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Direct Response Marketing

Response Magazine’s 22nd Annual State of the Industry Report

1 Sep, 2017 By: Thomas Haire Response

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


“Innovation has been the touchstone of growth in our business,” says Kevin Lyons, president and CEO of Opportunity Media. “We need increased innovation around product and service development in our industry to ensure continued growth.”

Lyons and the other members of the Response Advisory Board recognize the importance of innovation and evolution in the continually changing performance-based marketing industry. As the confluence of media, technology, and commerce become an undeniable force in our everyday lives, we’ve once again gathered this group of leaders to respond to a series of questions for Response’s 22nd annual State of the Industry report.

“Marketing is a complicated business — and it’s becoming more labyrinthine every day,” says Peter Koeppel, founder and president of Koeppel Direct. “But as with every challenge there is opportunity. The combination of intelligence and fortitude can overcome any obstacle, which is why I look forward to what the future brings.”

Lyons, Koeppel, and nine other members of the board took the time to address 14 questions about the current status of the industry — and its future. 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?

Tony Besasie, Cannella Media: Given the performance-based segment has become a more diverse group of marketers, it’s difficult to find that one common accomplishment. For the traditional product marketer that relies on direct-to-consumer sales supplemented with brick-and-mortar retail, the biggest accomplishment is managing the impact of Amazon. Many have successfully adapted their pricing and marketing strategies to effectively nurture the Amazon opportunity while concurrently managing their other sales channels — not an easy feat.

Doug Garnett, Atomic Direct: In the past year, performance marketers have made significant strides integrating the range of media types. This has resulted in campaigns that bridge multiple media, and we see an emerging understanding of how they relate.

That said, hard work remains. Each time a new widget is released in media (programmatic, social video, live video, etc.), it’s backed by claims to solve all problems forever. That is, of course, not true. And it becomes the marketer’s (along with their agency) obligation to sort out where that widget is useful.

Peter Koeppel, Koeppel Direct: All of the domestic growth in retail has occurred online, a direct byproduct of effective performance-based marketing. In 2016, that growth was 13 percent and Kiplinger forecasts that it will be 15 percent this year. Thousands of brick-and-mortar stores are slated to close this year, and Walmart — the nation’s largest retailer — has fortified its e-commerce efforts by acquiring Amazon competitor Jet. That investment seems to be paying off as Walmart’s online sales surged 63 percent in the first quarter.

Fern Lee, THOR Associates: The advancement of programmatic media, both in digital and in television, was on the leaderboard. However, the true leader is the integration of cross-device marketing, which we can finally say includes mobile with user experience (UX) ease and data offerings.

Brian Norris, DISH Media Sales: As audience fragmentation grows, it’s more important than ever to reach viewers wherever and whenever they’re watching TV. In the past year, the market has responded to this consumer fragmentation by introducing new inventory that allows advertisers to tap into their target audiences anywhere on any device and measure the true impact of their messages.

Richard Stacey, Northern Response Intl. Ltd.: It’s been the continuous evolution of our companies and our business models to overcome, improvise, adapt, and pivot to the rapidly changing media landscape. Change and disruption creates 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 iterate to take advantage of emerging digital solutions.

What do you believe the hottest topic will be in the coming 12 months?

Abed Abusaleh, Havas Edge: It will be the expansion of programmatic and addressable advertising. Marketers are becoming increasingly interested in narrowing the focus of their advertising dollars to specifically target their ideal consumers.

Peter Feinstein, Higher Power Marketing: One of the hottest topics is going to be consolidation of over-the-top (OTT) and other non-linear channels of video distribution. As the cable industry consolidates, there’s going to be greater demand for OTT and other segments to begin offering a better value to advertisers. Right now there’s just so much noise — fragmentation — in the space, there’s little opportunity to buy scale, which is what every advertiser wants.

Bill McAlister, Top Dog Direct: Amazon’s retailing muscle and the out-of-control robo-calls we all are all getting.

Besasie: For product marketers, it will be navigating the continuing dominance of Amazon. For lead-generation/customer acquisition marketers, audience targeting will continue to be a hot topic, yet both will continue to be focused on cross-channel attribution.

Garnett: Marketers must be careful about “hyper-targeting.” Targeting and segmentation are critical in marketing, but their use at a micro-level must be kept in check. Campaigns that only target consumers showing the “just about to buy” behaviors of hyper-targeting might find some short-term gains but won’t build a market for the long term.

Fortunately, the general ad industry understands this now, and we see it in stories like Procter & Gamble’s recent elimination of a massive amount of hyper-targeted advertising without an impact on sales. Bottom line: hyper-targeting is not wrong as a tool — but it’s incredibly wrong as a strategy.

Koeppel: The looming threat of net neutrality going away could be a huge issue. Its demise could fundamentality change the way we do business and significantly increase costs as marketers pay even more to vie for online eyeball and mind share.

Lee: A quick list: privacy, attribution, artificial intelligence (AI), and six-second ads for both digital and TV.

Norris: As more services gain speed within the live OTT space, the market will experience meaningful uptake from consumers, leading to more opportunity for advertisers. Sling TV entered uncharted territory two years ago, but we’ve found that we’re in a world of “if you build it, they will come.” At this point, we’ve worked with thousands of advertisers — including direct response brands — that are using Sling TV to reach a new consumer, test creative, and gain more insight into their audience.

Stacey: The hottest topic will continue to be how we embrace, integrate, and attribute all the new media platforms into a unified and aligned strategy. It’s about continually learning, evolving, and innovating to adapt to a rapidly changing media and retail environment in order to stay ahead.

What are the three biggest advantages for marketers presented by today’s omnichannel marketing environment?

Kevin Lyons, Opportunity Media/A+E Television Networks: First, the ability to reach more consumers. Next, the ability to more accurately target their audience. And third, the ability to increase customer loyalty and value.

Omnichannel, by its nature, represents increased opportunity as well as flexibility for marketers to tailor specific messaging to the audiences in each channel.

Besasie: It is often inferred that omnichannel marketing means an integrated and concurrent effort across multiple marketing channels, which is often the case. However, omnichannel doesn’t necessarily need to be a large-scale, concurrent investment. Given the differences in scale and uniqueness of today’s marketing channels, a marketer can vet or incubate offers in social, via email, or via direct mail that later leads to, and scales, with broadcast media and retail promotions.

Marketers today have many more response channels at their disposal — at varying scale — that have a lower cost of entry than traditional media and marketing practices. This allows marketers to scale their efforts across channels at the appropriate time. A second advantage is the ability to reach more narrowly defined cohorts through addressable media that were not present with large-scale mass media. The ability marketers have today to use the efficiencies of mass media to gain reach, awareness, and share of mind — and the targetability of addressable media with tailored messaging — offers marketers the best of both worlds.

Feinstein: One that immediately sprung to my mind is that people, in general, are spending more time with their faces glued to a screen. Whether it’s their phones, tablets, laptops, desktops, or living room TVs, the amount of time being spent with media is on the rise, with all indicators, based on demographics alone, that this time with media (TWM) will continue to increase. This increase in TWM offers marketers more opportunities to make an impression and engage. But in today’s world, even an advantage possesses the power to cause damage, if misunderstood and improperly used.

For example, if a marketer wants to try and be everywhere, but in doing so spreads their budget so thin that they establish no sense of presence anywhere, then they run the very real risk of endangering their business. They need expert counsel on how media should be bought and used so that they derive the best use from what the media has to offer.

Garnett: With omnichannel, ad spending can pay out across multiple channels and that increases the potential profit to be generated by the ad spending. To find this advantage, though, marketers need to be careful not to demand perfect attribution. Today’s attribution gives more value to channels that are highly measurable even though they may not be highly significant.

Omnichannel can also increase consumer spending. When consumers are allowed to buy in the way they want, consumers will tend buy more and buy more often. But take care: studies show that the biggest, most profitable spending happens with consumers who learn online then buy in-store. Retailers who convert store purchasers to online purchasers generally suffer a loss of profits.

Koeppel: First and most obvious is that more channels mean more ways for marketers to sell products and services and more paths for consumers to get what they want efficiently and conveniently. Secondly, every marketer has the opportunity to sell direct, which cuts out the middleman, reduces reliance on big retail players, and helps fortify manufacturers suggested retail price (MSRP) and margins. Lastly, the internet advances opportunities in a global marketplace, not just one necessarily relegated by borders or geographical limitations.

Lee: 1) Improved data access; 2) increased talent to utilize data; and 3) e-commerce infrastructure for revenue — replacing retail.

Norris: One thing remains constant: advertising follows the eyeballs, from scrolling through the news on your morning commute to surfing the web and kicking back in front of the living room TV screen. Omnichannel marketing allows advertisers to create a 360-degree view of their consumer. From the TV perspective, addressable advertising has changed the omnichannel game, ensuring TV ads are delivered to the right household with pinpoint accuracy across any device or platform in a measurable way.

Stacey: Some of the biggest advantages are 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.

What are the three biggest no-nos for a marketer using a multichannel, performance-based strategy in 2017?

Greg Sarnow, Direct Response Academy: 1) Websites that load slower than in a single second; 2) forgetting the cost-per-acquisition reality; and 3) thinking that TV is done and you better do everything on the web — that could be fatal.

Abusaleh: Marketers must treat each channel as a profit center and as a unique campaign. Too often, marketers spend the majority of their marketing budget on a TV creative, and then are left with a lack of resources to optimize their digital platforms, social media campaigns, and backend operations. All channels need to optimized and aligned with the brand messaging.

Besasie: Given that consumers use multiple devices and media and shop across channels, the marketer must have a master plan and the proper checks-and-balances to prevent consumer confusion. For example, if a TV offer and a direct mail offer differ in any way, they must both be supported online. I have seen marketers that feature one offer on their website, a different offer through direct mail, and a third on TV. If the consumer is expecting a free trial offer with a promo code from TV but the web features a $50 off offer with no acknowledgement of the TV offer, it can create dissonance and potential loss of a sale. Similarly it’s a common practice for marketers to create special SKUs for each sales channel in an effort to manage side-by-side price comparisons. Developing the proper SKU variations and supporting them with the appropriate messaging is critical to minimizing retailer blowback and consumer confusion.

Feinstein: 1) Don’t test. 2) Don’t test. 3) Don’t test.

It’s kind of like real estate — location, location, location. If you’re going out with a single message, and don’t ever test against it, because you just “know” this is the one, you’re violating the most sacred rule in marketing, regardless of however many channels you’re using. Within the mantra of “always test” are offshoots that are equally important:

A.      Dominate, don’t dabble. Don’t test a message like you’re afraid of failure. You will fail, and then you’ll erroneously fault the medium, when what you should have done is bought the medium like you’re buying media that always works for you. Buy big or don’t buy at all — otherwise you’re wasting your time and money.

B.      Buy smart. This follows the first. You can buy big and still do it wrong. Get expert guidance from people who have a track record of successful media buying and message testing. You can afford to dominate if you buy smart.

C.      Analyze early and often. You can’t improve what you aren’t measuring. You have to have sufficient tracking tools and devices in order to track more accurately. But don’t get caught up in the minutiae — allow yourself to see the obvious trends. The truth is always self-evident if you step back and allow yourself to see it. In analyzing data, look for the most telling and obvious examples of success and failure, as reflected in the most basic set of parameters, i.e., response rate and conversions.

Garnett: Do not believe that measurement is highly accurate. Yes, there are a lot of vendors and data scientists wielding statistical margins and the like to claim they give you laser-like precision in measurement. But they don’t. In the multichannel market, laser-like precision doesn’t exist.

A second error is to want to believe in precision so badly that all data is assumed to be valuable. Yet in the multichannel world, the amount of important and useful data is far smaller than the data that is simply noise. This means organizations need to keep in check the tendency to rely on numbers merely because they exist and regardless of whether they are important. Organizations must build the self-discipline to demand quality data.

A final error is to believe that online sales are best. I’ve seen that happen for a number of reasons: they’re simpler to track; they’re a shiny bauble; or the seduction of high percentage rate increases. The truth is that stores continue to far outperform e-commerce in volume and profitability. So embrace all of the channels — but recognize that leaning to e-commerce because it’s simple can miss far higher returns that come from supporting the entire channel, especially brick-and-mortar retail.

Koeppel: 1) Lack of brand consistency and messaging; 2) not controlling pricing, which is a huge challenge in today’s marketplace dominated by discounters; and 3) thinking you can live by digital alone and not rely on broader advertising mediums, such as TV, to create awareness amid a cluttered marketplace that competes fiercely for consumers’ attention.

Lee: 1) Never assume your consumer’s behavior; 2) limiting test media budgets — you need a higher allocation of funds for statically significant results with multichannel tactics; and 3) misinterpreting your segmentation

Norris: The biggest no-no is approaching measurement with traditional, industry-standard metrics across the board. Consumer response to direct marketing has expanded to include search, website visits, in-store purchases, and more. How a brand measures its multichannel strategy should be directly correlated with consumer behavior.

Stacey: The biggest no-no is to scale before you’ve got a proven market or model. Other mistakes include 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.

With consumers gaining more control on how marketers can and will reach them, what are the most important items for a marketer to consider when building a customer acquisition model?

Besasie: First, start with the fundamentals of marketing. Create solid and differentiated brand positioning, ensure all marketing messaging is rooted in a consumer insight that resonates with the target audience, and develop a compelling value proposition.

Second, once the foundation is complete, ensure that the creative executions are appropriate for each marketing communication channel. As an example, 30-second TV ads don’t play well in a mobile video environment.

Garnett: It is more and more critical to have something important to say — and to say it clearly and well. This means DRTV traditionalists need to cut back on the trappings of yell-and-sell. And the corporate DRTV agencies need to walk away from formulas. Formulas will not make products distinctive in this emerging world.

It will also be more critical to be distinctive in what you say and how you say it. For consumers to keep your brand/product mentally available, it must stand out to them. This has always been critical, but it becomes even more critical given that you’ll have fewer opportunities to be in front of consumers to remind them that your product is important.

Koeppel: Identify consumer segments and their common media habits versus using a one-size-fits-all model. Cultivate value and a relationship with consumers with relevant information that gives you category authority instead of always asking for the order. Carefully manage your online reputation and social proof so that when prospects research your brand, their initial curiosity is affirmed by positive reinforcement.

Lee: 1) Aspirational messaging that builds brand loyalty, including retargeting and remarketing; 2) listen, respond, adapt — be nimble; and 3) testing and data.

Lyons: The three most important items: Who is the target consumer? What is the best mix of platforms to reach that target consumer? How can you create an accurate measurement system to track the performance of the model? This last part is often lacking — even in seemingly sophisticated marketing machines.

Norris: With audience attention splintering across more touchpoints, understanding your consumer and where to reach them is key to creating an impactful acquisition model.

Sarnow: The more things change, the more they stay the same. Demographic profiling not only impacts the way we communicate to the potential customer but, now, where we communicate. It was always that way — except now, the variety of messages and venues has grown exponentially.

Modeling an acquisition strategy begins with segmentation. More than ever before, segmentation is critical. Segmentation begins with the demographic but continues with the degree of response once the first response is made. Creating a marketing channel and message for every degree of interest and reaction is becoming the norm. A person that buys gets different messages to increase lifetime value. A person that inquires gets a multitude of communications to become a customer. The science of demographic and response segmentation is bearing fruit in a big way.

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.

What’s the top challenge marketers face today in attributing sales (or leads, as it may be) to specific marketing messages?

Abusaleh: Source attribution on the web when a marketer is using a multichannel approach can be challenging. Microsites only provide partial visibility into which channel is driving volume because the majority of customers will go directly to the corporate site or will arrive at the website via an online search. More than 50 percent of all volume is now transacting on the web, so sourcing that back to the right channel can prove to be challenging.

Besasie: I’m not certain the challenge has as much to do with the message as it does with the media. Optimizing the media mix investment to eliminate the worst performing media is still the focus. Giving proper sales attribution across media channels is still the greatest challenge.

Feinstein: The overwhelming challenge for marketers is to try and gain clarity on what message is working — and where. If you’re testing various messages, you have to work on gaining clarity on which media is delivering the result line you’re seeing. The insight is going to have to come from experts in the field. Brands and marketers are going to need to seek out experts who understand attribution and can offer true guidance on developing these insights.

Garnett: What performance-based marketers must remember is that the world is far too noisy and complicated for attribution to be pure science.

One particular error I see is that marketers forget that statistical models almost always deliver numbers, and their handlers usually will claim those numbers are “answers.” Yet, too often the answers are invalid because not everyone running models is dedicated to understanding the validity of their work.

This makes attribution services a “buyer beware” situation for marketers. While it might be comforting to accept attribution numbers at face value, that won’t lead to high profitability.

Koeppel: The means with which to track attribution effectively is a moving and evolving target. New technologies are being introduced where their effectiveness has yet to be proven while — at the same time — consumer behaviors are constantly changing. So perhaps the biggest challenge is for both marketers and agencies to exercise patience and to willingly collaborate openly and transparently to find the right answers.

Lee: Capturing the media spent against the e-commerce sale. Last click is not reliable and the model is changing for lead-gen offers. True cross-device attribution is crucial.

Lyons: A major challenge in the world of “big data” is just that: there is a vast amount of data to draw from. The top challenge is the lack of accuracy in the attribution model. This is often felt in direct response campaigns that do not accurately reflect the true sales drivers — often TV — of the campaign through the various point-of-purchase channels.

Norris: Think back to the last time you dialed a 1-800 number to buy a product immediately after seeing its ad. Consumer behavior is changing, and old, industry-standard measurements like tallying phone calls give an antiquated, incomplete look at the impact of your efforts. Addressable advertising is an area where direct response advertisers can update their measurement approach and lengthen their attribution windows to match the modern consumer.

Sarnow: Deciding which attribution model gives each marketer the best results is part science and part art. Maybe the intuition is on shaky ground, but the science alone does not guarantee the best bang for the buck. Still, attribution modeling impacts message — especially if you can determine which medium created the first awareness and which closed the sale. Touchpoint analysis goes a long way to determine what caused the consumer to finally go from being a looker to a buyer.

We all know the path to purchase is complex and any link that becomes the weak one in the chain can throw the analysis off. Determining weak links is a lost art when everyone is trying to attribute a sale based on the strongest message/medium.

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. So, in many areas, I see a major disconnect between what’s getting measured and where people are actually buying.

Combined digital ad spending has surpassed TV ad spending. What three things are most important for marketers to consider when selecting the right media mix in this environment?

Abusaleh: Most importantly, marketers need to understand their target age demographic before they choose the channels in which they are initially going to invest. If the target demo is 50-plus, they will want to explore a longer message length offline (two minutes, five minutes, or even 28:30). If the target demo is 18-34, they should be focusing on social media and online platforms.

Secondly, they need to have a long-term outlook as to what their ultimate goals are for the product or service. Do they eventually want to enter retail? Are they more concerned with immediate ROI or lifetime value?

Finally, they need to make sure that the offline and online campaigns work together. The experience they see on TV needs to match what they experience on the web. This applies to the offer, the unique selling proposition, the color scheme, and the on-air talent where applicable.

Besasie: Knowing and capitalizing on the key attributes of each media and aligning it to the marketing goals is important. Broadcast media (TV, radio) builds reach, awareness, and can scale — where social is best used for hyper-targeting.

Feinstein: The biggest consideration is to not be unduly influenced by how others are spending their money. Trying to mimic how others are spending their ad budgets without knowing how best to reach your customer can be a fatal mistake. I can appreciate the idea of duplicating the success of others — there’s no greater form of flattery, but it is not necessarily the path to take in which media to buy.

It’s critical to know your target consumer as well as you can, including their media choices, and let that insight be your guide on how to spend your ad budget. It is far less important to be everywhere your customer is than to make a powerful impression with them in even one or two of the media they consume. Most companies can’t afford to be everywhere. Even the largest brands have opted to scale back or eliminate specific media, for a variety of reasons, not the least of which is the understanding that it may not pay to be in certain media — i.e., the risk exceeds the return.

Garnett: We must adopt new thinking about digital. Because the reality is that: (a) “digital marketing” is not a thing; and that (b) there is no usefulness in tracking “combined digital ad spend.”

First, ”combined digital ad spend” — this term is meaningless today. For example, how would we classify TV ads placed through a network yet viewed on an iPad via Xfinity? Is that TV or digital?

Yet the term is being used by the internet’s “Four Horsemen” (Google, Facebook, Apple, Amazon) to increase their own profits. Smart advertisers need to rise above what these four are saying and do what’s right for their situations — and the volume of spend that’s “digital” doesn’t matter.

As to the idea that “digital marketing” is a meaningful category? There are thousands of digital media types, and they are simply media options. Smart marketers approach them as, well, marketing and look at each separately.

The most common error I see is a major commitment to “digital first.” It’s very poor marketing strategy to pick media before understanding the problems to be solved.

Koeppel: While we can apply best practices, first and foremost each product and service and its associated campaign needs to be treated uniquely to determine what the optimal media mix is. Secondly, what we do is test and refine and then use media modeling to replicate response based upon media mix and consumer demographics and behaviors. Lastly, we suggest focusing on the data versus any preconceived bias one might have. We all tend to reference our own behaviors when it comes to prescribing what might be right for a campaign; after all, that’s human nature. But it shouldn’t necessarily be the compass that gets applied to any advertising effort.

Lee: 1) User experience; 2) retargeting; and 3) testing of the call-to-action/message for brand loyalty.

McAlister: What makes a DRTV product a success is especially important for the web: a compelling, quick demonstration; product margins that enable a realistic allowable; and a sizable target market. 

Norris: Calibrating the right media mix begins with your audience: where are they, who are they, and how do you reach them? Once you have that understanding, zero in on placements that reach your audience in a premium environment that offers quality content.

Sarnow: At the Direct Response Academy, we have had products that have failed on TV and been home runs digitally — and vice versa. Considering the right media mix begins with the goal of the campaign. Is it a long tail, continuity type offer — or a “go-to-retail” strategy? Is it for a young audience or an older audience? Have you created a TV commercial that works, that is borderline, or that is just not achieving goals?

All of these questions impact the right media mix. Rules tend to blur the question. The formula will be different for every campaign and every product category. Athletes know they have to walk the fine line between aggressiveness and letting the game come to them. Stats rule above media-mix philosophy.

Stacey: The three most important factors when considering media mix are objective, target, and testing. Know what you are trying to accomplish, know who you are trying to reach, and test and measure carefully before scaling up your campaign.

What are the three biggest concerns for marketers regarding the current TV media landscape as we head into fourth-quarter 2017 and early 2018?

Abusaleh: The largest concern is the move to “skinny bundles” by cable and satellite providers. Ultimately, there will be cable networks that go away if this move continues its momentum, which will drive up rates and increase competition on the networks that prevail. Secondly, the general market has been very strong in 2017 and looks to be strong in 2018. That is going to make clearance tougher for direct marketers utilizing short-form DRTV. Finally, consumer buying patterns have continued to show a move toward purchasing on the web. Marketers need to make sure they’re working with a media partner that has a proven web attribution model.

Besasie: There is no mistake that the TV landscape is changing. That said, in the very near term, the biggest concern will be similar to today. Is the TV media priced appropriately?

Other concerns might be related to the volume of business that goes through Amazon and how to attribute sales back to TV advertising. If we take the view that Amazon is a sales channel that permits marketers to market within their shopping environment (Amazon PPC), there are similarities there to spending trade marketing dollars in Walmart’s brick-and-mortar stores — or back-in-the-day product features in the Sears catalog. No matter the era, despite the ability to spend trade marketing dollars, the leading marketers built their brands outside of these systems — and TV was a fundamental component in that strategy. It’s important to not underestimate the power of advertising and promotion outside of these dominant sales channels.

Feinstein: First, diminishing viewership of linear TV: how will this affect my ROI? Second, the consolidation of cable TV: what affect will this have on network options, and the viability of remaining networks? Third, how are OTT and other non-linear delivery of video going to start consolidating so advertisers can buy scale? Even if 20 percent of linear TV viewership bleeds off, there doesn’t seem to be any one place I can go to buy that missing 20 percent — and I certainly don’t seem to be able to buy it as efficiently.

Garnett: The TV landscape is pretty stable for planning and buying — at least as bought through traditional outlets. That said, we have seen small erosions of audience TV time overall, with slightly larger erosion among the very young.

Still, TV remains the strongest medium for getting a message out to the market about a new product or brand. And it will continue to be far more cost effective at doing that than any other option.

What’s tough is that marketers will have to fight the prejudices of their own companies to do the right thing when it comes to TV. TV remains far stronger than the “futurists” predicted 20 years ago, having survived (and thrived) through the DVR revolution and the past 10 years of streaming advances.

But marketers need to win that fight with their company’s prejudices in order to deliver highest profits. TV remains the most cost-effective way to drive the market — a truth that is often forgotten behind the low cost of entry to digital. Remember: that low cost of entry usually means high cost-per-net-result.

Koeppel: The current political climate is sucking all of the oxygen out of the room. It’s a huge distraction that creates an un-level playing field for marketers trying to arrest the public’s attention. Second, AI is going to fundamentally change the way people watch television and will likely narrow their consideration set — reducing random channel surfing, which could have an impact on response.

Finally, despite increases in income growth and the lowest unemployment rate in years, consumer spending has been anemic. This could have a direct impact on results in the second half of the year, particularly around the holidays, and bleed into 2018.

Lee: 1) The cost of media vs. ROI goals; 2) the ability to acquire DRTV/brand response airing time at the right price; and 3) strategically developing a media plan that includes integration.

McAlister: Rates! Rates! Rates! If people are switching off, rates should be coming way down.

Norris: With the convergence of TV and digital, brand-safe, premium inventory has become a key focus for advertisers looking to reach their consumers during high-quality viewing experiences. This is where live OTT services like Sling TV step in to bridge the divide, offering brands the full-screen viewability of traditional TV with the advanced targeting, reporting, and controls of the digital world.

Stacey: Continued deterioration in audience levels and response rates; attribution models to track orders across multiple platforms; and the U.S. political situation potentially making good media more scarce.

What are the three biggest effects of the expansion of TV programming viewing options — subscription video-on-demand (SVOD), OTT, TV Everywhere, mobile video, and more?

Abusaleh: As cable and satellite providers continue to build out platforms on which consumers can consume content, they are also developing options to support it with ads. This presents a great opportunity for marketers to engage early and participate in the testing while the providers are offering favorable rate structures for the early adopters.

Besasie: No. 1, the largest SVOD provider — Netflix — doesn’t offer advertising, so until it does there is not much a marketer can do and the other SVOD platforms don’t offer much scale for a performance-based marketer.

Second, OTT — on the other hand — is building scale and offers some opportunities for performance-based marketers. Marketers should be testing the waters of OTT and addressable.

Finally, when thinking about mobile video, it’s important to recognize that while the small screen requires simplified creative, the majority of the views are derived from social media. Make no mistake about it: video is the focus of Facebook and Facebook is mobile. When thinking about mobile, focus on Facebook.

Feinstein: 1) It complicates an already muddy medium; 2) Expansion of choices can lead to narrowly placed media buying, generating sub-par reach with excessive frequency that can negatively influence consumer attitudes toward an advertiser, or worse, cause highly scattered media buying resulting in useless reach because there’s no ability to buy frequency in any one place; and 3) where do I go to buy media?

Garnett: Unfortunately, none of these advances is priced where it pays out for performance-based marketers. So the biggest effect right now is a risk — the risk of losing audience to mediums where you can’t reach them cost effectively. If that happens in a major way, it will be a serious blow to the economics of performance-based marketers.

Koeppel: More choices result in a greater dispersal of viewership meaning a continued march toward smaller, though perhaps more engaged, audiences. Second, those who prefer to pay to watch advertising-free content can do so easily and efficiently. Finally, the use of multiple screens beyond the television, but especially mobile, means that advertisers need to customize messages based upon each screen’s unique considerations which include aspect ratio, screen orientation, attention span (likely shorter, the smaller the screen), and viewing context.

Lee: 1) Brands have more choice; 2) integration opportunities are more creative; and 3) media agencies are able to expand and offer clients new growth channels.

McAlister: Millennials are not watching commercials, they have even shorter attention spans, and they are becoming a shrinking market for traditional DRTV marketing. 

Norris: With these services, we’ve given TV viewers access to high-quality content anywhere, anytime, across any device — and created more premium ad inventory for marketers. We’ve also changed the dynamics of industry relationships, spurring cross-functional collaboration among TV and digital ad teams working to stay ahead in this tech-heavy environment.

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

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 ability to create web-based dashboards for clients has dramatically improved the level of visibility our clients have to their schedules and results. We’ve been able to sync the dashboards with our Rentrak ratings estimates so they can see both performance and impression data in one central location.

Besasie: Technology in the broadest sense has transformed our agency — much like our peers. We use technology to automate our skills and make more informed business decisions in shorter time spans. We continue to invest more resources in this area of our business. A decade ago, we didn’t have any developers or engineers on staff. Now, we have an entire department.

From a media consumption perspective, technology has changed how we think about our clients’ marketing efforts. The number of marketing channels and the interrelation of those channels influence our media strategies and tactics. In order to maintain our expertise in TV media, we must be well versed in all other marketing channels. We embrace marketing technology. We always have and will look forward tinkering with the new toys.

Feinstein: The pace of technological changes has given us some freedom to examine our options on how we process business internally, as well as with clients and our media partners. We expect to see this pace increase, but not let this increase unduly influence us into making rash ad-tech or business decisions. Instead, we’ve actually become more thoughtful, because as options increase, we have to really examine the consequences of their integration before we pull the trigger to bring them in.

Garnett: The past 12 months have reflected constant evolution as technology gives us opportunity. There are improvements in many areas: cloud-based services, new ways of sharing data and creative, leveraging new tech in production, etc.

Yet, through it all, we remember that success in advertising depends on people — not technology. It’s the choices and decisions that drive success.

This year’s shiny tech bauble is AI. But, having worked around AI since 1985, what we’ve seen this past year isn’t really artificial intelligence. Rather, it’s renamed “big data,” where “intelligence” refers to using algorithms to process data. This can be quite useful, but its not game changing and performance marketers have done this for decades.

Koeppel: We’ve found there is no attribution tool available off the shelf that can do what we need it to do with today’s sophisticated marketers, so our agency is employing more specialized data scientists with advanced math degrees and data-modeling capabilities. That has allowed us to develop our own algorithms that interpret the data with greater precision. This is an ongoing commitment we will continue to make into the years ahead.

Lee: THOR Associates has incorporated iCloud technology for almost every aspect of our business, with clients and internally for our team, which is virtual in five states. It’s a game changer!

In the next 12 months, we plan on utilizing information from software-as-a-service (SaaS) dashboards that provide us data and put it into a unified database that will allow our team to have intelligence at their fingertips.

Norris: Our company is part of changing the definition of TV and, with it, the definition of TV advertising. With Sling TV, we entered uncharted territory two years ago — dynamically inserting ads in a live, digital TV world. Much of this technology is brand new and incredibly complex. At this point, we’ve completed campaigns for thousands of brands and introduced real-time programmatic buying to premium, live TV. And we’ve just hit the tip of the iceberg in terms of OTT’s ad capabilities. During the next year, you’ll see more services enter the live OTT space and incredible market growth, leading to higher uptake from consumers and more opportunity for advertisers.

Sarnow: Digital just plays a bigger role every year. Everything from testimonials and ratings to programmatic media and attribution has changed the way we approach the market. We have found that a lot more preparation is necessary than just making a commercial or putting up a website — or both.

Stacey: Technology is always evolving, but 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.

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: We need to educate traditional, impression-based advertisers on the benefits of accountable advertising that generates a tangible return on investment. The work being created by the producers in our space currently has been able to sell the unique benefits of products or services while maintaining brand integrity.

Besasie: I would like to see our industry associations invest more in research and publishing white papers to promote the virtues of direct response.

Garnett: Performance marketers know how to rely on response measurement to guide campaigns and improve performance. And we are ahead of many traditional agencies in achieving performance across channels.

We need to continue to build those skills as new media options appear. But we will help our clients better by complementing response measurement with a thorough understanding of traditional media. Some marketing objectives lead to advertising where a measurable response is not possible.

Growth happens by bridging this divide and building sophistication to work with results and planning in both worlds.

Koeppel: It really comes down promoting this truth: TV is still the most powerful mass media. Yes, digital can allow a marketer to hyper-target, but it doesn’t necessarily have the reach of television. When you combine the longer lengths that DRTV affords a marketer to make their case to the public, along with remnant media rates, you have advantages in the form of a powerful one-two punch that every brand should consider.

Lee: It’s not what you know — it’s who you know. It’s all about relationships.

Norris: We’ve worked with incredibly innovative direct response agencies and advertisers who integrate targeting across their marketing tactics to bolster their marketing plan’s overall impact. For example, a brand may improve upon their direct mail efforts with addressable TV, cross-tabbing their first-party data with third-party data to adapt to consumer viewing habits and efficiently reach relevant households with premium video.

Sarnow: The two things marketers need more than ever are operational efficiency and great content strategy. DRTV producers, media buyers, and logistics firms truly have the best experience for people that are looking to take their businesses beyond the first million dollars. Recently, I listened to a panel of online gurus in Austin, talking about their success in the web marketing space. I was shocked how rudimentary their “a-ha” moments were. What they were talking about as keys to success were areas that DRTV marketers were thinking about 15 years ago.

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 businesses along with the changing marketplace.

How will the expansion of mobile marketing — perhaps even more importantly, mobile response and purchasing — affect marketers in 2018?

Abusaleh: This process has already started. In many cases, more than 50 percent of online traffic is coming in via mobile devices. Marketers need to make sure their websites are compatible with mobile devices and that consumers can easily make a purchase.

Besasie: I don’t think we have a confident view on whether mobile can be an end-to-end solution. By that, I mean from advertisement and promotion to conversion and transaction. I think, for most marketers, a greater percentage of their web sessions come through mobile — but a larger percentage of sales comes through desktop.

Feinstein: Mobile will prove itself in 2018 — beyond the tipping point — as the preeminent response vehicle; purchasing from mobile will continue to lag, but will continue to grow, likely beyond most predictions. We’ll bear witness to mobile purchase growth for many years to come. Millennials are already deeply entrenched in the process. It’s the generation behind them, and today’s kids, who will use mobile as their primary means of making purchases.

Garnett: Mobile is primarily a subset of various types of advertising online — just accessed on a mobile device. And only a subset of that access is truly with a “mobile consume,” as opposed to a consumer at home.

As a result, mobile will have some niche applications that return decent profit. However, there is no big game changer here.

Koeppel: Time spent on mobile devices will continue to increase. In fact, eMarketer forecasts that the amount of time spent on a mobile device in 2018 will, in hours and minutes, average 3:23 per day! To put that in perspective, five years ago (in 2012) that number was 2:15. That means marketers will need to put more emphasis on how they deliver content on smartphones, as well as how nimbly they can execute transactions, because mobile will continue to make up a larger share of their online activity.

Lee: Mobile marketing will continue to bring revenue, as well as messaging by mobile response data capture and cross-device information delivery.

Norris: The way people watch TV is changing rapidly. Today, consumers watch live TV on the device that’s most handy — whether they’re in a hotel room or traveling by train on their morning commute. With this trend in mind, cross-platform targeting will become even more important to advertisers needing to reach the right eyeballs wherever, whenever — regardless of platform or device.

Sarnow: Greater bandwidth makes video more accessible to everyone. The first important impact of that greater bandwidth is mobile. Marketers better learn quickly how to load rich media fast. Otherwise, your keyword impact will be reduced.

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.

With the change in presidential administrations shifting regulatory and Congressional priorities, what will be the most crucial topics in regulation for marketers during the next 12-18 months?

Besasie: Media consolidation is creating mega-companies. How that will affect the market is still unclear, but the amount of data that some of these companies are able to compile could offer better consumer insights and more options for addressable media.

Feinstein: Privacy: it engulfs most conversations I have with friends and business colleagues. Most people have no idea how deeply analyzed their online activities are, nor do they comprehend how machine learning and true AI are taking hold of how they are tracked and advertised to on a moment-by-moment basis everyday. They only know that when they search for something, they get bombarded with ads for the same or similar things, or related things.

As agencies, we’d better be prepared to call on our vendors to keep themselves clean of retaining data that isn’t theirs to own, and worse, reselling data that doesn’t belong to them. These kinds of actions push liability down to the brand and agency, without either ever knowing it’s going on — until it may be too late.

Koeppel: Again, it’s net neutrality. If it goes away, it will have an incalculable impact on how marketers do business. However, with recent news that President Trump will be nominating Democrat and net neutrality supporter Jessica Rosenworcel to the FCC, the notion that the demise of net neutrality is a fait accompli may be a rush to judgment.

Lee: There will be less regulation, consumer protection, and power afforded to the fairness of marketing practices.

Lyons: Certainly some of the keystone topics will be consumer privacy and protection (data collection by marketers) and self-regulation. As we have seen in the past, effective self-regulation is the best means to protect both the health of our business and the interests of the customer.

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?

Besasie: Could you pick an easier topic — like how to stem global warming? I would like to see Netflix sell advertising.

Feinstein: In seeming lockstep with ad-tech advances that are clearly beyond our ability to manage their consequences, I’ve seen the infestation of a real Wild-West attitude toward business. If I didn’t know any better, and sometimes I wonder about what I know, I’d say there are more, bigger companies that are driven by the mantra, “We can, so we will” — instead of giving thought to how what they will do will affect others. I’d seek to change people’s minds about how they apply rules of business — moving back to “commerce with a conscience” and taking a stewardship approach to business. It’s so much more powerful to be of service, than to just be beholden to the weakening dollar.

Koeppel: The industry’s energies are too diluted. There are too many organizations, trade shows, and publications. I would love to see some kind of merger or consolidation occur that would marshal those efforts and make us more effective in terms of networking, thought leadership, and government lobbying.

Lee: Venture capitalists (VCs) and investment bankers need to be educated on performance-based marketing to understand the power of the call-to-action, which will then allow for more money to be put into our industry for acquisition, mergers, and growth.

McAlister: Respect inventors’ patents. Knock off the knockoffs!

Norris: Historically, direct response advertisers have been the first to dive into new advertising spaces. I’d challenge them to keep pressing their position as the ad world’s pioneers and risk takers. As consumer behavior shifts, direct response advertisers must continually rethink the conventional knowledge that dictates how they reach their audience and measure their efforts.

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 where speed is often the ultimate competitive advantage.


About the Author: Thomas Haire

Thomas Haire

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