Response Magazine’s 19th Annual State of the Industry Report1 Sep, 2014 By: Thomas Haire Response
Members of the magazine’s Advisory Board speak out on the current state of the direct response marketing industry.
We are knocking on the door of the 2014 holiday shopping season and now — more than ever — marketers in the direct, digital and data-driven marketing world are facing a consumer base that’s fragmented and distracted.
As consumers gain more control over when, where and how marketing messages reach them — and gain more outlets to react to those messages, as well as the products they purchase — marketers have to work harder than ever to keep up with technological, regulatory and medium shifts that make closing each sale even more difficult.
For the past 18 years, Response has asked members of its Advisory Board to analyze current trends and make predictions about the future of the direct response space. Once again in 2014, their thoughts represent a cross section of the industry: from DRTV legends to technology experts; from the international perspective to that of leading marketers.
This year, we asked each of them to address a series of key topics, including the expansion of omnichannel marketing, the shifting economy, the regulatory landscape, burgeoning technology like mobile and social — and more. According to these leaders, this is the state of our industry.
What was the most significant accomplishment in the past year for direct, digital and data-driven marketers?
Doug Garnett, Atomic Direct: In the past year, more marketers have begun to accept that we live in an omnichannel world and that we can no longer evaluate the impact of our work solely on the easily measurable channels. And, we’ve come to understand that once the advertising airs, it drives consumer response through any channel available: phone, Web, retail, catalog and others. This trend needs to continue because far more changes need to be made to get the full potential of DRTV. At this point, too many agencies and media buyers focus their analysis in the old world of “phone sales,” rather than the integrated world of omnichannel. As a result, companies abandon campaigns that are powerful at retail because retail power can’t always be seen by counting phone calls or analyzing Web data. Conversely other campaigns get huge DRTV investment because the phone/Web looks good — even though their retail impact is relatively small.
Peter Koeppel, Koeppel Direct: Omnichannel has taken over as the prevailing term now employed by direct marketers, and this is a reflection not only of our new reality as an industry, but our embracing of it. Consumers now engage with marketers at a time and locale of their choosing — whether it be over the telephone, online or at brick-and-mortar retail — and it is essential that we respond to them with messaging and offers that are clear and consistent across every medium.
Fern Lee, THOR Associates: It’s the integration of omnichannel campaigns to use a halo effect to drive to Web and the ability to master the attribution.
Mike Medico, Allscope Direct: It’s the attribution modeling that is being tested and put into use by direct response TV marketers and agencies. This will allow for the ability to refine the media planning and buying function to allow for much greater efficiencies.
Rob Medved, Cannella Response Television: Nothing stands out as significant across the board. Each marketer has been working on its own specific needs. There hasn’t been a universal achievement. However, there is something to be said for the continued focus on cross-channel attribution and analytics. You can sense the convergence and the marketers need to further understand their customer.
Digby Orsmond, ARM Direct Ltd.: U.K. short-form has morphed into brand response TV (BRTV) advertising during the past year as more direct and digital marketers switch their fulfillment away from their traditional call centers and instead concentrate on driving online response. We’ve seen several major DRTV advertisers shorten their ad length to 30 seconds to increase their spot volumes and drive more TV viewers with switched on smartphones or tablets to visit their website and make an immediate inquiry or purchase. In several European countries, BRTV qualifies as “direct response,” allowing media agencies to purchase airtime that costs 50-percent less than fixed-position brand inventory. With BRTV there is usually a more effective viewer engagement via the advertiser’s website and this more than makes up the difference in media budget spend levels. Additionally, the airtime discount minimizes risk and allows first-time advertisers to safely test TV. The latest Nielsen research in the U.K. confirms that nearly 60 percent of television viewers watch the box and surf the Internet simultaneously, and for clients targeting them, we find that the multi-tasking Millennials react positively to BRTV ads — provided they are engaging and unlike anything they’ve seen before. Younger TV viewers are happy to immediately visit a BRTV advertiser’s website and — just as importantly — share what they’ve found with their friends on Facebook and Twitter. Results are even more powerful when the BRTV ad offers a free sample or special immediate discount.
David Savage, R2C Group: It’s adapting to consumer’s changing media habits, especially the rapid growth of mobile media consumption, and developing strategies to capture consumers’ attention and get them to purchase — on whatever device they may be using.
Richard Stacey, Northern Response Intl. Ltd.: The DR industry model has been experiencing some degree of disruption during the past several years, and the most significant accomplishment of the DR industry has been the continued evolution and transition to an integrated multi-channel model in response to changes in media technologies and consumer audiences. We’re seeing the fusion of direct, digital and data-driven marketing as an integrated approach to marketing.
What do you believe the hottest topic will be in the coming 12 months?
Linda Goldstein, Manatt Phelps & Phillips: The hottest topic will likely be the continuous and exponential growth of mobile marketing. This trend has already impacted the traditional national advertising community, and direct response marketers will need to quickly — yet intelligently — incorporate mobile into their selecting strategies in a fully integrated manner. Compounding this trend, more consumers are accessing social media today through their mobile devices. Historically, the DR community has been slow to embrace mobile, and while the mobile platform present some unique regulatory challenges due in large part to the space constraints, it also presents unique opportunities to connect with the consumer and interact with the consumer right at the point of sale. Combined with the growth of mobile commerce, this presents enormous possibilities. Native advertising continues to be one of the hottest marketing trends. Ironically, direct response marketers were the pioneers of native advertising — the long-form infomercial is, at its core, a form of native advertising. Now, however, with the growth of digital and social media, native advertising is taking on new formats. But it is a trend that direct response marketers should fully embrace, as the opportunity to target discreet audience segments with unique content that aligns with your product can be a powerful marketing tool.
Kevin Lyons, Opportunity Media/A&E Networks: The continually evolving capabilities of multichannel marketing will remain in the forefront during the next year as new technological innovation and fine tuning create ever more ways to reach consumers and close the sale.
Greg Sarnow, Direct Response Academy: Web presence — DR marketers are finally making the shift from website fundamentals for conversion to their web presence.
Garnett: First, the DR world will continue to adjust to the challenges of Internet. While Internet video makes it easy to get stuff out, it’s nearly impossible to get enough people to watch it. Second, we will see the continuing integration of DR with the omnichannel world. It will take several years before the majority of DRTV is executed with the savvy needed to get the best leverage in this world. As of today, most DRTV producers, marketers and media agencies remain bound to models and formulas that restrict their success across some channels.
Koeppel: With Netflix, video-on-demand (VOD), and other choices, the consumer is in direct control of watching what they want to watch, when they want to watch it, and on what device they choose. While this may be a boon for consumers, it poses a direct threat to ad-supported networks and programing. With exceptions — such as news and sports programming and big-event specials such as the Oscars — there is increasingly less reason for viewers to tune in to commercial-supported programs. At the same time, advertising itself can become a form of entertainment, so the real question for the industry is how to adapt to this new mix in a way that remains relevant and reaches audiences of sufficient critical mass.
Lee: We must clearly define mobile as both an advertising and a social media vehicle given the competition of Facebook, Twitter and other platforms incorporating direct response advertising.
Medico: With the window between direct and retail closing rapidly, discussion will center on how much of the allowable is allocated for traditional DR and how much is allocated for retail support/branding. Do you go negative spending or not — that’s the question.
Medved: As an industry, we continue to make headway with cross-channel attribution, but there is more work to be done. As the video entertainment viewing experience evolves with multi-device usage, new forms of content distribution, “on-demand on-my-time” functionality, and new search and discovery methods, the DR marketing world will be presented with exciting new selling opportunities.
Orsmond: The hottest topic in the U.K. continues to be the way major fashion and cosmetic brands have finally woken up to the power of BRTV and how smaller companies are now adding this genre to their marketing mix. Several young consumer brands are using TV media buying tactically with VOD and YouTube as an integral part in their campaign planning, as well as maximizing their use of social media. Some TV advertisers are cutting their creative budgets in half and instead making several low-cost VOD and YouTube videos, which allows them to refresh their sales offers on a much more frequent basis. We’ve seen highly successful BRTV ads made for less than $10,000 (U.S.) and, in one really dramatic case, retail sales for a teenage fashion brand by more than 800 percent.
Savage: It will continue to be how marketers build and refine attribution models for how their media is driving their business. There is so much online and offline spending going on for most campaigns that this is the single biggest opportunity for improving efficiencies and profitability.
Stacey: Two ongoing topics are the continued integration of the DR media model with the retail model and the growth of the international DR market.
What are the three biggest advantages for marketers presented by today’s omnichannel capabilities?
Keith Gerr, Havas Edge (general manager, digital services, on behalf of Steve Netzley): The proliferation of both communication and sales channels presents today’s marketer with many advantages to engage, convert and grow their customer-base — such as access to cross-channel data to improve targeting, lifetime value (LTV) analysis, and the ability to address customers across multiple touch points. But the key starting point for omnichannel marketing is recognizing the complex path consumers take on their way to purchasing. Interacting with influencers, price-comparing, reading reviews, demoing product — all of these moments and more are important to study. Consumers like having a choice in when and what channel they choose to interact with a brand. They expect all of these channels — online and offline — to be easy to use, have a level of brand consistency and be personalized. Marketers that can see omnichannel as a total customer experience versus a collection of touch points could give themselves a great advantage in pursuit of customer acquisition and retention.
Garnett: Omnichannel opens up a very large market with retail, catalog and general Internet. The potential profits in those channels can be a full magnitude higher. Also, if you plan and structure your campaign for immediate omnichannel distribution, the DRTV portion of your campaign has far lower risk than traditional DRTV. Finally, in an omnichannel world, new types of products benefit from DRTV. There are many products — even entire product categories — that can thrive at retail when supported with DRTV, but where TV sales alone wouldn’t justify a campaign.
Koeppel: 1) Being able to tap into the 164 million smartphone and 147 million tablet users that can buy a marketer’s products/services directly from those devices, often while watching TV; 2) the ability to take advantage of mediums — like Facebook — that have the scale to reach 1.3 billion potential customers worldwide, but at the same time can also target the exact audience for each campaign and measure the ROI; and 3) running integrated campaigns that utilize the latest technologies, such as location-based consumer data and targeting.
Lee: 1) Instantaneous marketing capabilities; 2) testing; and 3) rebranding based on “personalized” engagement with each consumer vs. collectively advertising to a targeted demographic.
Medico: Omnichannel retailing allows for an easier, flawless shopping experience across all channels including mobile, TV, radio, retail outlets, computers, etc. It also provides the shoppers with more complete product information and demos so they can have a meaningful interaction with the brand.
Medved: 1) More, not fewer, opportunities to intercept an audience; 2) more access to consumer behavior data will fuel better business decisions; and 3) video content is a central part of all channels.
Orsmond: The three biggest advantages for us have been the ability to link TV, VOD and social media — making these work in a much more coordinated and planned manner. Many bigger consumer clients were not getting to grips with maximizing their social media opportunities, which is critical due to the high percentage of U.K. TV viewers having their smartphone or tablet on while at the same time watching their favorite TV programs.
Sarnow: Video, video — and video. Direct response marketers can leverage their videography in the omnichannel marketing world. You can get your video placed all over the Web — on your own YouTube channel, on other sites, in PR, in retail stores and more.
Stacey: Which omnichannel possibility presents an advantage will largely depend on the product you’re selling and your objectives. I look at all these new possibilities as additional tools in the marketer’s toolbox — each appropriate depending on what the marketer is trying to achieve.
What are the three biggest no-no’s for a marketer using a multichannel strategy in 2014?
Garnett: The first serious error is relying only on the easy-to-obtain data and jumping to conclusions. When you step into multichannel and measurability, far more patience and care is required to get a clear understanding of your campaign impact. Phone call data is immediate and complete — so the tendency is to rely on that alone. Yet it tells, at best, the story of 10 percent of your campaign impact (when you have solid retail distribution). Web data is easy to get — but muddier than phone, and it isn’t obviously tracked to the media that drove it. Data from stores is much harder to obtain, takes longer to obtain, and is made difficult because of the noise of other promotional actions. Those who thrive in the multichannel world will develop a new discipline and patience with data — avoiding the error of jumping to conclusions based on phone or Web data alone. All three data types are critical — you must wait for the retail data, and develop the ability to process this data to remove noise that gives you the wrong answers.
A second serious error is failing to get your channels (other than phone) aligned with the TV campaign. Your website must be designed to take in consumers who have seen your DRTV — you can’t assume that a general website is the best direction to send them. And, at retail, you need visuals to help people realize, “That’s the one I saw and was interested in!” That said, I am no fan of the As Seen On TV label. For quick-hit DRTV work, it might be useful in-store. But if you have a long-term product on mainstream shelving, don’t use that label because you don’t want consumers to believe it’s a gimmick. Find another way to make this connection.
Finally, your TV must be designed differently. In general, the more aggressively you ask for the immediate phone sale, the more people you turn off from seeking the product at retail. Yes, your TV should usually ask for the order. But there are good ways to do that that work in a multichannel world to maximize the combination of direct and retail sales. The old formulas just don’t deliver the power you get through these more interesting approaches. In fact, there are products that thrive in multichannel DRTV where the formulas would actually cause failure.
Koeppel: 1) Not being able to integrate online and offline analytics utilizing sophisticated attribution and measurement models; 2) not knowing how to use data across platforms and devices to fully understand the consumer’s needs and expectations; and 3) not having a strategy based on analytics for allocation of media dollars to offline vs. online, including mobile, social, search, video, real-time bidding, etc.
Lee: 1) Failure to gather and intellectually utilize proper metrics; 2) failure to re-target effectively; and 3) delivering conflicting messaging to the consumer rather than a layered, integrated message.
Lyons: 1) Failing to have the proper measurement metrics in place at the outset of the campaign — it sounds simplistic but it happens more than you think; 2) not understanding the connectivity between the various channels, particularly how each may affect the other and which elements drive other channels’ activity; and 3) failing to fully harvest and optimize all of the leads, whether by retargeting, outbound efforts, etc. It is critical to a campaign to take advantage of all interest generated by the advertising effort.
Medico: 1) Underestimating the investment in time and money to execute an omnichannel approach; 2) not allowing the consumer to bookmark and pause their shopping in order to move to another channel for whatever reason; and 3) ignoring real-time data when moving to an omnichannel approach.
Medved: 1) Overanalysis that produces interesting but not meaningful and actionable insights; 2) too much focus on data measurement at the expense of higher order marketing strategies — the best marketers fulfill a consumer need with a differentiating product, make a good product, price it right and provide great customer service; and 3) not gathering all of the data — skewed results from segmented data sources results in poor decision making.
Orsmond: I have only one big no-no for 2014: do not ignore the power of TV and switch over to online advertising entirely. We’ve had several clients think they can save on their customer acquisition costs and then sell their soul to Google only to scramble back to TV after sales have dipped dramatically.
Sarnow: 1) Don’t ignore reputation management — for marketers with new campaigns, if you simply compare the Google listings of a campaign that is brand new vs. one that is six months old, the competitive techniques in pay-per-click (PPC) and organic search need to be attacked before your campaign ever starts; 2) marketers should not under-utilize their video assets — they should be found everywhere from your website to YouTube to retail stores; and 3) don’t ignore mobile — make sure your website is easily seen and accessible by consumers using their cellphones to shop.
Savage: 1) Don’t look at each individual channel’s ROI in a silo — they must be assessed holistically; 2) don’t underspend — you must give each channel a realistic shot at performing; and 3) don’t stop testing different messaging and different offer configurations from channel to channel.
Stacey: Measuring a multichannel strategy is an art and a science, and marketers have to be careful how they interpret all the data coming at them. One has to look at the data both individually and collectively and then add an element of judgment. Things are not always as black and white as they used to be. Some of the no-no’s for multichannel marketers include: 1) Not setting a clear objective for their campaign and not knowing the tradeoffs between what’s realistic and what’s not — for example, making a profit from DRTV and driving retail may not always be simultaneously possible; 2) operating in silos such that separate marketing channels do not account for the synergies between them and that one plus one can equal three; and 3) not properly sequencing and layering the media campaigns and the distribution channels so that they are properly aligned — for example, launching in retail before live shopping or airing TV too early before retailers have stock or too late after retailers are already sending stock back.
What effect is the current economy having on campaign success rates, media rates and other areas?
Garnett: The economic situation is good and bad. First, the bad: there is more competition with traditional advertisers now that general economic health is stronger. This can increase rates or decrease availability of good media time. It’s not a crisis — it just makes us all work harder to get things to perform. Now the good: As the economy has strengthened, consumers are spending more and retailers are more interested in ordering product. Net out, this is a very good thing for the DRTV business.
Koeppel: The economy is improving. It generated a sizzling 4 percent growth rate in second-quarter 2014. Media rates and campaign performance were typical for both the first and second quarter of the year. In Q2, inventory tightened and rates rose through June. However, in Q3 rates have been soft and there have been many fire sales. But most importantly, we’ve seen response rates increase by 15 percent during this quarter.
Lee: The consumer is still weary even though the stock market has come back strong, unemployment has lessened and the cost of food is level. The current economy is no different from any economic period because successful direct response marketing works even in down trends. The goal of marketing with transactional messaging is to provide lead generation or sales conversion. Regardless of media rates and other areas, a successful campaign is effective as long as ROI, average order value (AOV) and LTV are garnished with proper metrics and analysis.
Lyons: The economy continues to present challenges as we are in a very low trajectory recovery. However, opportunities to build revenue abound.
Medico: Lately, I have seen many more promotions being tested and pulled than going into rollout. The poor economy is playing an important role by driving down the impulse to purchase when an offer is seem via DRTV. Then there is the increasing perception that the product will be (or is) available at retail, so why order now? Lastly, demand controls what rates the media can charge so if response to a product is high, then rates don’t matter as much. If response is too low, then rates don’t matter at all.
Medved: All economic indicators suggest a stable consumer economy, however consumers still seem to be cautious and marketers are wary of that. That has been seen in some reluctance to go too long on inventory or media commitments. That equates to a bit lesser demand and lower rates. The result is we all have to work harder for modest incremental gains.
Orsmond: The U.K. is currently the fastest growing economy in Europe, and we’re finding more DR clients are rediscovering TV as an affordable option. With more than 300 TV channels, U.K. rates are at their lowest in several years and this is a great time for U.S. advertisers to test DRTV here. Recent U.S. companies testing in the U.K. are in the debt management sector, fashion for teenagers, language learning and exercise-and-fitness.
Sarnow: The economy is fine. Finding consumers is far more challenging as they shop more online and watch less television. Media rates are a function of supply and demand, and DR rates are often driven up by branded direct response media consumers who find the savings of buying DR media to be enormous. This makes it harder for any marketer that does not have a retail play.
Savage: The economy and response could be better. But it is still good for marketers who have developed an effective strategy, have a unique offering and are delivering value to the customer. Innovation and commitment to the customer can always create success.
Stacey: The American middle class has been literally gutted like a fish. It’s going to be a difficult period for the average consumer in the coming years and consequently for companies that sell to them. The current economic environment has made it challenging to sell some higher-priced offers both by DRTV and at retail. This has impacted campaign success rates and the type of products that seem to be working well. Naturally there are exceptions, but this trend toward lower-priced offers has been a general theme during the past couple of years.
What do you believe the most crucial topics for marketers during the next 12-18 months will be when considering the actions of industry regulators?
Goldstein: There are a number of regulatory issues that will dominate the scene this year. First, aggressive Federal Trade Commission (FTC) enforcement activity shows no signs of abating. Most importantly, the FTC has begun to enforce the Restore Online Shoppers Confidence Act (ROSCA), which readers may recall was the bill passed by Sen. Jay Rockefeller (D-WV) to regulate data pass as part of upsell marketing transaction and all online offers with a negative option feature. The law requires clear and conspicuous disclosure of all material terms and conditions and affirmative consent to the negative option feature of the offer. The FTC, in its enforcement actions to date, has set a high standard for what constitutes clear and conspicuous disclosures and, in its consent orders, has been insisting on a separate consent to the negative option feature. Because most DR campaigns online contain some continuity shipment component, as an industry we are at a heightened risk for FTC scrutiny of these offers. The penalty is $16,000 per violation with each sale constituting a separate violation — so these are potentially big money cases for the FTC.
We can also expect FTC scrutiny of dietary supplements — and now homeopathic products — to rain at a high level with the monetary demands getting higher and higher. The FTC has recently begun to particularly target homeopathic drugs and insists that such products be supported by human clinical studies much the same as they have been requiring for dietary supplements for years.
Second, we have a new cop on the beat. As many DR marketers are already aware, the district attorneys of Northern California have discovered this industry and are aggressively pursuing actions — with dietary supplements and negative option programs being a key target.
Third, privacy and data security will likely be a huge issue this year. With the continued growth of big data and increased incidence of data security breaches, further attempts at legislation are likely and continued enforcement by the FTC is a certainty.
Finally, as social media continues to expand, we can expect increased attention by the FTC on enforcement of its Testimonial and Endorsement Guides and particularly on the requirement that material connections between the advertiser and consumer be disclosed. As DR marketers continue to harness the power of consumer testimonials, FTC focus on compliance with these requirements will likely increase.
Koeppel: With diet programs, nutritional supplements and fitness regimens continuing to be leading categories for direct marketers, it is more critical than ever that advertisers comply with regulatory guidelines as they relate to claims. That issue is hardly new news, but it is critical to the industry’s long-term health. In many instances, that means marketers must pay for double-blind studies or studies conducted by reputable third parties to provide efficacy to any claims being made. The volume of information available to consumers on the Internet creates an acute transparency where claims will either be supported or debunked by the marketplace itself. So, although such due diligence may be costly and time consuming, it is essential — not only to persuade the public about the merits of a product, but also to ensure regulators are satisfied that the public interest is being served.
Lee: Targeting breach and protection of consumer data; rogue affiliate marketers using false claims; customer service; fulfillment; the coaching and mentoring verticals; and the Telemarketing Sales Rule, regarding receipt of payment.
Medico: There are a few major topics that will be of concern to governmental units including identity theft, especially for E-commerce businesses. Weight loss continues to be the most scrutinized category, and net neutrality — discussing an open versus closed Internet — will remain important.
Medved: The FTC continues to actively pursue advertiser’s claims on television. That doesn’t appear to be waning. However, it appears to be incapable of keeping up with the media fraud in the online world and exaggerated marketing practices of rogue digital marketers. Trademark infringements and product piracy in the online world is uncontrollable. Marketers need to elevate these issues with the FTC. The pending Federal Communications Commission (FCC) auction of broadcast spectrum to wireless will be a hot topic and interesting to follow, but not necessarily crucial.
Stacey: DR marketers need to be aware that regulatory policies and their interpretation are continually evolving as the marketplace changes and they need to keep up-to-date so they can remain compliant.
How are media rates affecting direct response marketers as we head into Q4 2014 and early 2015?
Garnett: With economic improvement, there has been more pressure from traditional advertisers — which always makes inventory a bit tighter and can hurt rates. That said, we’ve found that we’re still able to get the media we need (long-form or short-form) at good rates.
Koeppel: Media and response rates are now favorable for DR advertisers in Q3, and rates will remain soft through October. It’s difficult to predict what will happen with rates in November/December, until we see the level of commitment by retailers. I expect rates for Q1 2015 to be in line with Q1 2014.
Lyons: Media rates reflect the power of the respective medium, with demand creating higher rates. More focus on the creative, script development and lead conversion in terms of campaign success.
Medico: The effects of media rates for 2014/2015 are about the same as in years before. There is a natural ebb-and-flow situation, which allows for the ability of a marketer to pay the rates that the media charges, based on the campaign objectives.
Medved: It’s too early to tell, but if the economy remains stable, the Q4 holiday selling season should be healthy.
Orsmond: The U.K. economy is booming, especially in London, and DRTV advertisers are benefitting from this upward trend — especially if they have a good direct-to-retail presence. Many TV channels are actually lowering their rates as they continue to be challenged by brand advertisers switching more of their marketing spend to lower-cost online and social media strategies. This means some DRTV and infomercial marketers are now paying less for airtime avails than four years ago and, with higher annual media budgets, they are able to substantially increase their opportunities to sell. U.K. media spot rates will increase in Q4 this year and that this trend will continue into Q1 2015 as TV sector advertising revenue improves.
Savage: As for long-form, given current response levels and demand, we aren’t anticipating huge increases in rates. We expect the same leading advertisers to be in market for Q4 — representing insurance, fitness, housewares and beauty. Fitness did not take off this past Q1, as it has in years past. If this trend continues, we would expect the same trend going into Q1 2015, with increases to be minimal.
For short-form, networks are projecting a fairly aggressive marketplace going into Q4. We are already seeing that, with Q3 bookings, cable remains very competitive — with less national inventory available to DR where we are seeing opportunistic avails on network (i.e., ABC, CBS, NBC) and syndication. The scatter market is strong considering the time of year, and we anticipate this will continue into Q4.
Heading into 2015 it’s safe to say the days of January being open are no more. After New Year’s, the marketplace has become much more competitive — many advertisers even outside of the fitness and diet categories are choosing to spend significant dollars early on. Both cable and network television have responded to soft first quarters by developing more original content. In January 2014, we saw some DR inventory priced out higher than Q4 rates as people were basically in a bidding war for the time, driving prices up. Setting clients’ expectations and preparing them to be as flexible as possible during their January flight is key
Stacey: Some of the media outlets understand the environment we’re in and others are clinging to the past. If there are some that are perpetuating rates that are unjustified based on declining viewership and performance, then that’s really a disservice to clients and the industry. However, for the most part, the media marketplace continues to find its true equilibrium and overvalued air time must eventually come back to earth.
The gap between the long-form DRTV and short-form DRTV marketplaces seems to be widening. How do you believe each sector of the DRTV market can continue to provide the best bang for the buck?
Garnett: Let’s start by looking at why more brand marketers don’t leverage long-form. Truthfully, brand marketers understand too little about long-form — it feels foreign to them after years of trying to condense messages into 30 seconds, or on the back of a box. Also, they end up seeing far too many long-form shows that follow canned formulas so they wrongly reject the format because of formulas they’d never use. Finally, undermining all of this is the reality that brand marketers have spent decades walking away from high-profit products that thrive with long-form because they fear the message depth needed to make it a success.
As a result, brand marketers fall back onto the form of DRTV that’s most familiar to them: short-form. It feels familiar, has what appears to be flexibility, and is far longer than the 30 seconds they are used to. Brands that are doing well with short-form need to seek out opportunities to leverage long-form. What about costs? Certainly long-form takes more investment to create — but not that much more for a brand marketer. And when you look at the potentially very high margin products that long-form can make succeed, a small amount of risk can have a big payoff.
My bottom line is that all this means the biggest untapped opportunity right now lies in long-form: you can drive higher margin products with long lifetimes and beat out your competitors who are hesitating to embrace long-form’s potential.
That said, as an industry, we need to clean up our act. Clients who’ve put a toe in the water in long-form are very turned off by having had traditional yell-and-sell formulas thrown at their marketing — or have spent too much on beautiful, and expensive, corporate film that was so dull it didn’t move the needle. There are amazingly powerful marketing opportunities with long-form, but the DRTV business has to change its ways for brands to grasp those opportunities.
Koeppel: More DR marketers are finding they can use short-form to drive people online, where they can further educate the consumer about their product or service. So in many cases, short-form DRTV drive-to-Web campaigns are replacing long-form shows. Short-form drive-to-web, drive-to-retail, hybrid and lead-gen campaigns are all performing well, and the appropriate type of short-form campaign should be incorporated into a marketer’s media mix. Due to media fragmentation and decreased attention spans of consumers, it’s becoming more difficult to engage consumers and to motivate them to watch a long-form show. However, I believe there’s still a place for long-form for certain high-priced products, lead-gen campaigns, and where testimonials, before-and-after photos/videos, longer demonstrations, etc., are key to selling certain products/services.
Lee: The challenge with short-form is that branded companies are using this form of advertising as a halo for all of their other channels. Availability is tightening and rates are rising. By using an integrated plan to drive to the Web, the marketer will have more available dollars to use on TV.
Lyons: Long-form certainly has work to do in bringing more hybrid marketers into the space. Agencies need to leverage their short-form success in this regard to bring more long-form hybrid advertisers to market. An effective measurement strategy, without ratings, is crucial to this effort. Media availability on cable for long-form has been consistent in recent years. The innovative networks that have compelled viewers to watch by creating dynamic original programming are the ones where marketers should direct their short-form and long-form advertising dollars.
Medico: There are forces at work here that need to be reckoned with. First, the traditional DRTV two-minute unit has become harder and harder to clear at rates that are reasonable, so developing a shorter unit — 60 seconds — that can achieve comparable response is vital. Second, the networks need to open up dayparts for long-form that can attract larger audiences. This is easier said than done.
Medved: Marketers should create multi-channel approaches. A good strategy includes short-form, long-form and digital.
Orsmond: Infomercials in the U.K. are restricted to what are called “tele-shopping windows” and not all TV channels run them. But it’s worth noting that half-hour avails have increased in recent years to the point where more U.S. advertisers should consider testing long-form in Britain with its obvious advantages of the English language and a liking for U.S.-style TV shows. However, British consumers are less impressed by U.S. film and TV celebrities appearing in infomercials. U.S. companies considering the European market should invest in tailored, localized long-form shows that will appeal to Europe’s consumers.
The biggest challenge, however, is whether any U.S. infomercial complies with more stringent European TV broadcasting rules in each country. Quite often, this means having to soften the sell or considerably alter the offer according to local regulations. These revisions can have a detrimental effect on the sales pitch. Marketers may have to edit out many enthusiastic U.S. testimonials to comply with U.K. broadcast regulations due to unacceptable claims. As a consequence, a long-form show can lose its punch, ultimately generating lower-than-forecast sales.
Sometimes 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 or vitamin supplement products in the U.K. In Germany, it is not possible to use doctors, dentists or anyone else claiming to be in the medical profession to endorse products.
Uncontroversial product categories like health-and-fitness, housewares, collectibles, music-and-DVDs, plus labor-saving cleaning products tend to be the strongest sellers and least controversial with European broadcasters and viewers.
If, on the other hand, your goal is to test the market first and scale up if there is a demand for your product, then starting out with 120-second DRTV spots is the quickest way to do this. You’ll also have a much better choice of TV channels and dayparts on which to run your U.S. creative.
Sarnow: Long-form is still ideal for marketers that have more expensive offerings, more complex messaging than a simple “buy one, get one free,” and a great story with testimonials. Navigating the creative process is far riskier, but the long-term benefits of long-form supplemented with short-form once the message is ubiquitous, is still a great opportunity.
Savage: Given the complexities of hybrid marketers’ campaigns — looking for both trackable responses as well as impressions — having a proper attribution model is key to determining what the right mix is for a particular product/campaign. We’ve seen from some of our campaigns that long-form and short-form combined go a long way to building a brand and driving overall retail sales. With that being said, it’s important for marketers in the short-form marketplace to be savvy enough to find the best media balance for their campaigns based on specific goals — knowing when to use different kinds of short-form media (local/national breaks, unwired networks for broadcast and cable, etc.) is key to a successful campaign.
Stacey: With the proliferation of TV channels and the fragmentation of the mass audience, it has also shortened consumer attention spans and changed the way consumers interact with the dial using the electronic programming guide (EPG) rather than surfing. These factors and others have made it harder for long-form to be successful or effective. For these reasons, for most campaigns in this environment, short-form is much more effective to drive Web and retail.
How has technology changed the way your company does business in the past 12 months? How will it in the next 12 months?
Garnett: Despite vast claims of dramatic change, we’ve seen less than one might expect. The place where technology, so far, has under-delivered is in reporting. I can count the vendors who have created excellent online reporting systems on less than one hand. While every vendor has online reports, few have the flexibility and utility to help us out. Many also claim to help pull together data so that smarter unified reporting can happen. But, after digging into a number of these, we just aren’t seeing the advantage. Media software is probably the area where vendors have best leveraged technology. The most change continues to be in the production and distribution end of the business. These days, electronic delivery is outstanding for short-form, and we use it whenever we can. Filming technology continues to develop quickly — including some amazing new lenses, new lighting packages and new cameras. And software solutions for post-production continue to become more and more sophisticated — it’s been a great ride for the past decade.
Koeppel: We have invested heavily in research, software and technology that allow us to more precisely target, optimize and improve the ROI of the campaigns we manage. We have automated all of our systems so that our staff can spend more time strategizing on how to grow our clients’ businesses. And we have hired more people with technical, analytical and research expertise. I expect this trend to continue in 2015.
Lee: Mobile marketing, specifically targeted local advertising, has allowed us to make a large impact on our retail sales. By advertising just to consumers who are in a specified geographic area around a particular store, we are able to deliver coupons and other incentives to drive incremental foot traffic and increase our client’s brand exposure. As marketers, we are planning on our consumers reaching us more and more through their mobile devices and social media than in the past. As smartphones have become more prevalent during the past few years, we’ve seen this trend increase. We need to be where our market is, and that’s on social media. New technology will allow us to remarket to past customers more effectively and reach new individuals with targeted effective messaging.
Medico: We continue to make major investments in technology, including enhancing the attribution modeling software systems, creating a dashboard that aggregates response information from all channels, and revamping of our reporting software.
Medved: We are operating at a faster pace due to technology and have access to more information. Our use of technology will continue to grow and improve over the next 12 months and beyond.
Orsmond: British consumers are now devoting almost half of their waking hours watching TV plus using their mobile phones/tablets according to the U.K. communications regulator OFCOM. The accepted wisdom is that, while these same consumers may be spending less at retail on the High Street and more online, dedicated TV viewing remains a central part of most consumers’ lives throughout the week. OFCOM reports that smartphones in the U.K. are increasingly being used for multimedia, but live TV still remains the main entertainment within most homes, especially with parents aged 35 or older. Younger people have shown the biggest changes in how they use media — particularly using different media platforms at the same time, such as watching their favorite TV program while checking on their Facebook messages. But the divide between younger and older people’s use of technology is starting to narrow as more middle aged people are getting online and finding it so much easier than ordering from a traditional print catalog.
Stacey: Technology is constantly changing, and we continue to invest in any system that allows us to grow and improve our business, save money, provide better service to our clients, and improve our productivity. Technology is always evolving — for example, you can move your interactive voice response (IVR) teleservices in-house these days for as little as $5.000. Even a small change can add up to real savings.
The DR-to-retail game plan now seems to be a must for every As Seen On TV campaign that hits television. What are the three most important things a marketer must do to have the right retail plan in place?
Garnett: Let me talk about mainstream products that are put onto the mainstream shelves but supported with DRTV. First, you’ll need to set up specific goals that understand the balance of both retail and direct sales. Because, for example, we have highly successful products that have been unable to drive solid direct sales but drive exceptional sales at the store. If the goal had come from traditional DRTV, the campaign would have been deemed a failure and the store success would not have been seen. So it’s very important to create achievable goals encompassing all channels.
Second, design your creative for multi-channel campaigns. The harder the advertising works to close the phone/Web sale “now,” the more consumers it alienates — people who would have otherwise purchased later at retail. You must balance this. A strong invitation to “buy today” is excellent. But that cheesy overstatement that comes with some DRTV formulas is destructive and can hurt your multichannel success.
Finally — execute, execute, execute. You want a complete campaign that leverages the investment in TV. That means strong support in-store, on retail websites, and on your website — with smart offline and online advertising. For example, Sunday newspaper circulars are often one of the best supporting media for a DRTV campaign. And at the point of purchase, your TV spot (minus call-to-action) should be playing next to the product so that consumers are reminded of the reason they want the product and can immediately identify it.
Koeppel: Timing, price point and distribution are critical to the success of a retail plan. If a product is selling well on TV, it should not be taken to retail too quickly, because this will adversely impact TV sales. However, once TV sales begin to level off, it’s time to take a product to retail. Products should be priced attractively to sell at retail. Keep in mind that once a product is taken to retail at a lower price point, TV sales will decrease. Distribution with key retailers must be lined up in advance and marketers must have sufficient inventory to meet retail demands. In addition to big box retailers, Amazon, As Seen On TV outlets and catalogs should incorporate into a retail distribution strategy. It’s also important to have a media plan that is designed to drive retail, which means staying on TV for a sustained period of time, at a consistent gross ratings point (GRP) level and utilizing shorter-length spots as the campaign progresses.
Lee: 1) Have a strong relationship with the retailer; 2) have strong flights booked on TV and radio, while integrating Web, print and outdoor advertising; and 3) build a brand.
Medico: 1) Have broad retail penetration; 2) maintain an adequate level of direct response media direct response; and 3) adjust the allowable to reflect the retail support component.
Medved: 1) Investing the time into developing and executing a strong distribution sales plan that includes pricing and merchandising objectives and strategies by retail outlet; 2) monitoring retail results and responding ahead of the curve with media and product inventory adjustments; and 3) knowing how to coordinate efforts — how soon should above-the-line marketing go into effect to support retail pull-through?
Orsmond: Newcomers will find the European Union market (now with 28 member countries) very confusing, so my advice is to concentrate your efforts on the U.K. first and link up with an established media buying agency with a history of successful DR experience. The most important things a DR marketer must do in 2014 include having a great customer relationship management system so that you know who they are, what they like and when they last visited your website as the consumer wants to buy on-trend products at better than retail prices.
Next, make sure you capture relevant data about your customer so that you can engage them on social media every day. It sounds obvious, but we find that many already successful direct response companies concentrate on making the initial sale and then do not follow up.
Finally, according to a survey by Appelerator IDC, 93 percent of mobile developers anticipate that it is “likely to very likely” that most retail companies will have enabled mobile commerce in 2014 as younger consumers constantly monitor their smartphones and tablets even while shopping in a physical store. Make sure that you’re looking at ways to engage with all of your existing customers via social media.
Sarnow: Marketers that have one-hit wonders have to go to the very few experts in taking products to retail. Wishful thinking about getting your product in Walmart hardly ever becomes a reality without the right experts in place. Don’t wait too long — line up retail as soon as you see there is life to your product.
Savage: Understand the consumer you are selling to — size the market and understand your customer demographics, psychographics and media consumption. This will enable you to push your customer to retail with the best media plan. Next, understand retail presence and retail density, as this should be factored into media strategy and affects appropriate ratings delivery for the target demos. Finally, develop creative that is compelling and engaging — and include retail tags when possible
Stacey: A successful DR-to-retail campaign involves doing a lot of things right — combined with some luck. Marketers need to line up the right mass-retail partners, a critical mass of doors to make media efficient; the right featured-placement in-store; the proper load-in quantities and replenishment inventory; and the right mixture, amount, and schedule of media to effectively drive the point-of-sale numbers. One way is through careful market testing, proper forecasting and figuring out the unique marketing algorithm for each product. In other words, “Nail it and then scale it. Run with your winners. Stack ‘em high and watch ‘em fly!”
What are the three biggest effects the growth of social media is having on the marketplace?
Garnett: So far, social media is having isolated impact on the marketplace in terms of helping drive sales. It is far more important for ensuring consumer satisfaction.
Gerr: The continued growth of social media usage and rapid innovation in social-sharing technology is altering the marketplace in many ways. Some of the biggest effects are on “Big Data,” mobile adoption and marketing communications. When someone socially registers with a site or just “Likes” a branded Facebook page, they are handing over a treasure trove of data about themselves, including demographic (location, age), psychographic (attitudes towards brand, mood) and social graph (cohorts). If analyzed, these new data points can provide unique information that can be applied toward audience segmentation, campaign targeting, offer formulation, product development, etc.
Another area where social is driving change is in the mobile market. Social engagement on mobile devices is rapidly rising. People now look to their hand-held as the go-to tool to post pictures, read reviews about businesses, view videos, check E-mail and other activities that bring conveniences to their lives. Brands that want to stay in-step with their customers will need to consider the social features within the mobile experiences they are delivering in order to impact acquisition and retention objectives.
While it may be obvious, another huge shift in the marketplace due to social media is in how brands are architecting general and direct advertising campaigns. The mainstream adoption of social media — by consumer and business audiences — is pushing marketers to integrate social channels into the overall media mix. Thinking about how social behaviors factor into the customer lifecycle is driving new strategies to align and prioritize budget allocations across paid, earned and owned media.
Goldstein: We are moving rapidly from Social Media 1.0 to Social Media. 3.0. It is no longer sufficient to simply have a presence on social media platforms like Facebook and Twitter. Brands are increasingly relying on their consumers to serve as their brand ambassadors and looking to harness the power of their customers’ social media networks. It’s happening at rapid-fire pace in the traditional brand world and it’s a natural marketing tool for direct response, which has always relied heavily on the power of consumer. But with these opportunities comes risk. This is a highly regulated media and attention must be paid to consumer rights of privacy and publicity, to third-party intellectual property rights and, of course, to FTC regulation through the endorsement guides
Koeppel: Social media users now represent 54 percent of the population. More than 70 percent of time spent with social media happens on phones, and Facebook is the dominant social media ad platform with most of its advertising revenue coming from mobile — 68 percent. Facebook is transforming social media marketing and is delivering a positive ROI. So Facebook marketing is now a critical component of any campaign.
Twitter is gaining traction and is following Facebook’s ad model, which encourages users to download apps. The problem with Twitter is that its product is hard to use, so that has affected its growth, but it is aggressively addressing that issue through product changes. Twitter now works with Nielsen to provide demographic information on people tweeting about TV shows and those viewing the tweets. This is helping marketers to better understand the viewing audience they are reaching through various TV shows.
Instagram is experiencing the biggest user growth among social media platforms and currently has 200 million monthly active users. Right now its advertising is priced too high for direct response marketers and it is only working with a select group of brands, but I expect that to change over time — and I believe it’s an ideal platform for selling a wide range of DR products.
Lee: It’s making brands more accountable for their products and marketing. In the past, if a marketer had an inferior product, it wouldn’t receive repeat orders from the consumer. Now with the growth and influence of social media, if one person says something negative, it can easily be seen by hundreds or thousands of other possible consumers.
Secondly, if a brand wants to stay in contact with a past customer, it’s much easier to inform them of upcoming promotions and new products by social media vs. E-mail or direct mail. Not only are you able to effectively measure the response of your posts, but also they can be edited instantaneously to maximize ROI.
Lastly, we find social to be a great research tool to find untapped markets and really focus our advertising message to that particular group. By customizing the ad to match the needs of that group our response is significantly higher than if we targeted a large population with a general message. Additionally, we are able to generate unique landing pages and telemarketing scripts for these special groups. While this does take more effort, the results our clients see definitely make this approach effective.
Medico: 1) Content is shared by word of mouth — a viral effect; 2) consumers become more engaged; and 3) results in more “earned media” rather than “paid media.”
Medved: The DRTV industry has effectively used consumer testimonials to endorse product attributes. Used correctly, social media can accelerate a marketer’s brand reputation and convert more shoppers into buyers. Left unaddressed, the market is at best under-utilizing a powerful marketing asset and at worst exposing their brand reputation to the possible degradation.
Sarnow: Customer service is becoming more important – the older DR marketers still hang on to IVR for up-front sales even though consumers are going online and bitterly complaining about inaccurate orders. Additionally, the entire “path to purchase” has changed for the consumer, and direct-to-consumer marketers are just beginning to catch up. How consumers research purchases online thorough social media and reviews demands marketers attention and action if they want to be successful.
Savage: Social media, such as posts, tweets, reviews and any number of other content creation mechanics is creating ”near perfect” levels of information for consumers and setting their expectations for what to expect. Because of this, social holds brands accountable for the experience of actually using the product by rewarding good experiences (both in marketing and product) with additional sales, and by punishing companies with negative product experiences or marketing missteps. Brands also have to be available and ready to respond to or answer consumers’ questions and concerns 24/7.
Because of the role social plays as both a powerful marketing channel and as a customer retention tool, it has the potential to force agencies and brands to do a better job planning, creating and aggregating great content for use across all channels (including social and site), while aligning social efforts with everything from new product announcements to changes in policy about existing products.
Finally, there is ”social snake oil” being sold by those looking to win acclaim within the industry by creating niche programs with limited reach in every new place consumers are interacting. This social snake oil confuses and distracts us all with social programs lacking enough structure to be effective and enough self-awareness to understand that the goal of social is really about — adding to the existing conversation in a positive way.
Stacey: Social media is yet another outlet to access customers both passively and more actively. It’s a critical part of today’s marketing mixture. Social media impacts DR in that it is now an integral part of the planning process, it can be a profit center on its own, and it can be utilized to engage consumers to help get the word out about your product.
How will the expansion of mobile marketing — perhaps even more importantly, mobile consuming — affect marketers in 2015?
Garnett: I don’t expect it to shift a lot and think the way to look at it is this: Mobile is basically a variant of online activity. That said, it’s online activity you take with you anywhere you go. In theory, this suggests that people will seek instant gratification by buying something they want quickly and easily. Except — most people want to learn a bit more before buying something they’ve seen on TV. So, they’ll want to read a website about it or search reviews a bit. And that means the “instant gratification” idea won’t be what helps DRTV. Instead, the immediate access to more information is likely mobile’s biggest contribution to our industry.
So, will there be more total sales because of mobile? Possibly — but probably only a small amount. Someone who might have put off deciding until they get home (only to never make the purchase) might make the choice to buy right away. But it’s in a small number.
That said, clients should be cautious. Every new media effort is accompanied by a set of ventures trying to make money by selling services agencies and marketers. Quite often, the biggest profit from a new media opportunity is vendor profit — not client profit from selling to consumers. So, choose wisely. While it can be useful to test the waters, the goal should be for mobile to increase your profits — not just those of a vendor.
Gerr: Mobile consuming will continue to have a major impact on marketing in 2015 and beyond. As consumers increasingly stay connected to their mobile devices, the opportunities to address them via paid and earned tactics rises. Consumers themselves are helping to drive these mobile marketing opportunities. People expect brands to deliver anticipatory in-context conveniences and experiences via mobile devices — whether its geo-locating the nearest restaurant with a discount code, anticipating a flight delay and auto-rebooking on the next available flight, or sending an alert on the availability of a recently published white paper. Marketers have to think about the complete customer journey and determine where they can lend mobile value across the acquisition-to-retention spectrum.
Koeppel: Mobile advertising will transform the DR business during the next five years. A smartphone is a multi-channel marketing device that can offer location services, in-store mapping, E-mail, coupon delivery, text notifications, search, payment processing, commerce and social media. This makes it the perfect device for selling DR products and services. Sales from consumers shopping on mobile phones and tablets will reached $114 billion this year and grow to $293 billion by 2018, so I expect to see strong growth in mobile commerce for marketers in 2015.
Lee: Social media platforms like Facebook and Twitter have opened up conversations and pushed advertising into a new direction. In the coming months, we expect to see more billing options, which will increase the effectiveness of our mobile campaigns. Currently, consumers need to input their credit card details into an online form, which can become cumbersome. With the development and acceptance of digital wallets, we expect to see this process become more streamlined. We’re also very excited about the opportunity to work with direct mobile billing platforms where the consumer is billed directly to their device. These systems are becoming more sophisticated and will give marketers the tools they need to succeed.
Lyons: Mobile has tremendous growth prospects globally, especially in relation to mobile consuming. The mobile device — with the growth of the phablet and its enhanced capabilities — provides an ideal order mechanism.
Medico: Mobile marketing is already eclipsing Internet venues and will expand rapidly as smartphones become smarter. In 2015, mobile will become the prime method of disseminating information and capturing both response and orders.
Medved: The future of mobile has yet to be clearly defined. 2015 will be a continuation of engagement innovation and experimentation
Orsmond: Traditional home shopping channels will continue to take a hit in the next few years as they suffer from having huge fixed overheads and their core viewers are getting older while being ever more media channel options. It’s striking how many 18-30-year-olds in the U.K. now do not have TVs at home, choosing instead to watch programs on their tablet or laptop when they want to.
“Live” 24/7 home shopping TV is alien to this younger generation, and it will be interesting how QVC and other home shopping channels battle to find ways to keep increasing their customer bases in the age of multimedia choice. Facebook and Twitter did not exist 10 years ago, and Amazon online sales continue to forge ahead — which means some media pundits predict that traditional home shopping channels may well lose the battle and have to re-invent the “live” TV business model.
Fifty-seven percent of the U.K. population now owns and uses a smartphone or tablet, with two in five adults and three in five teens saying they are “highly addicted” to them. Smartphones and tablets affect consumer purchasing behavior on a daily basis. These are the top six mobile searches conducted by U.K. smartphone and tablet users: news, 54 percent; High Street retailers, 30 percent; movies, 28 percent; music, 27 percent; local travel updates, 24 percent; and finance/insurance, 15 percent.
In the U.K., shopping on a tablet is now more popular than from a smartphone with 66 percent of tablet owners admitting to having made a purchase from their device already this year. More interesting is that tablet online shoppers tend to purchase multiple products with a higher price tag.
What does this mean to the DR marketer? Despite increasing use of the Internet and an explosion in the choice of mobile devices available to access media and the Internet, regular TV viewing remains the U.K.’s most popular media choice, with the average viewer now watching nearly five hours every day!
Savage: The best marketers will have a mobile strategy and will recognize mobile’s potential to create action — from the couch or by sending to a store — among those already loyal to a brand and to create CRM ecosystems powered by data to capitalize. If the ecosystem is a good enough addition to the product and the content provided is valuable enough, the most engaged consumers will be excited to share, and mobile efforts will become a reason to be a customer. None of it will be easy, but brands that have it down will continue to perform well. At this point, responsive design and a good mobile purchase experience are table stakes.
Stacey: We have not yet seen a significant impact of mobile marketing on the growth of our business. People are accessing the Internet through mobile devices, but using mobile as a standalone marketing strategy to reach consumers is still evolving and will continue to grow in 2015.
How can agencies and service providers with their genesis in the DR space better reach out to branders and other big marketers who are looking to integrate direct, digital and data-driven efforts within their overall marketing plans?
Garnett: There’s a tough balance to find to make this happen. Namely, we have to learn to speak their language, and fit our work within their goals — all without losing those what makes DRTV powerful in the first place. Unfortunately, some DRTV agencies working with brand clients have already given up the measurability that makes DRTV efficient when they have moved to measuring DRTV like general rate ads. Some campaigns have even given up putting phone numbers on their DRTV. This is sad because phone number tracking is the only way to give brand clients some of the best deals out there — smaller audience media where Nielsen numbers are in error by around 50 percent or more. Some agencies just go ahead and report these numbers. Others claim Web statistics show all that’s needed. Neither approach is right. Clients need numerically valid solutions to sort out which media works best.
In DRTV, we need to learn the media language our clients use and learn how to show the results of DRTV campaigns in that language. But we also need to train our clients to understand our language and the value of seeing results as we see them. By bringing the two worlds together, clients thrive — as will their agencies.
Koeppel: Big marketers are struggling with cross-channel attribution and integration of complex data across devices. Savvy DR agencies and service providers have an advantage over brand agencies, since they have been developing attribution models for many years that integrate offline and online data. Brand agencies are trying to catch up and bolster their capabilities in this area, but there is still an opportunity for our industry to demonstrate to brand marketers our superior expertise in measurement and generating a ROI.
Lee: Case studies of current or heritage clients play a significant factor in recruiting new business. By visually seeing how a campaign is laid out and the results that are generated really helps a potential client see the value in direct, digital and retail marketing. An effective option is to engage with the brander for a limited time period while developing a marketing plan and estimated sales forecast. Being able to show a clear, well thought out vision for how its campaign will be managed, there is a high likelihood that the marketer will move forward with a long-term contract.
Medico: The most effective way to attract brands and large marketing organizations is to partner with other agencies that do not have a robust direct capability.
Medved: The marketing world is moving in a direct-to-consumer direction where marketers can engage with potential buyers directly, even if the sales transaction happens through a third party. The disciplines of direct marketing are well suited for brand advertisers looking to engage consumers on a one-to-one level. DR agencies and consultants should be sharing how we employ database management, customer segmentation, creative versioning and media testing.
Orsmond: Large advertising agencies constantly have to learn how to offer more services for less income. Specialist and social media agencies charge a lot less for their creative and media services, but when successful they can have a substantial impact on the bottom line. Recently, one of the U.K.’s best-known vacuum brands wanted to add direct response to its marketing mix. In previous years, the focus had been on supporting their thousands of retailers, but now the marketer believes that it’s missing out by not also selling other products direct to the end user. They’re a household name but only now are they considering making a first infomercial so that they can go head-to-head with their main competitors who’ve used long-form successfully for many years. I find it encouraging that even famous designer-led consumer brands are having to rethink their direct-to-consumer marketing strategies to attract new customers and keep existing ones.
Savage: The potential to start a powerful business discussion by crossing sales information with other data from the client or the world at large (think social data, demographics, anonymized data from other clients) is immense. The closer an agency is to sales data, the more powerful they are in making recommendations. The big limiter is likely the initial scope of programs/questions, but smart analysis and questions going beyond a last click/direct call focus will move the DR provider upstream and make the agency more valuable to clients.
Stacey: Many agencies and service providers are at the intersection of the convergence of DR advertising and GRP advertising in a multi-media environment. This is increasing the complexity of their businesses and they need to work to stay current, keep their customers educated, and change course as the industry and its customers evolve.
Given the current state of the industry, what would you change to ensure its continued health and growth?
Garnett: We need to develop sophistication in three key areas. First, we need to be able to talk in depth about how DRTV interacts with and supports brand building. Our industry seems willing to conclude, “If it sells, that’s all we care about” — or that building brand is just about pretty pictures. Neither is good enough. If our work is to deliver the most for our clients’ money, we need it to participate in, and contribute to, growing brand. That requires we become articulate about how to do that.
Second, we need to become far better at the subtle statistics of the multichannel world. This will be tough. Phone calls and even Web hits are simple measurements. But the wide array of issues that affect conversion at retail are far more subtle. The simple math we use today just won’t give us the future insights we need.
Finally, we need to get smart about using research. This means using research on more projects to uncover the keys to success. And it also means changing our creative and production process to ensure that what we learn makes our work succeed. Far too much research is lost during the process of production, which shouldn’t be acceptable. But perhaps most importantly, it means avoiding the abuse of research. I’m hearing stories of traditional DRTV companies who start using research then decide it will tell them everything they need to know and become lost in 18-month planning cycles. Research is critical for informing and guiding our instincts. But it doesn’t have a magical ability to answer every question we’ve ever had. As Einstein has observed, “Much that can be measured does not matter and much that matters cannot be measured.”
Koeppel: Marketers and supply chain partners need to share data and information in a transparent way so that everyone in the mix can optimize their role. We are in the midst of an age where consumer behavior is ever-evolving and changing. While this presents new challenges, it is an exciting and dynamic time because everything is clearly moving toward a direct marketing model.
Lee: Our industry is changing faster than ever. It’s our job as marketers to stay on the forefront of new technology and platforms. This is how the consumer is communicating and shopping, so we need to make sure their experience with our campaigns is pleasant and streamlined. Marketers that don’t stay up to date with the newest technology are going to be surpassed by those that do. It is in everyone’s best interest to be responsive and engaged with our audience online. If we don’t, then someone else will.
Lyons: The direct response industry’s model works! We are in need of product and offer innovation, though, to ensure its continued health and a solid future.
Medico: The industry must encourage mergers of capabilities so that agencies can offer full service solutions.
Medved: We need greater advocacy of DR outside of our industry.
Orsmond: Direct Response advertisers must embrace a multimedia strategy from day one. The world is changing fast and younger consumers are quickly abandoning the buying habits of their parents so the future spoils will go to those companies at the forefront of the media usage revolution. Media multitasking — 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. The younger the person, the more this happens. Surfing the Internet via mobile phones and tablets is the fastest growing U.K. media activity with more than1 million new users during first-quarter 2014. DR marketers who ignore this trend will be left behind as the world economy continues to improve year-on-year and ever younger consumers become potential buyers.
Stacey: The DRTV industry is facing a number of externally generated disruptions to its business model — some of which we can influence and others of which we have to adapt. One disruption is the disintegration of the mass media audience and the evolution from As Seen On TV to “As Seen Everywhere” that many marketers must make. As they say, “Adapt or Die!” Another disruption, and one that is not unique to our industry, is the increasing regulatory burden and punishing legal environment that is significantly raising the risk profile across all industries and resulting in the curtailing of investments in new products and innovations.