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1 Your One-Stop Source For DRTV Media Buying Information & Expertise Agency DRTVdecisions DIRECT RESPONSE INDUSTRY WHITE PAPER
2 Table of Contents Introduction... 3 How Media Buying Has Changed... 4 DRTV s Return on Investment... 5 Short and Long Form DRTV = Infomercials?... 6 Gauge Media Buying Effectiveness Through Tracking & Reporting
3 Introduction Media Buying and DRTV: A New Era in Television Advertising Direct response television has been making a name for itself in recent years. Once considered an inferior form of advertising and accompanied by many jokes about hokey infomercial tactics, that direct response television (DRTV) has not only reemerged as a legitimate form of advertising, but it has become one of the best returns on investment for media buyers and companies looking to profit in this tumultuous television advertising environment. Naturally, when considering the best places to spend advertising dollars, it s unwise to focus all attention on only one advertising channel. However, media buying consultants suggest that DRTV is one of the most cost-effective marketing investments available today, when and if applied effectively. 3
4 How Media Buying Has Changed Television advertising has traditionally been known for its expense above all things. Though it was the best way to reach the broadest customer base for years, the Internet has been giving television a run for its money in recent years. With cheaper advertising dollars and an equal, if not greater, number of eyes viewing each ad, it s easy to think that television advertising has become obsolete. A few recent studies suggest it s wise to take a second look. With widespread unemployment across English-speaking countries, particularly the United States, consumers are watching record amounts of television. A media buying company, Media Marketing Analytics (MMA) study found an increase in the effectiveness of TV over recent years. TV advertising, against all expectation, is actually performing better than it did before the rise in Internet usage. However, the way that advertising is bought and sold and from whom has definitely altered significantly. For one thing, network TV has taken a huge hit, with lower ratings and fewer viewers forcing network providers to offer advertising space on their channels for a much lower cost than they commanded even five years ago. An oft-quoted indication of the new affordability of network television advertising is the Cash 4 Gold spot that ran during Super Bowl 2009, historically one of the most expensive advertising slots on television. Though Cash 4 Gold was not actually the first direct response television advertisement to run during Super Bowl, it was very likely the first advertisement that the average consumer would recognize as a DRTV ad, having been accustomed to seeing Cash 4 Gold in what they would generally consider infomercials. Network TV is also seeing many of its major ad buyers pull out at the last minute because of budget constraints. Desperate to fill those ad spots, DRTV advertising can usually swoop in and obtain those slots for a fraction of their original cost on shows that would have been far out of their price range had they bought them in the traditional manner. 4
5 DRTV s Return on Investment With the factors indicated in the previous section, DRTV can often be obtained at costs up to 50% less than traditional advertising. As last-minute openings become more and more common, direct response marketers are finding it to their advantage to hold a ready-made spot in the wings and wait for an appropriate slot to open. They can then negotiate for a price that is within their client s budget. DRTV is one of the most cost-effective forms of marketing, particularly because it s easier to track the customer s response utilizing a DRTV campaign. Buyers can experiment with different time slots and demographics to find the audience that gets the best response through factors like the number of calls and web visits received during and immediately after each advertisement. On the other hand, traditional advertising methods do not generally offer the luxury of tracking where ads are most effective until months after the ad has aired. With CEOs and CFOs of major companies tightening marketing budgets and demanding results from the marketing dollars they do spend, media buying consultants are having a lot of success selling the concept of DRTV. Being able to track the results they get from every ad allows CEOs and CFOs to be satisfied that their investment has been well used, and they are encouraged to spend even more marketing revenue to obtain equal or better results. Again, because DRTV ad time can often be obtained at a fraction of the cost, this allows DRTV marketers to run their ads on a wide range of TV networks and stations that might not perform for their traditional counterparts who are often more interested in reach, frequency and GRP s than ROI. Since the response to each DRTV ad is much more easily tracked, it s easy for the return on investment to be gauged and any adjustments made before much advertising revenue is wasted. This flexibility is one of the reasons DRTV is recommended so strongly by media buying consultants. A media buyer can track how to get the most out of every dollar he spends, even if his initial speculations about where to air the spot were incorrect. As media buying consultants have discovered, companies are recognizing the value of DRTV campaigns and are willing to invest in them. Though overall advertising spending decreased 2.6% last year, direct response advertising actually increased by 9.2%. This indicates a willingness among CEOs and CFOs to overlook previous negative connotations about infomercials and embrace direct response television as a legitimate form of advertising that can generate trackable sales numbers. 5
6 Short and Long Form DRTV = Infomercials? Direct response TV once had a bad name because so many infomercials were of poor quality and often advertised outright dishonest products. Consumers came to associate an 800 number with a poor company and a scam product. However, direct response TV no longer looks the same as it used to, and it s easy to avoid the dreaded infomercial association if media buyers avoid certain common and often fatal mistakes. As any media buyer knows, the word infomercial as a term came into vogue fairly recently. Short-form DRTV refers to any spot two minutes or shorter, and long-form DRTV is any spot longer than two minutes. The word infomercial used to apply to any long-form DRTV spot that lasts 30 minutes or more, but now it s come to mean any DRTV spot, regardless of length. As direct response television advertising enjoys an upswing, it s critical to examine the factors that made those older infomercials the subject of so much scorn among consumers. Infomercials are the source of a lot of jokes and yet they get one of the best responses among all forms of television advertising when done correctly. They re still infomercials but they re not scams. Companies as major as Coca-Cola, which used to only use traditional advertising, are now using direct response television and other direct response techniques. It s also worth mentioning the infomercial s previous dark days as direct response television comes back into the light, mostly because there are lessons to be learned if media buyers are going to make the most out of the opportunities in DRTV right now. There are several critical factors to making a direct response television campaign successful: DIRECT RESPONSE TELEVISION ADVERTISING SUCCESS FACTORS The success of a DRTV campaign heavily depends on the quality of the spot itself, the selection of the right telemarketing firm, customer service, the method of selling used within the campaign, and the media buying strategy employed. Spot Quality: Using a professional team is essential. One of the reasons consumers lack faith in infomercials is because of the low quality production of the spot. 6
7 While traditional advertising even had awards for the best-designed spots, infomercial marketers often produced extremely low-quality ads with charismatic salespeople carrying the show. If media buyers are going to avoid sending direct response television into the shadows again, devotion to quality is key. Cast: The quality extends beyond the camera to the cast. Infomercials have long relied on actors who are compelling and charismatic, as well as good salespeople. Sincerity is a huge plus. It is also helpful to cast actors with whom your target demographic can empathize; studies show consumers are more likely to buy from a direct response television spot that features actors similar to themselves. Telemarketing and Customer Service: Selecting the right telemarketing firm is a critical component of any DRTV campaign. Many short form campaigns now utilize an Interactive Voice Response system (IVR) to handle their telemarketing calls, since the cost is less expensive than using a live operator and the conversion to sales can often match the performance of live operators. Some DRTV marketers do still prefer to employ live telemarketing operators, especially if they are selling a higher price point product or service or if the nature of the sale is more complicated. Direct response marketers often neglect to put an appropriate amount of money into ensuring the customer service positions are staffed properly, which can mean losing buyers who intended to purchase but were unable to because of shortages or shortcomings on the other end. Another must to consider is the hiring of an experienced fulfillment company that can also handle customer services calls, and ensure that the website is of a high quality that is capable of handling a large number of visits in a small span of time. Nielsen shows that many viewers go online while watching TV, so it s entirely possible to see thousands of visits in a two-minute span of time. If the website in place is not capable of handling that volume, you will lose customers, likely forever. Methods of Selling: The most popular and effective forms of selling include storytelling, repetition and honesty. By telling a story, the actor in the DRTV spot makes the viewer 7
8 empathize with him, thus building trust. This is one of the reasons it s so essential for direct response marketers to cast the right actors for each show; if the viewers really believe the actors, they re far more likely to feel compelled to buy. Honesty is also a critical factor; the Internet will quickly alert customers to any deficiency or outright discrepancy in your product that deviates from the advertisement. Media Buying Strategy: Before buying, direct response marketers should always be sure they have a good understanding of their target market. Experienced DRTV media buyers know the right media channels for each audience type, and can target their buys so that they don t wind up pitching to the wrong audience. A media buy directed to audience that is amenable to the product being sold will result in a higher conversion to sales, which translates into a more profitable campaign. Though the most popular DRTV networks can often appeal and then translate to excellent performers, they are often expensive. Direct response marketers with tighter budget constraints should consider looking for sleeper or niche media channels that do not yet have a great deal of popularity, but that do have a highly targeted audience with the appropriate demographics. Locating these sleeper or niche channels may take some more time, but they can often prove to be very valuable in terms of both cost efficiency and ROI. Never assume that the rate card price for a network is a constant. Direct response media buyers should always be prepared to negotiate. Any industry information can be very useful in these negotiations, so it bodes well to be versed in the latest news and performance results for a wide range of networks and stations. Knowing when a media channel has excess inventory will enable a direct response media buyer to almost always negotiate a better price for the direct response campaigns they manage. Finally, repetition has shown to be one of the most effective ways to keep a product in the consumer s mind long after a spot has aired. Considering and using these sales methods are likely to translate into better and often excellent results for your DRTV campaign. 8
9 Gauge Media Buying Effectiveness Through Tracking & Reporting One of the most valuable assets of a DRTV campaign is the ability to track where new buyers are coming from, and which spots are responded to most strongly. However, many media buyers are so focused on getting the ad spots they want, they forget the importance of setting up reliable tracking and reporting systems to see which infomercial spots are most effective. Any media buyer is well-advised to invest in tracking software that allows them to determine when their buyers searched for their products online, which demographics responded most heavily to which spots, and other information that can help determine where a DRTV campaign would be most effective in the future. Such safeguards can also prevent marketing dollars being lost in ineffective infomercial spots. If media buyers truly wish to maximize the effectiveness of their DRTV campaign, tracking, reporting and campaign optimization is the key to discovering the best possible places to put those spots. It s also important to work with a DRTV media buying firm that employs a full-time analytics team that works closely with its account service and media buyers to generate the optimal results for each campaign. Media buying consultants who want to stay on top of their game should know tracking, reporting and campaign analysis inside and out so they can demonstrate how powerful a tool DRTV is for their clients in today s competitive media buying environment. 9
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