Direct response on the small screen
Why it's getting bigger, smarter and easier to measureSimon Andrews
There's nothing new about 'selling off the screen', but now it is growing and changing. This article shows why this is so, who's using it and what's new. Direct marketers are finding new technical solutions, eg. how to receive sudden large floods of telephone calls. Meantime fundamental changes in the way they think about their advertising, branding and distribution are prompting and more conventional advertisers fmcg as well as durables etc to include a direct response element in their TV commercials. With TV's impending technological revolution in sight, extended product presentations will also become part of agencies' basic skill sets.
To discuss the role of television for any specialised marketing application requires some clarification of what is meant by television in 1994. Only yesterday there was just ITV, BBC and C4, then satellite started to complicate matters. Today, around 16 per cent of homes have access to 50+ channels whilst the rest do with four.
The television set is now rather more than a passive receiver of broadcast programmes. As well as time-shift (allowing programmes to be viewed when the viewer wants to watch, rather than when they are scheduled), a high proportion of viewing is now devoted to programming collected from the local high street - video rental. And, in homes with children, a significant amount of time is devoted to the first generation of interactive use - Nintendo and Sega are just as much programme providers as Carlton or the BBC.
As the role of the TV set has changed and as technology has made new `programming' available from a wide range of sources, so the role of TV as an advertising medium has started to change - a process that is going to accelerate over the coming years. Just as the changes to TV seem to have happened virtually overnight, the pace of change will continue. Already it is possible to advertise on rented videos and on computer games - it is inevitable that the use of the medium for advertising will have to change and we believe that the techniques of direct marketing will become much more prevalent.
THE CURRENT SITUATIONTwo events are colliding in the UK to make the rise in interest in DRTV inevitable.
The factor that has stimulated the category is that of `cheap' airtime becoming available - the general down-turn in the economy dampened demand for advertising, and media strategies changed to reflect the advent of Channel 4 selling their own airtime. Because of this, the price that contractors could ask for certain parts of their inventory - the unfashionable off-peak segments that only reach the heavy viewer and are consequently of little use to most advertisers - fell. Day time on C4 and many ITV regions is now filled with DRTV ads - many targeted at the elderly, often from charities; clients with low budgets who are attracted by the chance of TV on the cheap. C4 has been quite successful in recruiting new clients through £15k packages of airtime, and commercials for as little as £5k.
Equally BSkyB, and other Astra satellite channels, have increased the availability of airtime quite dramatically, indicating that even as the economy comes out of recession, or at least the demand for advertising increases, the availability of cheaper airtime will be sustained.
However, this use of cheap off- peak airtime means that the vast majority of the audience for most current DRTV is old, downmarket or unemployed (often all three), and that few of these campaigns reach more than 25 per cent of the population. Of course, for true DRTV, the key element in media planning is frequency rather than reach, but being confined to this `ghetto' precludes the use of DRTV as a means of reaching the younger, more affluent light viewer. The current state of DRTV really is the `postal bargains' of TV and of little strategic interest to the more sophisticated clients.
TRIGGERING A DIRECT RESPONSEHowever, the general atmosphere in marketing, driven partly by the general economic downturn, is one of accountability: proving the effect of advertising and making every element in the marketing mix work as hard as possible. Measurement of response, through the addition of a phone number, is of course an inadequate measure of effectiveness of brand advertising. But recognition of the need to go beyond the `push' of traditional advertising has highlighted the benefit of building and developing a two-way relationship with the brand's customers.
Consequently, the use of a response mechanism is becoming commonplace in many categories of advertising: it is estimated that some 15-20 per cent of television commercials now carry a phone number (the new C4 research suggests it is 12 per cent, but this seems to have been a function of the timing of the research). This additional characteristic of brand building makes media planning rather more sophisticated than merely buying the cheapest spots to minimise the cost per response.
Measurement of the effect on the brand can still be taken through traditional tracking studies, with the DM effect measured through more specific qualitative work. Research conducted by the WPP Centre in the United States suggests that the more sophisticated consumers of the 1990s are actually beginning to expect a response mechanism, and rate companies who offer a number more highly than those do not - whether they respond or not.
BETTER PHONE HANDLINGA third event that promises to further stimulate this area is that of better telephone handling facilities. Apart from the sheer economy, the other factor in confining direct marketing to the off-peak ghettos has been the inability to handle response from larger audiences. This is true, even at the low single figure response rates that DRTV campaigns typically generate. Until recently there has been a problem in dealing with the calls generated. The consequence was that those advertisers who did run response ads in peak time suffered, with their callers unable to get through. This was hardly a good way of building a relationship with their customers.
However, this problem has been alleviated with the arrival of companies such as ITS, a call handling service with over 2200 lines, enabling DRTV to start to use the medium fully at the appropriate areas of magnitude. Their experience in running Telemillion shows that a brand can be built using `brand response' television.
The way people interact to television programming itself is already changing: shows like Noel Edmond's House Party, the Talking Telephone Numbers, thrive on involving the public through using the telephone. There is also the new phenomenon of the tabloids' involvement with TV game shows. As the general public get used to referring to game cards from their newspapers and interacting through the use of the telephone, so it will become possible to adapt these techniques for advertisers.
OPPORTUNITIES fOR FMCGWith this coincidence of events, it is now wholly feasible to use the techniques of DM as an extra dimension to brand advertising. A number of the more far-sighted packaged goods companies are currently using DM as part of their television advertising. For example, O&M Direct client Elida Gibbs is successfully using TV both to build a brand and generate data for its new Ponds Institute, both in the UK and across the rest of Europe.
Unfortunately, a number of those embracing these new opportunities have been badly advised. The telephone number is often treated as an optional extra, rather than as a fundamental part of the commercial. Some agencies who really ought to know better are guilty of ignoring some of the basic rules established both here and in the States - most importantly that the phone number needs to be on-screen for rather longer than the three seconds of the end frame of the commercial. Referral in the commercial to Teletext (the first interactive medium?) allows for the phone number and further information to be made available to viewers who have not had time to make a note of the phone number.
The grand master of using broadcast as a direct marketing medium, Al Eicoff (whose company is far and away the leader in US DRTV, and part of the O&M Group) has written the rule book on this subject, and whilst rules are made to be broken, one needs very good reasons to do so.
Whilst the inclusion of such information may offend the sensibilities of some members of the creative world, it does not preclude making good ads - Forte and Talking Pages are just two examples where both brand and direct response have been well served.
HOW DRTV MAY EVOLVEAccess to the audiences that advertisers currently take for granted will be a victim of the imminent changes in television. As well as the additional uses of TV described above, the onset of extra channels (and the fact that almost three quarters of homes have remote controls) has already created the phenomenon of channel surfing - flicking between the 50- odd channels to see if there is anything worth watching. When does this tend to happen? In commercial breaks, of course.
Advertising on the BSkyB movie channels is already limited to the gaps in between the films, and one has to wonder whether, when the pay-per-view movies they have just agreed with Phonogram are shown, will they show ads at all? As and when the BT Video on Demand service is extended beyond the brave new world of Colchester, will it carry ads?
All BT will say at the moment as they go to trial in Ipswich and then Colchester is, `that they are not going to apply traditional broadcast concepts such as `carry advertising', to a world in which people are selecting what sort of message they receive and when they wish to receive it.'
A Californian cable station already has pay per viewer channels showing (amongst others) Roseanne every hour, on the hour, for three days after it is premiered on Network TV, so if the viewer missed it, they can tune in and for a $1 see the show when they like. The cable station has chosen to show it uninterrupted by commercials.
When television audiences are available to advertisers, the opportunity is going to be too valuable to merely tell the audience about your new product in a 30 second commercial. Offering further information through a response mechanism (and hence collecting the name and address of a prospective customer) is going to become the norm. And in some circumstances it may be that the advertiser has to reward the viewer - watch this commercial and we'll send you a free sample? If the response mechanism is included this is perfectly feasible.
A paradox of this problem in getting people to watch your commercials, is that over on other channels it is very likely that people will be choosing to tune in to watch uninterrupted `commercials'. The proliferation of channels (initially through more satellites and potentially C5, eventually through digital compression) will require significant amounts of new programming - repeats of Star Trek and I Love Lucy will start to lose their appeal. In just the same way that technology has allowed people to make hit records in their bedrooms, so we can expect to see camcorders and home computers create a visual equivalent and finally give people true access TV.
However, there will still be a huge programming gap, which will be filled in part by advertiser-created programming. This will not be the soap operas or entertainment that advertisers created to fill up the schedules in the early days of US TV - instead, advertisers will feed the hunger for information on the huge range of competitive products with `infomercials'. In the same way that someone in the market for a new car or PC now goes to WH Smith and buys a pile of magazines on the subject, in the future they will tune into the car channel or the IT channel and watch 15/30 minute programmes giving the full story on the new Ford or Compaq. Here, the skills of direct marketing in delivering large amounts of information in an entertaining, engaging way will be more relevant than the skills necessary to make a 30 second spot.
The early examples of this phenonomen can already be seen late at night on some of the satellite channels eg. Eurosport, Superchannel, albeit selling rather odd products. (In the US a number of these infomercials featured juicers - over 18 months, the TV sales of units grew fairly modestly but the retail sales of juicers leapt from around 100,000 per quarter to 1.2 million!) These rather kitsch infomercials and QVC have demonstrated that people will shop by TV, and other channels showing this type of `catalogue TV' are already being planned.
In the US, major advertisers such as McDonalds, Kodak, Braun, Avon and Volvo are already using Informercials. Despite the involvement of the European Commission, trying to ban this type of marketing (and depriving Superchannel of £3m revenue in the process), we foresee this growing very quickly.
Interestingly, the true pioneers of this approach in the UK have been the BBC with their underestimated Select service, targeting doctors using the now slightly archaic approach of transmitting overnight for subscribers to record on their VCR.
THE LONG-TERM FUTUREDespite a certain amount of hype, and inevitable media backlash, it seems certain that the much vaunted superhighway is going to arrive. Much of the technology exists and the sheer amount of money moving around Wall Street in the form of mergers and alliances will make it happen.
Quite what shape it will take, and how that will affect marketing is still a matter for speculation, but experience has shown that consumers are relatively quick to adapt to new products and services that make their life easier, even if they hadn't previously realised that they needed them.
It is important that advertisers are quick to learn how the new technologies can be used - those that sit back and wait until they are proven will be at a real disadvantage. O&M Direct has taken the proactive view that investing a proportion of funds into experimenting with these new tools is a sensible commercial decision. In Spain, for example, O&M Direct pioneered Europe's first interactive channel, through a joint venture with the US company Interactive Television. This system allowed the viewer to press a button whilst watching a TV ad and cause a coupon for the product to be printed out. Also, the system held details of up to three credit cards, allowing the viewer to buy advertised products simply by pressing a button. Whilst not without its problems, this project has given useful learning which O&MD offices around the world are utilising.
And whilst it is easy to believe the new frontiers are some way away, Interactive TV is available in London now, through Videotron. The numbers are not huge nor is it as versatile as future systems promise, but again it is a chance to learn. O&MD has already screened the first UK interactive (as we know it) ad for the Ford Mondeo. In March last year, viewers to Sunday football on LWT and Videotron responded to the Ford multiple choice Mondeo commercial by voting with their control to receive (a) local dealer information or, (b) technical specification or, (c) press reviews.
Early next year, say Videotron, we can expect the next stage of interaction, the `reverse path' - `to know more about this product press the code into your hand set'. Transactional television requires a secure circuit which is likely to be at least two years away.
And, next Spring (1995), Videotron in Canada will launch a videoway box with a smartcard reader and printer in conjunction with a service provider syndicate (bank, post office, computer games manufacturer and electricity company).
The service provider will supply boxes to each home and cable will deliver a coupon response facility for advertisers to reach the customer instantly. It is generally understood that the major reasons for the failure of the `over-the-air' Spanish venture included the cost of the boxes, the smallish group of householders on the scheme and, because the interactive codes were downloaded before the programmes started, the `grazing' viewer was unable to become `interactive'. Videotron has used this learning curve to its commercial advantage.
Perhaps the unexplored part of the story is what consumers will want, and how they will respond to the new methods and media offered to them over the coming decades. But it seems self-evident that those businesses that already know how to create and manage direct relationships with their customers will make the most of the evolving interactive screen for the future.