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Direct Response Marketing

Response Magazine's 13th Annual State of the Industry Report

1 Sep, 2008 By: Thomas Haire Response

As traditional marketers continue to flow into the DR space, how is it affecting the industry — most notably via media availability and pricing?

Bruckheim: In Latin America, media rates are being driven up by the confluence of reduced media avails and increased competition between some of the key players, rather than the entrance of traditional marketers.

Eden: Airtime is one of the only commodities where when viewership declines, prices go up. Corporate advertisers whose metrics are not firm MERs or cost-pers have been the primary factor in driving the prices higher. Additionally, less traditional DRTV companies are using the 30-second spot with DR rates, which has pushed the cost of 60- and 120-second spots even higher. Like the dot-com explosion of early 2000, DRTV advertisers are relegated to higher rates or lower clearance to achieve a client's MER goals.

Fays: Regardless of how many traditional advertisers flood the DR space, if inventory is available, these clients will always have a home — for the right price.

Garnett: The biggest impact on media cost and availability is, as it always has been, the most successful hard-sell show on TV. When a big show hits and four or five media agencies start competing to see who can buy the biggest budget for that show, all reasonability in media price is thrown out the window. Traditional marketers, on the other hand, only help us all by providing stability in media that makes it possible to escape the "feast, famine, famine, famine, bankruptcy" pattern of DRTV.

Knight: Media costs have not risen during the past year. With the current state of the economy, high inflation, an unpredictable market on Wall Street, and corporate budget but-backs, unprecedented pressure has fallen on ad rates. As oil and food costs dictate many people's checkbooks, consumers are becoming very conservative with their expenses. That said, if there is any business model out there that can best protect traditional advertisers' costs with a maximum level of ROI, it would be DR.

Lee: The election and Olympics will have a bigger impact this year than traditional marketers.

Medico: The migration of traditional advertisers into the DR space has had a significant impact in that it has caused the rates and availabilities on high-profile networks to increase and decrease respectively. The counter to this is that, generally, traditional advertisers use shorter units — 30 seconds versus two minutes — and that allows for some lessening on inventory pressures. In addition, the merging digital tier niche networks have become a source of media for DR advertisers due to the lower cost and two-minute avails.

Orsmond: Media avails in the U.K. are increasing and rates are dropping due to the "credit crunch" affecting media budgets. This means that DRTV advertisers already in the market are likely to do better — they will be less affected by the downturn in the U.K. economy and will feel less pain than traditional retailers. The short-form sector is driven almost entirely by debt management, insurance and loan services, and long-form is driven by U.S. advertisers running proven American-made Infomercials.

Sarnow: This process of traditional marketers entering the DR space has been going on for the past 10 years. It is nothing new, and it will continue to increase as the advantages of "accountable advertising" become more evident with successful campaigns. Overall, the affect of this shift is both positive and negative. It's positive because a wider audience becomes interested in buying products from TV advertisers; higher quality products raise the bar for what is acceptable for TV marketing; and because many more marketing models will be used for TV marketing for both DR marketers and corporate marketers. From the negative side, media has always been and always will be a supply-and-demand dynamic. The price of media will rise and fall according to that dynamic. Television advertising in general has bucked the trends and odds during the past 10 years because advertising rates have managed to increase even while audience levels have decreased because of increased viewing options and the Internet alternative. The recession will impact this dynamic in favor of direct response marketers. The next 12 months should be very interesting for those that have an interest in watching media rates and comparing them to previous quarters.

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