DRTV: A Retail Marketer’s Best Friend

DRTV: A Retail Marketer’s Best Friend

[As published in the June 2007 issue of Response Magazine]

Today many well-respected brands are integrating direct response with their existing brand efforts - Sears, Home Depot, Pfizer, Dell, Church & Dwight and P&G are some of the prime examples in that area. More than that, direct response builds retail brands as well. Examples of household names built exclusively by direct response include OxiClean, Sharper Image, Proactiv, Aero Bed, Space Bag, Oreck, Magic Bullet and Juice Man, to name a few.

Direct response brings immediate media spending accountability to the table, with results that can be tied directly to expenditures. We call the integration of direct response and traditional brand advertising “Direct-to-Brand Marketing” because it uses direct response advertising to drive sales in retail channels through increased brand awareness. If the weekly DRTV spend is high enough and the retail distribution levels are high, then the POS level is more than likely to be multiples of the direct response sales. Direct-to-Brand campaigns are given a measurable objective. The measurable success is derived from combining the direct response sales with the increased retail sales revenue based on creating strong consumer awareness and interest for a product that has strong retail distribution.

Calling for Action

Direct response, in its many formats, is a unique marketing approach designed to optimize direct-to-consumer relationships for the benefit of your brand and your bottom line. Direct response is an evolution in traditional brand marketing by adding one significant factor - a call-to-action; a motivation for the consumer to “act now”. The model results in an accelerated return on media spending that yields a self-funding or partially-funding advertising approach.

The good news is that whether you’re starting out with a new product, or have an already established brand, direct-to-brand is an innovative way to establish market position, or improve the position you already have, and can reduce the cash requirements for media support to do so.

How is success measured? With direct response television, the metrics that are measured are pure and simple. We take into account every ad dollar spent on television and measure a gross sales return on that investment. Direct response marketers utilize ROI measurements as a way to gauge success and understand the relationship with the consumer and the demand for a specific product by way of accountable media buying and immediate sales. DRTV can be an effective market research tool, as direct purchases can represent a high propensity of success at retail. There is no faster way to understand if your creative messaging has triggered strong consumer demand.

For mass market consumer products an acceptable ROI ratio hurdle is generally 0.40 to 0.50, inclusive of TV and Web sales, However, some products can sustain a ratio of a .10 as retail sales make up for the sales volume. Usually these lower rations will materialize when a product has reached a mature brand cycle. Although, we do see some products on air that have high retail distribution levels and still maintain well above 1.5 ROI.

In order to do this, the direct offer needs to differ from that of retail so the perceived value is great. Even though the direct offer is greater, we’ve seen retail out-sell DRTV/Web: 28 to 1.

Industry averages show roughly 1 out of every 30 DRTV products drives a ratio that is determined to be a successful ROI for a given company’s business model. Campaigns that do not have retail presence need a higher ratio to fund the media. If a product has retail presence or is sold on a continuity basis where products are not sold in retail, then the DRTV ratio expectations are lower on the front end, as the retail and continuous shipment products become an additional revenue stream.

DRTV media provides marketers with immediate measurable return. Products that lend themselves well to product demonstrations, tend to perform at the upper end of the curve because a :120 spot provides an ideal time period to demonstrate the product effectively. However, as retail distribution increases because of the impact of the DRTV campaign, the DRTV media ratio will show a decline because the product line has greater awareness and is more easily available in retail. The up-side to increased awareness is incremental retail sales volume. :60s, :30s and :15s will ultimately be integrated to add a reach strategy to the mix for retail sales growth. Ratio will eventually decrease as distribution and awareness grows; however, the value of remnant media continues even with “non-direct” spots.

 

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