Outlook 2006: Measurable Marketing: The Future Is Direct Response
Measurability counts. Gone are the days when a business could place an ad in a magazine or put a 30-second spot on television and simply hope that it generates customers. Marketing strategies must be tactical, deliberate, targeted and diverse. With such an intense need to prove return on investment, direct response advertising stands out.
Direct response is a conglomeration of TV, radio and Internet advertising that directly solicits an order from a consumer. In 2004, the direct response industry was estimated to have grossed $296 billion, of which DRTV sales made up more than $167 billion. Overall growth rates for direct response surpassed 8 percent last year, with Internet sales growing a whopping 24 percent. According to Forrester Research, Internet sales topped $141 billion last year, of which $64 billion was generated by direct response e-commerce.
Convenience, not just channels. Consumers demand the convenience offered by direct response and are shopping at levels never seen before. And they are choosing to purchase through multiple DR distribution channels.
In a study commissioned by the Electronic Retailing Association in May 2005, more than 70 percent of all buyers surveyed considered themselves multichannel shoppers. Also, they are active product researchers. More than two-thirds of respondents first researched a product online, then bought it in a store. The study also concluded that three of four buyers saw a product advertised an average of three times on multiple channels before choosing to make a purchase.
In essence, consumers are smart, sophisticated and prepared, and they care about convenience, not channels. You need to touch them multiple times and reach them in targeted ways.
Technological advancements are improving the marketer's ability to reach the consumer. We've all seen the growth of the Internet, and as mobile technology matures, I believe this will be the channel to reach the tech-savvy, younger consumer. Do I think you can sell a product to a grandmother using a mobile phone? Probably not. But my 19-year-old son would order a movie via his cell phone in a heartbeat.
It's about knowing your consumer and knowing your market. Given the immediate response this form of marketing generates, a company knows instantly who's responding to an ad and ordering a product. Within days, even hours, many companies can tweak their campaigns to turn profits within a week.
Case for DRTV. So why does direct response have to keep defending itself? In an industry that has seen the likes of Bowflex, Proactiv and Tae Bo gross hundreds of millions of dollars, why are traditional ad agencies seemingly unwilling to embrace DRTV fully? Some of the market's biggest industries have entered the field, unveiling full direct response campaigns for Procter & Gamble products, Nissan cars, Bissell vacuums, Craftsman tools and Braun mixers.
Furthermore, more retail stores now carry products that began exclusively as direct response goods, so much so that retail distribution is a fundamental element to launching a DRTV campaign today. Big-box retailing giant Wal-Mart is the No. 1 retail outlet for "As Seen on TV" products.
To fully launch a direct response campaign, you have to go to the experts. I have seen many traditional ad agencies start direct response divisions without fully understanding the market and all that direct response entails. This is a scientifically based marketing medium, and a company that wants success needs to go to the market leaders.