A Seat at the Table1 May, 2009 By: Thomas Haire Response
Broadcast, satellite and cable network ad sales leaders Stephen Appel, Michael Finn and Jeff Lucas discuss the growing role and influence of direct response on their overall businesses.
The vast growth of the DR media landscape during the past five years has forced many network advertising departments to take this marketing method far more seriously. How seriously?
"Going back five years, DR was seen as filler," contends Appel, who has been with broadcast giant ION since 1999, after previous stints with Seltel Television Sales and ABC Radio Group. "If you weren't sold out and had available time, DR would fill that. Two years ago, there was a change. The production quality got better. The ads looked better. And, where DR advertisers had mostly been tied to 60-second and 120-second spots, a lot of them started doing 30s, which became more attractive and popular with buyers. Now, DR is something that's budgeted. It has grown dramatically."
Finn, who joined Dish in 2007 after serving 11 years at MTV Networks, says direct response has always had top billing at the satellite network. "At the distributor level, DR has always been incredibly important, as we have always had a significant amount of inventory to fill based on our 120 insertable networks," he says. "Since taking the business back in-house two years ago, we have focused intently on our DR clients and have made changes internally — in operations, billing, data and more — to ensure that we are operating our business in a manner that makes it easy for DR to use us effectively."
Lucas, who joined cable behemoth MTV Networks in 2005, also boasts a three-year stint at Universal Television Group's cable networks (including USA, Sci-Fi, Bravo and others) and a 20-year run at NBC. He says his turning point for DRTV came about seven years ago. "When I ran USA and Sci-Fi (now SyFy), I hired Brian Fays (now executive vice president of ad sales at MTV Networks in charge of direct response)," Lucas says. "We've worked together now for about seven years. Since the moment I hired him, DR became and has continued to be an integral part of how I run my business. It's a tool that is used to maximize total inventory. During different aspects in the planning process, we always talk about how to extract the most value from DR."
Part of the Team
While DR has cemented a stronger role in overall results, Finn and Lucas were on what could be called a leading edge in bringing their DR groups to the table earlier in the decision-making and planning process.
"From a network standpoint, looking back at when I first came into the business, DR wasn't even in the room," Lucas says. "As a matter of fact, the competition was between DR and promotions. When I moved into cable, DR morphed into a real tool, but was still secondary. If you had extra inventory, DR is what monetized it. As we evolved, DR is really involved in the entire process. DR sales management is involved from Day 1 of the process for building an annual budget, and is closely involved in the planning process. In terms of input on budget, insight on market, anticipation of numbers, DR is bringing analytics to forefront."
Appel says much the same about ION's operations. "We have a DR sales department that completely and only sells DR," he says. "We include them in all budgeting decisions prior to the start of the year. There are really some very good clients spending real money in DR now. The fact that it is not guaranteed business is welcome. With upfront and guaranteed business, it eats up more inventory when you have to make good. DR isn't like that. It is an immediate hard cash dollar to the bottom line."
Finn, who was brought on at Dish to build the company's in-house DR sales team — a goal that recently resulted in the company opening a 22-person office in New York — knew when he arrived that DR was not just a component, but the component that would predict Dish's success or failure.
"DR has always been the main revenue driver at Dish so our DR leader, Brian Norris, is front and center on all strategic decisions taking place daily," he says. "When I was tasked with building this team a year-and-half ago, I made it a priority to bring Brian on board, as I knew DR was the key to building our business."
Not only is DR in the door for annual or quarterly planning, these leaders of overall ad sales agree that, today, they consult with the leaders of their DR operations on a daily basis. "When I previously worked at the network level, we focused on setting weekly DR goals, but looked at it purely as filler," Finn contends. "In today's world, our DR revenue is tracked and discussed daily due to its ever-growing impact."
Lucas agrees. "I talk or E-mail with Brian (Fays) on a daily basis," he says. "Brian's managers and my managers interact daily. We communicate on units and pricing, weeks and flighting, future budgets, weekly estimates, and to assess risk and opportunity."
Appel says DR allows him the best look at ad trends of any type of ad buy made from ION. "Every week, I watch unit rates very closely," he says. "A week doesn't go by where I don't know the rates. I look for trends and look for who's buying. In fact, just yesterday, I asked for a list of every agency that was on DR air, who spent what, and their average rates in 2008 and 1Q 2009. I want to know who's at the top of the game."