 |
 |
|
"Koeppel Direct's media buying expertise has played an integral role in making my company successful. Koeppel generated so much business for our company, occasionally we have to limit their media buys, in order to handle all of the new business." | |
| - R. Gregg Marketer of Senior Products |
|
MEDIA BUYING DIRECT RESPONSE TELEVISION (DRTV) ARTICLE ...... |
More Bang for Your TV Buck
Published: 12/05 - Target Marketing |
| |
Trends that will define direct response TV media buying in 2006.
Direct response television (DRTV) advertising is anticipated to pull down about $150.1 billion in sales in
2005, according to "U.S. Direct Marketing Today: Economic Impact," the Direct Marketing Association's
recently released study of the nation's direct marketing landscape. Conducted with support from forecasting
firm Global Insight, the study also predicts a compounded annual growth rate of 6.4 percent for direct
response TV ad expenditures between 2005 and 2009; in this same time period, compounded annual sales
growth is projected at the same 6.4 percent rate.
Compared to direct mail's expected ad expenditure growth rate (5.3 percent), direct response TV is
gaining ground as a more valuable lead-generation and sales channel. But when stacked up against both
the ad spend and sales growth rates for Internet marketing (18.3 percent/12.6 percent) and e-mail
marketing (19 percent/12.6 percent), DRTV still is working to find its place in the direct response
marketer's media mix. A few challenges to continued growth are the increasing adoption of technologies
that allow viewers to skip commercials and the intricacy of finding cost-effective air time.
To get a handle on the trends affecting the direct response media-buying space and solutions for making
the most of this medium, Target Marketing Editor in Chief Hallie Mummert spoke with Peter Koeppel,
president of Koeppel Direct, a Dallas-based direct response media buying agency that specializes in
short-form and infomercial DRTV.
Target Marketing: What factors are affecting available inventory and media costs for DRTV
marketers?
Peter Koeppel: During the fourth quarter, short-form rates typically increase when retailers and brand
advertisers selling holiday items buy up inventory at higher rates to meet sales goals during this key
sales period. This tends to decrease lower cost inventory available for direct response TV advertisers
and increases direct response TV rates.
This year the rate increases for short form are similar to last year on a national level. Since there
were not many local elections this year, and with car dealers cutting back on advertising due to slumping
sales, local broadcast TV rates stayed reasonable in the fourth quarter.
With direct response TV short-form media buying, it's a tricky balancing act between securing the
lowest rates and attaining a reasonable level of clearance. If you submit rates that are too low,
your clearance could be low, and if your rates are too high, your show might not pay out. Good DRTV
media buyers know how to balance these two aspects of their media buys to optimize results.
Infomercial rates did not increase much from the third to the fourth quarter [in 2005], so we have
seen improved response, which translates into a more profitable ROI for our clients.
TM: What is the penetration of personal video recorders (PVRs) doing to how companies buy direct
response TV spots?
PK: We haven't yet changed the way we buy DRTV to counteract the penetration of PVRs, since the
penetration is still relatively low. It's estimated there are currently only around 6 million
households with PVRs, so the effects aren't apparent yet. However, by 2010 DVR penetration is
expected to reach 40 percent of TV households. This will have a significant impact on the way
people watch TV, and could result in a large segment of the viewing audience zapping through
commercials.
I've seen some recent research that viewers of cable news and sports channels have the highest
percentage of "live" viewers, so buying more of this type of programming is a way of
counteracting higher PVR usage.
TM: What strategies should companies employ to find cost-effective time slots
for their DRTV campaigns?
PK: Employ an experienced direct response TV media buyer. [These professionals] understand the
value of inventory, they have leverage with the networks/stations due to the volume of time
they buy, they know the networks/stations/dayparts that perform best, and [they] know how to
effectively track and optimize their buys by moving money to higher performing media and
dropping less responsive media vehicles.
TM: Are certain formats more flexible on inventory and cost than others?
PK: With short-form DRTV, there's definitely more 60-second inventory available than 120-second
inventory. There's generally a set amount of inventory available for infomercials, so this limits
the available inventory during periods of higher demand during the fourth and first quarters.
National cable has traditionally been the primary TV medium for direct response TV advertisers.
However, short-form cable rates have increased as a result of more general advertisers moving into
the medium. The growth of satellite TV has provided additional inventory for both short-form and
infomercial direct response TV advertisers. In addition, we have seen more DRTV advertisers buying
syndicated and network TV.
TM: What other DRTV options do firms have besides traditional spots?
PK: Many direct response TV marketers are running their commercials on their Web sites and including
an 800 number. This is a good way for someone with a limited budget to advertise.
TM: What role will the Internet play in shaping the future of DRTV?
PK: Currently, anywhere between 15 percent to 50 percent of the direct response TV purchases are coming
from the Internet. Half the people watching TV are simultaneously online, and more than half of the
online audience now has access to high-speed Internet connections. This has fueled the growth of
DRTV sales on the Internet. It also has allowed for streaming video of TV commercials on the Web.
This has helped to reinforce the direct response TV message online, which has translated into more
online business for DRTV advertisers.
TM: What coming trends do you foresee in direct response TV?
PK: I expect video on demand (VOD) to become a big growth area for direct response TV marketers.
This will allow consumers interested in finding out more about a particular product or service to
view a longer format commercial, somewhere between a short- and infomercial DRTV spot length.
Comcast and others are aggressively moving forward with VOD programs.
Due to the fragmentation of the viewing audience, I expect to see the industry start to air
commercials in new mediums such as cell phones, iPods, gaming devices, etc., to more efficiently
reach various segments of the population.
Peter Koeppel can be reached at (972) 732-6110 or at pkoeppel@koeppelinc.com.
Koeppel Direct is a leading multi-channel direct response media buying agency.
|
| |
|
|
|
