May 2007 - Lessons Learned

Some of the leading minds in DRTV reveal the learnings gleaned, sometimes painfully, from underperforming campaigns.

By Tom Dellner

Everyone in the direct response television (DRTV) world lives for the big hit. The home run. The large-scale, sustainable campaign. But DRTV is anything but a sure thing. How often does that big hit come along? One in 20 campaigns? One in 50? And while the home-run show or spot obviously yields the greatest financial reward, perhaps the lesser-performing campaigns are ultimately more valuable for the lessons they provide.

Electronic Retailer spoke to some of the industry leaders to gain insight into some of those lessons learned.

President, Cannella Response Television

The campaign that jumps to mind is one we did for a fishing lure kit called the Zip Lure. It was a very good product and we had some great footage. The cost of goods was a bit high, though. We certainly didn’t have that traditional direct response mark-up, the eight-to-one that many marketers look for.

We tested at a price point of $29.95, but it just didn’t work. We then re-worked the price point to $19.95-and this is a product where we really didn’t have the margins at $29.95. But we thought that if we generated more volume and were able to sustain the upsells on the backend, we could make a campaign out of it. Plus, we know that running marginally performing TV often can be a wise decision if you can build brand awareness and generate some pull-through at retail; your margins at retail can more than make up for a TV campaign that is doing little more than breaking even.

However, we didn’t get the retail. We learned that, when it comes to certain niche products like fishing, big-box retailers don’t look at TV products the way many mass-market retailers do. The ultimate lesson learned is that spending millions on TV doesn’t necessarily mean you’ll be successful at retail. You need to know where you stand from a distribution standpoint going into a campaign. That retailer needs to be in your back pocket from the start. It takes a well-concerted effort and an intelligently laid-out retail plan that’s in place well in advance.

CEO and Co-founder, Mercury Media

Three scenarios come to mind. They may be a little dated, but they remain important today-we use them still to steer our clients away from making the same mistakes and having to re-learn the lessons again themselves.

The first is a reluctance to go for the sell. Back in the mid-’90s, we did a fair amount of Fortune 1000 business. One of the biggest issues these marketers had was that they wouldn’t sell the consumer on the product in the infomercial. They wanted to distance themselves from the “Call now!” or the “But wait, there’s more!” Often, it was based in a fear of disenfranchising their retail distributors, but if the psychology of the sale isn’t there, if you dance around it trying to be coy or high-brow, you can lose a lot of money. Plus, most retailers today are well beyond this issue-they know they’ll sell 10 to one of whatever the marketer sells directly on TV.

The second is the old adage that preventative products simply don’t work [in DRTV]. I remember hearing this at one of the conventions I attended in the late ’80s. And since then, I have seen some terrific preventative products, with beautiful, well-crafted infomercials. And yet, the rule holds true.

The third has to do with tenacity. We recently handled the campaign for a beauty product that tested poorly. We thought it might wind up being a single, where we might be able to spend a small amount of money week-in and week-out. We’ve gone from spending about $30,000 a week to $400,000 to $500,000.

The norm is, if a show tests like a single, it’ll stay a single. But the lesson here is that if the client has the wherewithal and tenacity to go back and change some of the variables, you can sometimes end up with a nice big hit. We have a number of shows on the IMS Top 50 that are examples of this.

President, Koeppel Direct

We worked on a campaign for a nutraceutical female hormonal balance product. It came to us as an infomercial. We tested it, and it didn’t do well, with a 0.5 media efficiency ratio (MER, a measure of revenue to media cost).

We recommended a number of changes. We re-did the infomercial (which had dragged on with long testimonials from people all from the same region of the country, with similar accents) as a two-minute spot. We lowered the price from $49.95 to $29.95, then to a 14-day free trial and eventually a 30-day free trial.

After we went to short form, we were able to target a little better; we were in female-targeted networks, with a high concentration of women 40-plus and perhaps a bit more upscale and better educated.

As we implemented our changes, we got more people to call, and our conversions improved, as did our MER, which went to 1.0 and eventually to 1.5. But ultimately, we couldn’t get to a level of sustained profitability-consumers just didn’t stay on the product long enough to experience results.

This case reflects how difficult the environment is today with increased media costs. You need to be open to, and budget for, tweaking all aspects of the campaign. Here, we did that. We adapted to consumer response and did everything we could to come up with the winning formula. But sometimes you need to know when to walk away from something.

President, JBT Media Management

The tragedy I see most is clients that fool themselves into thinking that their campaigns will succeed right out of the gate on their test flight. Rarely does this happen. We handled a campaign recently in the business opportunity category that illustrates this point.

I felt the campaign had potential, and perhaps could be tweaked to be truly great. The presentation of the infomercial was good and its appearance was well crafted. However, there were several issues with the production. Also, we needed to strengthen the backend sales campaign to support the infomercial results on the front-end.

Unfortunately, although I believe the client wanted to implement the necessary changes, they hadn’t allowed enough room-budget-wise-to tweak and re-test. They were under the common impression that once the infomercial was produced, their job was done. It was a shame, because I had hope for this campaign-I’ve seen many lesser campaigns succeed.

On the flip side, I’ve seen many campaigns that are initially on the fence that grow into mega campaigns by refining their efforts, whether it’s creating different test versions (perhaps with different price points, adding testimonials or just having the phone number up more) or by building a strong backend campaign to support their media budget up front.

VP, marketing services and account management, hawthorne direct

We tested an infomercial for a client with an exercise product. We held all other variables constant and tested three offers: a free trial, one with “payments as low as,” and a third asking the consumer to call for a premium.

The free trial emerged as the control offer, but we fell short of our client’s profitability objectives.

Then, in partnership with the client and the call center, we monitored live calls to pick up on customer objections, operator training, upsell issues, etc.

We then repositioned a stand as an added bonus instead of an upsell. We adjusted the operator scripts. The client even sent out the infomercial spokesperson and product presenter to the call center for an interactive training session.

When we tested again, the cost per call improved slightly, but the conversion rate rose by 50 percent.

I think the important things to take away are to include the offer that’s likely to generate the most volume in your first test. In other words, test your best offer (but one you can live with). Why? When your test fails, it can be difficult to go back and get additional support from investors and management.

Second, this case clearly illustrates how effectively a campaign can be refined when you have a true three-way partnership with the client, call center and media company.

President and CEO, Lockard & Wechsler Direct

We’ve been handling an interesting product called Clever Clasp. Basically, it’s a magnetic jewelry clasp. It’s a great product, and we learned very quickly that it was very appealing to women 70 years and older. It works very well for people with arthritic hands. You don’t need to fiddle with intricate clasps that require fine motor skills.

The product presented itself very nicely, but because the target was so specific, there was a very finite universe of media that effectively reached that target. So the scope of the campaign was limited by the media universe.

We’re firm believers in Nielsen’s research and leveraged it in a way that allowed us to broaden this limited campaign. Rather than buying networks in traditional daypart allocations, we used the research to [dissect] these dayparts. We began to discover that there were hours within all of these dayparts where the audience was there to substantiate the rate (in fact, there were hours that would substantiate even a higher rate). And there were hours when the audience wasn’t there.

So we were able to go back to the networks armed with this knowledge and, rather than buying the raw daypart, we’d offer their rate, but only for the specific times that we knew substantiated the rate. We then started cherry-picking opportunities across a broad spectrum of networks.

So here was a campaign that had promise, but was constrained by its media universe. By using this strategy, we were able to take this campaign from, say, an average of $85,000 to $100,000 to more than $400,000 and sustain it there for a period of time. We found a way to expand the viable media universe without assuming disproportionate risk (we knew what our CPMs needed to be because we knew from experience what kind of response we’d generate).

To us, this was an extremely important lesson-we apply it to nearly every campaign we do.

President, Inter/Media

We were approached by a client in the lifestyle service industry. They came to us with creative. Unfortunately, the spots were put together by a general agency and it was a total brand message-no urgency, no call to action whatsoever.

It didn’t do well. The cost per lead was 50 percent higher than what they achieved in print, and the conversion rate was off by about 15 percent. We were able to make it work on just four networks-only because we could buy them at a ridiculously low CPM.

We convinced the client to let us add an offer to the creative and the next test did appreciably better. This allowed us to expand the network set, not solely on CPM, but via a more focused media analysis.

Having built credibility, we were able to produce entirely new creative with true direct response elements: a stronger CTA, testimonials and a better offer. We started to exceed our objectives and expanded to 20 or 30 networks based on a more detailed, focused station analysis.

This example showed us that even if you put up crap (and by “crap,” I mean creative that’s strictly a brand message), you can make a media buy work on a purely arbitrage model-on a one-off, inconsistent basis based strictly on CPM, buying cheap. But as the creative gets stronger, you can begin to expand the network set and achieve scale and continuity with a focused media plan based on targeting and a reasonable CPM.

President and CEO, Newton Media

We have a client with a DVD collection called Country’s Family Reunion. They’d done an excellent job, producing an infomercial with compelling creative and clean CTAs. The price was competitive-all the elements were there.

We had a target audience that skewed older demographically: men and women, 55-plus. The offer was a three-pay $33.95. They had several upsells on the backend as well. We bought national cable, with an additional focus on broadcast.

We started running media in April and found the initial results to be lackluster. Moving into May and June, we refined our strategy, honing in tightly on the target audience, dropping stations that didn’t pay out and narrowing the specific days and dayparts to air the program. Results improved.

The initial struggles that we had show the importance of proper planning and timing when it comes to media management. We had essentially two timing issues. We discovered that, for this target audience, buying on Sunday morning or Sunday afternoon just doesn’t work in some markets. This particular demographic goes to church and then to lunch right after that.

Also, April is notoriously one of the worst months for DRTV. The weather improves, daylight-saving time goes into effect and people tend to watch less television. Looking back, had the campaign been delayed four to six weeks, I believe our initial results would’ve been significantly better.

President, Chief Media

We had a campaign for a software product-it was essentially a hands-free dictation device. It was a long-form show with a hard offer, which had run on national cable-including networks like ESPN and CNBC. Initial results had a very high cost per call (more than $70), with a decent close rate of 45 percent.

Looking at the cost of goods vs. their retail price, the margins were inherently incorrect from day one. Also, we thought the show dragged. The product could be explained in a much shorter time frame.

We shortened the creative to a spot and increased the price, but changed to a soft offer and added a giveaway to help the phones ring. We trained the call center on the script and provided them with accurate call-volume estimates.

We’re now running on the Game Show Network (GSN), PAX (now ION), DirecTV, etc. The cost per call is down to $11 and the close rate is 24 percent. They’re now profitable and we’re increasing the volume every week.

This is a good example of how various components of a campaign work together to make it a success or failure. Here, the creative length was wrong, the offer type and price point were wrong-they could never have made money unless the cost per call was exceptionally low. But they were testing on very expensive networks. We find that testing on smaller networks is a much more efficient scenario for our clients.

President, CEO and VP/media director, Zephyr Media

We had a client that was marketing an exercise product. We had reservations about the campaign from the start, for three reasons. The client, although wonderful people and a real pleasure to work with, had very little money to work with. Second, the product had a high cost of manufacturing. And third, the creative had lots of problems: the audio was off, the lighting was off. The product did have benefits and a point of differentiation, but the infomercial just didn’t bring them out.

Despite our reservations, we went ahead with the test. They were very happy with the creative and were not going to change it. They felt very strongly about that; it was very personal to them. They were going to move forward with this project, no matter what.

And although there were numerous aspects of the campaign that we would’ve liked to alter, this was not a case where it was absolutely clear that it would not work-we’ve seen (and turned down) projects like that (e.g., where the cost of goods is so high that the market could never sustain the required price point). Plus, we’ve seen products in the past succeed where we never would have guessed they’d be successful. So, we never pre-judge a product; you just don’t know what the public will embrace.

We tested national cable in appropriate networks for this type of product, but it didn’t sell well at all. There was really no choice but to pull the plug on the campaign.

As this illustrates, if you’re going to embrace the concept of doing production and placing media and bringing a product to market, you need to be financed for it. At the end of the day, the money makes a difference-you’re always going to have to tweak the show. If you only have the resources to give it one shot, you probably shouldn’t move forward.


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