Response Magazine's 15th Annual State of the Industry Report17 Sep, 2010 By: Thomas Haire Response
Members of the magazine's Editorial Advisory Board speak out on the current state of the direct response marketing industry.
What was the most significant accomplishment in the past year for the DR industry?
Continued economic troubles. The expansion of regulation, especially for testimonials and endorsements. And new media rising to the forefront. As 2010 heads into its final quarter, these are among the many issues facing the direct response marketing business.
For the past 14 years, Response has asked members of its Editorial Advisory Board to analyze current trends and make predictions about the future of the direct response space. Once again in 2010, their thoughts represent a cross section of the industry: from DRTV legends to technology experts; from the international perspective to that of the cable networks. According to these leaders, this is the state of our industry.
What was the most significant accomplishment in the past year for the DR industry?
Brian Fays, MTV Networks: The ability for advertisers to understand the inventory landscape has tightened. Show specifics such as “Jersey Shore,” “The Comedy Central Roast” and the “TV Land Awards” are just a few examples of where clients have spent big dollars at high pricing to secure inventory.
Doug Garnett, Atomic Direct: This past year won’t get a big entry in the annals of DRTV. It was pretty much business as usual, after a 2009 rocked by Snuggies and ShamWows — the twin approaches to leveraging a worldwide glut in synthetic fabrics. But behind the scenes, there’s been a building action among brands moving back into the DRTV business after having learned that Facebook isn’t the answer to all their marketing challenges.
Tim Hawthorne, Hawthorne Direct: Considering the state of the economy in 2009-10, our industry’s most significant accomplishment was proving our resiliency. In difficult economic times, with close to one-tenth of the workforce looking for jobs, American consumers did not have as much discretionary income to spend on many of the products and services our industry promotes. The fact that most direct marketers and DRTV agencies are doing reasonably well bodes well for 2011, when we expect the economy will pick up and begin a trend towards a more robust era of national prosperity.
Fern Lee, Factor Nutrition Labs: There was not one significant accomplishment — but if you were to tie my hands I would say that the Internet has become one of our biggest marketing touchpoints. From social media to online video advertising to online couponing, the Internet is educating the consumer, selling products and pushing the consumer to the retail store.
Mike Medico, E&M Advertising: Someone told me, “There is no old media or new media … It’s all just media.” Direct response marketing companies and their agencies have come to accept this as the way they must evolve to succeed in their businesses.
Digby Orsmond, ARM Direct Ltd.: The European recession continues to have a serious negative effect on the short-form television advertising sector. However, the United Kingdom is bucking the downward trend in that long-form home shopping airtime has risen on an increasing number of cable and satellite TV channels. Due partly to strict regulation and high production costs, relatively few European direct-to-consumer brands have tested the power of the half-hour show. Several U.S. companies, such as Guthy-Renker and Thane — and successful U.K. newcomers such as HighStreetTV and Pitchworld — understand this genre, along with the well-established JML Group now dominate the long-form sector in Britain.
David Savage, R2C Group: Adapting to a changing media and consumer marketplace! So many of our clients are adapting to the challenges that the economy presents by diversifying their media spending, and by finding ways to make their TV budgets more efficiently push multi-channel campaigns.
Richard Stacey, Northern Response Intl. Ltd.: I see a continued move to multi-channel DR in response to the increasing fragmentation of the media environment. This was a year of ongoing expansion into a variety of new distribution channels. The electronic DR industry is moving quickly from “As Seen on TV” to “As Seen Everywhere.” Our own company is now actively distributing through more than 30 channels of DR distribution, including classic channels like TV, radio, print and live shopping — and new online channels like YouTube, Facebook, eBay, Amazon and affiliate marketing.
Bob Yallen, Inter/Media Group: DR has further legitimized itself during the past year, with more Fortune 500 brands entering the space. An advertising medium that was once labeled as taboo has now attracted more mainstream actors and celebrities. Recently, we signed football legend Jimmy Johnson as the spokesperson for our client ExtenZe. Without the industry making a positive shift from the perception of smaller, less brand-centric companies, we would not have been able to attract a top personality like Jimmy. Also, DRTV has become a viable option for marketers without call centers as consumers have become more comfortable utilizing the Internet to make purchases and/or get more information about an advertiser’s products or services.
What do you believe the hottest topic will be in the coming 12 months?
Fays: Without hesitation, video-on-demand (VOD) will generate more buzz during the next 12 months than any other medium. Ever-changing viewer habits have dictated to Viacom that we need to be educated on the evolving thirst for VOD.
Garnett: We should see a return to long form ahead of us. And I’m seeing a lot of early action in the home improvement/do-it-yourself (DIY) markets as more people see the impact DRTV has made for their competitors. Whether this continues depends on whether they get exceptional work from our business — or merely “business-as-usual” work from either the yell-and-sell side or the corporate film producers. For example, I know of one infomercial set to come out this fall for a major, respected brand that uses yell-and-sell offer gimmicks (omitting only the doubling of the offer). It’s pretty sad because a brand of its stature deserves an offer that supports the brand.
Hawthorne: In periods when we experience lower response rates, it makes sense to maximize the revenue of every call, click and order you get. The industry focus is going to be on hot back-end solutions, such as innovative cross-selling, couponing, retail-driving incentives and new, outside the box approaches to maximize DR revenue. At Hawthorne Direct, we are starting to utilize highly innovative upsell techniques and back-end programs that add significant revenue to the initial DRTV and online sale and improve our clients’ overall ROI of DRTV. In addition, we’ll see marketers rolling out SMS text codes on their commercials’ tag pages to enable growing mobile phone response.
Lee: The FTC and new compliance regulations.
Medico: The seamless integration of digital media with traditional media; the use of social media outlets to enhance direct response promotions; and the expansion of mobile commerce for direct response promotions.
Orsmond: During 2009, the U.K. witnessed a rush of U.S. advertisers offering cash for gold in print as well as short-form DRTV. This market has now become oversaturated, and most have fallen by the wayside with only Money4Gold and Cash4Gold rolling out across other European countries. The tried-and-tested infomercial and home shopping product categories continue to be beauty and wellness, DIY, home and garden, jewelry and collectibles, and health and fitness. However, U.K. consumers are now spending 45 percent of their waking hours watching TV, using their mobiles and other communications devices, new Ofcom (the U.K. communications regulatory agency) research recently revealed. They’re sending four times as many texts per day than in 2004, spending almost a quarter of their time on the Internet on social networking sites, and spending three hours, 45 minutes per day watching TV. They’re also using several types of media at the same time — with the average person cramming eight hours, 48 minutes of media into just over seven hours during the average day. The growing popularity of smartphones — and the changing way we use our mobiles — is increasing the U.K.’s overall use of communications, and helping us to do much more simultaneously. This is being particularly driven by the under 25s. However, the over 55s are catching up, with half now having broadband at home — the fastest growing age group.
Savage: Negotiating efficiently priced media schedules that allow marketers to attain their goals — there is a lot of competition for time in both the long- and short-form marketplaces, and as we head into 4Q and 1Q 2011, strong relationships and adaptability will play key roles in ensuring continued success for many marketers.
Stacey: How to simultaneously manage multiple and changing business and revenue models and integrate them with existing operational platforms — more importantly, how to get these models all moving in the same direction. Companies like ours are now involved in so many different DR channels of distribution and revenue models that it requires constant review and updating of the organizational management structure so that it learns and evolves along with these new and growing business units. DR companies are also in an on-going process of determining what their core business is and what is better outsourced to specialists. For example, decisions regarding whether to buy media in-house or outsource it to an agency specializing in that area are important in determining the future growth and direction for every DR company.
Yallen: With Baby Boomers quickly approaching retirement age, and with the distinction per Nielsen of Baby Boomers comprising one-third of all television viewers and the No. 1 viewers of video, the senior care sector is becoming the hottest DRTV category and a topic that will also have sustainability.