On January 2, 1971, the ban on cigarette advertising created a huge drop in television advertising revenue to the tune of about $270 million. The recent recession created a similar decline. In both instances, direct response advertisers rode to the rescue.
In the 1970s, the Television Bureau of Advertising (TVB) began an effort to find new sources of revenue, and they decided that direct response advertisers were a natural source. At TVB’s urging, stations relaxed their restrictions on longer-length spots, and agencies encouraged clients to capitalize on this move. Increased DRTV money helped compensate for lost cigarette ad revenue at the time.
When the recent recession hit, direct response advertisers again increased their spending, drawn by greater availabilities and lower rates. From pharmaceutical companies with direct-to-consumer spots to online companies trying to generate web site visits, they provided significant direct response revenue that propped up stations’ sagging bottom lines.
As the economy improves, we’re bound to see a swing back toward less availability and higher rates for direct response advertisers. The same thing happened in the 1970s after stations recovered from the loss of cigarette ad dollars.
Stations, however, should understand that a fundamental change has occurred. Many advertisers have shifted their budgets away from television and toward new media. Direct response advertisers, though, remain more committed to television than ever before. They include a growing number of blue chip companies, such as Ameritrade, Procter & Gamble and Sears.
Just as important, hundreds of companies have joined the DRTV ranks recently as they try to drive viewers to their websites. Given these trends, stations may want to think of DRTV advertisers not just as saviors in dark times, but as partners for a brighter future.