A Q&A with Jack Hale, Butler/Till’s direct response expert.
B/T: How would you describe DRTV to someone who is not familiar with it?
JH: It’s actually a complex question to answer because it’s been around for a long time but has evolved a great deal. By its simplest definition, Direct Response is any advertisement that seeks to get a consumer to respond to their ad using some kind of call to action, traditionally in the form of a toll free number but more recently with the use of website URLs. The desired response could be to order an advertiser’s product, creating immediate and measurable performance for that ad, or it could be to simply request more information, download a coupon, or any number of other actionable responses, which an advertiser can then use to generate leads.
B/T: So, how has it evolved over the years?
JH: For starters, the quality of the spot! When people think of DRTV, late night infomercials selling some product for “only $19.95!” pop into their heads, along with phrases like, “But wait, there’s more!” and “Call in the next five minutes, and we’ll double your order!” These have been used so repeatedly in traditional DR ads, that they’ve made their way into pop culture and are recognizable by most people.
The unfortunate result is that people have come to view those kinds of ads as a joke, despite the massive success they’ve had selling products. When in fact those cheesy ads are increasingly in the minority, replaced by more sophisticated DR ads from Fortune 500 companies. On the surface, they look like brand awareness commercials, but look more closely, you’ll see a call to action, which, behind the scenes, is being measured and optimized based on responses. While many of these companies are not necessarily looking to sell their product directly over the phone, that doesn’t mean they haven’t come to recognize the benefits of using DR as their TV media tactic. And that goes beyond just the direct measurability of these ads.
B/T: How so?
JH: One of the biggest, and in some ways most important, differentiators between DRTV and traditional TV advertising is how DR is bought and the impact it has on the advertiser. With national TV buys, for example, non-DR advertisers typically buy inventory in specific shows as part of fixed, non-cancellable deals with guaranteed delivery of impressions or gross rating points and guaranteed clearance.
In the DR world, advertisers buy broad rotations (i.e., Daytime, Prime, Late Night, etc.) rather than show-specific inventory. The schedule is 100% pre-emptable and thus not guaranteed to clear, and there are no guarantees when it comes to impression or GRP delivery.
B/T: That doesn’t sound like a good deal in comparison to traditional TV buying…
JH: Right, but when you look a little closer, there are a number of significant benefits. While your spots are not guaranteed to clear, they’re also 100% cancellable, usually within just a few business days of the air date. So you’re not completely committed. That’s a huge deal for any advertisers with fluctuating spending levels who are wary of making big commitments. The flexible cancellation policy also means you can better optimize your campaign, pulling money off of the stations that are underperforming and reallocating to the ones that do well.
Another benefit is that when you buy TV through the DR model, you’re typically able to get a reduced rate–as long as you know the state of the DR marketplace and which stations or networks have enough inventory to offer you a good deal. While traditional TV sales teams negotiate their deals based on the CPM goals, DR sales teams are almost completely driven by supply and demand. Some stations reserve a certain amount of inventory for the DR team to sell, but many just give them inventory that has not been sold. DR inventory prices can be high if inventory is limited. But more often the DR inventory in a given week is enough that it is still being sold only a few days ahead of time, sometimes even midweek, which can mean big discounts.
And while you’re not getting the guaranteed ratings or impressions, that doesn’t mean you’re not still creating brand awareness (after all, the viewer watching your spot doesn’t know or care if it’s a traditional ad or DRTV). Assuming you have a call to action that you’re tracking and analyzing, that will tell you that a viewer has not only watched your ad, but was interested in it enough to engage with it by calling for more information, visiting your website, or any number of other direct responses you’re measuring. And engagement is a much stronger indicator of intent to purchase.
B/T: Because DRTV uses remnant or lower-cost broad rotators, there is a clearance factor, which is not like brand TV. What do you think is an optimal clearance percentage, and how would you figure out with your clients their threshold for clearance?
JH: On the surface, I’d say optimal clearance would be 100%! After all, we buy the inventory with the hope that our ad runs, right? But from my experience on the sales side, many clients are looking for something less than that, in part because they think that if 100% of their spots run, that must mean they paid too much. And to an extent, that is a fair concern. It’s entirely possible that some other advertiser paid a lower rate and was still able to clear some or even all of its spots, but not necessarily. You could have the lowest booked rate of any advertiser and still clear 100% if you only book one or two spots! Or maybe there are 50 units of inventory all sold at the lowest possible clearing rate. You might have booked 10x spots at that rate and cleared 100%, while another advertiser booked 80x spots and only cleared 50%. Does that mean that one of you got a better deal than the other when you both had the same exact rates?
I’ll leave you with this…
At the end of the day, I think the more important concern for an advertiser is, “Does this rate work for me? Is my cost per lead (or cost per whatever metric you are using) where it needs to be?,” and trust that your buyers have a strong enough relationship with their sales rep to get the lowest rate possible without putting your clearance in jeopardy. It’s those relationships that ultimately lead to huge dividends for clients.
Before moving to Rochester and joining Butler/Till, Jack spent seven years working in Direct Response ad sales at Crown Media Family Networks (the parent company for Hallmark Channel and Hallmark Movies & Mysteries) and NBCUniversal. During his time at those companies, Jack worked with numerous brands directly, including Nutrisystem, Trivago, and Wayfair.com, and got to know a lot of the DR salespeople at other TV networks and rep firms. He also worked with many different agencies, from more DR-focused groups like Diray, A. Eicoff, and R2C Group to larger agencies like GroupM, OMD, and Horizon Media.