More than television
More than television
Marketers are combining the compelling nature of DRTV, as well its ability to describe a product in-depth, with the cost effectiveness of online marketing. As a result, marketers are creating campaigns that can be run and measured across channels.
"Today, what we call our 'Web lift' is a much more significant percentage than it was just three to four years ago. We convert customers differently through the Web, but we are working to optimize that," says Patrick Baynes, VP and general manager at Gaiam. "The Web consumer is a consumer that wants more information and is not as impulsive as the TV consumer, but they still want you to provide information in a way that they will understand. The phone buyer is more of an impulse buyer."
Brands are finding that DRTV — which, because of its length, allows marketers to explain a complicated product or service more thoroughly than traditional TV advertising — goes hand-in-hand with the Web, where consumers can research products on their own. As a result, brands are seeing a significant swing in orders made through the Internet from those made through a 1-800 number.
"A big trend is that business has switched to online more and more. The traditional direct response is occurring through the Web, as well as through telemarketing," says Peter Koeppel, president of Koeppel Direct, a DRTV firm. "In the average campaign, from 30% to 80% of the orders are now coming from the Web. One reason is that 60% of people watching TV are logged into a computer in the same room, so it is much easier for them to go online and do some research and then go to the website to order. What that has done is made it more important for brands to integrate their TV and online."
Koeppel, who recalls that only 10% of orders were placed through the Internet as recently as seven years ago, notes that consumers are more likely to buy through the Web when there are different versions of a product to choose from. Rob Medved, president and CEO of Cannella Response Television, concurs, noting that Web response to an average DRTV ad was as little as 15% five years ago. More than half of consumers now routinely buy products from DRTV ads through the Internet after seeing a DRTV ad, he says.
Q&A with Bernard Luthi, VP of marketing, Web management, customer service, Newegg
Bernard Luthi discusses Newegg's use of DRTV
The Web activity has also helped telemarketers — many of whom describe themselves as obsessive when it comes to adjusting their TV creative based on results — refine their campaigns based on metrics. Art Jacobsen, VP of CarMD.com Corp., an automobile performance product manufacturer, said his company "measures everything we do, amplifies what works, and shuts down what doesn't" in response to DRTV performance analytics.
"We had to radically reinvent the way our website is architected. Some of our best practices from five years ago are dead today," he says, adding the company has used specific URLs to funnel consumers who saw CarMD commercials as either short- or long-form DRTV ads. "It's really changed the way we approach the Web."
However, the convergence of DRTV, e-commerce and Internet marketing is also forcing brands to synchronize their campaigns across a range of channels, including emerging ones like social media. For example, to better measure response to DRTV ads aired at certain times of day or different versions of the same campaign, marketers often create distinct microsites. Brands also measure the responses from specific search terms corresponding to ads or offers, explains Ian French, president and partner of Northern Lights Direct, a Toronto-based direct response agency.
"What a lot of companies are discovering is that nothing generates the cost efficiency that online does. Search is the most efficient form of advertising ever created, but it doesn't drive volume. However, a good DRTV commercial both drives people to the phone and to the Web," he says. "We spend a lot of time working in the online space and designing landing pages for microsites, and we do a lot of multi-variant testing on the color of buttons [on a page] and that sort of thing."
Although a run-of-the-mill corporate website has many uses, from branding to media relations, microsites generally make better landing pages for consumers targeted by DRTV ads, adds French.
"For nonprofits, if you go to a corporate site, it has something for everything — customers and the press. It's a dog's breakfast, and where the person has to go to purchase is five to six clicks away," he says. "Whereas a microsite can have the commercial playing again and the donation form, and as soon as the customer lands it's much easier and intuitive. In a nutshell, conversion rates are often several hundred times better than on a regular site."
The convergence of DRTV ads with various tracking phone numbers and URLs has also created a complicated tracking environment for brands trying to determine their ROI. "Without question, it's more complicated than it was, but it is also opening up new avenues with desired customers, so it's wonderful from an opportunity standpoint," notes Matt Greenfield, SVP and director of client services at KSL Media.
This dilemma has forced DRTV agencies to think creatively about how to prove DRTV ROI to clients.
"We will run an online campaign at the same time we run the TV ads, and we sync them. It creates challenges in terms of measurement. If someone calls a 1-800 number, you know where it came from. But with more response coming from the Web, it's more challenging, so we've developed a system to track Web activity back to the TV networks," says Koeppel. "You might look at the calls that come through telemarketing and it might look like the network isn't profitable. But if you assess the Web activity, it is possible that it is profitable."
However, French adds that it's difficult for brands to push consumers to a specific landing microsite by a call-to-action because respondents often search for a product or service using its brand name rather than the specific URL.
"Ninety percent of the time, a microsite is a must. Where it gets tricky is if you have a well-known company, and if they put out a commercial, consumers will Google the company name. So they won't end up on the landing page that you want them to," he says. French adds that the firm tries to refer consumers to product- or service-related search terms or URLs but that it is "very hard to do because the customers have it in their minds that they can type in the company name and get what they want."
Some marketers are also conflicted about whether or not to tie their DRTV campaigns to social media outlets such as Facebook and Twitter. A positive case study is fitness program P90X, which has more than 420,000 Facebook fans and 26,000 Twitter followers after years in DRTV. "Social media has helped propel many direct response brands so much further," notes Medved. However, he adds, marketers then "have to make sure people are not squatting on the brand's keyword search terms and have to defend the brand from things that people are saying about it that might not be true."
"You've got 100 million Siskel & Eberts out there that can comment on it immediately," says Medved.
Growth in a poor economy
Despite an uncertain economy, US DRTV advertising spending increased 2% to $1.59 billion in the first quarter of 2011 compared with last year, according to Kantar Media. While the medium was outshined by the gaudy growth of Internet display ad spending, which increased nearly 15% in the quarter, US DRTV spending avoided the retraction seen by newspaper advertising, which saw a 2.1% decrease. Free-standing insert spending in the US dropped 17.5% in the quarter.
Industry experts say DRTV has been able to maintain as other traditional media have suffered because of the accountability it gives marketers.
"I agree that DRTV does run parallel with the economy, but with DRTV as a vehicle in itself, if you put a dollar out there, you're going to get something back. There's no other vehicle like that," says Arthur Wing, president of Little Giant Ladder Systems, a DRTV marketer. "And even as we surround ourselves with social, I still want to meet the first person that says they can monetize that. DRTV is probably the most measurable gut-check reaction you can get from an audience."
The sluggish economic recovery has also helped DRTV's reputation in some ways. As brand-name companies have moved into the space to save money and to demonstrate their ROI to corporate executives, the quality of products in the DRTV space has improved, notes George Leon, SVP for media and account management at agency Hawthorne Direct.
"It has brought a new advertising space to the DR platform. We are now seeing more insurance companies, more automotive companies and more of the traditional, general-rate advertisers looking at direct response as a more cost-effective way to reach a consumer," he says. "You don't see the same number of $19.99 products out there. It's become a more suitable option for brand advertisers and those who are doing hybrid direct response and brand marketing."
Put more bluntly, French explains that DRTV is "not as sexy and budgets are not as big" as traditional advertising, but marketers will embrace it when they need to prove that their ad spending works.
"The underlying thing is that the economic downturn hurt businesses, and they have less money to invest and they need a return. It's not like the boom times, and there's not a lot of discretionary spending — and they need the maximum return from their money," he says. "Direct marketing is measurable, and it tends to be way more efficient than brand advertising."
Direct response brand-building hybrids
Driven by the need to prove ROI, marketers are also using DRTV to improve brand awareness, while also taking advantage of its ability to drive consumers to retail or e-commerce purchases. In the process, brands are quickly blending their DRTV efforts with other marketing tools.
"Before, we created products specifically for DRTV — now we look at all channels and see we need to not only emphasize the need to make money from DRTV, but we need to use DRTV to advertise it on all different channels and promote it on different channels," says Baynes. "I wouldn't say we use DRTV for branding, but to optimize the advertising there and to sell it through multiple channels."
The hybrid approach, which combines elements from traditional and DRTV marketing, has also been fueled by large advertisers getting into the DRTV space due to the difficult economic climate.
"Because of the recession, we introduced the hybrid branded response to new advertisers, and we have seen DRTV now become BRTV: brand response TV," says Leon. "From the creative standpoint, it is preserving the brand. From the measurable and attribution perspective, it is adding value to the ad dollar. It makes the advertiser accountable to every ad dollar spent."
Although industry experts say the use of hybrid DRTV tactics will continue even if the economy improves, they differ on how it will work on interactive platforms such as interactive cable TV and tablets.
"New technologies are the $64,000 question. Dish Network has integrated a platform and done some click-to-call and other order types. They all know it's coming, but it has been coming for a few years, so I think it will still be a few years before you see it start to take hold," says Medved. "The other question is consumer acceptance. Not everyone is going to be sitting around with the remote and willing to click and order. There is going to have to be an educational process with the launch of any new technology."
Home shopping channels also broaden reach
As DRTV marketers move well beyond their own traditional medium, companies that were built as shop-from-home cable TV networks are doing the same, broadening the appeal beyond TV.
However, direct response technologies evolve in the coming years, marketers say brands will need to continue to integrate DRTV campaigns with other tactics. They also say they will have to integrate their expertise with DRTV across various media, as well as their expertise in analytics and search marketing, into their direct marketing strategies.
"Most CFOs need to be able to quantify and justify the marketing spend, so being able to demonstrate a clear-cut ROI is something that has obviously become more prominent as the economy has become more challenging," says Lee Cutler, founder and president of Kre8 Media, a direct response firm. "We are constantly encouraging a holistic approach by direct response. I don't think any platform works in a silo, but in harmony with each other. You have to know how one affects another and how together you can deliver the customer's desired ROI."