Why Internet Marketers Need to Rethink DRTV

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No sooner had certain Web gurus declared the death of the 30-second spot than other model-breaking entrepreneurs, including the likes of Google, Spot Runner and Visible World, showed up at the funeral to say they believe in reincarnation. (And we're not talking about broadband video.)

So let me deliver a eulogy here in the classic tones of famed BBDO copywriter John Caples on why the state of direct response television is, well, alive and kicking.

Viewership and Interaction

Despite video games, iPods, online social networking, gambling and everything else, television is still a popular entertainment option. In fact, increasingly popular if you look at the research.

According to Nielsen Media Research, U.S. TV viewership was up nearly 3 percent from the previous year and 12.5 percent from a decade ago. Cable Advertising Bureau data show that weekly viewing per cable household is up 69 percent in the last 10 years.

Of course, that doesn't mean that people are watching the commercials. However, many industry studies, as well as those we've conducted at ID Media, have shown that ad-skipping is by no means ubiquitious by those empowered by their digital video recorders (DVR). In fact, there's not only viewership, but engagement if the advertising is well-constructed.

For example, we tested the impact of enhancing our clients' spots with a branded "thumbs-up" clickable icon visible only to TiVo subscribers. Rather than skipping through the commercial, many TiVo subscribers - who have very attractive demographics - clicked on the icon and then asked to be contacted.

The response generated here was 13 to 23 times higher than the benchmark cable TV campaigns. Previous ID Media interactive TV tests have also shown an increase in response.

Content

Programmers, especially in cable, have continued to invest in a wide variety of content, much of it increasingly appealing to niche audiences, thus offering good targeting opportunities for marketers.

ID Media's clients ran on over 100 ad-supported networks this year, and there are 60 percent more Nielsen-rated cable networks than there were five years ago. Whether someone's passionate about Africa, the New York Mets or country music, there's now a cable network dedicated to that special interest.

Targeting

Reaching the right person at the right time with the right message, once the mantra of direct mail marketers and now increasingly voiced by online practitioners, is now becoming a reality on television through technology like that of Visible World.

According to Forrester Research, "Visible World's ad delivery system can be used to enhance both broadcast and cable commercials, but it has the most to offer in a cable environment. There it reaches approximately 28 million cable households - by far the most of any new TV ad system.

"The primary advertising benefits of Visible World are its ability to dynamically update, customize, and target ads … Auto, retail, and packaged goods firms have the most to gain from the system as it is currently available," Forrester said. "If the household-level targeting version of Visible World wins deployment, database marketers in industries like financial services will come calling."

Measurability

For decades, consumers have shown their willingness to engage with television advertising by responding to a toll-free number featured in the commercials. We've used those responses to calculate a highly granular return on investment for each spot aired and to use that feedback to optimize the DRTV plan.

But today, attuned to consumers' changing preferences, we are also promoting the use of a URL as a response mechanism and factoring Web responses into our ROI calculations.

Many of the leading networks are also offering us direct response rates for spots - including 30 seconds - that feature a URL exclusively. (Since certain of our advertisers actually see a higher conversion on the Web than by telephone - incredibly - we think these networks are very smart.)

But beyond a more-or-less direct response to a URL, the other new and exciting "response channel" for DRTV is search.

Not every consumer is going to call now or go online to find out more. But instead, they more organically "remember" the next day and then decide to search about whatever the DRTV spot stimulated.

ID Media research shows a clear correlation between DRTV spending and search queries. Smart marketers are also building this into their ROI models.

Market-based Pricing

Today technology allows DRTV buyers to act like traders. Deeply discounted rates - 50 cents on the dollar - are available to direct response advertisers who qualify in terms of offering a response mechanism in their spots and a willingness to be pre-empted if another advertiser comes in willing to pay a higher price in the scatter markets.

Our TV buyers take calculated risks on what price will clear and re-estimate rhythmically based on what the markets are doing. Using both their rate-history databases and their instincts, they shrewdly play the markets to clear spots in the open TV markets in which supply and demand are doing a very dynamic dance.

It's not so unlike the market-driven pricing in search in which advertisers compete to buy what they want, but don't pay any more than they need to. The impact of technology in enabling market-based pricing for response television is certainly one of the most exciting aspects of DRTV today.

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