September 2004 - Sweet Sounds of Radio Response

Could you make money with direct response marketing on the radio? You bet. But only if the right building blocks are in place. Mastering eight tips can help you achieve success.

By Jack Gordon

Direct response radio advertising is not a good bet for every DR marketer. For many types of products, though, radio DR offers such striking opportunities that people on the radio side of the direct response industry grasp for reasons why the medium continues to be a tough sell relative to television. Most write it off to confusion or lack of knowledge among DR marketers.

Chuck Hengel, CEO of Marketing Architects, a Minneapolis-based radio-advertising agency, believes there’s more to it. “Radio just doesn’t seem as glamorous as TV,” he says. “I see people who will spend $200,000 on a television infomercial but aren’t willing to spend $1,000 to try a radio spot.” Direct response marketers, Hengel says, “will spend their last dime trying to become famous on TV.”

Fame is swell, but if your main objective is to make a buck, you ought to reconsider, radio’s supporters say. The medium may not be as sexy as television, but it can be every bit as profitable for direct response marketers and advertisers. Radio DR can be integrated with an existing television campaign to bring in additional revenue. Radio also can be an extremely cost-effective way to develop, refine and test a DR campaign before taking it to TV.

Like any other medium, radio has its own rules, advantages and drawbacks. If you are new to direct response marketing, or if your DR experience has been limited to television, radio will be a different ballgame. Here are eight tips from industry experts that point to the key factors determining whether you can play successfully.

Experts agree that radio DR has two major advantages compared with direct response television (DRTV): lower production costs and demographic specificity.

Because production costs for radio are far lower than for a TV spot, “you can test your message, your offer and the market much more affordably with radio than with television,” says Patrick Lennon, president of San Diego-based ad agency Fairway Radio. Are your TV production costs running somewhere between $1,000 and $20,000 per minute? A radio station might produce your 30- or 60-second spot for free. Most radio DR spots can be produced for $60 to $600 dollars per minute, Lennon says, and even a top-of-the-line production might run $1,200.

Add creative and production costs together, says Chris Homer, co-founder of radio advertising agency MediaPower of Portland, Maine, and you can develop a good 60-second radio DR spot for $1,000 to $3,000. As for long-form radio DR, a format still in its infancy relative to TV infomercials, creative and production costs for a 30-minute radio commercial usually range from $4,000 to $8,000, Homer says.

And demographic specificity? “If television is the shotgun, radio is the rifle,” says Greg Anderson, president of Salem National, a radio syndication network based in Irving, Texas. “Radio is the quintessential target medium.” It allows you to pinpoint very specific markets both geographically and demographically. Do you sell a cholesterol-lowering product? Want to aim your advertising only at consumers over 40, maybe in particular cities?

The potential for specificity does not translate into a lack of reach. According to Hengel, 90 percent of all consumers are reached by radio in an average week. The average consumer listens to the radio two hours a day. That compares to five hours a day for watching television, but it’s no small potatoes.

Homer insists that if you’re looking to drive traffic to your Web site, radio DR can do the job far more economically than television. “And let’s say your television DR campaign has matured and you’re entering retail. Radio can support that much more cost-effectively than TV.” When CalMax, a calcium dietary supplement, went the retail route, “we realized a 30-percent lift in individual markets, where we integrated radio DR into the retail distribution campaign,” Homer says.

“We tell eight out of 10 people who call us out of the blue that their products are not right for radio DR,” says Mark Lipsky, president of Radio Direct Response (RDR), an advertising agency in Media, Pa.

Industry veterans all sing out of the same hymnal when describing products most likely to succeed with a radio DR campaign:

The product doesn’t have to be demonstrated. That is, the consumer doesn’t need to see the thing in action in order to understand or become excited by it. If you’re selling cosmetics, or a new kitchen gadget (“Watch it slice!”), or a better Ab Roller (“Look at that rippling six-pack!”), or next year’s answer to the ChiaPet (“Watch the sheep’s ‘hair’ grow!”) your successful television campaign is unlikely to translate well to a medium that is heard but not seen.

The product has a price point higher than $100. As Lipsky puts it, “Either the original sale or the residual lifetime value of the customer should exceed $100. Radio DR is not the medium to sell a $19.95 videotape. You’ll never make your money back.” But radio DR can be a terrific way to sell a $30 product that the customer will repurchase every month for years: hair-growth formulas, vitamins, diet products, nutritional supplements, skin-care items and so on.

The product is a “high-involvement” item. Toothpaste is low-involvement, Hengel says. High-involvement products include things like insurance policies, mortgages, car loans, or health-and-fitness consumables. Lipsky suggests you think of them as products that trigger a personal, self-centered response: “How can I make more money, save more money, be thinner, be healthier, be smarter, be sexier?”

Together, financial products (such as insurance and mortgages) and personal consumables that must be reordered (diet and nutritional supplements, etc.) account for about two-thirds of all radio DR advertising, Lipsky says. Why? They’re high-involvement items with the right price points for the medium, and they don’t have to be seen to be understood.

A radio DR commercial has to do four things, Lipsky says: Grab the listener’s attention; present compelling benefits; proffer an irresistible offer; and generate urgency for the listener to take action now.

Each of those pieces is vital. For instance, says Hengel, “The grabber can make a 10-to-1 difference in response. In radio, if you don’t get their attention in the first 5 seconds, it’s over. Consumers really do flip radio stations that easily.”

But don’t confuse “grabby” with an entertaining exercise in branding. Salem National’s Anderson says effective radio DR has little to do with entertainment and everything to do with clear communication. “You’ve got to be really clear about telling the listeners what you want them to do and why,” he says. What you want them to do is to call you right now. So tell them upfront and give them a clear incentive: “Call now and we will send you a free booklet to lower your cholesterol, a CD demo, a free month’s supply of (fill-in-the-blank).”

Hengel says the hardest thing for marketers to grasp about the creative (i.e., your message) for radio DR is that it must present benefits, not features. Never mind that the blades on your battery-operated blender spin at 20,000 revolutions per minute. On TV, you can demonstrate the muscle of that feature; on radio, you can’t. On radio, Hengel says, you need to focus relentlessly on the result your blender produces: “Enjoy the thickest, richest, smoothest shakes you’ve ever tasted!”

Direct marketers “fight us all the time on this,” Hengel says: “‘Hey, I’ve got to tell them what my product is!’ I say, ‘Why?’ No, in radio you’ve got to tell them what it does.”

As a rule, experts agree, soft offers work better than hard offers in radio DR, so think carefully before you decide to state your price. In a half-hour TV infomercial, says Homer, you have plenty of time to explain that your $19.95 vitamin supplement is 10 times more powerful than the $5 versions people can buy at the grocery store. In a 60-second radio DR spot, you don’t. Soft offers-and, indeed, radio DR spots in general-produce calls from customers who are not yet completely sold. This has important implications for your call-center operation, which we’ll discuss further down.

People listen to the radio while they’re doing something else. They’re driving. They’re shaving. Seventy percent of radio listeners are away from home, according to Hengel, most of them are either driving or at work. They are emphatically not sitting in front of a television set with a pencil and paper close at hand, ready to write down your phone number.

Whatever else you may do with radio DR, the experts agree, give listeners a vanity number that is easy to remember. As Lipsky puts it, “1-800-FLOWERS, I got it. 1-877-258-7296, kiss me goodbye.”

Media buying is a complex proposition, and unless you have an awfully good reason to believe you’re qualified to do it yourself, you should enlist an advertising/media agency or some other knowledgeable partner. That said, here are some guidelines.

For your venture into radio DR to succeed, Lipsky says, “your commercials must air on the right stations, at the right rates, on a schedule that maximizes reach and frequency.” Radio is a frequency medium. People need to hear your message three or four times to become motivated to take action. The key implication: “You’d rather reach 30 percent of your target audience five times than 100 percent of your audience 1.5 times.”

Homer says it is generally better to consider individual stations than to deal with a radio network because many networks lack experience with DR advertising (he singles out the Salem Radio Network as a notable exception). Network people tend to have a shaky grasp of who listens to their individual programs, he says. “You need to know who’s listening in order to write creative that will get a response. A station in Los Angeles generally will have a better handle on who listens to a program in the L.A. area.”

Hengel recommends most radio DR marketers buy formats (rock, talk, country), not programs. “It’s usually a waste to pay a premium for an individual program,” he says. “People tend to stay with the same radio station all day. Or, they have five buttons set on the car radio, and they go to one of those five. Just target the format that reaches the audience you want.”

Remember that radio is primarily a daytime medium. “Radio’s primetime is television’s downtime,” as Anderson puts it. Most of your target listeners are probably driving to work or driving home. Ideally, he says, “you’d like yours to be the last offer in their minds when they’re getting out of their automobiles.”

After you have filmed a long-form infomercial or even a short-form DR spot for television, changing it is an expensive proposition. One great beauty of radio’s inexpensive production costs is that you can tinker with your message inexpensively-tweak it, massage it, try it and test it with different text, different voices, different incentives.

Changes in your creative can make an 8-to-1 difference in customer response to your radio DR spot, Hengel says. Changes in the production (a polished voice vs. a plain-folks voice, for instance) make as much as a 5-to-1 difference. Using a male vs. a female voice can mean a 3-to-1 difference in response-and you often won’t know which works best for your spot unless you test both.

In television, you’d go broke long before you could refine and test a spot the way you can in radio. This is why Anderson touts radio DR as “a marvelous vehicle to start with before you film a TV spot,” rather than just as an adjunct to an existing TV campaign. “You can narrow the margin of error very quickly with radio,” Anderson says.

Most sources agree that for as little as $5,000 in creative and media costs, you can test a spot that will give you some idea whether radio DR will work well for you. But, of course, not all radio time is cheap. Tricia Lea, vice president-media services for hawthorne direct inc., an advertising and production agency headquartered in Fairfield, Iowa, says that a good test of a product with national appeal might run up to $15,000-about the same as a small TV test, except that in radio your $15,000 buys more stations, more frequency, and therefore, more saturation. On the high end, she says, you could pay about $10,000 a week to run 20 spots per week on the nationally syndicated radio show of a mid-level personality such as Michael Medved. The same schedule with a top-tier personality like Rush Limbaugh could cost up to $30,000 a week.

A half-hour television infomercial commands sustained attention, demonstrates the product, tells viewers a great deal about the product, shows various payment options on the screen, states the price, justifies the price, and sells, sells, sells. The upshot is a motivated buyer who calls your 800 number and says, as Lipsky puts it: “Hi, I want to buy the [Quick-Time] duck defroster for $69.95. Here’s my credit card number.”

With radio DR, the caller is likely to be someone on a cell phone who was intrigued by your soft offer but…well, again as Lipsky would have it: “Hi. I heard something on the radio about a duck thing…”

Most prospects who respond to radio DR spots aren’t buyers yet. They still need to be sold. This means that the people handling your calls must have better sales skills than the people who take orders generated by DRTV campaigns. For radio DR to work, Lipsky says, “you need to hire and train qualified telemarketing sales agents.”

Yes, this can add to the cost and complexity of a radio DR campaign. In fact, it can be the great hidden cost of successful radio DR. But most experts agree it is essential.

You were the one who told them to call now! When they do, somebody had better answer the phone.

Hengel says since radio is primarily a daytime advertising medium, and since half of all responders to a radio DR spot will call in within 20 minutes of hearing it, you probably can use regular call-center agents working regular business hours. This makes it easier to develop an effective team.

However, Lipsky warns that if your call center has four other clients whose TV infomercials happen to be generating spikes when your radio spot airs, your callers may hang up in frustration before they can talk to an agent.

You can buy media to run on a schedule that mirrors the staffing and avoids the peaks at your call center, Lipsky says, or you can start with the media schedule you want and arrange with the call center to staff for your spikes. But one way or the other, you need to stay on top of the issue “so you don’t have 50 people sitting there to handle three calls or vice-versa.” Usually this is a question of communication between your agency and your call center. What you need to know is whether that communication is effective and ongoing.

Get any one of these factors wrong-the product, the price point, the creative, the media schedule, the call center-and your venture into radio DR will be disappointing. Get them right, and your venture into radio DR can be a very lucrative one.

Jack Gordon is a contributing editor to Electronic Retailer magazine.


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