stuck-in-the mud cultures, highly political cultures — and from the day I decided it was time to start hiring colleagues at Balsam Brands, I have thought daily about what kind of culture we should have and how to build it.”

It started at Balsam with finding the right office location. “I took BART (the Bay Area’s local train system) to potential locations and walked from station to office to see if it felt safe,” Harman recalls. “It was really important that our location be accessible for our employees, as well as safe and great to work in. I also wanted a location that was in more of a retail area, rather than an office park. And that’s where we are, on the second floor of a retail building in Redwood City – in a quintessential ‘Main Street USA’ downtown. It gets our employees out into a place where people are connecting with customers and they interact with them.”

The next big factor in the culture — especially operating in a location where Balsam Brands is competing for top employees with companies like Google and Facebook — was “creating an environment that is completely supportive of the employee,” Harman contends.

He adds, “We go out of our way to support every one of our employees, no matter their situation. We have a husband and wife who team to share a job. They’ve been doing it for 15 years, including their time with us, and they’re incredibly talented and responsible. It helps them support their son and they do great work for us. We also have a lot of working moms on our management team, so we pitch in by making sure they can flex their hours on a weekly basis, depending on the needs of their families. At the same time, we have a program to develop college undergrads to join us, and we’re not afraid to hire international workers who are on visas. Small companies can get scared by that process, but we invest and get talented international members of our team.”

This culture has led to Balsam Brands now fielding a staff of more than 100 employees and contractors. The pool of talent around him now leads Harman, when asked about his day-to-day role at Balsam, to joke, “I’m the dishwasher, because at this point we have a truly amazing team that runs our company.” He continues, “But, besides loading and unloading our office dishwasher, my role is really to delight our customers by designing great products and empower and inspire our Balsam Brands team.”

The culture that’s been built allowed Balsam Brands to survive its initial challenge — the Great Recession of 2008 and its near-devastating impact on Balsam Hill’s sales that holiday season. In early 2009, Harman pulled the team together and guaranteed them that their jobs were secure through 2009. He told the team that if they pulled together and worked hard, Balsam Brands could leapfrog the competition. “Looking back, this meeting was the catalyst that drove Balsam Brands to its rapid growth, low employee turnover and record revenue and profit — while our then-peers have largely faded away,” Harman says.

Dipping a Toe in DR

Three years after the big turnaround of 2009, Balsam Brands began to look at marketing opportunities outside its traditional online marketing of Balsam Hill artificial trees.

“For the most part, our marketing has been focused online, which generally has been a more reactionary area, so we hadn’t focused on or invested in demand generation,” Harman says. “In recent years, Google has rolled out some new products that allowed us to participate in more demand-generation marketing, but it’s only been a small part.”

And though the company has done some non-TV direct response in a limited way — “We launched our first print catalog this year, and will evaluate its efficacy over the coming months,” Harman contends — it began to look at DRTV as an option in 2012, after doing some limited “branding-only” television in recent years.

“We started doing some brand-awareness TV via Google TV a couple years ago,” Harman says. “I’m a big believer in analytics, and it was easy to test TV with Google TV’s metrics. When Google TV was discontinued, it made sense to take a deeper look at DRTV.”

But Harman understood from the moment the idea of DRTV began to be discussed that any such campaign for Balsam Hill would be a hybrid DR-brand campaign. “Since we have a large product selection, we view our TV advertising as direct response and branding advertising, since we cannot realistically promote just one product to the audience,” he says.

The company’s initial foray a year ago was “disappointing,” Harman says — but he doesn’t blame direct response marketing. Rather, the fact that Balsam Hill tried to repurpose video that wasn’t shot for a TV campaign — let alone a DRTV campaign — is what Harman believes caused the disappointment. And the experience drove Harman and the Balsam Brands team to desire a deeper and more concerted test of DRTV as a driver for the business.

Testing, Branding, Selling

Harman says the Balsam Brands team did a detailed search for an agency partner in the DRTV space, listening to many recommendations from friends and business associates. Once the review was complete, Balsam Brands selected New York-based THOR Associates.

“They’ve been able to marry the direct response concept with our higher-end brand to create commercial assets that are still response-focused, while also communicating the quality, realism and selection Balsam Hill offers,” Harman says. “THOR also has been able to work within our corporate culture and understand our demographic, translating that information into what stations are likely to reach the people who have the potential to be our core customer group.”

At press time, the short-form DRTV campaign — with multiple spot lengths — had just launched, but Harman’s hopes are high. “Our market is surprisingly competitive, as there are both niche players and mass retailers in our competitive set,” he says. “We hope that our DR campaigns not only drive response but also help to build long-term value for our Balsam Hill brand.”

Harman is also intrigued by the differences in this well-crafted DRTV campaign compared to last year’s toe-dip. “Our first goal is to learn how this outlet might fit into our overall plans,” he says. “We’re testing a lot of formats, a lot of channels, a lot of time slots — all of those things. It’s about testing what works, brand awareness and generating revenue.”

But Balsam Brands feels no extra pressure from the seasonality of their business. “Because we are a highly seasonal business, we get only one chance a year to test new marketing tactics,” Harman says. “But, from our founding, we have always tried to test new marketing mediums each season — continuing the winners and discontinuing the losers.”

But, much as Harman believes in the culture he’s created at Balsam Brands, he also believes that his business will only work if he truly grasps his customer base.

“It’s critical for us to understand who our customers are and how to appeal to them. The kind of direct response advertising that we have done this year has required significant lead time and has not afforded us the ability to be reactionary to the response we receive, which is very different from our traditional online advertising,” he says.

Harman continues, “Testing DRTV this year is a big leap of faith — but even if it doesn’t work from a response standpoint, we can cross that off the list while still driving brand awareness.” ■

About the Author: Thomas Haire

Thomas Haire

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