DRTV MEDIA BUYER

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.

I started my career in marketing working in brand management on the Heinz Ketchup business. Working on a brand that was a household name and that had over a 50% market share provided me with an appreciation of the value of a strong brand. In the direct response media buying industry, many marketers overlook the power of branding and the value it can create for your company.

In the direct response TV industry, the marketers that understand the power of branding seem to be the ones that are most successful and have the longest running campaigns. Brands such as Bowflex and Proactiv come to mind when I think of successful direct response brands. Having a well-known brand can dramatically increase the value of your company. Just look at Orange Glo. I’m certain the reason the Church & Dwight was willing to pay $325 million to buy Orange Glo was because of the company’s profitability and the value of the OxiClean brand.
 
Direct response marketing provides marketers with the opportunity to both sell and brand their products simultaneously. If you can establish your brand as the leader in the drtv marketplace, it can help differentiate your product from the competition and it makes it harder for competitors to gain market share. For example, my company works with the leading ladder product. In only a few years, that product went from nothing to the leading brand in its category and knock-off products haven’t been able to gain traction. This was accomplished through effective media buying, branding and marketing of the product.

A significant event in the history of direct response advertising transpired in late October. Wal-Mart, the world’s largest retailer with a $580 million ad budget, selected a direct response media buying agency to help it overcome slowing sales growth. People in our industry would classify the winning agency, Draft FCB, as a branded direct response agency, but nevertheless, it is a direct marketing agency. It beat out some of the largest traditional ad agencies in the world to secure the coveted Wal-Mart account, according to a October 26 Wall Street Journal (WSJ) article. Although other big marketers like Microsoft and P&G have used direct response advertising for certain brands, I can’t recall a company the size of Wal-Mart selecting a direct marketing agency as its lead agency.
 
Major marketers have seen the type of accountability and customization that Internet advertising can provide, and now they are looking to more accurately measure their return from their offline advertising. Savvy media buying executives are finally realizing direct response advertising can provide them with a way to measure the ROI from their advertising expenditures.
 
With the tenure of CMOs averaging about two years, media buyers are under the gun to deliver results. Wal-Mart recently recruited senior marketing experts from top consumer products companies, such as PepsiCo, Target and DaimlerChrysler, to help overhaul its marketing efforts. Based on their selection of a direct marketing agency for Wal-Mart, these marketers clearly understand the power of direct response advertising.

Neuromarketing can help marketers and media buyers determine the right message and the right design before a campaign even goes out. “What kind of information can you provide that will make an emotional connection with consumers and lead them to read the rest of your information?” asks Rao. “Should it be words? Pictures? In color or black and white? In the top left corner or the bottom right? What about font size?”
 
One company that uses neuromarketing to sharpen its marketing message is Vistage International, which provides networking and educational opportunities to CEOs. And one of the areas in which neuromarketing has made the biggest difference for Vistage is direct mail.
 
Laura DiPietro, Vistage chief marketing officer, says that although direct mail has always been a key element of her company’s strategy, the organization’s direct-mail pieces were “blah” before Vistage began working with SalesBrain, a marketing company that specializes in neuromarketing.
 
Vistage’s old direct pieces were very conservative, with visuals of white men in their fifties, says DiPietro. She and her associates learned from SalesBrain that the look didn’t elicit an emotional response in prospects, and therefore wasn’t memorable, nor did it motivate consumers to take action.
 
Vistage began the makeover in May, and the company’s direct mail pieces and Web site now feature elements that resonate far greater with their target customers. “We’ve really tried to modernize our direct-marketing tools by including something based on neuromarketing. Our new pieces incorporate a more active sense,” says DiPietro. “The photos we use now do not just focus on people but are more high-concept pictures. The colors are new and fresh and the direct pieces always have a question and then a payoff line.”