Miami ERA 2015 - Loews Hotel, Miami Beach
It’s fascinating to see and hear how the key topics affecting the direct response industry change from year to year, and even from event to event. This year’s Great Ideas Summit 2015, aka the Miami ERA Show, proved once again how dynamic the direct to consumer marketing environment really is.
While last year everyone seemed to be talking web marketing and maximizing revenue, this year’s trench meetings centered on expanded media and product distribution. More specifically:
Although still not widely used, savvy marketers are reaping the benefits of the five-minute short form (or long form as some view it) unit. A few years ago five-minute unit inventory was almost non-existent, however that is changing as more networks begin to expand this unit selection. In particular, networks featuring movies or extended content appear to be perfectly suited for the five-minute unit. For higher priced products or complex sales that rely on an inbound phone component to convert customers, the five-minute is rapidly becoming a solid addition to any media plan.
As part of your campaign planning stage, and in particular the production phase, we recommend you manage your creative assets in preparation for creating and integrating the five-minute unit length into the campaign.
Now, while live shop or home shopping is nothing new, it does appear there is a renewed energy among marketers and clients to embrace this channel. Putting aside scalability issues for this outlet, just about any revenues from shopping network appearances clearly are a major factor internally with companies as they build out their direct to consumer campaigns. When doing the obligatory end of the day analysis, we are hearing from many clients and manufacturers that home shopping contribution to the bottom line is important to them. We’ve been careful over the years to stop shy of saying DRTV and home shopping work together from a marketing perspective; but, from the accountant’s viewpoint, they do.
The conversations around international distribution this year at the Great Ideas Summit were perhaps the most interesting of all. It may just be that the “conquer the US first” mantra may not always be best approach. Perhaps this year more than ever we’ve entertained questions of a simultaneous distribution approach with the US, Europe and Asia. It appears there is a clear mindset shift to multi-prong distribution attacks, regardless of the country. This could be the culmination of global commerce shrinking down upon itself, where it’s just as easy to sell in the UK or Japan as it is the US. Perhaps not on the same scale, but again, revenue is revenue, no matter where it comes from.
Answers to Clients Most Asked Questions
If you are new to DRTV, or, if you are looking for answers to specific direct response marketing related questions, read on. Below we have compiled many of the most asked questions we receive as they relate to utilizing DRTV to market a product, and in general, how DRTV actually works.
What exactly is DRTV, or direct response television?Direct response television, or DRTV as it is known, is a marketing tactic aimed at reaching consumers directly via television, versus a traditional approach of selling in a retail store. Pre-produced DRTV commercials, typically :60 and :120 in length, usually include a response mechanism such as a toll free number or web URL, so that consumers can respond immediately to an offer.
What are the differences between DRTV and brand advertising?
Brand advertising, including TV, seeks to implant a memorable or favorable image of the product or service in the consumer’s mind, so that recall is easier later on once the consumer is ready to transact (usually in a store). DRTV seeks to elicit an immediate response or transaction and is much less concerned with long term brand recall.
What is an infomercial vs. DRTV short form vs. long form?
In the direct response industry, infomercial refers to a pre-produced television program which is 28 minutes, 30 seconds in length. Infomercials are also known as paid programming or long form DRTV. Shorter length DRTV commercials are commonly known as spots, or short form DRTV.
Where will my DRTV commercials run or be seen?
Depending on the DRTV campaign/media strategy, many times DRTV spots will be run on a national cable basis. This means media time will be purchased directly from national cable TV networks, allowing commercials to be seen in upwards of 90 million homes. In some cases, media will be purchased on local market TV stations. Infomercial media, for example, can perform well on a local market basis.
Is it true only 1 in 20 DRTV campaigns works?
This question is one of those broad stroke statements that just has too many variables to be considered accurate. It’s complicated too. This idea of a high failure rate is based in some truth, though. A component of the direct response industry is product marketers who rapidly test many, many low budget, DRTV campaigns to find the one product which hits the marketer’s tight performance requirements. Many times these products are tested for one week on TV. These campaigns comprise the As Seen On TV market, particularly in retail. So if you measure by this dynamic, yes, many campaigns go by the wayside. But the majority of companies we work with have legitimate products and brands, with specific goals on sales revenues, customer acquisition, etc. So in this case, success is measured and determined by each company’s goals. So the 1 in 20 question becomes irrelevant at this point.
Do DRTV and live home shopping work together to drive incremental sales?
Rarely, and being able to measure the incremental lift across both channels would be a challenge. It’s best to consider DRTV and home shopping as two separate tactics and manage them separately. Live shopping networks operate more like a retailer than direct response media. There are, however, some production efficiencies that can be realized, ie broll from the commercials can in many cases be used for live home shopping.
Do I need a call center with live operators?
If your budget allows it, yes. Historically, live operators will convert sales, leads and appointments at a much higher rate than an IVR (interactive voice response) or outbound calling. There are of course, pros and cons with live operators and IVR. Live operator environments typically have trouble staffing properly for overnight media. And some consumers are predisposed to talking to a live person before ordering, versus entering secure information into an IVR. But when you go just off pure numbers, live operators will outperform automated systems in most every case.
Should I disclose price or not in the commercial?
Price disclosure is a testable proposition. A good rule of thumb, though, is if your price is $29.99 or less, then disclosing it in the spot rarely impedes response. And in the case of $29.99, you could go with 2 payments of $14.99. At prices above $29.99, and certainly at $49.99 and above, testing a soft offer vs. disclosure begins to make sense. In the case of non-disclosure, you will rely more heavily on your phone and web mechanisms to close the transaction. What’s great about testing price disclosure is that you may be surprised to find that response and/or conversion can be the same or more by disclosing price. There are known categories in which the consumer converts at a higher rate if they know price going into the transaction.
It's All in the Numbers, If You Know Where to Look
Whether we're in a new business pitch, or at a tradeshow, or at a networking event, we're often asked how success is measured in our business. In the direct response arena, it's fairly simple - direct sales and revenues. And do those sales/revenues exceed the marketing investment to acquire that customer.
Success lies in the data, pure and simple. So to understand a campaign's efficiency, and to make solid ROI optimization moves, there are many metrics we measure and analyze. Below we've listed the top six direct response metrics, when measured properly, can provide clear answers and direction for just about any campaign.
CPR – cost per response
Media spend / total responses (phone + web)
Here we factor in all responses and divide into the spend. This provides a good benchmark of how responsive the program is and can be an indicator of how strong the creative is pulling.
CPC – cost per call
Media spend / total calls
While phone volume is declining currently, measuring cost per call is still a very reliable metric for efficiency, as toll free calls are tracked in a 1:1 ratio to each network via unique toll free number.
CPV – cost per visit
Media spend / unique web visitors
It is not uncommon to have at least 80% of upfront response go to the web when phone and URL are displayed. CPV gives a clear indication of web response and efficiency. In pure drive to web programs, CPV will be the key front end response metric.
CPL – cost per lead
Media spend / total leads
For lead generation programs, or two-step sales models, CPL will be the key metric in evaluating efficiency. CPL is dictated heavily by the conversion path process (phone or web) and not the creative or media.
CPO – cost per order
Media spend / total orders
In the end, CPO is the ultimate metric in any direct response campaign. However, CPO is a product of the sales conversion process, not creative or media, so care should be given in how this metric is evaluated.
AOV - average order value
Revenues / total orders
AOV is an important direct response metric in that it can be directly compared to CPO to determine whether revenue exceeds the cost to acquire. AOV can and should be heavily influenced by a solid upsell strategy.
Depending on a direct response campaign's compexity, many more metrics may come into play. For example, on a drill down basis, some companies will use a CPLS metric. CPLS is cost per lead sold. Thus in a two step model, leads are measured on the front end, then corresponding sales conversion data is supplied later as the sales cycle completes. This data then paints a clear of how many of those leads actually convert to a sale, a key metric for any sales department within an organization.
The Impact On Your Brand Must Be A Consideration
One of the most common, and intense, discussions we have with our direct response clients is about offer. As in, what do you think is the best offer for this TV campaign, or this print ad, or this radio spot? Our response is always the same – go out with your absolute strongest offer, for the particular customer you are after. However, the strongest offer doesn’t necessarily mean a free offer. So read on to gain a better understanding of how your direct response offer must match the targeted consumer’s transactional mindset.
Let’s start with FREE. We are big fans of the four letter word as it relates to direct response marketing. In most offers we construct, if possible, there is a free component. We know historically that free drives bigger response. So there is much merit in the word free, as well as an offer incorporating something free. For example, bonus or free items, of course, sweeten any type of offer and build value in the consumer’s mind. Many times this free component is the catalyst to push the consumer to transact. So, free is good. However, while free add-ons or bonus items are effective, free does not always work as a main offer component. It’s critical to understand why.
Where FREE gets dicey. We’ve all seen them running heavily – DRTV offers with free trial, just pay p&h; or buy one, get one free, just pay p&h, etc. As of late, the lead price is sinking even lower, to around the $10 mark at this point. While we do see these types of offers work from time to time, you must be aware of all of the implications of this type of offer. And in many cases, this offer will not be the best, or strongest, type offer for your product or service. This is where having a complete understanding of your customer and their mindset comes into play. Let’s take a look at the pros, and the risks, of FREE and BOGO for your product/brand. These risks come straight from real world campaigns, several which are running now.
First, a typical free offer might look like this:
Try this widget in your home today for free, just pay P&H. You’ll also receive this free widget when you call or go online.
And a BOGO like this:
Get this widget for just $9.95, plus P&H. But wait, when you order, we’ll double the offer and give you a second widget absolutely free. Just pay additional P&H.
Pros of FREE/BOGO:
1) Grabs the consumer’s attention quickly
2) Low consumer barrier to cross for engagement
3) Easy for consumer to justify/rationalize the transaction
4) Can create big value build in the consumer’s mind
5) Can drive large up front response/inquiries, a requirement for continuity based programs
Risks of FREE/BOGO
1) Can turn off more affluent potential customers
2) Often degrades the brand/perceived value of the product or service
3) Typically drives a lower quality and lower converting respondent
4) Significantly more customer service issues, including returns
5) Consumers reject add-ons such as additional P&H, upsells or club offers and only want free item
6) Many times tied to an ongoing spend commitment by the consumer
As you can see, while there are some good reasons to test a true free offer, there’s quite a bit of downside. It’s at this point where we work with clients to zero in on the actual, true objective of the campaign. Is it just to drive up front sales revenues? Is it to build a customer database quickly that you can remarket to? Is it to drive retail distribution and ultimately sales at retail? Is it to build a brand over the long haul?
By staying true to the real objective, you can better align with the particular customer you are seeking, and thus find the right offer that resonates. For example, over the years we’ve seen that free offers or BOGO offers are not the best way to build trust and legitimacy (requirements for brand building) for new products in the minds of the consumer. While they do satisfy an instant gratification need for the value seeker, free offers tend to generate short term awareness.
Conversely, if you understand your target customer thoroughly, you may find that what resonates best is finding the right price, in conjunction with a solid value proposition. In many cases, we’ve tested free offer vs. a price disclosed offer on the same product, with the price disclosure version actually performing better. Many consumers, when presented with a good product that resolves their problem, will be more than willing to transact right then and there. Keep in mind, it is possible to oversell unnecessarily to consumers with the free or BOGO offer.
In the end, taking time to think through your potential customer’s mindset and the category in which you are operating are essential early steps in direct response offer development. By avoiding a possible herd mentality that free is always better, you can now think logically about what the consumer actually wants, needs and what propels them to transact.
Myth Versus Reality
If you’re a brand manager who’s been tasked with overseeing your company’s new direct response television (DRTV) campaign, or, if your company is contemplating delving into TV, read on!
It’s no secret DRTV can be extremely effective in launching new, never before heard of products and revive or ramp up sales of an existing products. And there’s no shortage of DRTV advertisers who employ exaggerated product demonstrations and in your face sales tactics. The fact is these tactics can ring the cash register. But what about a well known brand? How does a company harness the powerful consumer and ROI aspects of DRTV without harming the established brand integrity of its product or service?
Let’s take a look at the most common concerns or misconceptions we’ve heard from brands over the years with regard to DRTV:
While all of these points are valid and should be discussed, each one can be addressed easily. With the correct execution these concerns can become rallying points versus reasons to not proceed forward. As with most misconceptions, they are not founded on well thought out premises but more on reactions to what you would never do in the first place, nor would you have to.
With any major project such as DRTV, it’s essential to be sure you are not falling prey to misconceptions. Rather, you need to evaluate the prospect of DRTV based on how your brand would employ it, not how others have done it.
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