25th Anniversary Issue: DRTV Finally Gets Some Respect
Twin motivators have driven the past 25 years of this evolution: innovation and necessity. Through the years, TV direct marketers grew up with the industry. They increasingly presented advertising that appealed to the full spectrum of the marketplace.
Today, more than $2 trillion is spent worldwide by consumers responding to DRTV, according to the Center for Media Research. DM advertisers spent $24.3 billion last year in the United States alone, according to the Direct Marketing Association. A study showed that 37 percent of all TV commercials display a toll-free number or a Web address and that more than 250,000 30-minute infomercials air annually.
Two Tiers for Pricing
DRTV began with television in its infancy. Perceiving a chance to take advantage of the new medium, Alvin Eicoff produced the first long-form TV commercial in 1949. Later, he consulted with AT&T to develop the concept of the toll-free number and he coined the phrase "or your money back!"
Direct response really became viable in the late 1950s when TV stations realized their ad inventory would evaporate daily and they were compelled to find ways to sell the remnant time. Thus was created the two-tiered pricing system, where neither train would meet.
The first tier became known as the general advertiser, consisting of national and local advertisers that planned their advertising typically a year at a time. They bought guaranteed media delivery, and their schedules could not be pre-empted. The second tier was created to capture the advertiser that was less concerned about sophisticated media planning or didn't require the ads running in an orderly fashion.
To ensure that these two groups did not compete against each other, TV stations required these second-tier advertisers to be different. They were required to look and feel like a local advertiser and compelled to use a response mechanism. These smaller advertisers weren't building brands or selling in the retail space.
This was the inception of the direct response advertiser - carpet cleaners, vocational schools and land developers - now known as DRTV marketers. These advertisers knew early on that to succeed in using TV they needed to be extremely rate-sensitive for the advertising to be profitable. They didn't care if the spots ran on Tuesday instead of Monday. All they cared about was whether the phone rang.
Veg-O-Matics and Mince-O-Matics
Ron Popeil further changed the landscape. Like several of the DRTV pioneers, he came from the perspective of the demonstrator-barker. The son of an inventor who sold products to Sears, Roebuck and Co. and Woolworth, Popeil began his career in the early 1950s selling those products on street corners and in dime stores. By mid-decade, he recognized the selling power of TV and created a series of four 30- to 120-second short-form commercials for $500.
The rest is history. In 40 years, Popeil and his father became wealthy from kitchen gadgets such as Dial-O-Matic, Veg-O-Matic and Mince-O-Matic, selling more than $1 billion in products.
In the 1960s, other main advertisers were Time/Life, K-Tel and other music marketers who drove sales with local short-form spots.
A seismic shift occurred when cable TV took hold in the early 1980s. Though it fragmented the audience, it provided a much more targeted buy. In 1984, the ad industry was deregulated. Cable TV embraced direct response, and infomercials proliferated with purchased time generally airing at fringe hours. But that soon would change. With so many new channels, DRTV marketers had a sweeping number of options in day parts, demographics, psychographics and regions.
Evaluating the efficacy of a spot could be done in various ways without incurring the cost of a test that typically was planned in at least five local markets at high CPMs compared with today's standards. Because of the exponential increase in viewing options offered by national cable, the networks were left with a lot of inventory.
The New Frontier
Out of this environment arose the Home Shopping Network. Lowell "Bud" Paxson, who managed a news/talk radio station in Clearwater, FL, was paid by one of his defaulting advertisers in can openers. Figuring there was more than one way to get his money, Paxson charged his newsman - much to the journalist's chagrin - with hawking them on air.
Recognizing the selling potential, Paxson and station owner Roy Speer soon launched the Home Shopping Network on a local cable network in June 1982. With sales consistently at $60,000 or more daily, the concept went national in 1985.
This truly was the new frontier. Specialized direct response agencies like Inter/Media, Halogen, Eicoff and CPO Direct (and now SendTec) became leaders in driving the business. Suddenly, short form became the hot format. With the growth, one of the largest problems was lead tracking - how to analyze where the leads came from. Until then, DRTV marketers used different 800 numbers per market to determine call origin.
A new wind was blowing by the '90s. The sophisticated DRTV agencies began transforming the industry from a low-end product marketing pipeline to a tool of the national brand manager. Pharmaceutical companies were among the first major advertisers.
Other opportunities existed in DRTV's growth. Forward-thinking media companies recognized the efficiency of using a direct marketing approach to initially force retail distribution, then drive the retail channel. Another factor has been the influx of better, more reputable products, such as the George Foreman line of grills.
With satellite services proliferating, another medium joined the mix: the Internet. Suddenly, there was a new response mechanism for DRTV spots, one that could impart more extensive sales information, provide online coupons or capture addresses for future sales.
This brings us to an exciting time where there is true interactivity and integration of all media. You can mix print, TV and radio, drive customers to the Web to download a brochure, call them back to find out why they didn't buy and sell them a continuity program to ensure long-term profit.
Challenges facing the industry include further fragmentation of the advertising landscape and stiffer competition for the limited time available at DRTV rates. Time-shifting digital video recorders skipping the ads also are a threat.
All this means is that DRTV marketers again must shift into that innovative gear that has served them so well for more than 25 years.