A comfortable source of ROI

Atomic Direct’s CEO discusses the Snuggie and why 2009 could be a good year for DRTV

Q: How does DRTV typically perform when the economy is down?

A: During the recession right after the dot-com bust and the 9/11 attacks, advertising dollars shifted to direct response, includ­ing DRTV. But, it usually takes a little longer to show up on TV than with other direct response channels because the cost of entry is higher. In contrast, any one can get a direct mail campaign out there pretty quickly and inexpensively.

Q: Do you expect a similar scenario to play out this time around?

A: Manufacturers have been moving their money into DRTV anyway in recent years. P&G, Cabela’s, Electrolux, Home Depot and the US Postal Service have all experimented with DRTV to varying degrees. I think the current recession will ultimately accelerate this trend.

Right now, however, most companies are holding back their marketing dol­lars and watching what’s going on with the economy and consumers. They’ve stopped spending on traditional advertis­ing, but they haven’t shifted into direct response yet.

In the next two to three months, I expect to see an increase in interest in DRTV from major manufacturers and big brands.

Q: What is the appeal of DRTV during these times?

A: DRTV is more cost-effective than tra­ditional TV advertising. If a brand’s TV budget gets cut from $50 million to $20 million, it’s still possible to achieve a lot with a DRTV budget of that size. Plus, with DRTV, there’s a measurable return on investment. Finally, DRTV drives retail sales exceptionally well. For every one product that a DRTV spot sells on TV, it typically drives between 10 and 15 sales at retail.

Q: Are there any particular categories for which DRTV would make particular sense right now?

A: Recreational equipment is one category that should benefit from DRTV. Con­sumer spending is likely to be cut back on things like bicycles, motorboats and other outdoor-related equipment, but DRTV has proven to drive retail sales quite nicely for these products. Anything having to

do with maintaining a house will also do well, since people pull back from hiring contractors during a recession.

Q: Are DRTV rates being affected by the recession at all?

A: The rates for short-form spots are beginning to come down, because of the economy, between 10% and 15% on average. Sometimes the discounts are even steeper, depending on the network. The trend isn’t as dramatic so far with long-form spots.

Q: How do you explain the success of the Snuggie, which was introduced in a DRTV ad in October and has reportedly sold more than 4 million units already?

A: It’s a great example of when you tell a story about a product, the product sells. Similar products have been out there for years, but the company behind the Snug­gie put it on TV in a DRTV campaign that makes the product compelling to consumers. Now it’s selling faster than they can make it. If you have a compel­ling story to tell about your product, than DRTV can be a really good way to go.

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