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Direct Response Marketing

Response Magazine's 15th Annual State of the Industry Report

17 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.


 

Which generation of consumers must DR marketers target today to continue to build their businesses? Why?
Fays: At Viacom, networks such as MTV and VH1 are key demos for DR marketers to target these younger viewers — which are early adopters, brand loyal and tech savvy. MTV Networks houses 19 ad-supported networks which canvas every possible demo, and these young viewers will grow into our core viewers in the future. If we gain their trust now, they will be loyal viewers for years to come.

Garnett: This all depends on the product and the goals of the companies. We continue to reach any and all demographic ranges of consumers with DRTV. The specific group reached depends on the product, its appeal and the creative you use to reach them. I suppose this question is motivated by the wild claims we hear that “this new generation can’t be fooled by advertising.” It’s a funny claim. Because I find that it’s the people who’ve lived a long life as a consumer who have best learned the lessons about how to be a discriminating buyer. Targeting younger buyers does require additional sensitivity to the Web. But, these are minor changes. Every generation seems to want to believe that it’s entirely different from the last. Despite some differences, when it comes to buying products, the generations are more similar than they are different.

Hawthorne: Still, a slightly female skewed audience, aged 35-59, is the sweet spot for most direct marketers. But the generation we must begin to reach is the younger and more mobile audience. The younger demographic is comfortable with technology, has no trepidation about ordering online or via their smartphones. As the economy improves, the younger audience will have more discretionary income. The industry must learn to market a wide array of products and services to this group as they age into a more mature consumer group. This strategy includes the integration of online, mobile and social media venues.

Lee: We know that the Baby Boomers are the biggest generation, but I think even more important is knowing your consumer and having a relationship with your consumer — so that they are not just a “one-off” purchaser but a committed consumer who you will touch over and over again.

Medico: It appears that there are two distinct groups that represent the greatest potential to direct marketing on TV: upwardly mobile adults 25-49; and adults 50+. These groups have money and need services and product to enhance or preserve their lifestyles. For online DR, the consumer group is 20-40 year olds. This generation either grew up with the Internet or started young enough that it is now an important channel for their purchases. Marketers that know how to reach them online will grow their business as this generation ages.

Orsmond: Our advice to DR marketers is to separate out their target buyers now as follows:

  • Younger people: Ofcom’s research found that 16-24s are the most efficient users of communications services as they squeeze 9.5 hours of media consumption into just over 6.5 hours actual time, spending the largest part of their time on computers and mobiles. Finding ways to harness this interest through clever apps is worth exploring and several of our U.K. DRTV clients are now using this approach. Barry M’s success at using multimedia to target teenage make-up buyers is an award winning example.
  • Older people: There is a growing use of technology among Britain’s aging population, and research finds that this consumer group (typically empty nesters) often focuses on a narrower range of products and services. This can be quite seasonal — for example health and fitness products in the winter, and later in spring, gardening products and outdoor pursuits. In 2009, the U.K. growth in Internet take-up appears to have been driven largely by older age groups (and families) who are using the Internet to save money during the recession. For the first time, half of over 55s have now signed up to fast broadband online services at home.
  • Social networking grows across all ages groups: Younger people are more likely to access social networking sites, with 61 percent of 15-34s claiming to do so, compared to 40 percent of all adults 16 or older. But it is by no means exclusively a young person’s activity. Nearly half of 35-54s claim to use social networking sites, as do 20 percent of 55-64s — the latter showing a 7-percentage-point rise over the past year.
  • •U.K. men spend more time using media than women: Men spend nearly an hour more per day using media than women — an average of 7 hours, 33 minutes per day compared with 6 hours, 38 minutes. Men (25 percent) are also more likely than women (21 percent) to use their smartphones to access the Internet, which opens up opportunities for male-focused products and services.

Savage: We must target all generations. And while targeting specific age cohorts depending on the product is sound marketing, it’s really targeting these consumers where they will find our messaging, i.e., on the three screens that dominate our lives — TV, laptops/computers and personal mobile devices — that will lead to bigger business for DR marketers.

Stacey: The younger generation is accessing media through many new formats and devices. To grow their businesses, DR marketers need to take their marketing messages to the devices and mediums this new generation are using. We are following the eyeballs, and the younger generation and the early adopters are leading us.

How is the trend away from immeasurable branding ads and toward measurable campaigns affecting multi-channel campaigns? Would you consider a marketer not using a measurable, multi-channel strategy in 2010 product/brand suicide?
Fays: Our conversations with clients have centered on going back to the basics of 100-percent measurability along with budgeting enough dollars for engaging creative.

Garnett: Companies are becoming more comfortable using numbers to evaluate their advertising. More often than not, though, what I’m seeing is that traditional agencies jump onto the numbers bandwagon but can’t connect the data to a business result. So, as we saw with the Old Spice campaign, dramatic, but meaningless, social media numbers are assumed to mean a campaign has succeeded. Then, as with Old Spice, better business data is available, we find that the huge numbers were meaningless numbers and the campaign had little business impact. Is this affecting DRTV? This helps DRTV because our measurability far outpaces what’s measurable on the Web and is more tightly connected with business results. But it can hurt DRTV when agencies and clients try to compare the weak and meaningless data from other campaigns with the high value data they get from DRTV — without realizing the dramatic difference.

Hawthorne: It is our experience that most brand companies have already awoken to the idea that measurable advertising is the way to go, especially in this economy. By 2011, DRTV has evolved to the point where a hybrid DRTV/TRP measured campaign makes sense to most corporate marketing folks, because they can now quantify their TV ad spending. Yet $50 billion is still spent every year on general brand TV advertising, with little or no response mechanism. Old habits die hard: brands and their agencies hate to “ask for the order.” So no suicides, yet.

Lee: Whether you are a branded marketer or a one-product marketer, you must use all the touchpoints in a marketing campaign. From offline to online, all marketing efforts must be consolidated to push sell-through modeling.

Medico: As a direct response agency strategist, it may sound self-serving, but applying measurable metrics beyond traditional media guidelines can make a significant difference in how budgets are allocated across multiple channels.

Orsmond: In today’s ever-shifting marketplace, we always recommend adopting a multimedia strategy. For example, during 2010 we have successfully combined what we call BRTV (Brand Response TV) ads, which are typically 10, 20 or 30 seconds long and less measurable, with totally measurable classic 60- or 120-second DRTV and 30-minute infomercial campaigns. The shorter BRTV ads feature the URL only and focus on the core brand messages, while the longer DRTV spots and half-hour shows sell all the product attributes and offer to take an order. This strategy is entirely complementary and allows us to place the shorter spots in near peak airtime that the clients could not otherwise have afforded. Savvy companies, such as the U.K.’s Barry M Cosmetics and Italy’s Filippo Berio olive oil, have recently used BRTV very effectively to substantially increase their Web site hits, social media interest and help drive retail sales — all of which helps support the bottom line at a time when their competitors are struggling during the recession.

Savage: Here’s what we’re experiencing: traditional, but savvy DR marketers with retail distribution see the value of “branding” by utilizing media strategies that build the kind of awareness that helps sell through product at brick-and-mortar retail. This means that long-form DR marketers are still running significant long-form budgets but adapting their strategies in a way that pushes retail. It also means short-form marketers may run 60- and 120-second spots and monitor MERs, but they also place shorter lengths and monitor clearance and GRP/TRP levels.

Stacey: Advertising can have many objectives, not all of which are an immediate sale. Volvo, for example, may run ads to convey that their cars are the safest. Ads like this can’t directly be measured by sales. All ads can be measurable based on their objective. If we survey people about which cars they think are safe, a lot of people would say Volvo. So with any ad, we start with the objective and then we figure out how it can be best be measured. The challenge with all of this new media, and with a multichannel environment, is how to effectively measure each individual channel and how to know which channel produced which results. For example, if we run a DRTV ad, we may get orders by 800 number, by mail, by Internet, and by retail. But if we’re simultaneously doing E-mail blasts, YouTube marketing, affiliate marketing, auction sites, and social press releases, it’s difficult to know exactly how to measure which ones are most effective and how they are impacting each other. So measuring results today can be both an art and a science.

Yallen: By its very definition, direct response provides a measurement of results. Many major general advertisers are now incorporating response mechanisms in their advertising — whether it is a consumer offer or simply placing a URL in their ad copy. In today’s complex media world of ever-expanding choices and the competition for attention and awareness, a marketer is wise to consider utilizing a multichannel strategy to most effectively achieve objectives. However, some of these non-traditional channels do not currently provide the same ROI as, for example, DRTV. But the savvy marketer that is building a brand, and has the vision and fortitude to invest in themselves, will reap the benefits down the road when hopefully their competitors have been myopic by only driving their brands with old school marketing strategies.

What vertical markets are best equipped to survive — and even thrive — in 2011?
Hawthorne: For traditional DRTV, the old standbys of home appliances, fitness, diet and beauty will remain strong. For brand DRTV, look for more insurance, financial and communications DRTV.

Lee: When you look at the top 25 from the IMS report, we are not seeing many different verticals then we saw 10 years ago: From fitness to beauty to housewares to making money — if a product delivers a promise message, the consumer loves the demonstration and they open the box and they feel they have just had the best experience — you have a winner!

Medico: For offline — drive-to-site for travel, financial services and the As Seen on TV products that are available at retail. For online — education, debt service and heavily discounted products.

Orsmond: The U.K. recession and the uncertain political climate following the recent general election continue to affect the banking and housing market. Unemployment is at an all-time high and disposable income is down, but there are glimmers of hope in Europe. Greece has started to cut its massive budget deficit just when Germany has posted its best exporting figures in more than two years bring hope that they are leading the €uro zone out of recession. All this gloomy economic news means that the companies who are continuing to thrive now tend to be those with the most experience and the best product mix. The upside for the DRTV advertiser of the recession, however, is that many television channels are struggling to attract the larger brand advertisers and are therefore having to lower their DRTV airtime rates to pre-2008 levels. This means that some DRTV advertisers are now paying less for spot avails, and if media budgets allow they are now in a good position to increase their opportunities to sell. Combine this with other related media, such as newspapers, magazines and online, and those DR advertisers that are able to afford integrated campaigns are likely to make the most gains.

Savage: While housewares, fitness and beauty solutions will continue to thrive, the business model is just as important as the category. Companies like Guthy-Renker, Beachbody, Euro-Pro, Allstar and other long-time DR marketers succeed because they stick to their knitting — they know their strengths and how they specifically succeed, and they look for innovative products that can fit into their respective models for success.

Stacey: Useful mass-appeal products with low prices will continue to do well in today’s multi-channel environment. Products with a retail component to their distribution plan are also likely to be most successful in 2011.

Yallen: The senior care category is the category that is best situated for growth in 2011 and beyond. Further, because of the unrealistic cost of media, verticals that are able to create a lead-generation model and take advantage of shorter media unit lengths is also a critical factor.

Does today’s consumer respond better to short-form or long-form DRTV? Which of these two formats are best supported by other media, including online, mobile, print and radio?
Fays: Short-form advertising during the past 12 months is the gold standard in direct response marketing. Paid programming is in desperate need of a few hit shows to make itself relevant.

Garnett: Both. So let’s consider where companies are missing the most opportunity — specifically brand use of long form. The brands are comfortable enough with short form that it’s their first stop in DRTV. Unfortunately, they never learn about the much larger brand impact that’s possible with long form. As far as these other media, it’s easier to support short form with them. If you need long form, it means you need a long message. And, long form is entirely unique in its ability to deliver these long messages. I’ve not even seen Web sites that effectively deliver what’s in a long-form ad. This doesn’t mean you should abandon efforts to support long form with these other media. But you need to have clear expectations about your results: if you need long form to sell the product, it’s not going to sell with an ad in an app on a smartphone.

Hawthorne: Tough question: I don’t think short-form vs. long-form response has varied much during the past 20 years. It still all depends on the product and offer. Which of the many other channels best supports short form or long form? Again, this is determined by the product. For example, an intellectual property DRTV product can hit a home run with radio, whereas a skin product would not. Print supports live seminar DRTV well, but not much else. Online supports it all. So direct response campaigns are best supported with multi-platform campaigns. Long form drives result for short form, which drives results online. The most successful campaigns know how to harness the power of all media to achieve winning ROI.

Lee: Short form had been stronger in 2009 and the beginning of 2010 — but don’t count the infomercial out! Both formats must have a multichannel campaign to bring complete success to the marketplace.

Medico: I don’t think you can make a head-to-head comparison in that for positioning, cost of media and calls-to-action, both are usually very different. Short form is best supported by other media, in that short form commercials air across a much broader daypart and have a better chance of being viewed by a much larger audience.

Orsmond: In the U.K., it has been the substantial growth of sales generated by U.S.-style infomercials that has generated substantial DRTV product sales during the past 2-3 years. U.K. TV viewers respond well to long form, and the only problem seems to be that there are not enough different and entertaining enough shows available, which is the reason only a few advertisers dominate this sector. In our experience in Europe, if a U.S. advertiser already has a successful infomercial, then doing a 120-secomd cut-down makes sense, as we are able to run these short-form ads across a greater number of cable and satellite channels and dayparts. This works very well to support sales on TV channels where long form broadcasts are restricted. Combining newspaper advertising with DRTV short form can work well if the offer is relevant to consumer’s needs. For example, several of the US “cash for gold” advertisers that launched in the U.K. during 2009 are now having to combine their DRTV campaigns with national newspaper ads to continue to drive the same levels of response. Fortunately for these advertisers, the U.K. is unique in that newspapers here have much wider national circulations than other countries, such as Germany and France, where regional differences are a hindrance.

Savage: It depends on what kind of consumer response you’re talking about. In terms of driving phone calls and online visits, research shows that consumers — from a “per viewing audience member” perspective — are more responsive to long form. But if you’re counting brick-and-mortar sales as well, short form can drive more response with fewer dollars spent. The most successful multichannel campaigns are supported both by long- and short-form media, as they take advantage of the strengths of each.

Stacey: Both short form and long form can be effective depending on the product you’re selling. We use both where appropriate, and both can be effective at supporting other media. The problem is that media rates seem to keep rising at the same time fewer people are watching, so something has got to give. Our response to this has been twofold. One is to go to 10-20-30 second, two-step ads to drive people to the Internet to see our commercials. The second is to move our commercials into retail stores by putting more TV screens on store shelves. In Europe, there are some DRTV companies with more than 10,000 TV screens at store level. This will be an increasing trend. In some categories, up to 75 percent of today’s retail sales are unplanned, so more purchase decisions are being made at store level. In-store TVs are not only effective, but they get rid of the increasingly excessive cost of traditional TV. In short, we have started to move our TV commercials off TV and onto the Internet and into the stores, while at the same time reducing our media costs and increasing our media effectiveness.

Yallen: The response rate is very similar in long and short form. In situations where we are running both long and short form for a client, we are seeing short form out perform long form by approximately 3 percent. Also, because of the more traditional media model of reach and frequency, short form is a much better driver of online, mobile, print and radio.

Given the current state of the DR industry, what would you change to ensure its continued health and growth?
Fays: The commitment from salespeople to buyers to marketers to lock arms and grasp the notion everyone can win in a negotiation. Often, it is an “us vs. them” mentality, and that often hinders the overall success and potential growth of the DR business.

Garnett: Shady business practices and bad products continue to erode consumer confidence. Industry associations have chosen to fight this with an ineffective self-regulation program and by merely fighting off regulation. That’s not enough. The problem facing our business is that it’s consumers who matter. As media prices continue to increase, we need audience trust our work even more than they have in the past. And that requires a dramatic shift in business practices in all areas — from product development, creative and production to the phones and fulfillment.

Hawthorne: Three letters: CPA. Cost-per-acquisition media insures that the best products/offers survive and thrive. As media continues to fragment, more distribution channels will have to increase their CPA inventory — a benefit to the bottom-line driven DRTV advertisers.

Medico: More fully integrate multichannel media strategies along with tracking analytics for better optimization.

Orsmond: For the U.K., DRTV media buying agencies would like the U.K.’s broadcast regulator to wake up to the fact that this is 2010 and for them to revise the Ofcom home shopping window rules to allow infomercials to “generate leads” instead of currently having to “sell a product via credit card.” This would immediately open up the long-form market to a substantial number of existing and new TV advertisers, all of whom are keen to test the power of the half-hour show to generate leads. In addition, this rule change would also benefit many other related broadcast services, such as TV production companies and call centers. In recent years, ARM Direct has been approached by several well known U.K. and American brands in the financial and retail sectors — all of whom we have had to turn away because of this out-of-date long-form U.K. media ruling.

Stacey: I’m not sure I would or could change anything. We are in an age of great technological change and choice being brought upon us externally. The challenge internally is to respond to this constant change — to quickly improve, innovate and adapt to develop the new business models and revenue models necessary to follow the consumer where they are going — As Seen Everywhere.

Yallen: Marketers need to think beyond the traditional approaches and adapt to current trends. The use of multiple platforms and true integrated advertising campaigns will ensure growth and maintenance of market share.
 

 

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