Last year we were in a dot-com advertising frenzy, or more specifically, an initial public offering/venture capital-driven television advertising frenzy.
Hundreds of millions of dollars were spent on advertising that did not produce results. Now that the IPO bottom has fallen out, how do dot-coms make advertising work effectively?
Here are a few questions for dot-com firms to ponder:
• What was your television advertising objective? Was it to build a brand, or to get people to purchase your product or service? Did your “cutting-edge” advertisement achieve that objective?
• Did your 30-second spot give your customers enough information not only to visit your site but also to make a buying decision?
• Does your marketing campaign work effectively to convert casual browsers into serious and loyal buyers?
• Do you know how to take advantage of testing your offers to keep your marketing dynamic and customers coming back for more?
Chances are, the answers to these questions are mixed with “maybes,” “nos” and an occasional “sort of.”
A great idea, a registered domain name and a little venture capital are nothing more than a way to lose a lot of money if they are not supported.
So what’s a dot-com to do? Abandon television? Settle for slow growth? Here’s a look at the basics:
Television can work.
Television is arguably the most effective mass advertising medium ever invented. More people have televisions in their homes than have indoor plumbing. Its power to convey information and elicit emotion is unrivaled.
It’s no wonder, then, that dot-com companies looking to build their customer bases have turned to television. It just makes sense. The question now is how to use television effectively and efficiently to drive revenue to your site.
What are the options? Television advertising is broken into three models used to build dot-com traffic:
• Traditional branding. A commercial is made to build awareness of a company or product and establish a brand image in the consumer’s mind. A consumer, armed with this brand image, visits the Web site or retail outlet, purchases the product or signs up for a service, and becomes a customer.
• Direct response television. A commercial or infomercial is made with the goal of selling a specific product or service. The consumer can either call a toll-free number and order or go online. Examples of this model abound in virtually every direct response commercial or infomercial on air today. When the advertisement runs, the URL is listed adjacent to the toll-free number. The customer responds to a specific offer using either the phone or the Web.
• Web response television, or WRTV. This is one of the emerging advertising models. In this model, the commercial is direct response. It gives the person all the information needed to take an action. However, unlike traditional DRTV, there is not a specific product offer. Rather, the “response” you are looking for is to visit the Web site, take a specific action or sign up for a service. In that sense, the Web site is the product.
Traditional branding evaluated.
When most companies think of advertising, they think of brand advertising. Hundreds of ads do nothing but saturate you with a brand name — Coca-Cola, Kleenex, Nike and Xerox, to name a few. These companies are U.S. icons of industry and have created brands and images so strong and far-reaching that they cannot be confused. Part of their success is their longevity. These companies have had decades to saturate the market with jingles, promotions and products.
So what does the Internet newcomer to the business world do? Copy the model and wait for success. The problem is, it’s not working. According to a recent article in Retailing.org, the magazine for the Electronic Retailing Association, dot-com companies spent $7 billion on advertising last year and generated $300 million in revenue. That equates to $21 on media to generate $1 in revenue. In the direct response industry, a more likely scenario is to spend $1 on media to generate $3 in revenue.
Here are three reasons traditional branding misses its mark of building a customer base, especially if you are the new dot-com on the block:
• Clutter. The promotion that was once a novelty is now lost in a crowd of other novel ideas.
• The promotion does not fully explain the benefits and services of the product or Web site. The ads are clever and entertaining, but people are asking, “What does the company do, and what are the benefits of what they are selling?”
An article published earlier this year in The Wall Street Journal asked, “Where Have All the Gerbils Gone?” It talked about the potential problem associated with traditional advertising for dot-com companies. The “gerbils” refer to an ad for the Internet company Outpost.com. It created an expensive ad in which beanbag gerbils were shot out of a cannon. The ad was humorous, but aside from the laughs, little more than humor was accomplished. Viewers had no idea what the company was about. Unless customers know exactly what dot-coms are selling, the commercial is little more than entertainment to them.
• The focus is on the wrong target. It sometimes seems that companies may be more focused on Wall Street than on the realities of driving customer traffic. If you can’t turn eyeballs into revenue, you can forget about Wall Street.
Why pure branding won’t work.
Branding a product or service is about making a promise to a consumer. If you try the product and it performs as promised, you will have created a customer who respects what you offer. To be effective, a branding campaign is typically built up over time. It is not about notoriety or entertainment. It is about meeting customer expectations time and time again. Don’t expect branding to do something it is not intended to do. Brand advertising is not able to drive traffic to your site in an immediate and cost-effective way.
Why direct response advertising works. Direct response advertising, whether on television or the Internet, is about motivation and action. How do you influence someone to do something — to pick up the phone, log on to a Web site or make a purchase? Consumers still want value, to look better and to feel better. They respond to direct response messages because it is to their advantage to do so.
Consumers buy a product or service presented in a direct response campaign even though they can’t examine it in person, because the commercial or infomercial has motivated them enough to call or go to the Web site and make a purchase. It gives them enough information to make a purchase decision and then motivates them to act — and it’s trackable. If planned and executed properly, you can track the effectiveness of ads. How much traffic is being generated? At what cost? This allows you to test and optimize performance.
In addition, a direct response campaign is a low overhead operation with immediate and accurate feedback from each airing. If consumers respond to the offer, it can be scaled up quickly to take advantage of the success, and quickly build brand recognition from a foundation of sales and performance, not simply image. If consumers don’t respond, losses can be minimized.
The reality of what will keep the customer interested and engaged continues to change. If you overlook direct response television as an essential tool to your site’s marketing success, you will miss a tremendous opportunity. It is an opportunity to combine the reach and power of television with the proven technology of direct response.
Remember: The Internet is new and hot, but the roots of direct response have been established and proved. Together they form a winning team.
• Lee Frederiksen is founder and chairman of The Frederiksen Group, Falls Church, VA. Reach him at [email protected]