Trends that will define DRTV media buying

Direct response television (DRTV) media buying is anticipated to pull down about $150.1 billion in sales in 2005, according to “U.S. Direct Marketing Today: Economic Impact,” the Direct Marketing Association’s recently released study of the nation’s direct marketing landscape. Conducted with support from forecasting firm Global Insight, the study also predicts a compounded annual growth rate of 6.4 percent for direct response TV ad expenditures between 2005 and 2009; in this same time period, compounded annual sales growth is projected at the same 6.4 percent rate.

Compared to direct mail’s expected ad expenditure growth rate (5.3 percent), direct response TV is gaining ground as a more valuable lead-generation and sales channel. But when stacked up against both the ad spend and sales growth rates for Internet marketing (18.3 percent/12.6 percent) and e-mail marketing (19 percent/12.6 percent), DRTV still is working to find its place in the direct response marketer’s media mix. A few challenges to continued growth are the increasing adoption of technologies that allow viewers to skip commercials and the intricacy of finding cost-effective air time.

What factors are affecting available inventory and media costs for DRTV marketers?
During the fourth quarter, short-form rates typically increase when retailers and brand advertisers selling holiday items buy up inventory at higher rates to meet sales goals during this key sales period. This tends to decrease lower cost inventory available for direct response TV media buyers and increases direct response TV rates.

This year the rate increases for short form are similar to last year on a national level. Since there were not many local elections this year, and with car dealers cutting back on advertising due to slumping sales, local broadcast TV rates stayed reasonable in the fourth quarter.

With direct response TV short-form media buying, it’s a tricky balancing act between securing the lowest rates and attaining a reasonable level of clearance. If you submit rates that are too low, your clearance could be low, and if your rates are too high, your show might not pay out. Good DRTV media buyers know how to balance these two aspects of their media buys to optimize results.

Infomercial rates did not increase much from the third to the fourth quarter, so we have seen improved response, which translates into a more profitable ROI for our clients.

Peter Koeppel is Founder and President of Koeppel Direct

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