The direct response television landscape has changed radically over the last three years. Increasing media rates, multi-channel distribution and lack of product innovation have all but eliminated the classic direct response television model of simple “cost per order.”
The days of “3 in sales for every $1 spent on media” are all but gone for most products, as I find myself constantly counseling clients that long for the old days of low rates and high media ratios.
In most cases, successful television marketers simply can’t make it on one-step direct profits unless they have high ticket items with enormous front-end margins that allow for a high cost-per-order (Bowflex model) or continuity products (Proactive Solution model) that allow them to take a loss on the initial sale in favor of long-term profits through re-orders.
The once uneasy relationship between retail and direct distribution has become a full-fledged marriage as product marketers embrace the fact that one of DRTV’s most compelling attributes is its ability to drive consumers’ retail and online purchases.
This has been a difficult transition for many DRTV marketers, as the new direct/retail model is much less accountable and more expensive to test, and ultimately involves a leap of faith that retail sell-through will maintain against media expenditures. But successful marketers are increasingly looking at DRTV expenditures as a hybrid advertising/direct sales model.
Consumer Packaged Goods Firms Buy Into DRTV
Perhaps nothing validates this direct/retail marriage as much as the entrance of the titans of traditional brand advertising, Procter & Gamble Co. and Clorox, into the world of DRTV.
I suspect that all the major packaged goods advertisers began to take notice of DRTV after the meteoric rise of Orange Glo over the last decade via direct marketing – the cleaner company that went from a tiny direct marketer into a retail giant with brands like OxiClean. OxiClean created a category that competitors rushed to replicate, including the use of DRTV as a marketing tool.
Both P&G and Clorox (and many other traditional marketers) have made DRTV a consistent part of their marketing mix, though they use the format slightly differently. P&G takes an extremely retail-friendly approach, using DRTV for brands like Crest, Downy, Oil of Olay and even its pet food brands.
Using 60- and sometimes 120-second spots, P&G’s primary approach is to drive consumers to the telephone or a Web site for a discount coupon. Media efficiencies are tracked via cost per coupon and redemption data, and also using more traditional advertising metrics.
Clorox has pursued similar strategies, but has been a bit more adventurous, even introducing a 28.5-minute infomercial a couple years ago to promote bleach.
When I first heard about a program devoted to the history of bleach I thought it was a terrible idea. But then one night while channel surfing I found myself glued to it, and as a result, have a new appreciation (and know many more applications) for the strong smelling cleaning compound.
In addition to couponing for established products, Clorox also uses DRTV as a testing platform for new products, correctly surmising that real data from television viewers as to the appeal of a new product is more valid than comments from focus groups.
Branding, Couponing Advantages
There are many good reasons for these brand marketers to use the format. As DRTV marketers have always known, demonstration and testimonials drive sales, and inserting these techniques back into television advertising for even venerable and established brands helps sell product.
Sixty, 120 seconds or even 28.5 minutes is a long time to talk about a product compared to the traditional 15- and 30-second time slots, and allows for the presentation of multiple reasons to purchase.
Couponing not only provides a great trackable media metric and provides an option to normal coupon distribution channels, but also builds database.
DRTV’s great media rates and flexibility can also be a boon to these brands, often doubling the impact of an ad budget. Since DRTV is typically only purchased two weeks in advance, marketers can quickly respond to market conditions, even concentrating on local markets to build presence in areas that need more attention.
Finally, most retailers are unabashed about their love of direct response television, understanding that accountable advertising allows marketers the justification to spend more on TV, which only helps the retailer.
