Response Magazine's 13th Annual State of the Industry Report1 Sep, 2008 By: Thomas Haire Response
Savage: We tend to think of a question like this just in terms of TV. But there are so many media choices for marketers, and most companies we work with are looking for the most efficient mix of media, based on their objectives. TV is most often a fairly priced and effective sales channel that also drives other media such as online, radio, print and alternative print. But these other channels can stand on their own pretty effectively, too, because of inventory levels that allow for highly reasonable pricing.
Stacey: I have been hearing about traditional marketers flowing into DR for a long time. However, I cannot say I have really seen this happening in the long-form arena. In short-form, drug companies and others have had some impact on availability and pricing but, then again, there are so many more channels. We have not found any significant impact in the markets where we operate.
Are production and media costs rising too quickly for the health of this industry? If so, how do you propose we stem that tide?
Bruckheim: To be frank, in Latin America, the expectation is that media costs will increase at an unaffordable rate unless the industry focuses on unity of purpose and cooperation between the key media providers/agencies.
Eden: Yes! I wish I had an answer.
Garnett: I don't see this at all. Production costs are just fine. This business needs to see higher quality, or we'll be taking a step backward. The one area where costs are getting out of control is celebrity "Endorso-mercials," like those from Guthy-Renker. Guthy has a formula. What's scary is how that formula affects the rest of the industry with higher prices — even for B- and C-grade talent.
Lee: Media costs are a supply and demand game. Production keeps rising because there is more demand for top producers in the field.
Medico: I believe that production companies are between a rock and a hard place on budgets. Many producers want to do a high-quality production that will showcase the offer in order to generate the response needed for success. In many instances, however they are forced, due to budget issues, to lower the production values that they put into the spots to meet the constraints of the budget. In order to justify the increased cost, production companies may need to look at adding value to their services by including instructional DVDs or commercial loops for retail or any other type of service that will enhance the production and justify the added expense.
Orsmond: In the U.K., the reverse is true. Production costs have decreased each year and this has allowed many smaller companies to test DRTV. The downside of this is that often production quality standards are compromised, and there are now a plethora of poorly made DRTV creatives on U.K. TV screens. Just a few years ago, higher production costs would have made this less likely.
Sarnow: Media costs were lower in second-quarter 2008 than the previous year. Third- quarter 2008 will be lower than third-quarter 2007. Infomercial time will be OK, and short-form media should see a shortage from convention time to the election. The question of how many campaign dollars will go to national cable is the main question for short-form media buyers and marketers. Once the election is over, if optimism impacts the economy positively, then rates will probably rise again. If negative economic indicators stay strong, DRTV should continue to see lower rates.
Stacey: Marketers will always desire lower costs for production and media. The production industry has few barriers to entry, so there is a limit on what they can charge without losing business to competitors. In the media world, they will always charge what the market can bear, so that will always determine the survival of the fittest. Good shows offering products that consumers want will be able to afford the airtime and bad shows with bad products won't. It's all market-driven.