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Direct Response Marketing

Response Magazine’s 21st Annual State of the Industry Report

1 Sep, 2016 By: Thomas Haire Response

Members of the magazine’s Advisory Board speak out on the current state of the performance-based marketing industry.


“One could argue that all marketers are direct marketers these days,” says Peter Koeppel, president of Dallas-based Koeppel Direct. “Our ability to understand what grabs a consumer and gets them to respond to an offer is unmatched in the advertising world. That’s why we heartily invite every brand to come join us.”

Koeppel and other members of the Response Advisory Board continue to recognize the opportunities for all marketers and vendors working in the direct, digital, and data-driven marketing world. As we gather this group together for the 21st time to take part in our annual State of the Industry report, performance-based marketing tactics have never been in a stronger position.

Once again, we’ve asked the members of our Advisory Board to address a series of key topics, including the expansion of omnichannel marketing, the quandaries surrounding customer acquisition and attribution, burgeoning mobile technology — and more. According to these leaders, this is the state of our industry.

What was the most significant accomplishment in the past year for performance-based marketers?
Doug Garnett, Atomic Direct: Answering this question is getting more difficult because the variety and style of accomplishments is far more varied than it was 10-15 years ago. There has been a massive effort to upgrade our abilities to isolate the key contributors to sales, to track more subtle results, and to attempt to leverage a far wider variety of mediums in pursuing goals.

By and large, the tracking and contribution estimating efforts have made significant progress. But one major progress is to accept that it’s far harder than it might seem. DRTV providers, in fact, were tremendously spoiled by the simplicity of the “good old days” where phone calls could be used as their primary tracking. That was relatively easy — this is far harder.

Notably absent from these accomplishments is progress on the messages we use. Message is the heart and soul of performance-based advertising. In no other advertising medium are we able to see immediate impact of smart, or poor, choices in message and the creative that communicates it.

Peter Koeppel, Koeppel Direct: Cementing the link between TV advertising and the mobile consumer — that means tailoring mobile communication and shopping cart ability so that it is easy for buyers to get what they want. In some cases, we’re seeing as much as 80 percent of our online sales originating from smartphones.

Fern Lee, THOR Associates: Making the investment in data and analytics systems and attribution — and using this data to impact plans, buys, and messaging

Greg Sarnow, Allegro Teleservices/Direct Response Academy: Performance-based marketing has shifted dramatically and successfully to the web. When you look at many of the successful online marketers, you get the feeling that you are looking at the DRTV marketers of 1989. The excitement, the experimentation, and the incredible results are becoming viral and everyone wants to do it now.

We have shifted 75 percent of our business to the web. Not just building websites or marketing via search engine marketing and optimization (SEM and SEO), and affiliate marketing but by going back to the fundamentals of selling and applying them on the web instead of TV. It is surprising to see $50 million to $100 million dollar organizations transacting direct response business completely on the web.

David Savage, ContentWatch: I struggle every year with naming “the most significant accomplishment.” But since my background — for a long time — is TV and I’m now focused on digital, I’ll say the accomplishment is the evidence and awareness that video in mobile and various digital channels drives success and ROI. It’s not surprising!

Richard Stacey, Northern Response Intl. Ltd.: To continuously evolve our companies and our business models to overcome, improvise, adapt, and pivot to the rapidly changing media landscape. Change and disruption create opportunity, and those companies that can embrace the rapidly evolving digital environment are the ones that will be the winners. They are the ones who can adapt, pivot, and iterate to take advantage of emerging digital solutions.

Robert Yallen, InterMedia Group of Companies: The development and accuracy of attribution models.

What do you believe the hottest topic will be in the coming 12 months?
Abed Abusaleh, Havas Edge: The presidential election, the transition to a new leader, and the first 100 days of the new president’s agenda will be the most watched and discussed topics. This election is drawing higher ratings than any in recent memory, and topics like trade imbalances and pay inequality are dominating the discussion. The electorate is divided on which way the country will go next, and for many marketers, any changes to our trade policy could impact their cost of imported products.

Kevin Lyons, Opportunity Media/A&E Networks: Although a perennial topic, it’s attribution. With the continued expansion of the omnichannel universe, the attribution challenge has expanded in complexity. Yet, its importance grows and those up to the challenge are best poised to succeed by making smarter decisions based on their model.

Bill McAlister, Top Dog Direct: How to integrate social media into a product’s marketing mix.

Garnett: This past year, the emperors of digital began to lose their clothes. We now know that of those digital display ads presented to a human, only 9 percent are viewable for even one second. We also know that there’s a huge fraud challenge with digital display ads — and likely less than half are presented on pages being viewed by human users.

Marketers are beginning to figure out that the hype around micro-targeting consumers might produce decent direct sales cost-per-orders (CPOs), but it’s a poor strategy for advertisers needing to drive retail and omnichannel sales.

Programmatic will continue to be a hot topic. But it will get hotter as those promoting it continue to cover their predictions by saying, “But wait — next year it will be more useful.” For those who buy via DRTV, it’s also beginning to look like programmatic will only drive up media prices, rather than reducing them. Some networks are already removing inventory from DRTV rates because they hope to get higher prices via programmatic.

We will have to suffer through another “Chicken Little” year of predictions of consumers cutting the cable in vast numbers. This will happen despite this year’s increase in TV budgets, a shift back to TV from major advertisers like Procter & Gamble, and the overall degradation of digital efforts.

Koeppel: Instead of chasing consumers, the focus will be on meeting consumers head on at the time and place of their choosing — whether that be via broadcast, online, social media, or in the retail aisle. This is already happening but requires ceaseless refinement because the marketplace is dynamic — with new forms of interaction constantly emerging as well as continuous shifts in media consumption habits.

Lee: Determining how to integrate and maximize mobile presence and revenue. Statistics indicate the continued exponential growth of consumers’ mobile usage to engage, research, and buy.

Sarnow: Great success is accompanied by greater regulatory oversight. This has not been advantageous for marketers. Too many unscrupulous marketers hurt the companies that are willing to go the extra mile for the benefit of consumers. The Federal Trade Commission (FTC) continues its efforts aggressively. Plus, its influence on media outlets demands a more conservative approach from organizations like Facebook.

Savage: Continued focus by marketers and agencies on keeping up with how technology is driving consumer behavior, and as a result, identifying and capitalizing on the best social platforms and digital media channels for generating revenue and optimizing ROI.

Stacey: It will continue to be how we embrace, integrate, and attribute all the new media platforms into a unified and aligned strategy — continually learning, evolving, and innovating to adapt to a rapidly changing media and retail environment in order to stay ahead. Jack Welch says that when the rate of change outside an organization exceeds the rate of change inside then you’ve got problems.

What are the three biggest advantages for marketers presented by today’s omnichannel marketing environment?
Abusaleh: The omnichannel environment has allowed marketers to broaden their approach and not be so tied to one particular medium. Marketers can dial up or down multiple channels if they underperform in a particular medium. The size of the digital opportunity has expanded massively during the past few years, which means in some cases they can keep a campaign alive online long after their TV campaign has run its course.

Garnett: Omnichannel gives much bigger opportunity for profit — but that comes with less clarity about the exact mix that gets you there. So it’s a tremendous advantage but requires more subtlety than traditional direct marketing.

Campaigns should start with full omnichannel distribution because it can lower the risk involved with traditional “direct only” DRTV campaigns. We’ve been leveraging this truth for years and have seen it drive some outstanding success rates — inverting the 29 out of 30 failure rate of traditional direct campaigns.

Finally, a much broader world of products succeed with omnichannel. Requiring direct sales success severely limits product categories. It’s a brilliant advantage — but to be successful, formulaic production won’t work. Agencies have to become smarter.

Koeppel: The three biggest advantages for omnichannel marketers today are: 1) there have never been more ways for marketers to reach consumers; 2) digital marketing across all channels — including programmatic TV advertising — enables marketers to reach finite target audiences; and 3) nearly every consumer — whether it be via a smartphone, tablet, or laptop — is walking around with a shopping cart in their hands.

Lee: 1) Integrated message reach/frequency; 2) consumer engagement on multiple platforms/devices; and 3) increased data capture to strengthen future initiatives.

Savage: 1) Digital media is accountable media; 2) consumers like compelling content; and 3) in most channels, consumers purchase good products with a clearly stated value proposition.

Stacey: The ability to test cheaply and quickly, scale on a graduated basis, and better target select segments. As old technologies are disrupted, new ones are rising to take their place. The marketers who can embrace change can benefit from these new frontiers.

Yallen: 1) Multiple touch points with the consumer, creating the ability to connect seamlessly on a deeper level; 2) the ability to quickly gather more data to better understand your consumer; and 3) for the agencies that have full offline and online capabilities, the ability for all channels to support each other optimally — driving the conversation with improved customer perception.

What are the three biggest no-nos for a marketer using a multichannel, performance-based strategy in 2016?
Abusaleh: With all the available options out there, it is a mistake for a marketer to test one channel and stick with it. Marketers should continually strive for the most balanced approach possible. Not every test will work, but — ultimately — diversity in channels will extend the life of a campaign and maximize its profitability.

Garnett: First, never make choices based on last contact attribution. It’s easiest to look at media through the lens of the media immediately before purchase. But this is deceptive and will lead you into less effective choices — possibly even cause failure where success should be. (Remember, errors in attribution or its interpretation can lead to choices that cause your campaign to fail.)

Then, never choose one option over another simply because it’s the option with clearest data. We must not confuse “the data is easy to obtain” with “the data is meaningful.” A friend of mine has observed that meaningless data is beginning to overwhelm meaningful data.

Finally, don’t rely on data vendors who tell you they can analyze data and predict the most effective media spend across different channels. They rely on black boxes that are not well tested. Some research even indicates that media mix analysis is failing in the real world.

Koeppel: 1) Dismissing any option — such as television or telephony — based on a personal bias; 2) not controlling their manufacturer’s suggested retail price (MSRP) — which is a challenge given how robust and complex the gray market is; and 3) poor reputation management. MineWhat.com reports that more than eight out of 10 consumers do online research before making a purchase, so managing a brand’s online reputation could not be more critical.

Lee: 1) Not considering or incorporating some type of attribution model; 2) not including a strong mobile presence; and 3) not having integrated creative strategy that is appropriate for each tactic.

Sarnow: The first big no-no is not having great customer service. The old DRTV mentality of encumbering consumer engagement is backfiring now. Everyone sees how easy it is for consumers to show their displeasure online, and direct-to-consumer marketers must do a better job making existing customers happy.

Interestingly enough, the second big no-no is ignoring TV. So many people insist that TV is dead, but the numbers show that to be a premature prognosis. Not only are sales excellent from TV, but also, no other medium impacts web traffic even slightly closely to TV advertising.

Savage: 1) Not testing new content and new offers; 2) not looking for new media opportunities; and 3) not listening to your customers.

Stacey: The biggest no-no is to scale before you’ve got a proven market or model. Also, not thinking carefully about your campaign objective, not testing your approach before rolling out, and not thinking carefully enough about attribution and where your results are coming from.

Yallen: Some marketers make the mistake of using one offer across all channels. Each channel requires a targeted message. The messaging approach you use on Television may not properly translate to mobile.

Also, not having a tested attribution system in place — a marketer must be able to attribute the leads/sales generated by all channels in order to effectively utilize this approach. Without a robust attribution system, the value of multichannel is lost.

A third no-no is a lack of integration among channels.

How has technology changed the way your company does business in the past 12 months? How will it in the next 12 months?
Abusaleh: The biggest changes over the past 12 months have been centered on attribution and the race to improve the accuracy of the process.

Garnett: We’re not seeing dramatic change. Most of the technological hype right now is going into big data. Yet we find that big data finds tiny profit opportunities at tremendous analysis cost. So far, the juice is only minimally worth the squeeze.

Koeppel: The complexity of our attribution modeling continues to become more sophisticated with predictive algorithms, regression analysis, and media model mapping all part of the mix. As new tools emerge in coming months, we will dedicate ourselves to incorporating whatever helps give us obtain the most meaningful data — data that will empower our ability to optimize results.

Lee: Technology has changed our company’s business in several ways in the past 12 months: media mix evolution; call-to-action (CTA) and fulfillment changes; and cross-device plan implementation.
In the next 12 months, it will be even more consumer centric: increased messaging via mobile; increased social presence; and increased subscriber video-on-demand (SVOD) usage

Lyons: Technology continues to create efficiencies in workflow for our company. It also provides for growth as well as a challenge to maintain an updated level of technology.

McAlister: Television is not the main media vehicle to reach younger consumers. They watch when they want to watch on the devices they choose to watch from — on the internet, on demand, on Hulu, and on Netflix. And generations to come will be doing the same.

Sarnow: In the call center space, giving customers a seamless experience to connect with customer service is a huge technological change. Whether it be SMS texting, e-mail, or the old-fashioned cell phone, helping existing customers in their preferred style of communication is essential for customer satisfaction.

From the direct response marketing side, “Big Data” has grown to “Enormous Data,” whereby looking at results from each channel and attributing revenue to different mediums is all in a typical day’s work for optimizing campaigns.

Savage: There are so many new media products from both established and emerging digital and social media companies. We’re trying to test as many new media opportunities as prudently possible. We have to keep up with how our customers are consuming media and content.

Stacey: Technology is always evolving, but I think our company is currently up to date on everything out there. We spend more time these days on determining the methods and techniques to be used in effectively applying the technology.

Yallen: Technology has allowed us to bridge the gap between disparate data points with our client’s data. It has allowed us to parse massive amounts of data in minutes. The ability to change visualizations with simple drag-and-drop actions has allowed us to look at data quickly from multiple points of view. This has allowed us to glean need opportunities for success with our clients.

During the next 12 months, we are continuing to virtualize our systems, as well add automation to our processing. This will continue to result in reduced overhead and increased productivity.

With consumers gaining more control on how marketers can and will reach them, what are the three most important items for a marketer to consider when building out a customer acquisition model?
Garnett: I disagree with the idea that consumers are more in control. The problem is that marketers have always wanted to think of themselves in control, but they never were. Consumer sophistication has been with us for half a century, and there’s not significant new change.

So first, don’t abandon old structures. For example, look at your consumers in terms of a funnel. Don’t believe those who like to hype funnels having “gone away.” It’s silly. Consumers don’t change in what they need to do to lead to purchase.

Secondly, consumers have become far more cautious with their data. Be aware that if they honor you with personal data, you need to respect that to be successful. Honesty while selling is critical throughout your process.

Finally, embrace the new tools on the market for tracking consumers from first contact to final close. At the same time, be cautious about some of the big tech promises. I recommend that every marketer read the book Disrupted by Dan Lyons. It reveals a tremendous instability at places like HubSpot, Salesforce.com, and others.

Koeppel: 1) Today, marketing is a dialogue, not a monologue, so having a continuous feedback loop is imperative; 2) today marketing is all about relevancy — there is just too much competition for attention spans, and we’ve got to focus on what is meaningful to our audience; and 3) “Big Data” is a popular term, but being able to distill it down to insight that is actionable is key.

Lee: The need to understand the consumer journey to understand how they interact with each channel and the value of each channel within a campaign — what tactics act is an influencer, what tactics act as a responder, and what devices are consumers using when interacting with these tactics.

Savage: 1) Understand that you have to be present to customers in many different channels; 2) patience and persistence in testing different content as much as testing different media; and 3) evaluate the different channels not only on their own terms, but for the role they play in your overall marketing plan.

Stacey: With the consumer in control, the three most important factors are relevancy, relevancy, and relevancy. If you’re not relevant you’re dead. Content is King.

Yallen: It is important for an advertiser to not be too intrusive. For instance, in order to avoid creating bad will, on Pandora many advertisers use the strategy of communicating to the consumer that they are temporarily interrupting music with their messaging.

Further, it is important to still keep the same metric discipline of attribution and key performance indicator (KPI) measurements.

Finally, know your customer. You have to understand all aspects of your prospective customer to attract and convert them:

  • Media consumption of the target audience — each audience consumes media differently, making it important to know where and when you can reach them.
  • Multiple user-friendly conversion paths — not only does each audience consume media differently, but they also convert differently. Creating multiple conversion paths will allow you to convert users though the path that is most convenient.
  • Marketers will have to ensure that the desired lines of communication are open or risk losing or alienating customers.
  • Measurement of marketing efforts — understand various channels and make sure you are effectively reaching consumers on the appropriate channels for the target.
  • The long-term value (LTV) of your customer is necessary to understand the cost you can afford to acquire them.
  • Understanding of your audience and how it would like to communicate with your brand is also important.
  • A younger, tech-savvy audience may want to communicate via social media, while others may be more comfortable with e-mail or phone.

With the importance of sales attribution growing for marketers using multichannel campaigns to reach consumers who are interacting with those campaigns via many different outlets, what’s the top challenge marketers face in attributing sales or leads to specific marketing messages?
Garnett: I think “attribution” is the wrong topic. The key is to isolate for any given sale what media influenced the purchase or contributed to the purchase.

The mere idea of “attribution” implies that each sale has a single source. It doesn’t. A typical consumer journey starts when radio suggests the product exists, TV gets the consumer excited about it, paid search gets them to your website, social media with friends influences their final choice, and they buy at retail.

Marketers must sort out ways to look at that entire journey and decide how media budgets need to be allocated among the stages — a process made worse in this journey because there is no way to specifically detect the radio and TV impact on the sale.

Koeppel: How do marketers get consumers to willingly engage with them at the point of lead origination by providing the information we need in order to be able to track them? This is a key to being able to then follow them across devices, behaviors, and ultimately to the point of sale. If we don’t know who they are, then we can’t track them.

Lee: We are seeing some clients have difficulty tracking a consumer who is using multiple screens during the investigation/education/purchase process. Their technology cannot tie the various devices the consumer uses, and they are unable to understand the consumer’s full engagement path to impact future initiatives.

Lyons: The top challenge is the accuracy of the model itself. Creating an accurate model is a great challenge, and many current models are not accurate. However, marketer intuition based on varied data is incredibly important and cannot be understated.

Sarnow: Attribution modeling is the key to optimizing campaigns and spending money on media wisely. As such a large percentage of orders are placed on a website, knowing how to accurately project where the order came from is critical. This has been going on for the past five years now.

Savage: With today’s fast pace and expectations of quick evaluation of media performance, you can’t always have perfect test conditions. So we’re working hard to track performance of media campaigns in different channels, even when they are running simultaneously. It’s important to understand what sparks the customer’s interest — or where in the funnel they might lose interest, as well. You have to keep testing and refining the customer experience in every channel, and then adapt your attribution model to take those refinements into account.

Stacey: What’s challenging is when marketers try to apply attribution models that are out of sync with the reality on the ground. Some are still focusing on 800 numbers and website hits when the consumer is buying through Facebook and Amazon. In many areas, I see a major disconnect between what’s getting measured and where people are actually buying.

Yallen: Multi-touch point attribution continues to be challenge as clients and partners have different viewpoints on how to weigh each channel contact with the consumer.

For example, a consumer may see ads on TV a few times, perform a search related to the ad copy, go to a landing page for the ad, be retargeted a few times, and then eventually convert to a sale. The question may be asked who was responsible for getting the lead? Some may argue that it’s only the last touch point that matters. Others may say it’s the first touch point, as it got them over the hurdle of being interested. Most often, it’s a little bit of everything. The key is the find the right balance of each media to maximize overall ROI.

How will the expansion of mobile marketing — perhaps even more importantly, mobile response and purchasing — affect marketers in 2017?
Abusaleh: There are two major things marketers need to do in order to maximize their campaign’s effectiveness in mobile. First, it is important that their website is compatible for mobile users. In many cases, more than half of all customer online visits originate from mobile. Secondly, it is important for marketers to maintain the customer relationship on mobile once the lead or purchase is obtained. This can be done with alerts, applications, and more.

Garnett: Let me repeat what I said last year: mobile, by itself, will not have a significant impact on marketers selling product to consumers. My advice is read a little, watch some, and be very cautious about taking action. Remember, most consumer activity in the mobile space happens with consumers going to your traditional website — not specialized mobile activities like beaconing or contextual ads/texts.

Koeppel: Consumers are already habituating new behaviors such as making purchases by swiping their smartphones. This will lead to more and more shortcuts that compress the amount of time and hassle required to execute a mobile purchase. As a result, we will see more commerce through mobile, so long as security issues are managed effectively.

Lee: We have already seen the shift in how consumers engage and purchase as our clients’ mobile sales figures are seeing double-digit growth. Brands need to have mobile compatible sites and the ability to comparison shop and incentivize purchase to ensure they can capitalize on this behavior. Additionally, brands should be utilizing the data from these devices to enhance their mobile initiatives in the future — including social, geo-location, etc. This will help set a brand apart.

Lyons: The continued growth of mobile commerce presents an incredible opportunity for marketers in the coming year. New avenues will open and existing avenues will present great sales potential for those who are nimble and adaptable to the changes in this space.

McAlister: Marketing creative will have to be designed with the small screen in mind. That means more impactful, short, clear demonstrations to get the message across.

Sarnow: It has become clear that selling is selling is selling. Where you sell and whom you sell to is very important. How consumers respond to a great product and a great offer needs to be measured and accounted for. Websites that are not responsive put the marketer at a disadvantage when consumers use their cell phones. Orders are lost when this is the case. Mobile marketing, when done correctly, gives marketers that ease-of-use factor that consumers love.

Savage: We are focusing on apps and the consumer experience of those apps. We are focusing more on simplicity and ease of use for the customer. While desktop still drives sales, the market is changing rapidly and it’s obvious where the growth is coming from and the platforms and devices on which marketers must focus their current resources — both human and financial.

Stacey: The expansion of mobile will force marketers to follow their customers. This creates a self-reinforcing circle that is one reason mobile is growing so rapidly.

Yallen: With nearly 1 billion people expected to make a purchase via a mobile device by 2018, it is important not to ignore the mobile user. The message conveyed to them and the path to conversation must not be handled as an afterthought.

Consumers are often exposed to media via their mobile devices and then convert using their desktops. As payment processing becomes simpler — with the increased adoption of Apple Pay and Samsung Pay — expect more consumers to convert via their mobile devices directly.

Marketers must pay attention to their mobile presence and ensure they have the best user experience possible — Tap To Call, shorter lead forms, and responsive web design all play a factor.

Most projections show 2016 as most expensive political campaign season ever. What effects is this massive expenditure having — both nationally and at the local level?
Abusaleh: Once the conventions concluded at the end of July, the impact started to be felt in a much bigger way. The biggest impact is affecting local markets in swing states like Ohio, Pennsylvania, Michigan, Virginia, Florida, and Nevada. Nationally, the two months before the election will tighten up inventory on the news channels: CNN, CNBC, Bloomberg, Fox News, and MSNBC.

Koeppel: Obviously, it means less inventory for other categories of advertisers. At the same time, given how much attention the presidential campaign is receiving editorially, less money may be spent on TV because the candidates are already getting their messages out via programming. I’ve never seen a campaign season where every move of the major candidates is followed with such intensity. The science of effective political advertising — where voters are parsed down to the ZIP code and household — will have more impact in some local markets than others. For example, so-called swing states may see more time gobbled up by national campaigns.

Lee: We have seen this impact on more of a local level to date. However, as the election approaches, we expect to see national inventory begin to tighten — especially on the news networks. For our clients that incorporate a multichannel approach, we will shift to other tactics should we see issues with select channels. If a client’s budget focuses on TV, we will have reserve networks and tactics in place to make quick adjustments.

Lyons: Broadcast will get very tight as we lead into the heat of the election cycle. This will benefit other media outlets as marketers get displaced. Those savvy enough to establish plans now for fourth quarter will benefit from advanced planning and minimize the disruptions to their media presence.

McAlister: We have not found any issues with election year media clearance. What we are concerned with is the negativity of the campaign, which might influence viewers to turn their devices off and get way from the craziness.

Stacey: Current political media spend is sucking all the oxygen out of the room. Traditional DR marketers will just have to wait out the storm.

What are the three biggest concerns for marketers regarding the current TV media landscape as we head into 4Q 2016 and early 2017?
Garnett: My biggest concern is that programmatic hype will lead to an increase in the cost of DRTV media. Some of the programmatic suppliers are attempting to use their systems to offer advertising to traditional advertisers at rates that are lower than traditional but higher than DRTV.

This is compounded by the fact that programmatic prevents negotiation. A tremendous amount of DRTV media buying happens via traditional negotiation. As a result, a DRTV buyer can work with a station to get rates that benefit themselves but also benefit the station. Programmatic inherently eliminates this option.

Koeppel: The first concern is: what will happen to the economy after the election? The market seems very skittish these days, and there have been various doomsday predictions that could impact consumer confidence.

The second and third concerns are the impact of cord cutting and the erosion of time spent in front of the TV by younger viewers. At the same time, older viewers are watching more TV than ever, so it isn’t all bad news.

Lee: 1) Healthy 2016-17 upfronts and the need to understand impact on the scatter market; 2) reducing commercial clutter on key networks — how will this impact inventory and rates during a critical time for many advertisers; and 3) the impact of seasonal advertisers (e.g., insurance, sports) and holiday retail campaigns on clearance and inventory given the potential shift in flighting due to the election.

Lyons: The election, sports gaming, and budgets.

McAlister: We are concerned that we are getting fewer viewers with increasing media rates. And those we are intending to reach with our commercials are skipping them with ad blockers, and fast-forwarding on their DVRs and streaming services.

Stacey: 1) The continued deterioration in audience levels and response rates; 2) attribution models to track orders across multiple platforms; and 3) the U.S. election making good media more scarce.

Yallen: With respect to fourth-quarter 2016, the biggest concern is the impact of political advertising on rates and inventory levels. Looking ahead into 2017, fragmented television viewing is leading to smaller audiences, which also means you need larger budgets to diversify and advertise across more networks and platforms. Better-crafted creative executions, messaging, and fresh offers are becoming more and more important. One key strategy is to customize the creative based upon the specific psychographics of the media utilized.

It seems that the gap between the long-form DRTV and short-form DRTV marketplaces continues to widen. How do you believe each sector of the DRTV market can continue to provide the best bang for the buck?
Abusaleh: Long-form and short-form have diverged in terms of effectiveness by age demographic. Long-form has been the most effective way to target consumers with products or services that are aimed toward an older audience — most notably 50 years and older. At the same time, short-form has become the dominant channel to reach the 18-49 demographic. Both mediums are still the most effective ways to reach a mass audience.

Garnett: It’s still true that brand marketers don’t understand enough about long-form. After years of trying to condense messages into 30 seconds, or on the back of a box, it feels foreign to them. Many have even (arbitrarily) decided consumers don’t want to know anything more than that the product exists. On top of this, advertiser perception of long-form is driven by the idea that Ron Popeil and Beachbody are the only options for long-form.

As a result, brand marketers rely on short-form: DRTV that’s more familiar to them. But brands that are doing well with short-form should explore opportunities with long-form. While long-form takes more investment to create, it’s really not that much more for a brand marketer. That small amount of risk can have a huge payoff, especially with those high-margin products that long-form can make succeed.

The biggest untapped opportunity right now lies in long-form. With long-form, you can introduce higher-margin products and beat out your competitors who won’t have the strength of these more sophisticated products.

Unfortunately, clients I talk with who’ve tried long-form have received formula campaigns. These campaigns don’t deliver what brand marketers need. While there are amazingly powerful marketing opportunities with long-form, the DRTV business has to change its ways for brands to embrace these opportunities.

Koeppel: Long-form is being dominated by a handful of players in the beauty/skincare, housewares, and fitness categories — and we don’t necessarily see a whole lot of growth in that arena. The reason is simple: with so much viewing choice, who wants to watch an infomercial? That’s why we believe the future is short-form. It acts as a catalyst to stir up interest that then translates into online engagement. Therefore, it becomes incumbent upon marketers to be able to offer compelling and succinct messages that will grab attention amid a tremendous amount of clutter.

Lee: Long-form billings continues to decline, but we are seeing success with products at a lower price point, as well as having multiple outlets for purchase. The right product is needed for this tactic to bring success. Short-form needs to incorporate a variety of traditional and non-traditional TV tactics to ensure spend levels and volume goals are met.

Lyons: Both sectors have their own unique draw. The short-form market remains robust and healthy in its abundance of marketers. The traditional advantages of long-form, such as the demonstrability of products, remain. However, there is a need for more innovation in long-form in terms of product mix. There are continued positive signs of this occurring as we look to fourth quarter.

Sarnow: Baby boomers watch long-form DRTV more than any other demographic. As always, if your product has a message that needs more than 105 seconds to communicate and it is ideal for boomers, long-form is the way to go. Of course, there are exceptions to every rule. Certainly, the example above is not the demographic of Beachbody. The brand factor and testimonials also make long-form very appealing.

Stacey: The use of long-form vs. short-form DRTV really depends on your campaign objectives. They’re both different tools that can be used separately or together depending on what you’re trying to accomplish. We started out in the 1980s exclusively in long-form, and today the majority of our business is short-form. We find in today’s media environment for most products, short-form reaches more people and is more effective at driving other channels, like retail.

Yallen: Long-form airings are predominately overnight and early morning. Airings that run during the day are not cost effective, as audiences have become much smaller because of media fragmentation. Additionally, consumers have become much more savvy and are aware they are watching paid programming. Further, long-form is most useful for campaigns that carry more complicated types of offers and messaging and also have much higher price points.

For most offers, short-form is a much more effective and efficient way to advertise. In addition to the much lower cost of entry from a production standpoint, short-form allows for a real media model with significantly higher levels of reach and frequency. Finally, short-form supports other channels including retail and still is the brand medium that supports of brand considerations, such as awareness levels and higher encouragement levels for trial.

What are the three biggest effects for performance-based marketers of the expansion of TV programming viewing options for consumers — SVOD, OTT, TV Everywhere, mobile video, and more?
Garnett: We need to keep a realistic eye on the evolution of TV. This will be another year of dramatic proclamations about TV change. But let’s remember these claims started in the 1980s with VCRs. And we heard them about online, about DVRs, about cable in general, and almost every other social trend.
I don’t think it’s time to be all that concerned. TV is more powerful than ever, and that’s not going away soon. And yet TV will change — so watch the trends and test a few new options.

That said, change just won’t be as dramatic as the hype about it put out by Silicon Valley venture capital firms. In part, the effectiveness of these new options for mass market is severely hampered by their limitations. Trying to assemble a complete, cable-competitive viewing environment out of this wide range of limited systems is very hard. And you can’t do it without big gaps in programming.

Koeppel: The first and obvious one is that it has never been easier for viewers to skip commercials. That leads to more pressure than ever for advertisers to have compelling content. Lastly, with so much choice, it also means you have to pack in an arresting message in shorter periods of time, because if you don’t, consumers will just tune out.

Lee: 1) Having the ability to properly track these tactics and attribute leads/sales; 2) having the appropriate creative executions (units, CTAs) to appeal to this viewer; and 3) having the budget thresholds to ensure the tactics are tested properly and can be a viable component of the plan/media mix.

Savage: 1) More opportunity for learning about and leveraging new technology and channels of distribution; 2) reaching more potential customers; and 3) refined business models to be more competitive and more profitable.

Stacey: Clearly mobile is the most important. In some campaigns, well over 50 percent of the orders are from a mobile device. If you don’t figure out mobile, it’s going to be harder to make money.

Yallen: The biggest hurdle to overcome will be performance attribution for these channels. Typical digital attribution and tracking break down in the app-based mobile space.

A melding of traditional attribution models and digital tracking capabilities are needed to ensure accuracy of new attribution models. Expansion allows for more opportunities to reach the consumer and drive sales as long as the options are utilized appropriately for the target.

With some audiences disappearing from TV, the expansion of programming gives the ability to reach those targets. Consumers have so much content to ingest that if you aren’t focused on targeting the right people on the right channels, the messaging will get lost and response will decline.

Which verticals are having the most success in the current TV environment — and why?
Garnett: The answer is different when talking about traditional direct sales approaches as opposed to campaigns for products with multichannel distribution.

There’s little category innovation in direct sales campaigns. The players are quite similar to a decade ago: still lots of fitness, weight-loss, beauty, kitchen, household products, and some lawn-and-garden.

Categories get far more interesting when we shift to look at a more innovative mix of channels. Hardware-and-tools continues to be quite robust when there is multichannel distribution. Using DRTV to drive sales online is also quite strong right now. Of course, the traditional DRTV product categories noted above are doing quite well at retail but are still struggling to get off the “As Seen On TV” shelves and into the main product shelves.

As a side note: if you have a branded multichannel product, it’s often a poor long-term choice to enter retail in the “As Seen On TV” products area. Smart DRTV and data-driven campaigns should give a manufacturer the leverage to start as a core product line.

Koeppel Consumers have to make a lot of their own decisions these days, and it can become overwhelming. That’s why we see marketers who focus on solutions that address those decisions succeeding. Some of the verticals that affect this include financial services, personal care, and pharmaceuticals. What all of these have in common is that on some level they are about personal empowerment.

Lee: Brand response campaigns continue to flourish in the evolving TV environment due to their “relaxed” goals and ability to adjust to rate and inventory fluctuations.

Stacey: Different marketers have expertise in specific verticals that seems to work best for them. Some may do well with cosmetic items. Others may do well in fitness, while others do best with housewares items or impulse items.

How can agencies and service providers with their genesis in the DR space better reach out to marketers who are looking to integrate offline and online performance-based media campaigns within their overall marketing plans?
Abusaleh: Historically, offline marketing campaigns learn quickly that an online component is essential to the health of a campaign. However, as agencies and service providers, we need to educate marketers that are solely using online, radio, and print that television can be cost effective and — in many ways — improve the effectiveness of other channels.

Garnett: There’s a tough balance to find to make this happen. Namely, we have to learn to talk 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 already gave up the measurability that makes DRTV efficient when they moved to measuring DRTV like general rate ads. Some agencies have even stopped ever 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 close to 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: Being open to partnership is certainly one way. We’ve worked with agencies that act as the primary brand steward, but who do not possess the kind of specialized knowledge we have when it comes to direct marketing. There is no reason why there cannot be collaboration that helps achieve the client’s aims without anyone in the supply chain feeling marginalized. This is not about dividing up a pie; it’s about creating a bigger pie so there is more success to be shared by all.

Lee: Marketers cannot think in a “siloed” manner anymore. They need to partner with one agency that has an integrated philosophy and approach vs. partnering with multiple agencies. This way, the client has the team with the expertise to navigate and adjust to the evolving media landscape. The integrated agency has one goal: the client’s bottom line, not each individual agency’s profit-and-loss ledger (P&L). That way, dollars are fluid and flexible between tactics to ensure goals are met.

Savage: Agencies and service providers need to invest in understanding what’s driving their clients’ business, and they need to keep up with and understand how consumers are learning about and purchasing products. Understanding the end customer helps the service provider sell to the marketer better.

Stacey: Hockey great Wayne Gretzky once said, “Don’t skate to where the puck is, skate to where it’s going to be.” Service providers and agencies need to stay ahead of the curve and change their business along with the changing marketplace.

What do you believe the most crucial topics for marketers during the next 12-18 months will be when considering the actions of regulators?
Koeppel: Some campaigns that employ continuity programs or BOGO offers with fees that are less than transparent could be opening themselves up to regulatory scrutiny. The customer has to be treated with respect and openness. Bad actors are going to be exposed online by disgruntled consumers. That will attract regulators and risk killing any long-term business.

Lee: It will be surrounding data: data availability, capture/usage, and consumer privacy.

Lyons: A key topic will certainly be consumer privacy. This is a big one and will likely be at the forefront of government involvement in our industry for some time to come.

Stacey: Today’s regulatory environment requires marketers to ensure they are compliant in every area of their business and to work with outside professionals accordingly.

Given the current state of the industry, what would you change to ensure its continued health and growth?
Abusaleh: One of the major keys to the growth of the industry is for us to expand the tent to include more Fortune 500 and Fortune 1000 companies.

Garnett: We need to develop sophistication in three key areas. First, we need to learn more about how DRTV interacts with and supports brand building. Too many DRTV vendors give up long-term success for a few more bucks short-term. We must become more mature.

We also need to understand the subtle statistics of the multichannel world. While we need to stay away from “black box” models, we must develop the skills to understand multichannel data and statistics.

Finally, and I know I’ve said this often in the past, the DRTV business needs to get smart about using research wisely. But that means we have to stop using the dumb approaches people in this business are passing off as “research.” Good research is an excellent investment. But you have to make sure it’s good research and not someone’s cheap imitation.

Koeppel: The halcyon days of the infomercial are over. DRTV, while still a response mechanism, in some ways has morphed into an awareness vehicle. Advertisers might get an immediate response or simply be starting a consumer on a path to purchase that will require multiple touch points. That reality requires an incredibly sophisticated approach and new ways of defining success. The more unified the industry is about this, the better our focus can be on finding solutions that help our clients achieve their goals.

Lee: Understanding how to incorporate new technology/tactics and their advantages with proven core tactics to maximize customer touch points and potential for engagement and response.

Lyons: I would like to see more innovation in products and the overall offering marketers put forth.

McAlister: Just like tax rate proposals, rates for placement on television and the internet should be cut across the board.

Stacey: To survive in this industry today, you need to be continually innovating in all areas of your business — including in operations, product development, and digital marketing. We are in a world of constant and never-ending improvement, and speed is often the ultimate competitive advantage.

Yallen: Setting up real-time bidding (RTB) for consumers tuning in via the set-top box, allowing real programmatic media purchases to take place. In addition, providing access to the impression data that is available to cable/satellite vendors. This would allow TV media to be on par with its digital counterparts in terms of targeting, optimization, and reporting capability.


About the Author: Thomas Haire

Thomas Haire

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