Safely Navigate through Obstacles in Direct Response: Taking Calculated Risks

(As published in the May 2010 issue of Response Magazine)

It’s a widely known fact that Direct Response is not a business for the faint of heart. But how do advertisers know which risks are worth taking with direct response? Much like investing in the stock market, there are times when taking a leap of faith is the only way to get ahead. Research and educated, informed decision-making help minimize the risk to advertisers, but they can only get a brand so far…if they don’t pay attention to consumer response. The time has come where many brands are looking at the value of direct-to-consumer advertising and the key performance indicators that come with advertising with accountable and quantifiable metrics.

When Opportunity Knocks, Answer the Door!

In 2008 and 2009, with the uncertainty of the U.S. economy, minimizing advertising budgets was a common decision made by many general market advertisers. There was a rise in open inventory left by these advertisers which allowed Direct Response marketers the opportunity to purchase premium media slots at highly competitive rates. Some Direct Response advertisers chose to jump on this unprecedented availability in media, and they experienced tremendous growth at a time when many companies were cutting back and seeing sharp sales declines. Many Direct Response advertisers sustained or saw substantial growth because they were able to adapt swiftly to the current change in the media environment.

The forecast for 2010 is back to a more stable media environment and signs of a strengthening economy are on the horizon. This does not mean that direct response advertisers are out in the cold. It only means that we had a great ride and when the opportunities are there, it’s imperative to act swiftly and take advantage of it while you can. Those that did jump at the available media opportunities performed well and were able to grow their brand faster and more efficiently than if they were in a normal marketplace. The key to determining which media vehicles are worth the risk is to hire an experienced media agency that can determine the true value of the media and negotiate the cost to be the most advantageous for your campaign as possible, on the spot, in any media environment.

Can I take your order?

Technology affords us seemingly endless possibilities when it comes to the availability of information. So why are some marketers not harnessing the power of technology to get as much data as possible to analyze their business? There are key areas where marketers should be collecting sales information in order to determine their customer profiles. Navigating through the options available and ensuring the desired data will be collected is key to a campaign’s measurability. On the Telemarketing end of the campaign, phone orders can either be handled by a Live Agent, through an Interactive Voice Recording (IVR), or a combination of both – where the caller starts out through IVR, but has the option to speak with a Live Agent. There are set up costs involved with each, yet IVR is more cost effective and converts calls to sales by delivering a consistent, controlled message. Live Agents tend to be the choice when a product or service requires human salesmanship; the costs are higher, but Live Agents are still the best way to go when dealing with trial offers, higher price point products and products that are more complex.

Some marketers are taking larger risks by foregoing telemarketing altogether. Depending on the product or service, the trends for online orders driven by direct response television or print is growing at a much faster pace than ever before. The risk with web ordering surfaces if you do not have your online metrics in place. What was once an afterthought is now the first thing you have to think about before you even trademark or name a product. Do you own the URL? Since the volume of online sales is so large now, you risk corrupting the accountability of your campaign if you do not have these metrics in place. We are always surprised at how many people do not think of this aspect a head of time. Protect your brand on the internet!

More and more consumers are becoming comfortable with online purchasing each day, and the trends in percentage of web orders show that this segment of the population keeps getting stronger and stronger. The key to implementing online order tracking to allow for clean results is to manage your keywords, URLs and site mapping appropriately. According to Snapnames.com, 5–10% of people type a URL address into their browser’s search bar. If an advertiser did not map their search terms properly, this could potentially cause 5–10% of their orders to either go missing or become untrackable. This is NOT a risk marketers should take, especially when the entire success of a campaign will hinge upon the sales activity and the origin of those sales.

How does a marketer know if a risk is worth taking or not?

As a marketer, it is essential to focus on the principal function the product or service delivers, and then illustrate to the consumer why they can’t live without it. Sometimes, simplicity might be the strongest tool you have to build your brand. Avoid the risk of cluttering your campaign by attempting to oversell your audience with unnecessary distraction. Excessive components in a campaign can be disorienting to the consumer. Keep it focused and use demonstrable attributes that sell, sell, sell!

Simply put, logically analyze which risks make the most sense for your brand. Your campaign should be as unique as your product and should starkly demonstrate why your product stands out from its competitive set. It’s imperative to work with a media agency that can act swiftly and aggressively to capitalize on the proper timing and needs of today’s consumer market. By taking calculated risks with your advertising strategies, marketers can boldly conquer the ever-changing world of Direct Response Advertising.

Top 3 Most Frequently Asked Questions by Potential Direct Response Marketers

Q1: How do I know Direct Response is right for my product?

When executed properly, Direct Response can work for a wide variety of product types. Generally, DR products will meet the following criteria: fulfills a need for the average consumer, appeals to a large audience, has a competitive price point that is likely to generate profit, a similar product is not currently available in retail. Direct Response is effective for products not available in retail, products in retail or products in a pre-retail launch.

Q2: How much will it cost to get my product on the air?

Basic cost will vary depending on the goals you have for your campaign as well as vendor selection. One could expect the cost to fall somewhere near the following:
Production: $50,000 – $100,000+
Telemarketing Setup: $5,000 – $10,000+
Website Setup: $5,000 – 10,000+
Media Test: $15,000 – $50,000+
Fulfi llment Setup: $5,000 – $10,000+
Fees/Misc: $20,000+

Q3: How soon will I start seeing results?

For television advertising, approximately 80% of your orders will come in within the first 24 hours after your commercial runs. For Print, there are much longer lead times, and generally it can take anywhere from 4-8 weeks to reach 80% of your total orders.