Media Buying Strategies Change as Dollars Pour In
Expenditures on DRTV media accounted for 41 percent of all TV advertising last year and growth is expected to continue unabated the next few years as media dollars that used to be allocated for general advertising are shifting to DRTV.
While DRTV advertising expenditures comprised 11.2 percent of all direct marketing expenditures last year, it is expected to grow as direct marketing activity increases. The latest Economic Impact study shows that U.S. direct marketing expenditures represented approximately 57.8 percent of the total advertising expenditures last year. Meanwhile, consumer direct marketing sales have grown 7.4 percent annually since 1992 and are expected to grow at that same rate the next four years to $978 billion.
Subhed: Buying Strategies
Over the past decade media planning and buying have grown more sophisticated with the increase in spending and the changing media landscape. Media distribution channels have become increasingly fragmented with the growth of cable and satellite channels, while new technologies continue to impact consumer spending habits. Television viewing habits are shifting as cable TV reaches a market penetration of 80 percent of U.S. TV households. National advertisers are shifting ad budgets into cable and are causing rates to increase for the DRTV buyer. Those higher rates have led to a higher cost per order for DRTV marketers.
DRTV buying strategies differ for distinct products and companies. Basically, the consumer DRTV media buying strategies have evolved into three approaches.
<B>Traditional Direct Sell Objectives.<B> The DRTV industry was founded on the sole objective of selling products directly through TV. The objective in these kinds of buys is to maintain a self-liquidating ad budget and deliver a profitable cost per order or return ratio. Up until about five years ago, meeting these objectives could be highly lucrative for the marketer. But the rise in media rates have led marketers to air spots that raise product awareness, create consumer demand and drive retail acceptance. The objective of making a profit directly from TV is seen with such notable products as the Thigh Master, Ab-Roller Plus, Igia Epil-Stop, Vanna White's Perfect Smile and the Sobakawa Pillow.
<B>DR/Retail Hybrid Objectives.<B> The hybrid objective includes a combination of maximizing direct TV sales and retail sales. These objectives are usually for products or services that have national distribution. A notable example would be Sears' strategy for Craftsman Tools. The retailer aired DRTV commercials that offered the product on television, but also raised awareness to drive retail sales.
This approach also has been very effective in launching DRTV products into retail. Both objectives include using an extend media budget with a partial self-liquidating return on investment through television, as retail sales now play a big part in the analysis of media buying efficiencies. The buying strategies not only include chasing the best cost per order, but now must include the marketing strategy to purchase in the relevant retail markets. The continued advertising support is necessary to maintain product and brand awareness while improving retail sell-in.
<B>DR Niche Objectives.<B> This strategy of media buying is a targeted approach for products with limited appeal. Such products as books, golf equipment or special interest videos are usually in this category. The objective of this kind of buying is to achieve a profitable return on investment in TV, while using targeted print or direct mail media to reach specific consumers. The niche approach is usually seasonal - golf products would air during golf season in some markets -- or tied in with some other marketing strategy. The one caveat to niche buying is that the volume of orders is usually much less than mass-merchandised products.
It's apparent that the corporate giants are waking up and seeing the benefits to accountable advertising. Ultimately, DRTV media buyers realize that ratings points don't buy products, people do.
Nancy Lazkani is founder and president of Prime Time Direct Inc., a DRTV media buying agency in Sherman Oaks, CA.
Direct Marketing Media Dollars Pour into TV
All figures in billions
Direct Marketing Total Percent
Advertising Advertising Direct Mktg.
Television $17.2 $41.8 41.1%
Direct Mail $37.4 $37.4 100%
Magazine $7.8 $13.9 56.1%
Newspaper $15.1 $40.1 37.7%
Radio $5.3 $12.9 41.7%
Telephone Mktg. $58.1 $95.0 61.2%
Other $12.0 $23.9 50.2%
TOTAL $153.0 $263.9 57.8%