Electronic Retailer - October 2012 - 37

BY PETER KOEPPEL

Is DRTV D.O.A.?
CHANNEL CROSSING: DRTV
A recent query on LinkedIn asked, “Is the DRTV industry in trouble?” The author went on to suggest that a combination of audience fragmentation, escalating ad and shipping rates, and a reliance on IVR, among other culprits, were threatening the core DRTV model. The reality is, one’s perspective on the viability of DRTV depends upon what lens you are looking through. The paradigm that views DRTV as a stand-alone engine of profitability is, with few exceptions, not easily attainable for key reasons that will be outlined below. At the same time, when viewed from a realistic perspective that takes into account today’s marketplace realities, DRTV possesses singular advantages over other methods of advertising that simply cannot be beat. With the exceptions of certain continuity-based cosmetic, skincare and fitness regimens that have managed to limit their distribution to exclusive direct-to-consumer offers, most DRTV programs are not profitable in terms of sales that can be attributed directly back to the television-based advertising. In an era where word-ofmouth is spread through social networking, consumers have naturally turned to the web to discover the “truth” about product and service claims and how they hold up to scrutiny. These consumers also price shop, and then, armed with the best possible knowledge, buy or, in the case of a lead generation model, opt in over the web. Because the paths to a “yes” cannot be always directly attributed back to a particular television broadcast airing, that airing doesn’t receive “credit” for the sale or lead in terms of a traditional media efficiency ratio (MER), even though that airing may have been the very thing that stimulated the consumer’s initial interest. As Shakespeare said, “Therein lies the rub.” Because marketers have countless ways with which they can try to reach consumers, yet there is nothing quite as compelling as sight, sound and motion, and the infomercial and shortform DRTV offer marketers two enormous advantages: 1) longer segments of time to tell a story, and 2) far cheaper media rates when compared to traditional TV advertising. Let’s examine both of these critical advantages more closely. First, an infomercial affords a 28-and-a-half minute canvas with which to engage an audience. This is a luxury amid an era of quick sound bites and banners that flash past in the blink of an eye. It is enough time to make a persuasive, meaningful case for a proposition that satisfies the need for rational explanation and that can also engage the heart. The same holds true for DRTV’s longer spot lengths, which can diagram a problem and solution and then create a compelling case for why a product or service stands above other alternatives. Then, when this educated consumer does his online research or encounters your product at retail, he is armed with conviction that manifests itself in additional sales. As for the media costs associated with DRTV, they are typically less than half what one would pay if they were to buy airtime on an audience-guaranteed basis – and, again, the length of time a general advertiser typically has to convey differentiation is a fraction of what a DRTV advertiser enjoys. Infomercial time periods are essentially fixed positions and are available in virtually every time period save for primetime. DRTV spots can clear in almost all time periods when planned properly, and while they are sold on a pre-emptible basis, the trade off in terms of lower rates makes the clearance gambit well worth the risk. Therefore those within the DRTV industry who are “in trouble” are those who insist upon clinging to a success model that is being driven to extinction by changing consumer behaviors. Measuring today’s DRTV response requires mastery of several different types of metrics including traditional DRTV response measurement such as cost per lead and total sales, but also reach and frequency, target rating points, online impact and retail sell-through. Simple formulas for success have been replaced by a kind of sophisticated alchemy that requires formidable expertise amid an ever-evolving landscape of consumer habits and emerging media models. When you put it all together, to paraphrase another great literary giant, Mark Twain, the rumors of DRTV’s demise have been greatly exaggerated. And speaking of exaggeration, anyone who tells you differently is doing just that! Peter Koeppel is president of Koeppel Direct, a full-service media buying agency based in Dallas. He can be reached at (972) 732-6110 or online at pkoeppel@koeppelinc.com or twitter.com/DRTVBUYER.

When you put it all together, to paraphrase another great literary giant, Mark Twain, the rumors of DRTV’s demise have been greatly exaggerated.

October 2012 | electronicRETAILER

Electronic Retailer - October 2012

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