Direct Response TV: A Fragile Ecosystem

TV Direct Response DR used to be a healthy industry that could support a slew of marketers and service providers By service providers I mean production companies telemarketers media agencies etc But when an industry is fragile read exponentially in distress it is felt by everybody up down and around the ecosystemLetamp8217s take a look at why it is fragile and then we might be able to see a way outWe all know that media fragmentation exists on an unprecedented level The average number of local broadcast cable and satellite channels available to audiences is now 198 But wait thereamp8217s more We have over 100 million Web sites available and the average person visits 99 different sites per month A Web site is a rough equivalent to a channel Choice abounds as attention dissipatesMedia fragmentation as a phenomenon is not a problem by itself It is only when media rates do not reflect the decline in audience reached that a problem surfaces for DR marketers So the real problem is that media rates have become destructively high So high in fact that few long form or short form commercials deliver a ROI Mind you these rates have escalated amidst a huge decline in marginal costs of media But this will be left for a different postTo accommodate irrational media rates the entire ecosystem either wittingly or unwittingly conspired to alter the economic equation DR marketers used for years If one could not make money on the direct marketing campaign rather than solve this problem most marketers began to kick the can of profitability down the road If marketers could not make money on campaigns and acquiring customers they would just put a mortgage on that customer in other words use debt to continue spending Pay now and earn profits laterSimply put when campaigns started to lose money time and time again media owners agencies trade publications and of course charlatan pundits invented the phrase amp8220drive to retailamp8221 Conventional wisdom suggested if DR campaigns lost money they would become profitable down the road and would hopefully cash in big driving retail sales Much more convention than wisdom I should sayThis one short phrase amp8220drive to retailamp8221 changed direct marketing from a transactional accountable discipline to a fragile strategic retail play DRTV in a sense became dependent on another fragile industry retail as a result A short list of struggling retailers is in order JCPenny continues its ignominious decline losing another 170 million last quarter Target lost money over the last 12 months Radio Shack still has one foot in the proverbial grave Sears seems poised for bankruptcy and still loses money And has anyone noticed Walmart reported 43 decline in quarterly YOY salesIf one wishes to delve deeper into the fragile retail sector you discover more and more onerous terms being extracted from marketers even from amp8220healthyamp8221 retailers like Bed Bath ampamp Beyond Not only do they often demand 100 return privileges but they demand holding back 30 of the invoice for 180 days to make sure they are covered for returns CVS and Walgreens are forcing 100 returns to avoid putting skin in the game and thus avoiding risk Under these conditions retail is far from the savior of DRTV Retailer fragilities increase marketersamp8217 fragilityCompounding the retail dilemma is how Amazon and other marketplaces affect pricing thus eroding profit margins for allOK so what else is problematic beyond irrational media rates and kicking the amp8220profitability canamp8221 down the road by driving retail salesWe should not discount how the Internet has affected the ecosystem ranging from predatory pricing to buyer psychology Benefits still and always will outperform features to motivate consumer behavior But there is a huge difference between authentic benefits and false disingenuous benefits With a click of your mouse false or exaggerated claims are revealed Hype in general starts to ring false We face a much more skeptical audience than we did 10 years ago yet the DRTV creative approach has not changed DR marketers have actually trained consumers to be skeptical with amp8220golden hammeramp8221 pitches that increasingly look like the snakeoil pitches of yesteryearOur industry still amp8220yells and sellsamp8221 with every short form and call to action pushing the limits of credibility We still think loud blustery creative is the only approach that works because it worked so well in the golden age Marketers and creative agencies seem to be the last people on earth that donamp8217t know an entire generation thinks they are full hot air In the 60s we tuned in turned on and dropped out Today our audience is just turning offCreative agencies hold on to an outdated formula with a viselike grip remembering the glory of past years It is sort of like bloodletting that hung around for 400 years even long after it was proven not to cure much I guess writing about a way out of this fragile situation will have to wait for the next installment so if interested stay tunedThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillage management or associated bloggers

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Direct Response TV: A Fragile Ecosystem

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Jaffer Ali

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