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Courses Provided By Direct Response Academy: DRTV Management Boot Camp DRTV Back-End Management: Where Profits Are Won or Lost Winning the Media Game DR Financial Management: From Scorekeeping to Strategy Bringing Your Media In-House 2008/2009 Course Schedule: October 28-29, 2008 DRTV Management Boot Camp Santa Monica, CA October 30, 2008 DRTV Back-End Management Santa Monica, CA December 3-4, 2008 DRTV Management Boot Camp (bonus: Xtra DRTV Media Buying Feature) Philadelphia, PA January 21-22, 2009 DRTV Management Boot Camp: Customer Acquisition Miami, FL January 23, 2009 DRTV Back-End Management Miami, FL March 10-11, 2009 DRTV Management Boot Camp Austin, TX March 12, 2009 DRTV Back-End Management Austin, TX April 7-8 , 2009 Winning the Media Game Santa Monica, CA April 28-30, 2009 USA Marketplace Geneva, Switzerland Chamonix, France |
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Direct Response Are you a:
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How to Measure the Results and Profitability of Direct Response Television Advertising ______________________________________ by Greg Sarnow Direct Response television marketing gives marketers immediate results. One day after the media airs, results are in and either a profit or a loss is made. Understanding how to manage a DRTV media can make or break a campaign. Successful DRTV media campaigns spend between $100,000 to $20,000,000 and a savvy media manager can save between 10-20% of the total media cost! Media Buying General Advertising Versus DRTV Whereas general advertising measures cost per point (CPP) or cost per thousand (CPM), reach and frequency, eyeballs and awareness, direct response measures profits. DR media is often referred to as “accountable advertising”, because every airing is tracked and profits or losses are measured. What ends up being accountable is not the quantity or quality of the people watching or listening to a commercial but the quantity of people that actually pick up the phone and order a product or service they see in the commercial. Because of this type of measurement, DRTV is a very dynamic media buy. On a daily basis airings are added, subtracted, re-negotiated or cancelled. Another comparison is the kind of media outlets which are bought for DRTV. DRTV short form commercials are one or two minutes. 90% of these media purchases are on National Cable stations. Only very rarely is a Network Buy made. On the other side, Program Length Advertising (also known as Infomercials), air on 70% local broadcast stations and 30% National Cable. Measuring Profitability The main way professional Direct Response marketers calculate profit is with a Cost Per Order (CPO) model. This model accounts for the direct profits of each product sold and the media costs per order. Below are the key issues to develop the model. Every product sold has costs associated to that sale. For example, the cost of goods sold, telemarketing, shipping & handling, fulfillment and merchant account costs are examples of these costs. Every sale creates revenues: product sold, upsells, membership clubs and shipping and handling all add up to create total revenue. Subtracting the expenses from the revenues gives you the gross profit of each item sold. As an example, and for simplicity sake, let’s just say that the revenue on Dream Eyes famous Miracle Eye Creme is $ 29.00 and all of the expenses are $ 14.00. That would create a gross profit of $ 15.00 per order taken. If we buy media from a National Cable station for $ 1000.00 and receive100 orders, our media cost per order is $ 10.00. With the sample above, our profit is $ 5.00 per order which equals a total profit of $ 500.00. Not bad on a $ 1000.00 media buy! Each airing can then be analyzed by its profitability, and this is the basis for creating and managing a media campaign. Testing Strategies The next step in media buying is creating a test to find out how the creative production, product offer, and the price points impact sales. There are several factors that go into determining how much money should be spent on a test, but the goal of the test is to find out if you have a commercial that is profitable. The strategies for DR short form and Program length advertising (long form) are quite similar, but the tactics to achieve results are radically different. Testing correctly is critical. There are 4 IRON rules for testing. Brand awareness is an intangible, which is difficult to give value to but will quickly be felt, especially in retail, if you are running enough media. For every product sold from a DR commercial between 5-10 are sold in retail! This will give you enough information at the end of the test to draw conclusions. Too little information can be disastrous in mistakenly concluding the value of the commercial being tested.
### The DirectResponseAcademy, founded in 1999 in Austin, Texas, is the only educational company dedicated to teaching the best practices of direct response television marketing. The DRA offers executive training, project management and consulting services for companies and individuals who are launching or managing DRTV campaigns.
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