More Bang for Your TV Buck
Trends that will define DRTV media buying in 2006
Direct response television (DRTV) advertising is anticipated to pull down about $150.1 billion in sales in 2005, according to “U.S. Direct Marketing Today: Economic Impact,” the Direct Marketing Association’s recently released study of the nation’s direct marketing landscape. Conducted with support from forecasting firm Global Insight, the study also predicts a compounded annual growth rate of 6.4 percent for DRTV ad expenditures between 2005 and 2009; in this same time period, compounded annual sales growth is projected at the same 6.4 percent rate.
Compared to direct mail’s expected ad expenditure growth rate (5.3 percent), DRTV is gaining ground as a more valuable lead-generation and sales channel. But when stacked up against both the ad spend and sales growth rates for Internet marketing (18.3 percent/12.6 percent) and e-mail marketing (19 percent/12.6 percent), DRTV still is working to find its place in the direct marketer’s media mix. A few challenges to continued growth are the increasing adoption of technologies that allow viewers to skip commercials and the intricacy of finding cost-effective air time.
To get a handle on the trends affecting the DRTV media-buying space and solutions for making the most of this medium, Target Marketing Editor in Chief Hallie Mummert spoke with Peter Koeppel, president of Koeppel Direct, a Dallas-based direct response media buying agency that specializes in short-form and long-form DRTV.
Target Marketing: What factors are affecting available inventory and media costs for DRTV marketers?
Peter Koeppel: During the fourth quarter, short-form rates typically increase when retailers and brand advertisers selling holiday items buy up inventory at higher rates to meet sales goals during this key sales period. This tends to decrease lower cost inventory available for DRTV advertisers and increases DRTV rates.
This year the rate increases for short form are similar to last year on a national level. Since there were not many local elections this year, and with car dealers cutting back on advertising due to slumping sales, local broadcast TV rates stayed reasonable in the fourth quarter.