The Essentials of Direct Response Media Thanks to Wunderman Worldwide

The Essentials of Classic Direct Response Media Direct Mail Print Broadcast –Television –Radio Support Media

The Role of Media Media planning is concerned with how to use advertising time and space most effectively (and efficiently) to contribute to the achievement of marketing objectives.

The Role of Media Media provides a bridge that delivers the right message (and offer) to the right target. In this respect, media decisions that deliver both image/awareness are the same for direct response efforts. Media planning that is involved with generating a direct response, goes steps further in analyzing previous results and projecting future response.

Media’s Role in Direct Marketing The “accountable” nature of direct marketing is the crucial determining factor used to plan each media campaign. Historical response analysis is the foundation and starting point for the overall planning process.

Media’s Role in Direct Marketing Front-end Response -% response -Orders per thousand -Cost per order

Media’s Role in Direct Marketing Back-end Response -The quality of the customer is primarily measured by total sales (net of bad pay) per customer, but related measures are also used such as: conversion %, renewal rate and upgrade %, cross promotion sales, credit card usage, and ultimately a “Lifetime Customer Value” Index.

Direct Response Media All media can be utilized for direct response advertising:

Media Decision Factors See table on next page.

Planning Direct Mail

Type of Lists Compiled –Names and addresses derived from directories, public records, newspapers, retail sales slips, trade show registrants, etc., to identify groups of people who have something (single identifiable characteristic) in common.

Type of Lists Response –Names and addresses of consumers or business executives who ordered and paid for a product or service through the mail. Response Enhanced –Consumers(purchasers) who have filled out questionnaires and mailed in those questionnaires which describe their demographics, psychographics and specific product buying habits. House List –Purchased or inquired, 5-6 times better results

R-F-M Recency –When was the last time they purchased? Frequency –How often do they purchase? Monetary –How much money do they spend?

Other Important Selection Criteria Sex State SCF/ZIP Age

Other Important Selection Criteria Source –Direct mail sold –Print –Other direct mail media (Renewals, M-G-M’s, Package Inserts, Co-Ops, Statement Stuffers, Syndicated Products, School Marketing) –Broadcast –Telemarketing –Take Ones, FSI’s, ETC. –Warranty Cards

Merge/Purge Advantages Previously mailed names are eliminated. Each prospect gets only one mailing piece. Current customers are eliminated. Bad debts are eliminated. DMA pandering names are eliminated (House pandering also). Inter-file duplicated are analyzed.

Merge/Purge Advantages Multi-buyers are flagged for r ing. Nixi’s are eliminated, (NCOA). Demographic data can be appended. Phone numbers can be appended. Carrier route coding provides for postal savings. Decoys are added in.

Planning Print Media

Planning Print Step One: Establish Objectives -Direct Sales or Lead Generation -Image plus Action -Retail Support Step Two: Determine Goals -Cost/Response or Order -Volume of Leads/Sales Needed -Budget

Planning Print Step Three: Establish Media Variables -Target Audience -Seasonality/Responsiveness -Unit Step Four: Response Projections -Based on Historical Data

Target Audience Step One: Sizing the Opportunity -Syndicated Research Step Two: Determine Media Usage -Broad Audience: Mass Publications -Narrow Audience: Targeted Publications

Seasonality/Responsiveness Seasonality of Product Most Responsive DR Months -January -February -September -October Frequency Separation

Unit Insert units vs. on-page Balance of volume and efficiency –Larger, intrusive units Volume High Response Rates Expensive out-of-pocket –Small space units Low response rates Low volume Efficient CPO

Buying Print Direct Response Rates Corporate Rates Frequency Rates National vs. Regional

Positioning Front of Book, RHP Back to Book, Heavy DR Editorial Adjacency Competitive Separation

Test Structure 2-5 Key Categories 2 magazines per category 2-3 unit tests A/B splits –Creative –Offer –Units Statistically reliable Individual key codes for clean read

Direct Response Television

DRTV: What is it? A direct marketing strategy… Designed to generate a response… Utilizing low-cost spot television… In a variety of lengths...

DRTV: What is it? DRTV is often purchased for as little as one- quarter the cost of General Advertising Time is bought in large blocks, I.e. dayparts rather than specific programming “Hybrid” clients pay a higher rate guaranteeing select daypart rotations Time is pre-emptible

Qualifications for Direct Response Rates The offer should be exclusive and not communicated in other advertisements. The commercial must have a strong call-to- action urging the viewer to call now. The offer should be time-dated and good for a limited time. A general oriented commercial with an 800# added will not qualify as direct response. Stations review story boards prior to accepting the execution.

Direct Response Television Process Direct Response television commercials produce two types of sales results: –One-step process: Utilized by most traditional DRTV advertising (subscription, low out of pocket items) Telemarketing closes order obtaining all pertinent information

Direct Response Television Process –Two-step process: Additional information is generally required to close a sale Often utilized for items costing over $ Multiple product/service items exist Requires more sophisticated support from either telemarketing or from in-person sales call Advertisers include; insurance, home loans, financial products, exercise equipment

Direct Response Television Process Direct Response Television is more like the Stock Market than it is television. –DRTV is: A commodity Extremely volatile Difficult to second guess

The Planning Process Media Plan prepared utilizing client and agency data from other clients on individual station response levels. The “accountable” nature of direct marketing is the crucial determining factor used to plan each media campaign.

The Planning Process Historical response analysis* is the foundation for the planning process: –Front end response % response and cost per inquiry –Back end response % quality of customer and lifetime value

Step: 1 Setting campaign goals/strategic approach –Leads/orders –Awareness Building –Spending levels

Step: 2 Select and Rank (priority) markets/stations –Previous history/back end data –Responsiveness –Efficiencies –Marketplace conditions –Anticipated clearance –Product distribution –Target audience penetration

Step: 3 Commercial Length Both :120’s and :60’s are strategically integrated into a campaign –:120’s Base support on all spot stations –More responsive than :60’s –More cost effective than :60’s –Ability to clear on most stations and dayparts –Use on cable based on available inventory

Step: 3 (cont.) Commercial Length Both :120’s and :60’s are strategically integrated into a campaign –:60’s –100%-150% higher cost vs. 120’s –Strategically schedule on selective dayparts »Where :120’s traditionally are difficult to clear »Demographically targeted –Base support for cable »:120 inventory is extremely limited

Step: 4 Daypart Rotation –Responsiveness –Cost –Targetability of programming –Availabilities During the buy management process, daypart rotations are adjusted: –Poor performing dayparts limited or cancelled –Increase spending in effective dayparts –Negotiate rates on marginal dayparts (keeping in mind the target audience)

Step: 4 (cont.) It is important when beginning a new campaign to schedule a broad daypart rotation. This will maximize up-front learning and help extend the life of the campaign.

Testing An Added Value/Dimension Testing is becoming more important for Direct Response Advertisers. –Viability as a DRTV campaign –Creative Unit length Copy variable –Offer variations –Premiums

Testing There are two primary forms of testing in DRTV: –Fixed-Spot Test –Matched Markets Test Each has its uses and list of specific characteristics.

Testing Fixed Spot Test (FST) Fast Controllable Guaranteed Costly-does not pay for itself Campaign performance questions “Little U.S.”

Testing Matched-Markets Test (MMT) Slower Feasibility test Campaign projection “Manageable” Pays in volume generation Pre-emptible Replicated DR campaign “As it Falls”

Managing the Buy Objectives are managed over the length of the campaign Counts are received from the telemarketing services on a daily basis. Exact times are received from the stations. Buyers adjust schedules daily based upon performance and availability of air time.

Managing the Buy Responsiveness on a daily basis Rates are renegotiated. “No-charges” are negotiated. Ineffective/inefficient dayparts are eliminated. Spending is increased on well-performing stations. Poor stations are eliminated. New stations are recommended.

Managing the Buy As a result... Flight dates are shortened or extended. Alternate commercial lengths are tested and used. Creative/product fatigue is assessed. Individual station activity is added to, reduced, or cancelled.

Future Opportunities--Long Form (Infomercials) As a result of FCC deregulation, Long Form has grown in acceptance: –30 minute infomercial –Marketer is the program producer –Integrated editorial/commercial message with response device

Future Opportunities--Long Form (Infomercials) Current uses: –DR marketers –Lead generation –Self-help and Self-improvement

Future Opportunities--Long Form (Infomercials) Benefits: –Self-selecting audience –In-depth product presentation/valued information –Immediate response –Efficient rates Long Form can be tested in a controlled environment to determine feasibility.

Radio Targeted Traditionally not responsive –Out of home medium Need memorable 800# Successful as support medium –Other advertising channels –Retail

Support Advertising What is Support Advertising? –Selling Ad –Support Ad Types: –Print/Print Teasers –TV/Print –TV/Direct Mail –Radio/Direct Mail –TV/FSI’s –Print Direct Mail

Support Advertising Why Use Support? –Increase effectiveness of a single exposure. –Avoid horizontal fatigue –Traditional medium response falling off. –Break through clutter.

Support Advertising Creative considerations –Peak Audience Interest –Sell Ad, Not Product –Show Premium –Show BRC, Transfer Device –Play the Game

Support Advertising Budget Considerations Support$ Primary$ % Lift Example: % Lift = 25% Total Budget = $125,000 Support $ = $31,250

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