Is Now the Time to Test DRTV?
By Peter Marshall and Mary Ram
The price is right—see if your product fits the medium.
There's no doubt about it—the economy has been rough. But while general advertisers have been pulling their money back, direct marketers chug along, allocating dollars that produce leads and make direct sales—in other words, delivering results and realizing a positive return on investment (ROI).
With ROI driving everyone's business decisions, cost vs. response is obviously the most important concern. Direct response television (DRTV) presents an attractive option for many advertisers in this environment. The Direct Marketing Association reports that DRTV has grown every single year by 11.5 percent from 1995 to 2000, and that it is projected to grow to $30.6 billion by 2004, to comprise a minimum of 15 percent of all direct marketing advertising expenditures.
With media rates 50 percent to 70 percent below general ad rates and measurability that can drill down to market, station, day part, creative, offer, etc., DRTV provides a long-proven, cost-effective media option.
Direct response television is 100-percent accountable. It allows an advertiser to determine—in short order—exactly how much business is derived from each station, each run, and/or each creative effort.
Is My Offer Right for DRTV?
Contrary to what some believe, there is an appropriate DRTV application for virtually every product or service. While certain product categories lend themselves naturally to the medium—fitness, household, beauty products and insurance—the medium also has proven effective for products that may not have been marketed via DRTV a few years ago, such as motor oil and dishwashing detergent.
How can you gauge whether your product or service may be appropriate for DRTV? Ask these questions:
* Does the offer have a wide appeal?
* Can the product or service be easily demonstrated?
* Has the offer been successful in other direct response media, such as print or direct mail, and/or has it had retail success?
* Does the product or service fulfill an immediate need?
* Does the product or service have a perceived value?
* If you plan to sell direct, is the product or service priced right for an immediate sale or suitable for payment options?
* Does the offer have cross-sell or up-sell potential?
If you can answer "yes" to three or more of these questions, your product or service is likely right for DRTV.
Short-form vs. Long-form
Once you've determined your offer is appropriate for DRTV, the next step is to determine a format: short-form (30-, 60-, and 120-second spots) or long- form (a half-hour infomercial). Picking the best route depends on your objectives, your budget and marketing allowable cost per order, and the demonstrability of your product.
Short-form is used generally to build brand and create awareness, while simultaneously generating an immediate response. For example, a long-term care insurer may use a short-form television spot to generate leads cost-effectively.
More complex messaging and a product that needs more demonstration may require long-form. A piece of exercise equipment or a series of videotapes may do well utilizing an infomercial. Long form—because of its narrowed media placement opportunities—may have a limited reach as compared to short form. But infomercials provide an excellent vehicle for direct sales.
Some marketers will test long-form and short-form efforts in order to determine the most effective approach. Additionally, some will use both formats to reach a variety of audience segments during different day parts and through different media outlets, getting a better bang for their buck.
Short-form has different applications. Some complex direct-sell offers and lead-generation programs simply require more time than a two-minute spot provides. For other offers, the shorter time frame is all that's needed to elicit an immediate response. Consider testing a combination of short-form spots to find the mix that meets your cost-per-lead/order/call allowance.
Creative development is a process that blends marketing know-how and art. Successful practitioners can develop a carefully formatted creative approach, in any length—from a 30-second spot to an infomercial—that can both brand a product and efficiently deliver sales or leads.
Testing to Reach Your Target Audience
Cable, broadcast and syndication are just a few of the many media options available today. The variety of choices enables good media planners to help their clients target customers efficiently.
And while the industry is quickly moving from broadcast to cable, it's important to establish your own business goals before developing a test strategy. What is your product or service's geographic distribution? If it's national, cable is a must to test. Also consider testing syndicated programs for products or services with national reach. Airing spots during syndicated programming combines the advantages of placement in highly promoted time slots with attractive rates.
Test spot broadcast when you want to target specific geographic areas.
National cable is the single most efficient DRTV delivery mechanism—it always delivers the most efficient cost per call. However, it is only applicable when the product or service is national.
When selecting stations, regardless of whether they are broadcast or cable, it's important to create a test metric that will minimize risk and provide the best opportunity for analysis. Test to identify trends, to determine the efficacy of your product and/or offer, and to make future media decisions.
Lead Generation and Traffic-building
Generating leads cost-effectively, driving traffic to retail stores, and sending consumers to the Web—are all possible through DRTV. While DRTV is universally recognized for its ability to make immediate direct sales and quickly generate leads, it can be integrated into existing campaigns to build brand and lift the results of other efforts, including free-standing inserts (FSIs) and direct mail—and, more recently, to lift retail. DRTV has been successfully used to:
* launch new products or services,
* reposition mature brands,
* educate consumers about a product's benefits,
* create cost-effective awareness for a traditional direct marketing campaign,
* create a new market niche, and
* increase brand/product awareness.
With DRTV, your goal should be to focus efforts where you want to drive your customers.
Before embarking upon any DRTV effort, take a serious look at the numbers. Your DRTV goals should relate back to overall business goals and specific marketing objectives need to be set for this medium.
The most important question to ask is, "How much can I afford to spend to generate a sale?" Once you determine your allowable cost per order, test and retest efforts to reach that target.
When it comes to budget, we're continually asked, "How much does it cost to produce a DRTV spot?" There are too many variables to give a blanket answer.
If brand is important to the overall campaign, then produce a top-quality, brand-conscious spot. If brand is not a concern, video and a small crew can produce a less expensive spot. If no spokesman or actors are required and the entire spot can be generated in the edit room, then the cost will be much less. If extensive demos are required to tell the story, factor in higher costs.
Additionally, some clients are afraid that DRTV spots will look "cheap," and therefore, hurt their sales or image. Production skills and techniques have brought the capability of a high-end "look" to most advertisers and budgets. A word of caution, though: Do your homework before selecting a firm to produce the spots.
When comparing DRTV to other direct response media, consider that DRTV can be less expensive than print and result in lower cost per inquiries (CPIs). A national cable test can be equal, dollar-wise, to producing and placing print ads or executing a massive direct mail campaign.
In general, you can expect to spend as little as $20K for a simple short-form spot, and up to $500K on a package that might include a 60-second spot, a 120-second spot, and an infomercial. You could also spend a lot less or a lot more. An experienced direct response agency can help to manage these expenses so they're appropriate to your budget.
Direct marketers who consider the benefits—measurability, accountability, and quick "read and react" results—should think about taking the leap into direct response television. You'll likely find that DRTV can produce a positive ROI in any economic environment.
Peter Marshall is president and CEO, and Mary Ram is vice president, director of account and media services, for The Direct Network (TDN), a full-service direct-response advertising agency in Hoboken, NJ, specializing in media buying as well as creative for broadcast, mail and print. Call (888) TDN-4-DRTV or e-mail the authors at email@example.com or firstname.lastname@example.org.