boosting direct mail marketing & catalog response rates

Think Outside of the Mailbox to Boost Direct Mail and Catalog Response Rates
Article appeared in Target Marketing Magazine, October 2001

With postal rates continuing to increase faster than the rate of inflation it's a great time to consider complementing your direct mail program with direct response television advertising. DRTV -- which gained notoriety in the 70s with half-hour infomercials that ran in the middle of the night hawking everything from Ginzu knives to the latest exercise fad - has come of age and is now used by myriad mainstream advertisers. Today, such well-known companies as Spiegel, AT&T and Rubbermaid employ direct response television spots to cost-effectively build sales, generate leads and lift direct mail response rates. According to the Direct Marketing Association, last year U.S. companies invested $22 billion in DRTV advertising, almost 40% of all television advertising expenditures.

The allure of DRTV lies in the fact that it provides an extremely cost-effective and measurable way to reach a highly targeted audience. Both broadcast and cable networks accept 30-second, 60-second and 120-second direct response commercials at considerably discounted rates. In fact, direct response spots can usually be purchased for half the cost of traditional spots and are often discounted as much as 80 percent. To qualify for these deeply discounted direct response rates your commercial must contain a call to action and a phone number. Almost all networks and stations now allow direct response advertisers to include a website address as well.

The reason networks offer discounted rates for direct response spots is because they run direct response spots in time slots they were not able to sell to traditional advertisers at traditional rates. This means that your commercial will run pending availability, can be pre-empted without notice and carries none of the audience guarantees normally offered to advertisers paying higher rates.

Keep in mind when buying direct response spots that the final rate can be negotiated. You will fare far better if you work with an agency that specializes in direct response and has the know-how to secure rates that will work for your campaign. Likewise, use direct response professionals to create your commercial to be sure you are getting the benefit of tried and true experience. Contrary to what traditional ad agencies might like to believe, producing a direct response commercial that moves consumers to respond is part art, part science and considerably different from creating award winning "image" commercials.

While you typically cannot control the exact day or time that your direct response commercial will run, you can target your audience quite precisely by buying cable networks that cater to your best prospects. With the plethora of cable networks available today it is possible to reach virtually any audience segment ranging from toddlers and teens to fly fishing aficionados and cross-stitching fanatics. In addition, direct response buys can be made on national networks such as ABC, CBS and NBC and are often available in nationally syndicated shows such as Jenny Jones or Rosie O'Donnell.

Making DRTV Work For You

Whether you market multiple products through a catalog or a single product or service via direct mail, direct response television can be a powerful and cost effective advertising complement. Lens Express, which sells contact lenses via direct mail, considers television its most cost-effective means of marketing other than word of mouth and credits DRTV with establishing credibility and brand awareness in addition to generating immediate sales.

Direct mailers and catalogers can use DRTV to ultimately reduce their costs per order, lead or customer in many ways:
DRTV spots can run in tandem with a scheduled direct mail campaign, generating orders on its own as well as lifting response rates by providing additional exposure for your offer.

Catalog marketers with appropriate product lines can use DRTV to sell "hot" products on a standalone basis and add new customers to their house list in the bargain. Moreover, many manufacturers will share the production and/or media expenses if their products are featured in your offer.

DRTV spots can generate highly qualified leads for complex or expensive products. You may not be able to close a sale for some items as effectively in a 60-second spot as you can in a 3-page letter, but a powerful commercial and offer will generate leads that a skilled inbound telemarketer or sales rep can then convert into sales and long term customers.

DRTV can also be used in conjunction with direct mail to educate and inform customers by enticing them to attend seminars or schedule a product demonstration. Charles Schwab, for instance, uses both DRTV and direct mail to promote its investment seminars.

Measuring Effectiveness
General television advertisers measure the effectiveness of their advertising campaigns by comparing the audience rating points delivered against their audience rating point objectives. DRTV is much more accountable. With DRTV, it doesn't matter how many people see your spot unless the phones ring with inquiries and orders. And with DRTV, you can monitor your cost per order or lead on a daily basis and adjust your offer, creative and media buys accordingly. In fact, testing and tweaking are the keys to success when using DRTV. Once you have a campaign that is achieving its profit goals, you can expand it for as far and long as it remains profitable.

Getting Started
To create a profitable DRTV campaign you must start by doing your homework. Chances are that someone else has used DRTV to market a product similar to yours, and their experience could save you time and money in the trial and error process. Companies such as Nielsen, Infomercial Monitoring Service and Competitive Media Reports can provide you with a wealth of information regarding networks and stations that were used, commercial length and how many spots were run. Keep in mind that the longer and more frequently a particular commercial was aired, the greater the likelihood that it was working. Video Monitoring Service can provide you with tapes of current and archived commercials for virtually every direct response product for a nominal charge.

Once you have a sense of what worked and didn't work, you can begin creating your commercial. Although 120-second spots have fewer opportunities to run than 60-second spots, I recommend producing and testing both lengths. A 120-second spot provides you with twice the demonstration, testimonial and selling time for your product and service and also gives viewers a better chance to remember your toll-free number.

Now you are ready to begin testing. A typical television test will run between 2 and 4 weeks and include 8-to 10 different networks and stations. A reliable test can be conducted for $40,000 to $75,000 including both production and media costs. Be sure to review your results daily and be open to testing price points and offers until you find the combination that works best for your product.

A common mistake made by companies new to DRTV is to insist on immediate profitability as the only benchmark for success. While generating profitable front-end sales is a desirable goal, you should also allow some leeway for the lifetime value of your new customer. Each new customer potentially represents an ongoing incremental revenue stream for catalog and direct mail marketers. How you capitalize on new customers and leads and estimate the present value of each is a critical part of your DRTV plan. Insurance companies understand this well. Many are willing to invest as much as $500 to acquire a policyholder based on his or her estimated lifetime value.

SIDE BAR: TIPS FOR CREATING DRTV SPOTS THAT DELIVER BOTTOM LINE RESULTS

Use testimonials - You don't need a celebrity, satisfied customers usually work just as well.

Demonstrate your product's features and benefits; make the viewer think, "Wow! I gotta have that!".

Display your phone number and website address on the screen long enough for prospects to write down or remember it; 20-seconds in a 60-second commercial is a minimum.

Use a production firm with a track record of successful DRTV commercials in your product or service category.

Hire media buyers that specialize in DRTV.

Test new offers, creative approaches and media vehicles on an ongoing basis.

Norman M. Goldring is the founder and president of CPO Direct. CPO Direct is a direct response media agency located in Chicago, Illinois. For more information Norm can be reached at 312-645-7700 or email him at: ngoldring@cpodirect.com