Panel Explores Direct-Response Market11 Jun, 2004 By: Jessica Wolf
Direct-response marketing of video product no longer has the stigma it may have carried in the past — in fact, it can be a valuable component of a DVD marketing campaign, especially for quality niche or lifestyle product, according to panelists at the Third Annual Home Entertainment Summit: DVD Lucky 7.
“When I started in direct response, it was kind of the unloved stepchild,” said Cliff Chenfeld, managing director of Razor & Tie Entertainment, which originally released the dance workout video Darrin's Dance Grooves exclusively through direct-response TV spots for months before it hit store shelves. Then when it did, it debuted as the top-selling VHS and DVD fitness release on VideoScan charts. Razor & Tie also watched the direct-response campaign for the hip-hop documentary Biggie & Tupac translate into much stronger retail sales than it would otherwise have found, Chenfeld said.
“There was once a theory that direct response cannibalized sales at retail and hurt the product's image,” he said. “That has changed drastically in the past five years. Now, it has come to be viewed as a way to complement the general marketing campaign.”
Retail accounts take the amount of direct-response marketing for a title into consideration when they make buying decisions, panelists said.
“Only one in 10 people will pick up a phone and order what they see on TV. But the other 90 percent are getting an endorsement, and they're getting to see the product,” said Dan Markim from Direct Holdings Americas, the exclusive marketer of Time Life video products. “It's one of the purest forms of demand creation.”
On the plus side is the fact that direct-response spots can be had for as much as 75 percent off regular TV ad rates, panelists said. Drawbacks include the fact that there's little control over what programming the ads appear in and that ads are subject to preemption.
“Networks tend to like [DVD direct-response ads] better than other products, because it looks more like entertainment programming,” said Tim O'Leary, CEO of Respond2 Entertainment (R2 Entertainment), with a product line that includes DVD releases of classic TV programming like “The Johnny Carson Show” and “Sonny & Cher.”
There is a learning curve, panelists said, as to which products will succeed with just a short-form 60- to 120-second TV spot, and which need a long-form infomercial.
Another benefit is the data mining aspect of direct-response marketing. It doesn't take long to figure out whether the product is selling, and if it is, it's easy to target those same consumers with add-on or related products, panelists said.
An important component in direct response is to offer a premium, a freebie or a different packaging or configuration than what will appear at retail.
“To be most successful, you have to differentiate from the retail release,” O'Leary said.
O'Leary also said direct-response ads can be used to tell a supplier when to take a product to retail.
“Direct-response numbers plummet once the product hits retail because of discounting, but if you're prepared for that, then you can use the direct response to support the retail release,” he said.