If you are seriously considering a DRTV campaign to promote your new, exciting product, take heed: Estimates say that only one in 20 DRTV commercials actually succeeds as a stand-alone profit center. That disappointing success rate is in part due to the unsuitability of certain products for the medium, but in certain cases, it may be the business model and the product that are flawed.
Whether you are an innovative entrepreneur with a great product idea or a marketing executive for a major brand, the new paradigm offers a straightforward approach to a comprehensive, integrated DRTV campaign that can unleash the awesome power of TV advertising to create profitability and an enduring brand.
The Old Model
With rising media rates fueled by growing demand and lower response due to increased media fragmentation, “old school” DRTV marketing successes have become increasingly difficult to replicate. To successfully operate in the old paradigm, you need virtually every relevant factor in your favor.
You can count on selling five to 10 units at retail for every unit sold on TV or online.
First, you need a 5:1 (or better) ratio between price point and cost of goods. The product must also solve a common problem ingeniously, be demonstrable, provide compelling, visual before-and-after transformations, and still be easy to understand. And you must produce a memorable spot that your target viewer feels compelled to respond to immediately.
Of course, all of the above parameters need to be in place for a successful new-paradigm DRTV campaign, too. But in today’s competitive media environment and general economic milieu, your DRTV campaign must do more than just generate phone calls.
Changing Channels
The best way to make your TV campaign more effective at generating revenue is to provide your consumer with multiple, fully integrated channels to buy your product, and motivate them to keep buying it over time.
The latest research says that 62 percent of DRTV viewers go online to perform additional research on a product before buying it. So, the most obvious additional channel to generate supplemental sales is a Web microsite that’s designed by DR experts to give more information about your product and guide the visitor toward purchase. Today, most DRTV commercials generate at least as many sales on their corresponding websites as they do from the 800 numbers on the screen, so it is imperative that an easy-to-remember URL is advertised on the screen alongside the toll-free number.
To achieve optimal profitability, many DRTV-advertised products must also be available in retail stores. Early DRTV campaigns used the words “Not Available in Stores” to motivate viewers to “Call Now,” but “As Seen On TV” products have long been recognized as hot commodities at retail.
If you have enough media weight behind your TV campaign, you can count on selling five to 10 units at retail for every unit sold on TV or online. A minimum threshold for your media spend should be at least $100,000 to $125,000 per week to achieve a desired retail sell-through, and you can typically improve retail sales by increasing the media spend.
An experienced DRTV agency must balance your Media Efficiency Ratio (MER, or direct-from-TV net revenue to media dollars spent) and retail sell-through with the campaign’s overall goals. The optimum effectiveness for a modern DRTV strategy requires retail distribution in at least 6,000 locations, so you can take full advantage of all the consumer education and TV exposure your product receives.
In product categories such as beauty and nutrition, a product may be available at few or no retail locations. In these cases, a continuity model that includes the use of regular automatic-shipping programs will help marketers reap the benefits of an ongoing revenue stream and better leverage TV media dollars. Many successful DRTV marketers have no retail presence, but they can count on continuity programs for overall campaign profitability.
In the new DRTV paradigm, additional revenue channels will make all the difference between the success and failure of your investment.