Direct Response Marketing

Retail Outlet: What If You Don't Get a 2-to-1 MER?

1 Sep, 2006 By: Donald L. Potter Response

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The media efficiency ratio (MER) is the universal benchmark used by DRTV marketers to determine if a product is paying out and has a potential future in selling direct to consumers. The standard in recent years has dropped to a ratio of $2 in sales for every $1 spent in media.

Donald L. Potter

Of course, these ratios will vary by product category and various market conditions such as the competitive situation and the speed with which a marketer intents to expand the business. One thing is for sure — there must be a timeline for turning a profit.

Time certainly is of the essence. DRTV can shorten the time it takes to determine if a product has life. It does not take a major marketing budget to test, adjust and retest in order to determine if the phone rings and/or if Web site traffic is generated. Following this activity the conversion to orders, upsells and continuity issues can be optimized. But this may still not deliver the desired MER.

Does this mean it's time to dump the product through a closeout distributor or a discount chain? This may not be necessary if a broad, as well as in-depth, planning effort preceded the DRTV launch. In order to do this properly, remove the DRTV hat and put on your marketing cap. After all, the fiercely competitive world in which we operate requires us to think universally before executing on what is normally a finite basis.

The end game is what counts. Do you know where you're going? If not, any road will get you there. Consumer acceptance and desire to buy is the key. For many products, this suggests that retail distribution will be the ultimate destination. Yet, an amazing number of DR marketers don't include these channels in their initial thinking. They think too small and consider alternative options too late.

Having the financial wherewithal to test and read the results in order to take a product to the next level is the right approach. Far too many products introduced via DRTV are under-thought and under-financed — yet carry over-blown expectations. So, if they don't hit a 2-to-1 MER on the first try, they're gone. What a waste!

Careful planning and a going-in commitment to stay the course, if there appears to be some vitality, can turn a 1-to-1 DRTV product into a solid winner through properly selected retail channels. However, the finances and willingness must be behind it.

So, the place to start is to consider all the places your product might be sold. Put together a plan for getting it into all these points of distribution. Determine how much it will cost and how long it might take. Consider what obstacles might stand in your way. Then, work the plan back using the DRTV model.

This will get you to the initial test phase along with the budget and results needed to keep the project moving forward. Then, check the budget again to see if you can afford to support the product through the unprofitable times in order to achieve the ultimate goal.

This sounds simple enough, but we often fall in love with the concept more than the consumer buys into the sales pitch. I certainly have! It's important to have objective help in developing the plan and evaluating the results, thereby giving the product the best opportunity to succeed. This assistance should come from those who understand both the DRTV and retail markets well enough to navigate through the minefields that separate the two territories.

Those providing such help must be compensated. However, they should not profit from creating, producing or placing the advertising on your behalf. Aside from a basic fee, their major financial rewards will be generated from product sales. Remember, it's important that the people supporting you have incentives to succeed, that way you can go beyond the MER on the way to achieving a better return on investment.

Don Potter is a 45-year veteran of the advertising agency business, a frequent lecturer and the author of the book, "The 50+ Boomer: Your Key to 76 Million Consumers." He can be reached at (818) 728-8266 or via E-mail at don.potter@sbcglobal.net.

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