Why DRTV Makes Sense in Tough Economic Times
Here is a Catch-22: Now that the economy has slowed, budgets are getting cut with machetelike force, and advertising and marketing allowances are often among the first to get a close shave. It seems counterintuitive: How can companies hope to grow their business in an economic downturn if their consumers aren't even aware they exist?
The reason ad budgets are among the first casualties of a recession is best summed up by this oft-quoted remark by adman John Wanamaker: "I know half the money I spend on advertising is wasted, but I can never find out which half."
So corporate decision-makers go about the task of eliminating what they perceive to be the wasted half - or so they hope. The question is: What to do with the remaining half?
Though some of us may feel as though we've been knocked upside the head by the drop in the stock market, its impact has created a clarity and vision among corporate decision-makers. Accountability is now their focus. The Internet promised a cause-and-effect model but to a large extent has been unable to deliver it.
Now the direct response television industry stands to benefit enormously from this emphasis on the impact of advertising. Why? Because we've spent years refining and perfecting our business models, and the key is this: We've figured out how to tie a return on investment directly to specific media.
Somewhere across this great land in a corporate boardroom, a valiant soul is clearing his throat and asking, "What about an infomercial?" The collective sniggering ends when the chairman says, "Let's take a look at that." This is the executive who has blessed millions in spending against traditional tried-and-true advertising avenues and probably realizes that, despite all the scurrying about with charts and graphs by the marketing department, they are no closer to knowing what is effective advertising and what isn't.
According to Management Review, 80 percent to 95 percent of new products fail, depending on the definition of success. No doubt these are products introduced to the public via "safe" marketing channels predicated on inside-the-box decisions engineered to save heads from rolling. Ironically, these decisions often have the opposite effect. If you want proof, pick up the business section of any newspaper and see whether there is an article about corporate cutbacks.
But an infomercial? Nobody gets tickets to the Super Bowl for making that call, but you just might make your company enough money as a result of one to buy your own 50-yard-line seats. And it stands to reason that if Fortune 500 companies such as AOL Time Warner, Microsoft, Newell Rubbermaid, Philips and Toyota have employed the genre, there clearly is some merit to it.
So how is it that these blue-chip advertisers have made the leap of faith to DRTV? Examine what is happening to their business models: Their margins are eroding from increased competition, including the introduction of private-label product and cheap imports; the retail landscape is controlled by fewer and fewer category killers; the media landscape is so fragmented that they have to spend more money to reach the same or a smaller target audience; and, finally, a weakening economy means their consumers have less discretionary income.
DRTV gives them the luxury of time - time to educate consumers about the benefits and features of their products, to differentiate and brand themselves so consumers are pre-sold before ordering either over the air, on the Internet or through brick-and-mortar retailers.
In fact, many big-box retailers are now advising their manufacturers to produce a DRTV campaign because they understand the enormous power of the genre and that they are the ones that reap the lion's share of benefit from such a program.
As more traditional advertisers gravitate to DRTV, the first question they're likely to ask is: What's my reach and frequency going to be? Old-school DRTV agencies will respond by explaining that it's not relevant, that with DRTV the cost per inquiry and cost per sale are the only yardsticks that matter.
Though there is no question that these types of measurement are extremely important to evaluating media performance, the reach and frequency question cannot be ignored. One can punch holes in the paucity of Nielsen homes from which the television viewing habits of nearly 300 million Americans are supposedly derived. Yet, it remains the standard upon which some $8 billion worth of TV airtime buying decisions are made each year in the absence of anything better. A solid DRTV shop can provide both traditional DRTV measurement criteria and tie it to traditional quantification methodologies. In doing so, a client can get comfortable with crossing the bridge to something better - DRTV.
Consider this a call to brave and bold decision-makers. You needn't discard your CPMs if that is what it takes for you to experience a better way. Imagine a world of advertising lucidity where you can hone your media to reach your target audience and the proof is the legions who raise their hands in response to your ad. Bring us your one-Super-Bowl-spot budget, and we'll give you an entire campaign - one that is profitable, despite the ravages of an economic drought. Cost per point? That will be the point of no return, once you discover how DRTV can be the engine that sells and brands elegantly, but most importantly, effectively.