DRTV prices up

July 1, 2009       Michele Donohue      

You might have noticed a slight difference flipping between the flamboyant lifestyles of “The Real Housewives of New Jersey” and hankie -grabbing drama of Jon and Kate Plus 8.

Suddenly, there might be less debate about whether people are a Mac or a PC. You could have forgotten that Folgers coffee might indeed be the best part of waking up. You can even worry less about developing restless leg syndrome while sitting on your La-Z-Boy.

Most of the largest corporate advertisers have slashed their budgets. You’d think that charities would have more opportunities to enter DRTV (direct response television). In many cases you’d be wrong. While consumer companies are dropping spots, particularly on broadcast networks, there is a feeding frenzy for the airtime on cable and that either stabilized or pushed prices higher.

The slacking economy has taken a chunk out of U.S. advertising, according to The Nielsen Company. The latest statistics in March reported that advertising in 2008 declined almost $3.7 billion, which is down 2.6 percent compared to 2007 – allowing for nonprofits to reach the boob-tube watching masses.

The Salvation Army’s national “Amazing Grace” DRTV spot found success in the cable niche. The Alexandria, Va.-based organization’s 30-second spot highlights the organization’s Adult Rehabilitation Centers (ARC), in-residence programs including work therapy and counseling for those battling homelessness or addiction, and asks for in-kind donations. The spot’s call to action asks viewers to call a 1-800 number for in-kind donation pick up or for viewers to visit SATruck.org.

The campaign is running primarily on cable news outlets, such as CNN and Fox News, and launched on Inauguration Day. It will continue through the summer. “Our research shows that that is where we need to be and it’s been very successful for us in previous campaigns,” said Jon Lee, The Salvation Army’s brand manager at The Richards Group, an advertising agency in Dallas.

The Salvation Army also partnered with A&E TV as presenting sponsors of the Emmy-nominated series “Intervention.” Lee said that research found the show was popular within the spot’s target audience, and the show’s premise regarding helping people fight addiction fit the ARC mission.

Although the campaign is ongoing, Lee said that one-third of the visitors to SATruck.org are actively pursing some sort of donation option, such as searching for a donation center nearest to them.

“Right now is a great time for nonprofits that maybe have not had the budgets to get into television,” said Lee. “Nationally it’s soft, but the [cable] market isn’t that much different than it was before. But locally, there are a lot of opportunities out there with smaller budgets to make things happen.”

The top 10 advertisers, such as manufacturer household product giant Procter & Gamble and communications company AT&T, cut 15 percent of their advertising compared to 2007. The reduced advertising spending by the corporate goliaths opened more spots, especially this past fall when news of the recession hit a boiling point.

DRTV media buying has traditionally been more difficult in the fall when general advertisers usually bump their spending in time for the holiday season, according to Graham Knope, president of Toronto-based Eagle-Com Inc. But this fall presented some great media buying opportunities when corporate advertisers started trimming their budgets.

The World Wildlife Fund (WWF) U.S. dove into DRTV a little more than a year ago and is learning about the medium as the organization goes along, according to Terry Macko, vice president of WWF U.S., headquarters in Washington, D.C.

“What we’ve seen is that some weeks there appears to be more media available than others — but that’s always been the case,” said Macko. But even with the weekly seesaw of media spot prices, Macko said he saw a significant rise in availability soon after reports of a recession surfaced in the fall.

“I would say when general advertisers started pulling back right after the Dow dropped and a few months after that there were a lot of media opportunities,” he said.

Some broadcast television markets tried to entice spending by offering deals in the fall, such as airing a bonus short- form spot if a long-form spot wasn’t performing, according to Kevin White, vice president of Russ Reid in Pasadena, Calif.

Those kinds of deal were “extremely unusual and a year ago they would have laughed at us if we asked for that,” he said, which allowed some flexibility for media buys. White said that some broadcast television stations lowered rates around 30 to 40 percent on average compared to what was charged in 2007.

With those deals and rates, you might expect a nonprofit appeal at every commercial break. But as general advertising has declined, direct response product companies have also seized the attractive media buy opportunities.

Direct response products, like ShamWow, the always-fashionable Snuggie and Mick and Mimi’s Magic Bullet, are competing for the same media buys left over after the general advertisers. Direct response product advertising spending increased 9.2 percent during 2008 compared to 2007, according to Nielsen, with companies making mammoth increases in media spend, like Video Professor (389 percent) and Allstar Marketing (318 percent).

“We all compete for the time,” said Knope. “There is a set amount of air-time out there, and when a lot of people are bidding for that air time, prices go up.”

Knope said the direct response product demand has made airtime buying a little more difficult in recent months. In some instances, Knope said clients had to increase the allowable rates they are willing to pay just to get on-air. “Whether I spend $1,000 for air time or $10,000, that doesn’t change how many people call in to make a donation,” he said. “So every time we have to increase our rates, our cost per donor goes up.”

White explained that the attractive rates have helped battle the year-to-year response rate decline he’s seen, especially in the country’s top 10 markets. Those response declines might become more problematic once the economy bounces back and media rates start to increase again.

“Then we will have to determine what we need to do at that time to counteract if there is still a decrease in response rates and we are paying more for those long-form shows and short-form spots,” he said. “How do we make that work at that time if they are not as flexible or willing to give us bonus airings? That’s a little down the road and we’re not at that point yet, but that’s going to be one of the challenges of having the great opportunities we are having now.”

Cable television is another animal. Cable actually saw a 7.8 percent ad growth from 2007 to 2008 and it was the highest-generating medium with $26.6 billion in sales, according to Nielsen. White said some cable providers aren’t slashing prices or taking deals because their revenue continues to increase.

White explained that cable networks, by nature, might be easier to target audiences demographically and psycho-graphically. For example, an animal welfare charity may want to target audiences watching programs on the Animal Planet channel. “The challenge is that because there are so many different outlets, it is much harder to find a concentrated audience than it used to be,” he said.

Targeting specific shows or networks could get pricey – you pay a premium when you selectively target an audience, Knope said. “It’s not so much about finding demographics as it is about getting a really good price for the air time. Cost per thousand viewers trumps demographic targeting,” he said.

Knope recommended organizations find a buy for fair rotation during a day for a week. Asking a station for three spots between noon and 10 p.m. every day for a week might cost less than if you ask to run at the top of the hour during a House marathon.

Media buys usually depends heavily on the client and campaign’s strategic goals, but White said that smaller to mid-size nonprofits will have to work a little harder to build trust with viewers.

“They don’t have a half hour or an hour to learn more about you. They have 30 seconds or 120 seconds,” he said. Well-known organizations don’t have to explain every detail of mission to viewers. But if you don’t have an established brand in the marketplace you may need to invest in repetitive spots that will breed familiarity with the viewer. White said another option would be to do a long-form spot.

“The decision between the two tends to have a lot to do with the specific offer and how much information you need to give to potential donors before they will give to you. If you are less well known for example, it takes some time to build credibility with someone before they are going to give to you,” he said.

WWF’s Macko explained that not every organization jumps head first into DRTV. “I think that’s because for television to work you need to have a very emotional cause, one where there is an emotional attachment between the viewer and your issue. And where you have a powerful, well-recognized global brand that individuals feel confident going online and to the 1-800 number and making a monthly donation to your cause,” said Macko.

An organization must decide if the mission and an appeal can be boiled down into a short-form 30-second or 120-second spot. Organizations that need more time to communicate a compelling message and establish the brand for the viewer could look into long-form, but the extra time comes with a price. White said he’s seen organizations place shorter airings, with twice as many airings as last year, because the short-form spots minimizes the risk if the spot doesn’t perform well.

Macko said nonprofits must continue evaluating how the spots are performing. “There are times when it’s just not working – and you have to stop until the situation changes. Then you can start again. It can be very irregular in terms of results and I think that makes people nervous sometimes,” he said. Some weeks might just not be worth airing if media buy rates are fluctuating too much without a guarantee on the response rates.

“It’s a channel that you just can’t toy with,” said Macko. “You need to be committed to making it work. It’s not a channel for someone who’s looking for quick results. It’s a payoff over the long term. So you have to be committed to it, you have to be dedicated and you have to have the stomach for it. But it’s in the best interest, financially, for an organization over the long term.” NPT

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