Fortune 500 buying into DRTV
Long the domain of small companies selling knife sets and abdominal-workout equipment, direct response television now is attracting more advertising dollars from Fortune 500 companies.
These corporations too value the quick return on investment and the accountability of direct marketing tactics.
"It's like they just discovered it," said Nancy Duitch, founder/CEO of Vertical Branding, a Los Angeles-based consumer product marketing, branding and distribution company, whose products include DermaFresh, Zorbeez and Hercules Hook.
"They've got all these major advertising agencies that don't want - that don't like - our business because then they have to be accountable," she said. "But eventually the big Fortune companies are going to have to make their advertising agencies accountable."
Because larger companies have greater resources, they can blend DRTV with other kinds of advertising.
"For them it's not about making money on the transaction but it's about getting a response and analyzing the response from direct marketing," Ms. Duitch said. "In our business we utilize our transactional markets to make money as well as to brand. They haven't really gotten to that place yet."
Advertisers are also responding to changes in the industry.
"What we're all seeing is increased fragmentation in the media marketplace and the proliferation of channels and platforms, specifically the Internet," said Linda Kalm, executive vice president of WorldLink Ventures, a Los Angeles multiplatform advertising sales firm whose clients include Fox Sports en Espanol and CNN en Espanol.
"The eyeballs are in a lot more places than they used to be," she said. "And I think there have been a lot of questions about the methodologies used for confirming how many people are actually seeing an advertisement that airs on television."
Companies that have relied on traditional advertising agencies have had no way to account for sales based on particular spots and times that they are going to be on TV. "Companies don't know which particular spots are actually working or not working, whereas in direct marketing there's true accountability," Ms. Duitch said. "We know how many people are watching at that time and we know, out of those people, who is watching [and] how many decide to call in or click on our Internet sites at that particular time."
Fortune 500 marketers are also benefiting from real-time information that is used in DRTV. Even on weekends when there is nobody at the office, reports tell marketers and advertisers when calls come in, what time people go on Web sites and how many pages they go through before they decide to place an order or opt-out.
"That's why everybody loves the Internet so much," Ms. Duitch said. "Discover - if you take a look - all their commercials have an 800 number or a go-to-the-URL-and-click-on. I haven't seen a campaign where you can't click on their URL or an 800 number to call up for more information about how to get a credit card in a long time.
"Procter & Gamble has a whole unit of people - a whole group of direct marketers - that they have hired to induce direct marketing growth," she said. "They have seen the accountability and have seen the revenues in the direct marketing world."
General Motors' campaigns are examples of "extremely successful" direct marketing, Ms. Duitch said.
"Nobody walks into a car dealership," she said. "You go online, you investigate, you go to Consumer Reports online - it's a direct marketing approach," she said. "The reason I think it's happening is that the consumer is changing their way of thinking, which is why in our business, about five years ago, you maybe had about 5 percent of your business online. Now, up to 30 percent of my sales are derived from online revenues."
Direct marketing worldwide is estimated to be a $300 billion industry and growing, according to Ms. Duitch.
"We've seen a lot of traditional and general-market advertisers like Lexus, for example, who, in introducing new products, are more open to using a direct response format where they have, in some cases, an infomercial or, in other cases, a short-form [spot] where they can elicit a viewer response," WorldLink Ventures' Ms. Kalm said. "They can ask the audience to call in to get a DVD with more information or a special offer from them.
"They then have some measurable results in their campaign," she said. "They can show what number of viewers were actually engaged in the advertisement and the motivation to respond."
Like other types of marketing and advertising, effective DRTV campaigns must show they respect the audience, understand how viewers think and respond to what motivates them.
"If that's the customer - very smart and searching online - and he or she is looking for information," Ms. Duitch said, "they don't want to get ripped off; they want a good value for their dollar, no matter how much they're paying."