Response Magazine Site Response Expo Site Direct Response Market Alliance Site Response TV Site Market Research Job Board

 

   Log in
  



Direct Response Marketing

Media Buying & Planning Guide: General Ad Dollars Make a Comeback

18 Oct, 2010 By: Nicole Urso Response

Long-form pricing remains low but short-form bargains are a tough find.


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.”

1 2 3 


Add Comment




©2014 Questex Media Group LLC. All rights reserved. Reproduction in whole or in part is prohibited. Please send any technical comments or questions to our webmaster. Contact Us | Terms of Use | Privacy Policy | Security Seals