The Top 500 retailer buys Campus Deals, which offers mobile coupons to college students.
The Unification Theory
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Powerful, as in cost effective, for unlike brand advertising on TV, direct TV commerce-if it generates traffic and sales-can pay for itself quickly. While purchasers of conventional TV spots must wait for the quarter or even the year to learn if campaigns are driving results, direct TV provides an immediate read. “Direct-to-consumer television advertising is the most cost effective form of TV advertising because if you do it right, it’s self-liquidating,” Kirby says. “Week to week, as you see what is working or not working, you can adjust your media spending strategy.”
A 30-minute infomercial may cost $150,000 to $200,00 to produce on the low end and $700,000 to $800,000 on the high end. Though infomercials are still an industry mainstay, direct response TV has expanded beyond them to include other formats, from as short as a one- to two-minute spot to what Kirby calls “transactional TV” in which a conventional TV show such as a soap opera sells the apparel or jewelry worn by characters in the show.
Though it’s moved beyond its early roots, recollections of some of those early late-night infomercials, cheaply produced and hawking merchandise of questionable value, hang over direct TV today, one possible reason that more of the established, traditional brands haven’t yet rushed to embrace it and hook it up to their web sites.
That’s an issue Kriby tackles head-on. “You have good infomercials, bad ones, some that can look like a great work of film and others that look pretty cheesy,” he says. “To indict an entire form of marketing because there are a few people who have done less than stellar infomercials in terms of their production values is silly. It’s a lost marketing opportunity.”
The opportunity is not lost on some big marketers. Dell has sponsored programming on QVC to drive traffic to both its web site and its 800 number, while audio manufacturer Bose sponsors programming on ShopNBC. At Internet retailer Buy.com, plans to add a direct response TV component have been in the works for more than a year, the company confirms.
The Sharper Image took the plunge into direct response TV on its own five years ago. Though it started cautiously in 1998 with an initial half-hour show for which production and the media buy combined cost in the low six figures, Sharper Image has since become a major buyer of direct response spots 30 minutes and shorter across outlets as varied as CNN, the Discovery Channel and even the Weather Channel.
With catalog and online advertising a more targeted endeavor, COO Tracy Wan says Sharper Image pursued direct response TV because of the medium’s broader reach. “We were really well positioned to take advantage of this advertising medium,” Wan says. “The first product we launched was a proprietary Sharper Image design. It was unique in the marketplace, we had a good margin structure to support it, and with our three-channel selling strategy-stores, catalog and Internet-it made sense.”
The TV spots promote sales at all three channels, and Wan is satisfied the web gets its share. But she says getting to that point took effort and staying there requires of Sharper Image the same “relentlessness” it puts into quality control for all the other forms of advertising it does. “There are different types of infomercials,” she says, admitting that the existence of some poorly-done examples initially caused some at Sharper Image to cringe at the prospect. “Going in, you have to take the time to communicate your objectives on quality in the creative. The room settings and the customer testimonials in our TV infomercials are very stylishly done, so if you saw it, you would think that could be my living room, my child, my situation.”
While these brands and others have experimented or plan to experiment with direct TV, their numbers are as yet small. That doesn’t mean other brands and other Internet retailers aren’t watching the space to see what happens, but many are busy balancing other demands. “Direct response TV of the type that HSN or QVC does is a very different from of direct marketing,” says Carl Rosendorf, CEO of 4-year-old pure-play Internet discount retailer SmartBargains.com, which does no direct response TV and isn’t currently planning to. “A company like Sharper Image has a lot of catalog experience and they certainly may be applying that experience to direct response TV. Many companies will be successful at it, and many won’t. A lot will depend on qualitatively, how they go about it. Just because you are good in one, you may not necessarily be good in another; you have to develop the skill sets for the different mediums.”
Kirby is hardly the first to say that marketers today need a presence in multiple sales channels, but he’s among the first to seek to expand the definition of must-do multi-channel marketing into direct response TV. “Consumers will decide how they want to reach you as opposed to the other way around,” Kirby says. “So you have to surround them with the same marketing message and make the product available to them through all channels of distribution.”
It’s his hope that web marketers and TV marketers will come to see themselves and their respective media as part of one continuum, and making that case to web marketers will be a priority at ERA in the time ahead. “If you’re doing business on the web, you already have that communication going,” he says. “Why wouldn’t you want to extol the benefits of your product line on TV? And why wouldn’t you want to have a response mechanism, and drive customers to your web site?”