Response wanted to hear directly from the pros about how technology is at play in back-end services so we interviewed five of them. They are:
Q. What are the most recent and most important technological changes/upgrades in your field that are helping DR marketers maximize ROI and reduce costs?
Schloth: Every marketer, whether in direct response or on Madison Avenue, is moving toward integrating their marketing campaigns to create a consistent message across Web, retail, TV, radio, catalog, direct mail and mobile. The ability for marketers to know what’s happening across all these channels is a constant challenge. That’s where technology comes in. It’s the application of existing technology that’s creating the most significant changes in the DR industry. Not until recently has there even been a campaign and order management platform specifically designed to meet the unique needs of a direct-to-consumer marketer. In the past, marketers had to create, update and maintain their own internal systems, usually costing them a lot of money, aggravation and wasted resources. Even then, the data they need often comes in the form of reports from multiple vendors — marketers still had to input the data into their order management systems. If marketers don’t have an automated system or technology to handle the voluminous data, they’re at a distinct disadvantage when it comes to making effective decisions that impact return on investment or reduce costs. Since many DRTV marketers are not IT experts or may lack the internal resources to create a platform to handle the data, they can never really get true end-to-end visibility of the entire integrated campaign. Ultimately, the application of technology in DR is designed to give marketers ultimate control over their ROI, data, campaigns and vendor partnerships.
Pavona: Smart direct response marketers are making the leap to value-adding service in payments processing. The competition for the more constricted flow of consumer payments has marketers looking at how payment processing can improve their business performance, versus simply stripping out costs — the commodity approach. Better use of technology is also allowing us to advance the performance of payment processing engines: how they capture information, what they capture and how they translate captured data into business intelligence, leveraging advanced reporting and the like to make the data actionable, and, increasingly, to extend its value from your payment operations to your customer loyalty, service and marketing efforts. Let’s not forget the human element either, especially when it comes to accessing people that can provide insight into your information. For example, it is one thing to have great technology and data, but if you don’t have people that help interpret it you may be missing a valuable piece in your organization’s direct response puzzle.
de la Salle: Anyone can pick and pack goods and effectively provide customer service. The key differentiator lies in how the fulfillment house captures, reports and analyzes the customer data. The data hold all of the information that’s key to both the initial campaign’s success and also to the ongoing success of the campaign. With real-time reporting, for example, marketers are able to see the success of a campaign and make fast decisions on how to proceed with the campaign. Based on these informed decisions, edits to the infomercial, telemarketing script and media purchases can be made faster allowing the sweet spot to be achieved in rapid time with less cost incurred.
Richards: Intelligent call routing makes it possible for marketers to maximize their sales by giving the call centers that are closing most successfully a higher percentage of inbound leads. Additionally, more calls can be routed to the best performing agents. And this can all be done in real time.
Kleinman: The most recent changes are alternative payments that compete with the traditional credit cards which include automated clearinghouse, remote deposit capture, mobile payments, person-to-person and more. Also, the Durbin Amendment [an amendment in U.S. financial legislation that shifts the burden of paying interchange fees, the payments that support the administrative and anti-fraud expenses, from merchants who accept a debit card to the financial institutions that issue them] and the potential reduction of interchange costs for debit cards and other prepaid programs are factors.
As general ad dollars trickle back into the marketplace and election season ramps up, short-form DRTV continues on a steady path of pricing increases and fewer avails. Long-form marketers still enjoy plenty of budget-friendly buys on cable and network television, but with tepid consumer response in the sluggish economy, many favor tried-and-true products rather than bringing new items to market.
“The country’s economic troubles translated into opportunities for direct response,” says Kathi Moore, president and CEO at Newport Beach, Calif.-based Engagem3nt. “Many advertisers pulled out in the finance category, telecom, and a variety of other categories stopped spending, so DRTV avails were good and pricing was really good. That was still the case at the beginning of 2010 up through about April, but then things started reversing themselves as packaged goods and other general market advertisers are coming back into the mix and bringing their spending up. That put pressure on DRTV rates. It’s gotten tough. So the big jump from second to third quarter, I really noticed it.”
This echoes trends reported in the May 2010 installment of Response’s biannual Media Buying & Planning Guide, which focused on the selling-side perspective of cable and broadcast networks. Brian Fays, executive vice president of advertising sales at MTV Networks (MTVN) predicted that short-form pricing would continue to climb throughout the remainder of the year. According to Fays, short-form media shot up 25 percent to 40 percent at MTVN at the end of 2009 and beginning of 2010.
“The biggest fluctuations have been on the short-form side because of several reasons,” says Scott Paternoster, president of New York-based Chief Media. “The political advertising climate has been very active, automotive advertising has increased substantially, large pharmaceuticals have returned and overall general advertising has increased.”
Despite strains on inventory, Paternoster reports that rates have remained fairly consistent. “Third-quarter rates are relatively flat from 3Q 2009 and are approximately 15 to 20 percent down from 2Q as expected,” he says. “September through fourth quarter is expected to increase, and we are already seeing those pressures in late August.”
Short Form Still Below Average
Heading into fourth-quarter 2009, media buyers reported discounts of up to 30 percent on short-form local broadcast and national cable buys (Response, October 2009). Although these discounts leveled off, overall media billings remain below average.
According to Kantar Media (formerly TNS Media Intelligence), 4Q 2009 closed at $1,048,047,100, the lowest 4Q total since 2006, which was $852,996,700. Short-form media billings continued to drop well into the beginning of 2010. The first quarter slid $52.3 million from 4Q 2009 and for the first time since 2007, first-quarter results fell below the $1 billion mark, coming in at $995,750,300.
While media costs were down, more marketers were afforded the opportunity to enter the space, and for the second consecutive fourth quarter, the total number of short-form DRTV campaigns that aired was up. There was a record high of 1,450 — 9.2 percent more than 4Q 2008.
“Interestingly enough, some of the strongest product categories have been lower-priced specialty items that are priced less on the front end, products such as household items, pet products, gizmos to improve the home or improve conveniences,” says Doug Frankel, president of Santa Monica, Calif.-based Broadcast Communications Media.
Pet-oriented products in particular are a noticeable newcomer to the top-10 spots of Jordan Whitney and IMS short-form rankings. Bark Off by TELEBrands, Pet Zoom Trainer by Emson Corp., Pillow Pets by Ontel Products and Emery Cat by Allstar Marketing have all appeared in Jordan Whitney’s Top 10 from May through August.
“The challenge when you are able to snap up low-cost media for traditional DRTV advertisers is that oftentimes the consumer response is down,” says Marc Johnston, CFO, Carlsbad, Calif.-based Direct Avenue, “so while a good DRTV agency will continue to hit client goals, true DR metrics such as CPO, CPL and MER remain relatively level despite the favorable rates.”
Long-Form Pricing (and Response) Down
“From the agency and buying side, we see that pricing of the media on broadcast and cable on long form is off between 20 and 25 percent year-over-year, so the cost of media is still down, and it’s dropping,” says Rob Medved, president of Burlington, Wis.-based Cannella Response Television and a member of the Response Editorial Advisory Board. “So an avail that cost $1,000 last year costs $700 to $800 this year.”
Due to the discounted rates, Medved explains, there has been more paid programming on the air in the first six months of this year compared to the first six months of last year. However, consumer response has remained weak and fewer new long-form campaigns have been introduced to market. Marketers are choosing to mitigate risk by sticking with products that they know will perform or that they can quickly move into retail.
“When dealing with long-form media, our mantra has been ‘rate reduction or cancel’ all year,” says Stacy Durand, president of Santa Monica, Calif.-based Media Design Group (MDG) and Revenue Frontier (RF). MDG is a traditional media buying agency and RF is a per-inquiry agency. “Our industry is fine when rates are commensurate with results, and this is a constant game you have to play. In my 20 years in this business I have never seen so many rounds of rate reductions. Every time we got a rate reduction, the results would dip again. I think the results are finally stabilizing for infomercials and will hopefully hold through the rest of the year.”
Total long-form media spending in 2009 was $1,108,578,5000, about 5.5 percent down (roughly $64.5 million) compared to 2008, according to Response’s in-house research. Long-form media experts have experienced more of the same in 2010.
“Rates have generally followed the typical pattern based on response and demand, with rates decreasing in second and third quarters and increasing in first and fourth quarters,” says Robert Hunt, president of Santa Barbara, Calif.-based New Day Marketing, a company focused on long-form media. “The primary difference being that rates as a whole have never been lower.”
Auto marketing is no longer limited to catchy TV spots or print ads, but now includes the need to interact with consumers on the Internet. A successful Web site is crucial to more sales on the lot, according to J.D. Power and Associates, which evaluates auto manufacturers’ sites twice yearly.
“Consumers shopping for cars want to easily find information, they want Web sites to be intuitive in their navigation and they need to get to information quickly enough,” says Arianne Walker, director of marketing and research at J.D. Power and Associates. “It’s all about effectively driving consumers to the key information.”
J.D. Power and Associates recently released its 11th annual Manufacturer Web Site Evaluation Study for 2010. According to Walker, consumers who begin their car shopping online are consistently looking for four key things: informative content, functional navigation, clean appearance and speed. Auto manufacturers that are finding the most success are the ones using online tools to engage with customers.
“It’s not just about listing the features of the car on a site or having brochures up online,” Walker said. “It’s about using the technology we have with the Internet to demonstrate as much as possible. It’s giving the consumers a way to give the tires a kick as much as you can online before ever stepping foot into the dealership.”
Reflecting Brand Passion
Kia Motors, ranked No. 2 in J.D. Power and Associates’ study, says the execution of its Web site strives to emulate the passion behind its products’ designs.
“Our Web site has to reflect the same promise that is reflected by the excellent products we have in the marketplace and the great response we’re getting from consumers,” says David Schoonover, national manager, CRM and digital, of Kia Motors America. “All that translates to for us is that we have to have a really high standard for what we do on the Web.”
Kia’s main focus online is to present consumers with the content they are looking for in a clear, manageable and interactive format.
“If someone is on our Web site, the primary information they’re looking for is information to better understand the specifics and features of our vehicles,” he says. “We use computer-generated imagery that provides the consumer with a look into the interior and exterior on every level, from a full 360-degree experience.”
Navigation of Kia’s site is important to the company’s digital marketing team, and appearance remains relevant from a brand standpoint, according to Schoonover, who adds that too often auto manufacturers spend time pushing a product rather than recognizing what a customer may be trying to accomplish online.
“At Kia, we want to make sure our message is available and let the customer know who we are and what we do, when they want it,” he says.
Thirty-nine percent of Kia’s customers research the company first on the Internet before buying a car and 13 percent of sales are coming from an online lead channel, according to Schoonover, a key reason direct response and customer engagement has become a critical aspect of the company’s marketing efforts.
“It’s extremely important to us to interact with our customers, and especially through digital channels,” Schoonover says. “They are interested in getting to know us as a brand, so for those people we want to have relationships with them and let them get to know us.”
Kia has also found digital success in its multi-channel advertising, Schoonover says.
“It was rare for a consumer to experience a TV ad one time and all of a sudden have their entire life changed. It’s no different with the Internet now,” Schoonover says. “They have to experience you as a brand over time. Consumers see us on a site like CNN.com, then once on a mobile app and once on their iPad, but the important thing is for these experiences to tie together. Instead of just giving customers little bits of an experience here or there, you’ve now tied those together to create an exponential result.”
Schoonover cites its Big Game Effort campaign in combination with its social media push as a great example of Kia’s foray into DR across multiple channels. After the Sorento campaign aired during the Super Bowl, activity on Kia’s traditional site as well as Facebook and Twitter pages increased by four to five times. Kia maintained an active presence on all platforms afterward to encourage continued conversation between the brand and its customer base.
“What was great about it was that the customers were not only talking about liking the Sorento specifically, but also about liking the brand,” Schoonover says. “There was a very positive and passionate response to our brand, and it could be seen across various channels on the Internet.”
The ‘Largest Showroom’
BMW’s marketing team frequently takes a task-based approach to its Web site, but has recently embraced the real-time benefits of online DR advertising. Its most notable DR efforts include utilizing the Web site as a place for consumers to voice their interests and interact with the brand.
Coming to work day after day this year and hearing stories from consumers and vendors of heartbreaking and amazing success stories motivated me to work harder and put more passion into my work than ever before,” says Denise Kovac, chief operating officer of Carlsbad, Calif.-based Your Baby Can LLC, the winner of the second annual Direct Response Marketing Alliance (DRMA) Marketer of the Year Award.
She continues, “The most touching to me was a special needs family who was able to communicate with their child for the first time through words with Your Baby Can Read. It was a message passed through a customer service rep, but it supercharged my motivation to take industry knowledge and apply it to a product that had such an unusual ability to empower children. So I am very grateful to my peers for being recognized — and it adds a meaning to my heart that it is for Your Baby Can.”
Largely due to the great success of the Your Baby Can Read product, the brainchild of Dr. Robert Titzer that launched on DRTV in April 2008, Your Baby Can earned a decisive margin of victory among the more than 1,000 votes cast by DR industry marketers and vendors, while the other two finalists — BJ Global Direct (marketers of the successful Kymaro line of beauty products) and FitnessIQ LLC (marketers of the viral sensation Shake Weight) were neck-and-neck in the battle for second place. Kovac accepted the award in front of an overflow crowd at a ceremony and cocktail event on Sept. 22 at Las Vegas’ Haze nightclub, located in the Aria Resort & Casino at CityCenter.
Your Baby Can, which has sold nearly 1 million units of the Your Baby Can Read product (via DRTV, online and retail) and claims $90 million in annual revenue, also offers such childhood learning products as Your Baby Can Learn and Your Child Can Read. Kovac believes that the company’s products not only strike a chord with consumers, but also with Your Baby Can’s staff. “Many of our employees have been in marketing for most of their careers, but this is the first time that we were able to market a product that can have a long-term effect on the lives of children — not only in our country but around the world,” she says.
Creating a well-known brand has worked well for the team at BJ Global Direct, where the Kymaro line — including the Kymaro New Body Shaper and Kymaro Curve Control Jeans — was responsible for much of its success in the past year. Meanwhile, the third finalist, FitnessIQ, has seen its Shake Weight line of fitness products gain widespread and viral consumer notice not unlike the Snuggie, which helped earn Allstar Marketing Group the 2009 DRMA Marketer of the Year award.
These three standouts earned finalist status in an industry vote among the top 10 nominees for the DRMA Marketer of the Year Award. During the coming months, each of the 10 nominees will be profiled in the pages of Response. However, these three finalists — and the winner — have truly set themselves apart.
Your Baby Can … Win!
Kovac, who “grew up in a home with direct-to-consumer sales, paid my way through college working in direct sales and joined this industry in 1988,” believes that consumers embraced the Your Baby Can Read product due to a successful, multi-faceted ad campaign that demonstrates how well it works. That campaign includes integrating long-form and short-form commercials, radio spots, print ads and an Internet campaign.
“Dr. Titzer had a vision when his daughters learned to read and used a ‘grassroots’ marketing campaign to spread his amazing reading and learning systems around the world,” Kovac says. “The past couple of years have allowed him to share his project of passion with millions of families and potentially change the academic future of the world.”
The campaign highlights that passion. “Our direct response campaign features real children with real success stories!” Kovac exclaims. “Universally, people love to see success stories involving children, and we are thankful to our producer for being able to bring those real-life stories to an appreciative audience.”
Expansion has come naturally for the company as the initial product’s success grew, not only in the form of new products and sales at retail, but also internationally. Kovac says, “The most significant accomplishment in the past year was being able to expand the brand to many countries and many languages — and therefore reach children around the world. We have translated the entire program into Spanish, French, Japanese, Korean, Portuguese and Russian, to name a few, and children will be learning not only to read in their native language but other languages around the world.”