DRTV MEDIA BUYER

Let’s look at consumer credit card debt. Not everyone believes that consumers have exhausted their ability to spend. They have about $14 trillion in unused borrowing power left on their credit cards, which should be enough to buy a few more Magic Bullets or Little Giant ladders. However, credit card issuers are being more cautious about extending credit and some feel the next financial crisis will be the issue of mounting credit card debt, as reported by BusinessWeek.
 
It’s important to note that not all the news is bad regarding the economy. The Wall Street Journal reports a surprising and broad-based surge in retail sales for November. The New York Times notes, “…the American economy has a history of unexpected resilience…” and that many experts feel we will only experience a slowdown or mild recession. Some believe that rate cuts by the Fed and a plan to keep adjustable mortgage rates from re-setting higher may cushion the impact on consumers.
 
No one can predict exactly where the economy is headed, but insights from those who track economic trends provide some possible scenarios for 2008 and beyond.

Peter Koeppel is Founder and President of Koeppel Direct, a leader in DRTV direct response television, online, print and radio media buying, marketing and campaign management. With a Wharton MBA and over 25 years of marketing and advertising experience, Peter has helped Fortune 500 companies, small businesses and entrepreneurs develop direct marketing campaigns to increase profits.

Peter started Koeppel Direct in 1995 and has built it into one of the leading infomercial direct response media buying firms in the U.S.

According to the Federal Trade Commission, there is a growing concern among health care professionals when it comes to growing epidemic of obesity.

Experts’ concerns are intensified by the relationship between obesity and several other health conditions such as cancer, sleep apnea, diabetes, hypertension, and cardiovascular disease.

Tie obesity and its health-related symptoms in with what many Americans see as an “ideal look” or “ideal weight” and it is easy to see why the diet and weight loss market continues to grow and thrive in the U.S. More than ever, Americans want to lose weight and keep it off as means of looking better and feeling healthier.

Direct Response TV (DRTV) marketing has been and continues to be an excellent way to target and capture the weight loss audience. An increasing amount of diet and weight loss merchants are using DRTV to relay critical information about their products and services to consumers.

To date, this type of marketing is considered extremely cost-effective. With the help of the right media planner or media buyer, just about any company can create a DRTV campaign that packs a big punch and yields a nice return on investment (ROI).

 In the book, Campaign Advertising and American Democracy, Freedman and his co-authors state that negative television ads actually have a more positive effect on voters’ views. These findings, released in January 2008, conflict with previous research indicating that negative political advertising has a harmful effect on public discourse.  

Freedman’s book also indicates that the more potential voters view political marketing, the more likely they are to vote. Claiming that the American public suffers from an impoverished diet of political information” and that those political ads that are the most criticized by analysts are actually “frequently informative, often funny, usually clever, and just a whole lot of fun.”

According to book reviewer Darrell West of Brown University, this book is “the most comprehensive examination of political advertising that has been attempted to date.” 

In addition to his duties at UVA, Freedman has also served as an election analyst for ABC News. Freedman’s co-authors for “Campaign Advertising and American Democracy,” are Kenneth Goldstein, a political science professor for the University of Wisconsin; Travis Ridout, a political science assistant professor at Washington State University; and Michael Franz, a government and legal assistant professor at Bowdoin College.

What is it: On-demand TV advertising involves video ads displayed in digital video-on-demand, DVR, and IPTV video streams, as well as inter-active program guides. Currently, on-demand advertising is more prevalent at the local level than nationally. It is still in the pioneer phase and offers unique opportunities to innovate DR marketers.
 
Who does it: According to Peter Koeppel at Koeppel Direct, everyone is getting into the game. TiVo has an interactive advertising platform that was developed specifically for direct response advertisers (and why not DRTV spots are some of the least fast forwarded ads on TiVo). Expo TV provides on-demand infomercials. Time Warner, Comcast and Cox offers Exercise TV, which reaches 22 million homes, and where Jake Steinfeld’s Body by Jake ads are inserted into on-demand workout sessions.
 
Time Warner, DISH, and Comcast offer short-form spots that telescope to long-form, on-demand advertising. DISH viewers can utilize their remotes to review a product, request information or purchase it directly on screen. Cox will be dynamically inserting ads into VOD content in 2008.
 
According to Koeppel, Time Warner also has a feature that lets digital subscribers re-start live programming, but does not allow them to skip ads in order to counter ad skipping. All of this activity (and all of this money being spent) means one thing, on-demand TV is here to stay.
 
Why bother: Unlike traditional “linear” television advertising, on-demand TV advertising can be tracked and quantified muck like Internet advertising. It is highly suited to direct response advertisers, since it enables the viewer to respond to offers, find out more information, or order a product or services. It also allows infomercial advertisers to most effectively utilize a combination of short-form and long-term advertising formats.
 
Internet protocol television (IPTV) is getting a slow start in the U.S. for a variety of reasons; however, its promise is true convergence of television and Internet. DRTV companies that have established themselves on the internet, such as AsSeenOnTV.com, see IPTV (and any technology that blends Internet and television) as a way to skip to the front of the line. According to Daniel Fasano of AsSeenOnTV.com, “our brand is one of the best positioned and most widely recognized by consumers across the two major viewing channels: television and Internet. Our “Powered By” solutions successfully bridge the gap between TV and Internet, allowing a seamless transition from viewing content to creating transactions in real-time. In short, our bridge allows for on-demand purchase advertising on a global scale.” Fasano sees his solutions working in today’s world, but also becoming a de facto “infotainment” standard as on-demand TV matures.

The formula that fueled Wal-Mart’s growth included selling high profile national brands, the growth of mass media to promote those brands and the growth of freeways, which allowed for the development of large stores in rural areas. This enabled Wal-Mart to overpower local chain stores and local brands. But today, national brands are striking exclusive deals with other retailers, the cost of maintaining national brands has increased due to media fragmentation and the growth of the Internet provides consumers with access to millions of products available online versus the 142,000 available at Wal-Mart. (WSJ) The result of these changes is that Wal-Mart has lost some of their influence over consumers and suppliers.
 
Although Wal-Mart’s influence is declining, it’s important to keep in mind that they are still a huge force in retailing. The WSJ article points out that there are other companies like Wal-Mart that remain dominant players in their industry, but are no longer defining their industry. For example, the role of definer has shifted from IBM to Intel, from GM to Toyota and from Microsoft to Google. Despite Wal-Mart’s decline, they will remain an important component of the retail mix for direct marketers. However, savvy direct marketers may now need to reassess where Wal-Mart fits into their retail plans, based on recent changes in their positioning in the retail marketplace.

Peter Koeppel is Founder and President of Koeppel Direct, a leader in DRTV direct response television, online, print and radio media buying, marketing and campaign management. With a Wharton MBA and over 25 years of marketing and advertising experience, Peter has helped Fortune 500 companies, small businesses and entrepreneurs develop direct marketing campaigns to increase profits.

Peter started Koeppel Direct in 1995 and has built it into one of the leading infomercial direct response media buying firms in the U.S.

Infomercials are typically are tested initially and if the test is successfully then the infomercial campaign is rolled-out. An infomercial media test usually consists of a combination of infomercial airings on smaller national cable and satellite networks and local broadcast stations. An infomercial test typically runs over the course of a week. This allows the infomercial marketer to test a variety of time periods and days of the week to see if any patterns develop in terms of the types of infomercial airings that perform best for a particular infomercial campaign. Sometimes more than one offer is tested to determine which infomercial offer generates the most sales.
 
In a successful infomercial test there are generally several networks and stations that generate a profitable ROI. Infomercial media buyers review this information and then proceed to:
 

A recent study by iProspect and JupiterResearch that looks at the influence of offline channels on online search behavior had some very interesting findings that helped confirm what I suspected - that offline media channels are having a major impact on online searches and online purchase behavior. The study found that 39% of online searches that are influenced by offline media channels such as DRTV, print and radio advertising ultimately make a purchase. Results from the study also showed that 67% of the online search population is driven to search by offline media channels.

This data from iProspect confirms what people in the direct response advertising industry have been noticing for several years, that offline media channels such as direct response TV, radio, infomercial and print are clearly influencing a staggering percentage of online searches and sales. The study clearly demonstrates that marketers who are relying on online advertising only are not harnessing the synergies that exist between search and offline advertising channels. I don’t feel this is a short term trend. I expect the influence of offline advertising on online search will continue to grow. We’ve worked with several Internet retailers that were able to take their business to the next level by adding direct response television to their media mix.

The average tenure for a chief marketing officer (CMO) was down to approximately 23 months in 2006, according to a study by executive search firm Spencer Stuart and reported in BtoB magazine on 5/7/07. The Spencer Stuart study also found that nearly three-quarters of CEO’s and board members consider the marketing organization “highly influential and strategic” in the enterprise, but nearly two-thirds say that their top marketers don’t provide adequate ROI with which to gauge marketing’s true performance.
 
Another recent survey reported that only 7 percent of senior-level financial executives are satisfied with their company’s ability to measure marketing ROI. The survey also points out that less than 10 percent of these executives indicated that their company had a separate budget allocated for measuring marketing effectiveness. (Marketing Management Analytics and Financial Executives International survey, revenue magazine May/June 2007).
 
“I worry about what will happen to the future of marketing leadership because of the turmoil-the short life span [in the CMO position], the pressure and the high expectations,” said Greg Welch, head of the CMO practice at Spencer Stuart. The steady stream of departures among high profile senior marketing executives is evidence of this “turmoil”. Just this year, Macy’s CMO, AT&T’s CMO, Verizon’s VP of marketing and the CMO at Wachovia all left their positions. (BtoB)
 
The mounting pressure on CMO’s, combined with corporate executives being dissatisfied with the lack of measurement of ROI by these marketers, creates the perfect opportunity for more companies to adopt direct response marketing initiatives to address these problems. This also represents a big opportunity for our industry to step in and help these companies develop direct marketing programs. Since the direct response marketing model is all about measuring ROI, it seems like more of these marketing executives will now be open to testing out direct response advertising.
 
Of course there are many CMO’s outside of the direct response industry that are doing a good job. The BtoB article notes that Martin Etherington, VP-marketing at Tektronix said his marketing department is 100% accountable and measurable and it aligns its metrics with the strategic objectives of the company. However, it appears that this type of marketing measurement and accountability is not yet that widespread among Fortune 1000 CMO’s, judging by the high turnover and the survey feedback from corporate executives.
 
From the perspective of a direct marketer who lives in a world of total accountability, the need for more accountability and better ways to measure ROI among traditional marketers seems like a relatively easy problem to address. However, many of the Fortune 1000 brand marketers work with mega ad agencies that have been slow to move away from traditional brand marketing and adopt the principles of direct marketing. Perhaps the increasing pressure on CMO’s will force them to take a more serious look at the power and accountability of drtv marketing.

Tracking the media ratio and return on investment (ROI) of a DRTV or radio campaign has always been a key aspect of the media buying process. Through all stages of a campaign, from initial focus group testing to network testing, tweaking and rollout, direct response marketers know the value of good data, analysis and careful media buying. The best marketers are those who literally “measure twice and cut once,” working closely with their media buying partner to evaluate each market and each test before signing off on a campaign.

With this kind of rigor, it is often surprising how few direct response companies analyze all of their marketing channels for overall performance. Very few execute integrated, multi-channel campaigns where the media plan includes TV, radio, online, on-demand, print and other channels in one comprehensive package.

Online and on-demand TV are often the poorest planned and least understood of the above channels, especially by traditional marketers who view new media as more of a sideshow. With the dramatic rise of Internet advertising and the disruptive promise of video-on-demand (VOD) and digital video recorders (DVRs), this mindset will have to change.

What is needed is a new approach to direct response media buying and planning that not only treats online and on-demand TV advertising as serious channels, but also provides for integrated, multi-channel planning and reporting. This solution would include media ratio and cost per action (CPA) calculations at the media category level as well as an overall performance calculation.

It’s important to work with a media buying agency that has the capability to do research that helps identify the best media vehicles to efficiently reach the target audience. There is a wide range of media research tools that can be utilized by a media buying agency, in order to develop a targeted media plan.

Experienced media buying firms often review a combination of research tools, such as competitive media schedules, Nielsen ratings and data that identifies the networks watched most by people in the target audience, who have purchased a similar product or service.

Direct response television (DRTV) media buying firms also look at their database of results from campaigns for other products in the same category. Some DRTV media buying firms utilize a combination of traditional advertising metrics, such as ratings and impressions and combine that information with DRTV measurements to create a hybrid DRTV campaign. DRTV media buying firms for direct marketers looking to both sell product and drive retail sales often develop these types of DRTV campaigns.