Government Debt Ceiling Uncertainty Hurting DRTV Results -- Susan Rowe

It appears that all this uncertainty is fueling a reduction in responses for Direct Response Television – especially for products and services that rely on response from the 65+ group.

We have seen over the past 3 weeks, for a number of products and services, a sharp decrease in call volume and web traffic. Let’s explore the primary reasons why this is creating such a dramatic impact on our industry and how we have to react, adjust and reduce our spend until the uncertainty fades.

Uncertainty causes concern about the future and makes people draw back on their expenditures. Hoover’s article, published on October 2^nd, 2012, “Uncertainty and the Economy”, proves the theory that “…high levels of economic policy uncertainty caused households and businesses to hold back significantly on spending, investment, and hiring.” Our government’s inability to solve the shut-down and the looming concerns about defaulting on the country’s debt is hurting all DRTV activity regardless of the product or service.

First, certain populations, especially the older segments of the population, migrate to news channels to understand and learn about the issues in Washington. This causes our media, sitting on non-news channels, to be less effective. So for clients, who have found great success on channels that are not news oriented, and cater to an older target audience, their media isn’t nearly as effective.

Secondly, those products, which are a considered purchase, and carry higher price tags, and not deemed “necessary” such as vital essentials like food and shelter, will experience the most dramatic decrease in response. The consumer may be just as interested in your product or service as pre-uncertainty. The ability to delay purchase until uncertainty goes away causes the target to stall on the purchase.

Finally, the most critical concern amongst the 65+ group is what may happen to Social Security if the Debt Ceiling is not raised. The Bipartisan Policy Center released a chart that sharply illustrates the point. On October 23^rd, a $12 billion Social Security Benefit payment is due, on November 1 ^st, a $25 billion Social Security Benefit payment is due. The question as to whether the Government will have the money to send out the payment is causing seniors, even those with other sources of income, to retreat and wait before making an unnecessary purchase.

So what can we do to help our clients during this critical juncture? We can reduce our activity to a minimum and ride out this uncertainty storm. We can also migrate some expenditure to the news channels if we are looking for an older target. Let’s all recognize that DRTV itself is not floundering, but the uncertainty that comes with the current political climate stops a potential purchaser in their tracks.

Prior to embarking out on her own Susan Rowe held the position of Senior Partner, Managing Director within the Digital and Performance Marketing media practice for Ogilvy Neo in New Yorkand Chicago (Feb 07 - July 08). Her charge was to oversee Performance Marketing for a number of high profile clients, including Allstate, Investools, TD Ameritrade, Select Comfort and Six Flags. She was also responsible for leading NeoVideo, the video unit that works with new forms of video on TV and online. Susan can be reached at srowe2202@yahoo.com.

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