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.