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Direct Response Marketing

Response Magazine’s 16th Annual State of the Industry Report

1 Sep, 2011 By: Thomas Haire Response

Members of the magazine’s Editorial Advisory Board speak out on the current state of the direct response marketing industry.

Continued economic troubles. The expansion of regulation, especially the possibility of a “Do Not Track” list that could hamper online marketing. And a combination of social media, mobile media and retail changing the face of the business. As 2011 heads into its final quarter, these are among the many issues facing direct response marketers.

For the past 15 years, Response has asked members of its Editorial Advisory Board to analyze current trends and make predictions about the future of the direct response space. Once again in 2011, their thoughts represent a cross section of the industry: from DRTV legends to technology experts; from the international perspective to that of the cable networks. According to these leaders, this is the state of our industry.

What was the most significant accomplishment in the past year for the DR industry?
Tim Hawthorne, Hawthorne Direct: With the economy being as weak as it was and with consumers spending less on non-essentials, probably the most significant accomplishment for the DR industry is that we are staying in the game and fighting hard to survive in this economic climate.

Fern Lee, Thor Associates: With the ability to track the integration of online/offline DR to provide compelling evidence for testing success, the true accomplishment is in the opportunity to immediately change offers for improvement of ROI through landing pages and social media. The excitement of having social media as a big part of the driver of DR and messaging to the consumer that is being accomplished has proven to be a positive change.

Kevin Lyons, Opportunity Media: The continued growth of DR in the world of advertising — it continues to prove itself as an incredibly effective way to build a business and a brand.

Mike Medico, E&M Advertising: Given the very poor economy, our greatest accomplishment is the industry’s ability to adapt and survive.

Rob Medved, Cannella Response Television: Continued resilience in the face of consumer contraction. The ability to survive in a want-not-need consumer driven business with shrinking disposable incomes is remarkable. Even with long- and short-form billings dropping considerably through 2010 and into 2011, numerous campaigns have seen breakout success.

Digby Orsmond, ARM Direct Ltd.: The U.K. TV advertising market grew by 14.1 percent last year and reports found that European viewers watched an average of 6 more minutes of TV this year — positive news for advertisers. Even more encouraging was the confirmation that the overall TV advertising spend in Western Europe increased by 7.6 percent. It was also found that 72 percent of EU households now have digital television, with 33 percent of homes in Europe watching high definition (69 percent in the UK). Catch-up services are also continuing to grow in popularity with over half of online users watching TV on their computers. Interestingly, 81 percent of catch-up users said they still watched as much television as they had previously.

Richard Stacey, Northern Response Intl. Ltd.: The music has changed, but the dance remains the same. The industry continues to transition along with the changing media environment. It’s increasingly about multi-media advertising and multi-channel distribution. Follow the customer eyeballs and deliver the goods when and where they want to buy them. Our company’s organization chart today looks more like Procter & Gamble than the direct response marketing company we originally started. The biggest accomplishment of “the survivors” of DRTV is their continuing ability to transition their business models and adapt to the evolving media landscape.

What do you believe the hottest topic will be in the coming 12 months?
Greg Sarnow, Infusion Brands: While technology is always at the forefront of hot topics, how technology multiplies the venues where consumers shop is changing the DR world into a DR branding strategy. Marketers are struggling for ways to reach consumers less expensively, and multi-channel marketing is the only effective way. Having a consistent brand message as part of the strategy will be the tipping point for direct response marketing — not only next year but for the foreseeable future.

David Savage, R2C Group: Leveraging the media dollar beyond television — the more front-end results are challenged from category to category, the more marketers have to create efficient ROI online, from continuity, at brick-and-mortar retail, or through other consumer response channels.

Hawthorne: In 2012, you will see the direct marketing mindset move even further towards a multi-channel campaign strategy — blending TV, radio, digital, mobile, retail and other venues. Anything less than multi-channel is no longer a viable direct marketing option.

Lee: Identifying where consumers are coming from, how they are touched and then developing the complete circle of touch points, from the Web to the telemarketing center to the purchase, allowing a determination of the true CPO, leading to a greater average order value and long-term value.

Lyons: The state of the economy is paramount and will affect any other topics the industry has to wrestle with in the coming year.

Medico: There are a couple of topics: how can we get into Hispanic and Mobile marketing? And how can we make money in Hispanic and Mobile marketing?

Medved: I’m not sure about hottest, but the most important is the continued abandonment of pay TV and the pushback from content providers. If producers and distributors stop giving away valuable viewership to streaming and online, consumers will stick to the pay TV model that exists. However, if the current trend continues, the next generation will see streaming, selective content viewing as a viable option versus a huge monthly bill. DRTV needs the mass market, channel-flipping model to succeed as we exist today.

Orsmond: The most successful Infomercial product categories in the U.K. remain beauty-and-wellness and health-and-fitness. U.K. consumers, however, are now spending around 45 percent of their waking hours using their mobiles and other communications devices. They’re sending more texts per day than any other European country. The growing popularity of smartphones is increasing the U.K.’s overall use of communications and helping us to do much more simultaneously.

Stacey: I’m not sure there is a single hot topic but I do know that 747’s don’t stay up in the air too long without gas. So the constant hot topic is “what’s working?” The continuing drive for the next hot product and the ongoing effort to extend the product lifecycle curve and build brands out of our existing product portfolio are hot topics these days. We’ve been spending a lot of time on increasing our inventory turnover at the retail level — “sell-in” versus “sell-through”. Once we get an initial order (sell-in), the job then becomes how to drive it with media and get re-orders at the store level (sell-through). This is where most of the profit is.

What do you believe the most crucial topics for direct response marketers during the next 12-18 months will be when considering the actions of regulators, such as the Federal Trade Commission (FTC), Food and Drug Administration (FDA), and Federal Communications Commission (FCC)?
Lee: At the FTC, it’s the language of fabrication. With the FDA, it’s clinical. And at the FCC, it is privacy and security.

Lyons: The “Do Not Track” list is most crucial for the direct response industry at this point. Increased regulation is not the answer.

Medico: Claims and testimonials seem to be where most of the problems occur, and most of the rejections come from standards and practices.

Orsmond: All television advertising in the U.K. is regulated by Clearcast, and U.S. advertisers often find the strict rules relating to content, testimonials and supers difficult to implement in post-production. The biggest challenge, therefore, remains whether U.S. creatives can comply with the much more stringent European TV Broadcasting Rules in each country. Quite often this means having to soften the sell or considerably alter the bonus offers according to the local regulations. Also, whole product categories are banned on European TV. For example it is still not possible to use DRTV spots or infomercials to sell weight loss, vitamin supplements or alternative health remedies on TV in the U.K. Uncontroversial product categories like health-and-fitness, housewares, collectibles, music and DVDs tend to be the strongest sellers and least controversial with European broadcasters and viewers.

Stacey: Most of the companies today have in-house legal teams, regulatory officers and compliance committees. Deals that used to get done on a handshake now require a contract the size of a telephone book. We’re hearing about increasing regulatory efforts in the area of Internet marketing and especially affiliate marketing. In general, no advertising material should go out of a company through any medium without legal review.

How crucial to the DR business is the industry’s fight against a rumored “Do Not Track” list. If enacted, how it could affect the online portion of DR campaigns?
Hawthorne: Tracking and re-engaging site visitors is becoming more important to online sales and revenues, but is a fraction of the Web sales generated by DRTV-driven campaigns. So, as long as DRTV is driving Web traffic, any “Do Not Track” legislation will not be highly impactful.

Lee: Opting-in is the future and DR marketers should take this as a mantra. Adoption of such a list will effect how all marketers reach out to the consumer through E-mail blasts and online marketing.

Lyons: If enacted, a “Do Not Track” list will negatively impact online results of campaigns.

Medico: While not an expert in the “Do Not Track” regulations, it is my understanding that once a person orders or opts in, they have given tacit permission to be contacted. Other than that, it will negatively impact the bottom line until alternative methods of contact can be tested and expanded.

Medved: Most DRTV campaigns drive the significant portion of online revenue from organic search. They have driven their customer bases online to branded sites from television dollars, so “Do Not Track” isn’t material in those cases. It would, however, dynamically change the monetization methodology for online display and video advertising. Knowing who goes where and when is the key metric to help drive online ad dollars and direct response conversions. Those DR marketers that utilize non-organic targeted online marketing as a meaningful acquisition tool will be most affected. Those that rely on more mass-market driven online response could actually benefit, as the media theoretically becomes less valuable. Ultimately, actually shutting down tracking is very complex and I don’t believe it will be implemented successfully.

Savage: It’s good for our industry to work to protect its ability to market to consumers. But we also think that transparency with our clients’ customers is very important. A lot of media partners have already adopted voluntary opt-out from behavioral targeting. However, once consumers understand why they are being served a specific ad, very few still choose to opt out. A relevant ad is usually more desirable than an irrelevant one. To date, it has not affected our campaigns.

Stacey: It is important that any regulation is “balanced,” in that it weights off privacy and other consumer concerns with marketing efficiency and consumer benefits. It could have a material impact on our online business and is definitely an area that needs to be monitored closely.

How is the up-and-down economy treating marketers in the DR business? What effect is the current economy having on campaign success rates, media rates and other areas?
Hawthorne: Obviously, DR marketers have been negatively impacted by the tough economy. My agency did a recent analysis that showed that TV media rates have stayed essentially the same over the past few years, but response is measurably lower. This is likely a function of a poor economy, joblessness, younger populations not being as responsive to DR advertising, and product repetitiveness.

Lee: We live in a cyclical world. Nobody is reinventing the wheel and the savvy marketer goes with the flow and uses all of its marketing tools to provide the best possible experience to the consumer. A great relationship with the consumer equals a more robust ROI!

Lyons: The volatility in the economy is mirrored, to a large effect, in the results of campaigns. DR has its finger on the pulse of the economy and is often the first place where change is noticed in consumer confidence.

Medico: Unfortunately, the mostly “down” economy has forced traditional direct response marketers to test more offers in order to find a winner. Once they find a winning promotion, these marketers have to settle for lower overall response and negative spending to support retail. With regard to businesses that depend on a steady flow of leads regardless of the economy, these companies are forced to pay the rates to clear with a lower response rates — the result of a poor economy.

Medved: Uncertainty is never good for response. Neither is the lingering unemployment rate. Both of those factors have continued to suppress DR revenue and media rates. We won’t see a dynamic shift until consumers claw out of the need-only consumption mode and back into more want-driven spending. The good news is that individual campaign successes are isolated from those macro issues.

Orsmond: The European recession and concerns about the Euro currency continue to have a serious negative effect on the traditional advertising sectors. However, the U.K. is bucking the downward trend in that long-form airtime has increased and avails can be booked on a growing number of cable and satellite TV channels taking business away from the two mainstream “live” home shopping channels (QVC and Ideal World).

Sarnow: Everyday, consumers’ trust erodes. Whether it is political shenanigans over raising the debt ceiling or the weak dollar, economic conditions are having a very negative effect on DR results. Media rates are down, no doubt, but viewership is down, sales are down, and the net effect is not good. But there is always a silver lining, and currently there are still many campaigns that are successful and many new direct response business models giving marketers excellent opportunities. The marketers and their vendors have to micro-manage campaigns and find opportunities together to increase sales.

Savage: It’s making us walk the walk on our core direct response abilities. We’ve had to be more creative and more flexible in finding marketing, offer, media and backend solutions to client challenges. Consumers are willing to purchase direct or at retail if there is an innovative product whose value is communicated in an effective and targeted way.

Stacey: It’s still more challenging to sell high-ticket items than it used to be. The economy has leveled off, but with consumers still holding back, it’s hard work for marketers to get them to spend. Lower priced items in the $20 range continue to sell well since they are truly “impulse buys” versus “shopping buys.”

How has technology changed the way your company does business in the past 12 months? How will it in the next 12 months?
Hawthorne: As a DR agency, we are relying more on digital, mobile and social media to beneficially impact the overall MER for our clients. We have developed analytical tools to measure the impact of TV on digital response, and attribution models that help us to understand the true value of TV time.

Lee: Speed of response — technology allows information to transgress at a faster pace, the platforms being developed allow for metric modeling, testing is transparent and immediate, reporting is flawless and the opportunity for human error less. We now have the ability to reach and touch the consumer more often and on more platforms.

Medico: Our agency has become far more integrated in terms of being media agnostic. The digital side of what we do is taking on increasing importance for both our company and our clients.

Orsmond: The U.K.’s Office of National Statistics confirmed that 41 million regularly used the Internet for two hours to four hours daily in the first quarter of 2011. That’s 82 percent of the U.K. population. The largest proportion of Internet users is in the 16-24 age group, with many choosing to watch online catch-up TV. This means that a growing number of TV viewers are not channel surfing, but instead are managing their own viewing time on a much more personal basis. The popularity of time-shifted TV services in the U.K. has continued to rise this year, according to the report, with the proportion of time-shifted television viewing more than tripling between 2007-2010. This has meant that more of our direct-to-consumer clients are now mixing their media more effectively by using a combination of TV, print, Internet and social media.

Sarnow: Digital consumer engagement is the biggest change we’ve made to our organization. Reaching out to our customers on the Web has become its own channel of distribution. Downstream revenue is being driven by this brand relationship we have created, and that is 100-percent technologically driven.

Savage: Mobile advertising and the technologies that surround it will grow leaps and bounds. The huge surge of smartphones and tablet devices now in consumers’ hands, combined with an increase in the frequency and average duration of Web access to these devices, has driven us to evolve our digital services and strategies so we can leverage the mobile universe for our clients. Improvements in data capture and analytics have enabled smarter decisions that improve the performance of our campaigns. Looking forward, we’re excited about new opportunities with digital media. We’re creating interactive video experiences that optimize conversion by delivering consumer-specific content.

Stacey: Most of our technology expenditures this year have been in the Internet marketing area and in our systems integration with major retailers. Wherever we can use technology to improve speed, efficiency and productivity we do it.

How will the improved upfront market in the cable and broadcast world affect DR advertisers in late 2011 and throughout 2012?
Hawthorne: Increasing general advertisers demand in the network and spot markets does nothing to help DRTV marketers, driving up our much desired and competed over remnant time.

Medico: It means higher rates, lower clearances and lower inventory for longer units (e.g., two minutes).

Savage: The upfront market may be improved this year, but if the economy continues to struggle and marketers pull back on their general ad budgets, direct response advertisers could see advantageous marketplace dynamics — more inventory and more attractive rates.

Stacey: The majority of long form shows is increasingly having trouble surviving and can be an inefficient way to drive retail sales. So we’ve seen more and more short-form spots with a retail product attached to them. There’s a major disconnect between media rates and performance. At some point, something’s got to give. It just makes common sense that if you add hundreds of channels and alternatives like video games and social networking that your viewership can’t possibly be going up or even holding steady.

The DR-to-retail game plan now seems to be a must for every campaign that hits television? What are the three most important things a marketer must do to have the right retail plan in place?
Hawthorne: Obviously, retail distribution for hard goods is essential in today’s DRTV environment, so that means that prior to launch, a product must have shelf space in at least two national chains where people can assume they will be able to find your product. Ideally, you need to be leveraging at least 5,000 doors to take full advantage of the TV exposure. Retailers must also be assured that your media plan will create sufficient retail drive. We suggest a minimum threshold of at least $125,000 per week for eight weeks to establish that push. Finally, because of the retail driving dynamics previously stated, you must make sure that your campaign is sufficiently funded in terms of media budgets.

Lee: Branding and education are crucial in using DR to drive retail consumer purchases. And integration of offline and online is a must to push the retail shelf sell-through.

Medico: You need: strong creative that establishes the benefits and attributes of the product/offer; an integrated media plan that focuses not only on ROI but on broad based awareness at the lowest cost-per-thousand (CPM); and certain branding elements that enhance awareness.

Medved: You must run a substantial amount of DRTV media. The item must meet cost-of-goods and retail perceived value, which can be a different model than the one that works for television. Third, CPOs from television must demonstrate inherent consumer demand for the product; in other words, just running DRTV enough does not equate to retail success. The product must be able to stand on it sown.

Orsmond: The U.K. follows the U.S. trend, in that retail is now the aim of every DR campaign. The main problem in the U.K. is that the bigger retailers dominate and ignore any approach unless it is backed up by a strong brand presence in either TV or print, which makes it very hard for start-ups. If the product is accepted, then you may have to change your direct-to-consumer advertising to what we call BRTV (brand response TV) to constantly remind consumers where they can purchase the product. Marketers have to explore new ways of coupling their DR and online spend with social media innovation to maximize consumer awareness.

Sarnow: First, determine if it is better to have a distribution model in place or a representation model. If you are a single SKU product, go the distribution route. Next, you must plan ahead. If you have a short-form campaign, get to the retailers as soon as your test is successful. If you have an infomercial, analyze clearly test results and early rollout results before making your retail strategy. Next, short-form needs media expenditures of $ 100,000 per week for 13 weeks to build brand awareness. Infomercials need $ 350,000 per week for 13 weeks to reach the same awareness. Make sure you reach those numbers if you want to “sell through” at retail. Finally, be very careful in planning the pricing strategy and product configuration for DR and retail so that your retailers are happy while you continue driving DR sales.

Savage: You’ve got to have the basics: 1) A great product with a compelling, value-driven offer; 2) The appropriate timing for making the product available at retail; and 3) The right DR media strategies over the course of the campaign — whether it’s a traditional direct strategy, hybrid plan or awareness-driving impression-based buy.

Stacey: The most important thing is careful market research — testing and forecasting upfront before getting too far down the road to potential disaster. Once you have done your research, you will need to start with a multi-media strategy, which is not just TV but Internet, PR, print, in-store promotion, etc. Next, you need a coordinated launch, so that the media is properly timed with your distribution rollout. And third, you need an overall marketing plan as to how you’re going to segment the market by SKU and price point.

What are the three biggest effects the growth of social media is having on the DR marketplace?
Hawthorne: Everyone has to have some social initiative associated with their campaigns. Second, everyone soon discovers that social is not direct marketing but PR and branding. Finally, the social guys get rich while the DR guys are in the trenches.

Lee: Social media pushes branding and is part of the marketing pie, not a standalone ROI. It gives marketers the ability to educate the consumer about one’s product through social media contests. And it gives marketers the ability to market and communicate the messaging of their product.

Lyons: Social media offers increased accountability for products and services, as well as the accompanying customer service; increased opportunity to win new customers and broaden your brand; and adds another spoke to the distribution wheel of DR.

Medico: First, social media creates brand fans. Consumers are now an integral part of the development of the brand and, as such, are having much more of a say into the brand’s lifecycle and how that product can grow with the needs of the consumer. Second, it drives consumer engagement. Consumers become much more engaged and interactive with the brand and what part that brand plays in the their lives. Finally, it offers improved online measurement. Seventy percent of marketers are planning to increase their social media budgets by more than 10 percent in 2011, according to one study. This increased investment in social media means marketers will rely more heavily on tracking data to improve ROI and boost future engagement. With this shift toward social comes not only a new way of interacting with customers online, but also new ways of assessing its results. To date, tracking social media results has followed more traditional barometers, which does not properly reflect how successful efforts are. New metrics are being designed to specifically track the impact of this new communication channel and are quickly becoming part of a new standard for critiquing a digital marketing program’s success.

Medved: First, truth in advertising becomes a consumer checked and controlled event. Marketers can say what they want about key selling benefits, but social media will take over quickly. Next, social media can substantially help or hurt a product, so monitoring and managing what you can is essential to the health of the product life cycle. With 50 percent of television-driven orders coming online, a good percent of those consumers will search for the neutral third-party social media opinion first. Finally, a good product will take on a social media life of its own, through groups and referrals. This can equate to enormous incremental revenue.

Orsmond: With more than 500 million users worldwide, Facebook continues to dominate social networking. Today, Facebook is available in 70 different languages with 30 billion pieces of content being shared each month. Around 70 percent of Facebook users are based outside the United States, with nearly 30 million of these being in the UK. New reports show that people are also visiting social media sites more often and the time people spend on them is rapidly increasing. The average session time spent on a social network in January 2011 was 22 minutes. Unsurprisingly, one in every eight people leaving a social network visits another one immediately after, something that is encouraged by the connections that exist between the networks. Unfortunately many DR marketers are not putting sufficient time, effort and budget behind social marketing strategies. All DR should be supported by a strong social media presence with a combination of Facebook, Twitter and YouTube helping drive awareness. It is now an accepted view that social media should be seen as a long-term branding strategy and less about quick sales and profits. This is the ideal way to engage and listen to what buyers and fans are saying about your products in real time.

Sarnow: Social media can drive positive and/or negative buzz about your product, as well as brand awareness and brand identity.

Savage: The three R’s: reviews, referrals and retargeting. Social networking sites are providing consumers the ability to publicly report what they honestly think of a product or service with no holds barred. This requires companies to be on their toes to either manage public fallout or reward loyal customers in a much more nimble fashion than ever before. Consumers are also being encouraged to share special offers with their friends and families, which can add a completely new audience to a campaign. And because Internet retargeting efforts give a passive consumer another chance at a DR offer, this can greatly affect a campaign’s long-term results. The life of a DRTV campaign can be greatly extended by making appropriate use of social media.

Stacey: The biggest effect is that social media is shifting where DR marketers need to invest their creative energy and advertising spend. Social networks are growing at alarming rates, and user engagement is skyrocketing. The good news is that social media is a relatively inexpensive medium that can be wildly successful if done right. The bad news is that it works differently than traditional DR mediums. One of the big issues with social media as it relates to DR has to do with the fact that DR marketers are so ROI driven. Social is about creating and developing relationships, but in DR we’re always looking for immediate gratification — and if the numbers don’t work, we see the campaign as a failure. There needs to be a bit of a paradigm shift, and DR marketers need to realize that when it comes to social media, your campaign will probably generate a deferred response instead of a direct response. The second biggest effect is that social media has the potential to turbo-charge a DR campaign. It is word-of-mouth on steroids, and the key to tapping into the immense power of social media is achieving critical mass. Third, social media gives Joe Public both an arena and a super high-powered megaphone to blast out his message about your product or service — whether it’s good or bad. The concept of “Social Proof” (i.e., customer testimonials and reviews) is an integral part of direct response marketing, and social networks naturally help facilitate social proof by giving everyone a powerful voice to share their experience about your product or service.

Has the influence of mobile marketing on the industry grown in the past 12 months? How will the expansion of mobile affect DR in 2012?
Hawthorne: Four words: QR codes and audio fingerprinting.

Lee: Mobile marketing has grown in the technology available to a consumer to instantly compare, decide and then purchase a product using QR codes.

Lyons: Mobile is clearly a major growth area for all businesses, and DR is no exception. Those ready to create a positive mobile experience in browsing the product and transacting the sale will find great results.

Medico: Yes, according to new estimates from ABI Research, mobile marketing and advertising combined will grow at an impressive 40-percent compound annual growth rate (CAGR) over the next five years, bringing the numbers substantially higher than the well under a half billion dollars spent in total in 2010. What size is the mobile market? Of the world’s 4 billion mobile phones in use, more than 1 billion are smart phones and a whopping 3 billion are SMS-enabled. Of this group, 29 percent are open to scanning a mobile tag to get coupons.

Orsmond: Media multi-tasking — where, for example, someone makes a phone call while surfing the Internet — now accounts for one-fifth of all U.K. media consumed throughout the day and the younger the person, the more this happens. Surfing the Internet via mobile phones is the fastest growing mobile media activity with 1 million new users during first-quarter 2011. Direct marketers who ignore this trend will be left behind as the 25+ generation enters the next decade.

Sarnow: While the United States considerably lags behind the rest of the world in mobile marketing, opportunities are emerging very quickly. DR marketers are dipping their toes into the space but are still trying to find ways to impact sales significantly. We all expect it to grow more every year, and with the integration of retail, cellphones and social media, that is becoming a reality.

Savage: We’re seeing the percentage of our DR mobile visitors increase in proportion to traditional desktop users. It’s becoming clear that people are starting to reach for their cellphones to engage with direct response campaigns without leaving their couches. Smart marketers are providing users with a mobile-optimized Web experience. In addition, as consumers continue to become more comfortable with QR codes and SMS campaigns, mobile will continue to open up new avenues for direct interaction.

Stacey: Yes, but not nearly as much as some had predicted it would. Many have been heralding the arrival of mobile for the past few years. However, the fact is that it’s still in the infancy stages as it relates to the DR industry. The proliferation of smartphones, tablets and the availability of faster mobile Internet speeds mean that more and more people will turn to their mobile device to access the Web, so I believe there is and will continue to be a lot of experimentation especially when it comes to mobile advertising. The next year and beyond will likely see increased mobile spending as DR marketers search for a winning formula and, with that, we will see continued growth in mobile commerce.

Which generation of consumers must DR marketers target today to continue to build their businesses? Why?
Hawthorne: DR marketers need to find better ways to reach the Gen X, Gen Y and Millennial audiences, who have shorter attention spans, but increasing purchasing power.

Lee: It’s Baby Boomers, because they have historic purchasing power.

Lyons: This clearly depends on the product. With that said, a great and valuable market segment is the Baby Boomer generation.

Medico: Adults 25-54. It’s the largest segment of the population, with high disposable income, and it’s full of familiar and active users of direct response technology

Orsmond: Our advice to DR marketers is to separate out their target buyers now as follows: younger people; older people; social networking growth across age groups, and male vs. female media usage. Recent U.K. consumer research found that the 16-24s are the most efficient users of communications services as they squeeze 9.5 hours of media consumption into just over 6.5 hours of actual time, spending the largest part of their time on computers and mobiles. Finding ways to harness this interest through clever apps that help to drive direct-to-retail sales is worth exploring. At the same time, there is a growing use of technology among Britain’s aging population, and this consumer group (typically empty nesters) often focuses on a narrower range of products and services. This can be quite seasonal. For example, health-and-fitness, plus family Christmas gifts in the winter, and later in spring, gardening products and outdoor pursuits. In 2011, the U.K. growth in Internet usage appears to have been driven largely by families who are using the Internet to save money during the recession. While younger people are more likely to access social networking sites, with 61 percent of 15-to-34-year-olds claiming to do so, it is by no means exclusively a young person’s activity. Nearly half of 35-to-54-year-olds claim to use social networking sites, as do 20 percent of 55-to-64-year- olds. Interestingly, men spend nearly an hour more per day using media than women — an average of 7 hours, 33 minutes per day. Men are also more likely than women to use their smartphones to access the Internet, which opens up opportunities for male-focused products and services.

Sarnow: Even five-percent additional sales can be the difference between a DR campaign rolling-out or going off the air. Expanding the demographic profile is more important than ever. The product itself dictates the primary demographic and expanding that footprint is in the messaging. Traditionally, marketers have loved the Baby Boomers, but Generation X is clearly equally important. Having a campaign that has purchasers in both generations and/or having a campaign that equally attracts men and women buyers are keys to DR success.

Stacey: Direct marketing isn’t a generational thing; it’s more about the medium. Obviously, younger people are more comfortable ordering directly, but the biggest difference is through which method. Younger people may learn about a product through social media and order online, while older people may still prefer print or TV and pick up the phone to call an 800 number. So, it’s really about “As Seen Everywhere” these days in order to reach a mass market that has been fragmented.

How is the trend away from immeasurable branding ads and toward measurable campaigns affecting multi-channel campaigns? Would you consider a marketer not using a measurable, multi-channel strategy in 2011 product/brand suicide?
Hawthorne: For 25 years, I have been preaching that measurable and accountable advertising is the most intelligent approach for marketers who want to justify their advertising budgets. If a marketer is not measuring response and optimizing every dollar of their advertising budget, they are simply throwing their company’s money away.

Lee: Whenever a measurable campaign that involves multi-channel marketing is successful, it can be duplicated. Success always breeds success because purchasing power has everything to do with consumer relationships. It is of the utmost importance to have proof of concept for all marketing initiatives and all must be measured.

Medico: The trend toward measurable and accountable media is affecting multi-channel campaigns in terms of response and impact from one media to another. The key to determining this impact is utilizing technology to create attribution modeling that can identify the most efficient and effective media, both on and offline. To ignore this component and focus solely on the bottom line response can be short sighted and perilous.

Medved: The idea of immeasurable branding ads is a bit of a misnomer. It’s safe to believe today, all major marketers evaluate and measure the impact of their ads and media channels at some level. The debate isn’t over whether they are measuring or not measuring their campaigns; it is over what they are measuring and whether their marketing generates bottom-line results. For years, traditional marketers have conducted copy tests, recall tests, brand affinity scores and other methods to track consumer attitudes towards specific ads and campaigns, but is that enough? These marketers have always been challenged when it came time to attribute these higher order measures to consumer behavior. Media planning, however, is changing as traditional marketers are migrating more towards the principles of direct marketing given the prevalence of digital media. As a result, measurement is becoming more refined with greater emphasis being placed on attribution; and the media market is responding. For example, cable companies are testing addressable advertising and click-through interactivity, and the outdoor and print industries are integrating mobile QR codes and unique URLs into creative executions.

Orsmond: In today’s ever-shifting marketplace, we always recommend adopting a multimedia strategy. For example, during 2010 we have successfully combined what we call BRTV ads, which are typically 10, 20 or 30 seconds long and less measurable with totally measurable 60 or 120-second DRTV spots and 30-minute infomercial campaigns. The shorter BRTV ads feature the URL only and focus on the core brand messages, while the longer DRTV spots and half-hour shows sell all the product attributes and offer to take an order. This strategy is entirely complimentary and allows us to place the shorter spots in near peak airtime that the clients could not otherwise have afforded.

Savage: “Branded” ads can be measurable, as long as the marketer is committed to providing a DR-tracking mechanism and committed to basing media decisions on those tracked results. But there’s no doubt that more and more “brand” marketers are leveraging measurable strategies to drive efficiency of their advertising dollars.

Stacey: All campaigns are measurable, they just differ if what they’re measuring and how they’re measuring it. As a DR marketer, I tend to look at what I spent and how many orders I got. However, as the company transitions to a fully integrated consumer packaged goods company, we ‘re looking beyond DR and more often considering our ratings, reach, frequency and the memory recall to drive sales at the retail level. I have access to Wal-Mart Retail Link right at my desk, so I can see last night the individual click-throughs at the cash register for any item at any store. It’s not too different than seeing how many calls I got last night on the 800 number. However, it’s safe to say whatever your objectives are and whatever type of campaign you are running, you have to be measuring something. Otherwise, it may not be suicidal, but it would be extremely inefficient.

What vertical markets are best equipped to survive — and even thrive — in 2012?
Hawthorne: Kids products are coming on strong after two decades of being an afterthought.

Lee: Health and wellness. It’s all about lifestyle, lifestyle, lifestyle.

Lyons: Fitness will continue to do well, as will the beauty category. Consumers always want to improve themselves and when given a good value proposition, they will purchase.

Medico: Healthcare and financial services are the two verticals that will grow in 2012

Medved: The breakdown of media spend by vertical has not changed much over the years. And won’t in 2012. Success will continue to hinge around the specific product. A unique solution to a proven mass-market problem that demonstrates high perceived value is what is important — not the category.

Savage: Financial services, educational services, online businesses, beauty products aimed at Baby Boomers, kitchen products and — you guessed it — health and fitness.

Stacey: Need, greed and vanity: create a want and fill it. Fitness, health, beauty and kitchen all seem to look promising. But look at how the bra category has come out of nowhere to be a best seller. You never know in this business.

Does today’s consumer respond better to short-form or long-form DRTV? Which of these two formats are best supported by other media, including online, mobile, print and radio?
Hawthorne: Our business is approximately 50-percent short-form and 50-percent long-form. We have found both formats to be highly effective, and we utilize one or the other, depending on product price, demonstrability, whether it is a lead generator or direct sale and of course, the ultimate goals of the campaign. The other media channels can support either a long- or short-form TV format equally as well.

Lee: It’s short-form because consumers have no attention span. I still believe long-form is prevalent depending on the product and the education required. Both forms are supported by other media equally if the marketer knows how to create offline/online integration.

Lyons: It is product specific. Both forms are successful methods of selling product. For demonstration-friendly products, long-form is hard to beat and offers a great way to effectively showcase a product’s attributes.

Medico: In our experience, each of the formats is suited for different types of promotions based on the complexity of the product or offer, and the generally higher price suited for a long-form offer. In both instances, however, short- and long-form promotions are best supported with online. We are also seeing growth in mobile response.

Orsmond: In the U.K., it has been the substantial growth of sales generated by U.S. style infomercials that generated substantial DRTV product sales over the past three years. British TV viewers respond well to long-form, and the only problem seems to be that there are not enough different and entertaining enough U.S. shows available. If a US advertiser already has a successful infomercial in Europe, then doing a 120-second cut-down makes sense, as these short-form ads run across a greater number of cable and satellite channels and dayparts. This works very well to support sales on TV channels where long-form broadcasts are restricted to just three hours of home shopping per day. Combining newspaper advertising with short-form DRTV can work well if the offer is relevant to consumer’s needs. The U.K. is unique in that newspapers here have much wider national circulations than other countries, such as Germany and France, where regional differences are a hindrance.

Savage: It depends on the product category and the consumer you’re targeting. We have client campaigns where the time to educate provided by long-form is essential to drive consumer response, and we have short-form campaigns where the targeted nature of the media makes all the difference in generating successful ROI. Both formats are supported by other media channels.

Stacey: Short-form is definitely the driving force in most campaigns today. Long-form is getting increasingly lost in a sea of channel choices and shortening attention spans. Most importantly, long-form doesn’t have a built-in audience but must create its own. Long-form depends on channel surfers and with so many channels, people need to use the EPG (electronic programming guide) so there’s less and less chance of them finding you. For many products, we find short-form is more efficient and cost-effective at reaching the audience faster, driving traffic to the Web and driving awareness to increase retail sales.

Given the current state of the DR industry, what would you change to ensure its continued health and growth?
Hawthorne: Media rates are always the key factor in the success or failure of a DR campaign. If I had a magic wand, I would cut media rates in half to ensure our industry’s continued growth.

Lee: It is very important for marketers to align themselves with the knowledge necessary to succeed and deliver the best possible product and message to the consumer. When you have a positive relationship with your consumer, they will want to be engaged and purchase over and over again.

Lyons: Overall, the industry is quite healthy. However, the economy needs to improve to ensure its continued growth. An improved economy will bring more investment into product development and more entrants into the DR world. I vote for some changes in Washington. Did I say that out loud?

Medico: What we have been doing at our agency is to evolve into a more integrated media model that is agnostic in terms of what we recommend to our clients. The broad range of media options and the influence of technology have presented a great opportunity as well as a challenge for direct response marketers. Consumers are becoming more savvy shoppers, and while they are watching TV, they are going to various digital media for more info or to order. What I would change is to get marketers to recognize these trends and conform or they will be left behind.

Orsmond: For the U.K., established DRTV media buying agencies would like the U.K.’s broadcast regulator to wake up to the fact that this is 2011 and for them to revise the home shopping window rules to allow infomercials to generate leads instead of currently having to sell a product via credit card. Changing this rule would immediately open up the long-form market to a substantial number of existing and new short-form TV advertisers — all of whom are keen to test the power of the half-hour show to generate leads. In addition, this rule change would also benefit many other related broadcast services, such as TV production companies and call centers.

Savage: What needs to change? Consumer confidence and the nation’s unemployment numbers.

Stacey: There’s a saying about God granting us the wisdom to know the things we can change and accept the things we can’t. The change that is happening in our industry is external and driven by technological changes in media that are outside our control. I would like to change things so that there would be no more changes — then I could get off this treadmill. But that’s not going to happen. Instead we’ve embraced change as the only constant, and we continue to modify our business model to adapt and survive. As in life, a big part of business can be summed up in the mantra “keep going.” Jack Walsh wrote a great book — “Get Better or Get Beaten.” That’s exactly right!

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