April 2008 - The Time Keepers

Should media buying be the agency’s headache, or must the marketer get deeply involved? Stop us if you’ve heard this before, but…it depends.

By Jack Gordon

People in just about any business will tell you that time is money. But in a direct response television (DRTV) campaign, the expression is literally true. The cost of airtime for television advertisements usually is the single biggest expense involved in making and selling a DR product-often greater than all other costs combined.

Media buying, therefore, is a make-or-break activity for any DRTV campaign. No matter how good the product, or how persuasive the commercial, if the marketer doesn’t buy the right airtime for the right price, the campaign cannot make money.

But how much do marketers themselves really need to know about the hands-on details of media planning? And how deeply must they be involved? Isn’t that what media agencies are for?

There are as many answers as there are DRTV marketers. On one end of the spectrum are advertisers such as Reid Briteman, president of Car Cash Loans of Los Angeles, which lends money against the titles of private automobiles. An investment banker by background, Briteman launched the company in January 2007. He hired Encino, Calif., agency Inter/Media Advertising to create a 30-second DRTV commercial, buy the time to run it, and handle most of Car Cash’s other advertising needs, including Internet search marketing.

Briteman says he is pleased with the results he’s getting (he won’t disclose figures), but he doesn’t pretend to understand exactly how the agency goes about its business on his behalf. He knows that the TV spot runs only in the Los Angeles market, for instance, but would have to check to see if it airs only on broadcast stations or also on cable networks. He knows that he spends “a significant amount of money” on search marketing, but depends on the agency to spend it wisely.

He hired Inter/Media because he had worked with its president, Bob Yallen, at a previous financial company and came to trust him. That relationship meant everything, Briteman says, because he had little choice except to delegate the media side of the business. “I know nothing about buying TV time or making TV commercials,” he says. “Any ad agency could sell me whatever they want, and I wouldn’t know the difference. I needed somebody I felt I could trust.”

On the other end of the spectrum are DRTV industry veterans like Katie Williams, former head of Williams Worldwide and now a partner with Sylmark Inc. of Los Angeles. She oversees direct marketing activities for Sylmark brands such as Miracle Blade knives, Tobi Steamer (for clothing), Ionic Pro air filters and Ultimate Chopper.

Predictably, Williams takes a more aggressive role in dealing with the 10 or so agencies she uses. “We look to them to be experts; a good agency should be able to perform without us micromanaging them,” she says. “But we still have regular meetings and weekly phone calls. We yell and scream when something doesn’t look good.”

She warns that a marketer who is forced by lack of experience to rely on trust in an agency should be very sure that trust is not misplaced. “I’ve seen some where buyers don’t have the training they should, or even the basic logic of what works,” Williams says. Even in some established, big-name agencies, “there can be newer buyers without proper training and account executives who aren’t as knowledgeable as they should be. You can see it immediately when you start working with someone like that,” she notes.

It behooves even an inexperienced marketer to know some media-buying basics, suggests Sally Lee, Santa Monica, Calif.-based head of media for direct-response giant Guthy-Renker. For instance, Lee says, “If the media rates are too high, don’t buy the time. Many times, the stations will come back to you with the same time period at a fire-sale rate.”

Dr. Ken Frank, founder of Dr. Frank’s Health Products of Santa Barbara, Calif., says he learned some lessons the hard way, especially when it comes to buying remnant space. Years ago, an agency he was using in connection with a two-minute TV spot for an anti-snoring product bought $10,000 worth of remnant space for a four-week period. “Every single one of the ads cleared,” he says. “That tells me, with the experience I have now, that we overpaid. The CPO [cost per order] was terrible.”

A related lesson learned from experience: When testing a new station or a new campaign, Frank says he prefers to bid on remnant space for only a week. “The problem is, you can’t cancel overnight,” he says. “There’s a lead time. If you’re testing a station where you might spend $5,000 or $10,000 in a week, and you have a terrible run, you don’t want to be stuck spending another $10,000 the next week.”

Though he now is very engaged with media planning, Frank’s advice about agencies, nevertheless, harkens back to Briteman’s: “If you find one you trust and that understands how you work and what your desires are, stick with them as you would with any good vendor.”

Frank has settled on Lockard & Wechsler Direct of Irvington, N.Y., and now works almost exclusively with that agency. He is just fickle enough to ensure that he isn’t missing any great bets. “Many agencies have come to my door waving the specialty flag: ‘We have a lot of experience with neutraceuticals.’ They have no doubt they can do better,” he says. “Several months ago, I tried one. They did very poorly.”

Marketers in the best position to know how well their media buys are performing are those with the clearest view of what “performance” means to them and how to measure it. A certain cost per order? Or, a target media efficiency ratio (MER)?
Williams, who deals with half-hour infomercials as well as spots, says that either CPO or MER could be her key tracking factor, depending on the campaign. “We calculate breakevens at a very granular level on every buy: which telemarketing company we’re using, which creative, which offer,” she says.

But all of that tracking is just a way to get a handle on the really meaningful figure, which is return on investment (ROI). “The main thing for us is ROI,” Williams says. She wants at least a 25 percent ROI on every media spend, though in practical terms, “you have to look at the average” for a campaign.

To Frank, cost per order is the key that unlocks the door to smart media buying. “Experience shows that with a certain cost per thousand [i.e., cost per thousand viewers, or CPM], I’ll get a certain CPO,” he says. “So if I determine the CPO I need, that gives me a CPM to decide which stations to test.” In other words, he can derive an acceptable price to pay for time.

CPO is a more valuable figure to Frank than MER because it is crucial to know how many units he sells. “I sell continuity products, and I always lose money on my first order,” he says. “But I know that a certain percentage of people who order will [become continuity buyers]. I can plug that into a spreadsheet that projects my earnings four months from now.”

If he knows that X percent of first-time purchasers of a product such as Dr. Frank’s Joint and Muscle Pain Relief will become continuity buyers, and how many also will purchase various upsells, then he has a good handle on the CPM he can afford to pay for a campaign “that will pay off in, say, two months or five months.”

Darren Howard, media director for Esurance, an online auto-insurance company based in San Francisco, faces a different challenge and takes a different view of measurement. Most of his TV advertising is done with 30-second spots. Like all of the company’s other marketing efforts, the spots direct viewers to the main Esurance.com website. “In that sense,” he says, “everything we do is direct response advertising.”

But auto insurance is “a low-interest category to consumers,” he says, not likely to spur an immediate, impulse buy. Therefore, branding is a major goal. “We don’t include any phone numbers or unique URLs in our advertising,” he says. With all promotional efforts designed to push customers to a single site over what might be a lengthy time period, it is difficult-and even beside the point-to track responses to any particular airing of a TV ad.

From Howard’s point of view, the difference between DRTV and general advertising is simply a matter of how the television time is purchased. An in-house group handles local TV buying and online marketing. He works with agency MPG of New York to buy national general advertising time (i.e., ads guaranteed to run), and with another agency, MPG Direct, to buy national direct response (remnant) time. The ads themselves are the same.

Measurement thus becomes a different proposition. “Where a typical [DR marketer] would try to optimize call volume and so on,” Howard says, “we make decisions based on syndicated research and dayparts. We also do econometric modeling….We track our media impressions by source, down to spot time, across all media-TV, radio, online video-and look at national vs. local, broadcast or cable. We look at the impressions we’re delivering, down to the day, and model them against our quote volume on the website.”

If you are a fledgling DRTV marketer and any of this sounds like Greek to you, a bit of advice: By hook or by crook, find a media agency you are confident you can trust.

Jack Gordon has served as Electronic Retailer magazine’s editor at large since September 2004. This award-winning freelance writer covers a variety of different industries and markets.


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