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September 26, 2007

Businesses Can See the Opportunity in Direct Response Radio by Watching the Evolution of DRTV

In a recent article in DM News, Daniel McMahon writes:

"In the 1980s, DRTV was the marketing vehicle for companies that had big enough budgets to run a TV ad, but couldn't get their products into retail stores. Often airing during soaps or late at night, infomercials tried to make up for brand anonymity with flashing text, hyperactive actors and the promise of free products if viewers "Call now!" The idea was simple: Sell as many products as possible."

"But DRTV is now playing a key role in multichannel marketing. Spots today feature celebrities and high-end products and work in tandem with Web sites. The medium now attracts advertisers such as MasterCard and American Express. The Electronic Retailing Association, the trade group for direct response TV, estimates that DRTV is growing at almost 10 percent annually and in 2005 accounted for $182 billion of the direct response industry."

Mr. McMahon's article provides valuable understanding for businesses looking for growth opportunities.

Let's ask two important questions to get at the core insights:

1. What are the forces behind the trends in DRTV?

Our best clue comes when Mr. McMahon references this:

"TiVo Inc.'s recent Top Commercial Rankings report says the least fast-forwarded commercials are DRTV spots."

It's pretty simple: The driving force is Accountability.

Those humble marketers using "cheesy" DRTV back in the early 1990's knew something about how to actually use TV advertising to drive measurable profit. It's a degree of sophistication that one wouldn't expect from these smaller, presumably less refined businesspeople. But they've shown the P&G's and MasterCard's of the world a) that it's possible to drive measurable profit and b) how to do it.

"The Geicos and Procter & Gambles are using the actual methodology of direct response - basically, wrapping content around anything in a compelling way with a call to action: 'Come to my Web site!'" says Sieglinde Friedman, VP of communications and strategy at the Electronic Retailing Association

It has taken so long because the typical Madison Avenue agencies have wielded every weapon in their influential arsenal to keep a cloud of doubt, confusion and disbelief over the very achievability of accountable advertising and specifically the approach of those 'common' DRTV marketers.

But Tivo's new rankings have helped blow that cloud away.

2. How does this apply to DR Radio?

The result in radio advertising is the same as it is in TV, except there isn't yet a "Tivo" service for radio that would make public what we and our clients know in private: that radio advertising is immensely profitable for a business - when direct response principles are applied.

We're 100% positive, however, that if there were a similar service for radio, the results would be the same: direct response ads are far more effective than non direct response ads. (We know this with such certainty because we've conducted hundreds and hundreds of tests.)

So for now there are many who don't advertise on radio at all. Additionally, there are Fortune 1000 companies advertising on radio who could be seeing a lot more of both profit and the evidence of profit from their radio advertising. Regardless, the trends speak for themselves.

"...prime-time viewing hours, once dominated by mainstream brand advertising, now include spots that incorporate direct response tactics.

In fact, DRTV commercials today account for 25 percent of all TV ads.

According to a recent survey published in New Products Magazine, 73 percent of consumers say they learned about new products in 2006 from TV commercials and infomercials."

Posted by Jeff Small & Brett Astor at 11:36 AM | Permalink