Exploring the value of social media within the direct response industry may evoke a bit of déjà vu for those who analyzed the value and importance of mobile advertisements just a few years ago.
The mobile debate seemed almost irrelevant after the 2010 holiday season when mobile shoppers used their smartphones to find local discounts, redeem electronic coupons and scan bar codes to compare product prices at competing retailers. Overall holiday sales increased 5.7 percent to $462 billion, according to the National Retail Federation (NRF), surpassing its forecast of 3.3 percent. After a comeback season, the NRF released an updated version of its “Mobile Blueprint,” a guideline for retailers entering the mobile space, to help them emulate mobile strategies that worked so well in 2010.
“Five years ago, it might have been acceptable for an associate to honor the prices on the store’s website for a customer but not the prices on a competitor’s website,” the NRF states in the report. “Today, customers may not even set foot in a retailer’s store if they are able to find what they need to purchase using a mobile device. Even if the customer enters the store, the customer can easily use a mobile device to scan the bar code of an item of interest, find and purchase it at a lower price elsewhere, and leave the item sitting on the store shelf.”
As retailers gear up for another holiday season, many have found that integrating a mobile strategy must also involve an exploration of social media.
“The optimum goal for retailers is to achieve a singular brand experience for customers, regardless of the technology used to interact with that brand,” the report states. “This means that legacy channel-based systems, business processes, and organizational silos must continue to evolve.”
No Strings Attached
Mobile media users are nearing the majority in the U.S., according to comScore’s “State of Mobile Advertising” report in June. At least 45.7 percent — or 106.8 million people — use mobile media; 27.2 percent use SMS but not mobile media, and 27.1 percent use voice only. Mobile media includes accessing rich data, such as browsing the Web, using applications and downloading or streaming video content.
As consumers continue to purchase smartphones and tablets, such as Apple’s iPad and Android devices like the Motorola Xoom, with unlimited data plans, the use of social media escalates simultaneously. comScore’s mobile advertising report states that users who access social media through a mobile device almost every day have grown more than 70 percent from March 2010 to March 2011, and the majority of their time is spent on Facebook.
According to Nielsen, 56 percent of mobile app downloads within a 30-day period during the second quarter were social media apps. Games were the most popular category with 64 percent of downloads; and 26 percent were tied to the shopping/retail category.
Game apps contribute to time spent with social media as they are often played with friends on Facebook. Zynga, the creator of Facebook games such as Farmville, Mafia Wars and Words with Friends, made more than $392 million in virtual goods profits in 2010. Its IPO filing in June states that Facebook is its primary distribution, promotion, marketing and payment platform.
Smart devices are also GPS-enabled, so they become equal parts entertainment and utility when people use them to search and discover new places and tap into their social circles for personalized recommendations. Customer review sites like Yelp! or check-in applications like Foursquare help in the decision-making process while also providing unique marketing opportunities to entice potential customers with local discounts and other incentives.
“The State Of Retailing Online 2011: Marketing, Social and Mobile,” a study by Forrester Research Inc. for Shop.org, shows that 91 percent of retailers have or will have a mobile strategy in place, up from 74 percent a year ago; 72 percent of retailers say they will spend more on social networks this year compared to last year.
The HauteLook Facebook application is able to sync saved customer account and payment information from its website, so once users are logged in on Facebook, they can browse products and complete their purchase using a saved credit card without leaving Facebook.
‘Like’ To Shop
The retail industry is quickly learning how to use social media to build an experience around shopping. Online sample sale websites RueLaLa and Hautelook, for example, host flash sales on their Facebook pages. In order to shop the sale, users must first click their Facebook “Like” button.
“Our first Facebook sale was in November 2010 with beauty brand Carol’s Daughter,” says David Sobie, HauteLook’s vice president of business development. “This event took place simultaneously on both the HauteLook website and on the fan pages of HauteLook and Carol’s Daughter. Our first Facebook-only sale was with Diane Von Furstenberg (DVF) in December 2010. We have also experimented with ‘First Look’ sales, where a select group of products are available for fans to shop on Facebook before the sale opens to the full HauteLook member base.”
The HauteLook Facebook application is able to sync saved customer account and payment information from its website, so once a user is logged in on Facebook, they can browse products and complete their purchase using a saved credit card without leaving Facebook.
“A sale on HauteLook’s website receives more visits than one exclusively on Facebook, which is a function of the size of our member base, which is more than 5 million, vs. our fan base, which is around 300,000,” says Sobie. “As an example, the Botkier event ran exclusively on Facebook for the first day and received over 12,000 visits. On HauteLook, it received about seven times that number.”
HauteLook rewards its members for referring friends. Thousands of users invite their friends to join the website every day. When a new member makes her first purchase, the original referrer gets a $10 credit. Sobie says that the refer-a-friend program is the company’s best source of new members and a core channel of its success.
The folks at TELEBrands remember a time when retailers turned up their noses when the words “DRTV” or “infomercial” were mentioned. It was the late 1980s, and the Fairfield, N.J.-based marketer was peddling its AmberVision sunglasses. “Sunglasses are a category,” the TELEBrands team was told by retailers, “which means you need 100 different styles, a display fixture, a replenishment system and a mirror so that consumers can try the glasses on.”
Without any of those things, TELEBrands — whose products at the time were viewed as competition for the retail sector — found itself in the role of educator. “We basically had to teach retailers about the As Seen On TV category, and have buyers assigned to that category,” recalls A.J. Khubani, CEO. The sweat equity paid off for TELEBrands, which eventually got a single retailer to put the brown-boxed AmberVision glasses on its shelves.
During the next five years, Khubani and his team achieved total distribution across multiple retail outlets nationwide, while concurrently teaching merchants about the value of carrying DRTV products. “It’s grown a lot since then, and today the As Seen On TV category is one of the top five for retailers, in terms of dollar volume,” Khubani says.
More Shelf Space, Please
You’d be hard pressed these days to find a retailer that doesn’t stock at least a handful of DRTV products on its shelves. Frequently positioned on aisle endcaps and as part of the “impulse” section (most often situated near the store’s cashiers), the product selection ranges from inexpensive gadgets all the way up to exercise equipment and housewares whose price tags exceed $100.
“Over the past five years, every retailer has become energized about As Seen On TV products,” says Bala Iyer, TELEBrands’ executive vice president who handles many of the firm’s retail relationships, including Wal-Mart. He credits successful products like the Ped Egg, Pillow Pets and the Snuggie with raising the bar in terms of sales velocity, and says we’re nearing a time when DRTV products are elevated to a new place in retailers’ hearts.
“At this point, As Seen On TV is no longer just a category; it should be a department in every retail store,” says Iyer. Wal-Mart is one company that’s leading the charge in that direction. Recently, the retailer’s CEO, Bill Simon, issued a directive designed to drive more DRTV product sales and tap even further into this “VPC,” or volume-producing category.
To achieve that goal, the retailer is dedicating 24-foot modular sections — with an additional 8-to-10-foot section at the front of the stores — where As Seen On TV products will be featured. “Wal-Mart has taken an aggressive position to capitalize on the opportunity,” says Iyer, whose firm will be participating in a half-pallet promotion for its Aluma Wallet across 2,500 stores this year. “Wal-Mart is expecting great results from this promotion.”
Retail Spotlight TELEBrands is taking part in a half-pallet promotion for its Aluma Wallet across 2,500 Wal-Mart stores this year.
So what’s driving retailers to do more than just shove a few DRTV products on its impulse racks? The media dollars spent upfront on DRTV campaigns have a lot to do with it. “Consumers are exposed to the products on TV, and calling or visiting retail stores to see if they carry those products,” says Iyer. “That bubbles to the top, where corporate buyers get feedback about the 280 consumers who asked about the Aluma Wallet. That viral feedback gets retailers excited about being a ‘destination’ for As Seen On TV Products.”
Clean Up on Aisle One
One direct marketer that’s posted good results at retail is Euro-Pro (Response, March), the Newton, Mass., developer of Shark and Ninja cleaning products. The firm introduces four to five new products annually to full, national distribution, including mass merchandisers, big-box stores, specialty retailers and clubs. According to George Fettig, chief marketing officer, each new product receives heavy DRTV support — primarily long-form — with retail distribution beginning shortly after the launch of the media and online campaigns.
Two recent Euro-Pro successes include the Shark Navigator Lift-Away Vacuum and the Ninja Kitchen System, both of which hit the top 10 in the Infomercial Monitoring Service (IMS) rankings and “sold extremely well at retail,” says Fettig, who has seen a 360-degree change in retailers’ attitudes towards DRTV products since the mid-1990s. “I remember a major national retailer threatening to throw the Jet Stream Oven out if American Harvest continued to advertise the product with DRTV,” Fettig recalls.
Fifteen years later, Wal-Mart awarded Euro-Pro the coveted “Supplier of the Year” Award based in part upon the traffic and sales generated by heavy and consistent DRTV campaigns for its Shark and Ninja products. “That pretty much sums it up,” says Fettig.
Direct response marketing depends on the platform that you’re talking about,” says Niko Drakoulis, founding chairman and CEO of Akoo Intl. Inc., a global media and technology innovator whose TV network integrates mobile, social and local in 161 pavilions in malls across the country. “It’s also about the consumer’s state of mind. And of all the experiences I’ve had as both a marketer and a consumer, there could not be a better network location and experience to offer DR than Akoo. The consumer is in a mall; they’re there to shop. The intent to buy is already there. With coupon downloads and other DR vehicles, Akoo can turn that intent into ROI.”
Drakoulis founded Akoo in 2001, then as the latest innovation in a career that has featured many in the mobile and wireless arena. That vision has led to the company’s national flagship television network, rated by Nielsen as the largest audience (age 12 and up) of any digital out-of-home network in the Fourth Screen Network Audience Report (1Q 2011). The 161 Akoo Pavilions attract more than 64 million consumers monthly and are situated in the most highly trafficked areas of premier shopping malls.
Last year, the growth of the company as both a marketer and a marketing partner capitalizing on TV, mobile, social and local retail, prompted Drakoulis to reach out to William M. (Billy) Campbell III, a long-time television executive, who most recently served as president of Discovery Networks from 2002-07.
“I got a call to meet Niko and take a look at his network,” Campbell says. “I met him in Chicago to look at the systems, and — going in — in my heart, I thought I might be a great board member or advisor. I hadn’t explored the space much. But, within 5 to 10 minutes, I saw the endless possibilities. It was too enticing to pass up.”
Campbell — whose visionary status in programming TV networks is nearly unparalleled — joined the company in late 2010 as president, adding even more weight to Akoo’s growth. Combining his strengths with those of Drakoulis has helped the company expand by leaps and bounds and appears to promise only bigger opportunities ahead.
Technology and Programming Come Together
While Drakoulis founded Akoo in 2001, he says, “It’s never been a one-man show. Our team really helped transform this into a revolutionary platform.”
However, Drakoulis’ background outs him as what he calls a “serial entrepreneur.” He adds, “I’ve had five patents issued throughout my career. I’m an inventor, an innovator. I’ve raised more than $75 million in my 19-year career to found and lead innovative companies at the forefront of media and technology. It’s what I love — the mobile, entertainment, online technology space.”
His interest in creating what Akoo has become dates back to his early career choices. Drakoulis says. “My grandfather’s business was in the media — radio, broadcast TV and theater. I was surrounded by it, and I really loved it. There I was, at the age of 8, crawling around underneath the consoles in studios with engineers.”
He took that interest forward early in his adult life to build a successful consumer and business-to-business (B2B) network for Ameritech Mobile. “I became one of the top 15 dealers in the Midwest and was asked to join a dealer council board,” Drakoulis says. “It gave me real insight into competition and how the marketplace works for technology.”
That insight led to him selling his business in order to found a new company that developed commercialized RF wireless technology for home entertainment applications. “It was a streaming media, streaming music product — similar to today’s Pandora,” Drakoulis says. “We were a little bit early to market, but our wireless innovations bolstered the company’s valuation and I was able to sell and exit.”
That exit led to what became Akoo. “My expertise in mobile allowed a vision surrounding mobile, entertainment and media to crystallize,” Drakoulis contends. “That vision became Akoo.”
But, Drakoulis, as usual returns to his team to credit them for the company’s growth. “When you bring the right people in, create that support team, it allows you to constantly innovate. I always want the Akoo team to think ahead from an innovation perspective,” he says.
Campbell is clearly one of those “right people” for Akoo today. His 20-year career in media and TV programming includes stints with ABC, Warner Bros. Television (where he developed such hit series as “ER”), CBS Entertainment and Miramax Television. But his greatest successes came during a five-year run as president of Discovery Networks.