The term “Branding” has been in use in American marketing vernacular since the 1800s, first being used for cattle in the west to identify members of the herd belonging to a single owner, but branching out to consumer goods shortly thereafter, one of the first of which was used to identify beer served at certain pubs, with a small symbol on the door that was also used on the beer’s label.
Brands can be a symbol, a word, a name, even a graphic element (think the Nike swoosh), but each brand carries a set of characteristics that are brought to mind whenever someone sees it.
Direct marketing practices came into being shortly thereafter, when a now-defunct soap miller created a flyer posted on people’s doors that offered a free soap sample if they brought the flyer into the store, but it was only distributed to the people on the west side of town, where the rich people lived, thus the list select was wealth and geography!
These two disciplines have in the past been seen as divergent in goal and practice, but current thinking would have it otherwise. Studies have shown that sales boosts can be achieved by using a combination of the two approaches, mixing the heavy rotation and creative enchantment of branding, with the mechanics of call to action, offer and response device of direct response. This extends from creative executions to media strategy to back-end mechanics and PR.
Longitudinal studies performed by a select group of high-volume consumer product marketers have shown a synergistic relationship when combining branding type creative executions with direct response mechanics and back end, to the tune of 50-75% improvement over sales of the same product using either approach singly.
The Ads Have It . . .
In most cases, marketers and ad agencies have been creating branding ads in order to raise awareness, launch brand extensions to existing products, shift perceptions of the product or announce or formulate a new use for a product. They simply presented the product, reinforced the brand visually and ideologically, and repeated the process heavily to build consciousness among the audience.
The targeting was largely done with media alone, for television using the program viewer demographics, for radio the listener demographic and stations or program format serving as differentiators.
Not much thought was given to tracking, or accountability of branding ads, as it was widely understood that few could unequivocally demonstrate a direct cause and effect relationship between the appearance of the branding ad and the increase in sales among a distinct population sector.
Sales were tracked on a regular basis, broken out many different ways on reports using a variety of analytical tools, but none could correlate a sales blip directly with the appearance of the ad, and could not use such a correlation to quantify the “dosage” or frequency, or the program selection or timing of the placement. Thus, the ad schedule could not be used as a predictor of sales activity, and conversely, the sales build up could not be used to fine-tune the ad placements to maximize their impact.
Additionally, with no response mechanism other than to buy the product at a retailer, there was no reliable way to market test one creative approach or offer against another directly as is common practice in direct response. However, even knowing this, U.S. and global companies spend billions of dollars each year on branding ads in an effort to keep in step with their competitors, build awareness and broaden their appeal to consumers in a general way.
Longitudinal studies were conducted by the Ad Council and other academic organizations in the late 70s regarding advertising’s effectiveness in general. The conclusions were contradictory, and noted that the more you advertised, the more likely it was that sales would rise, up to a point of saturation.
Far from clarifying the situation, this study muddied the waters for corporate marketers for years, until larger corporations with deep pockets and savvy media departments could develop ways to maximize the value of the dollars they were spending. Media costs have far outstripped creative and production expenses in most media including radio, TV and Print, and distribution is the largest of all the concerns for advertisers, according to a study by Ad Age Magazine circa 1990.
Direct Is The Way . . .
On a parallel path of development, direct response, the art of targeting the right audience with the right message at the right time, was having its own growing pains. Marketers realized early on that there were several major components to success in their business model and that efficiency topped the list for direct marketers. Fewer pieces mailed meant lower cost, and lower cost meant higher profit margins. But in order to mail fewer, the package had to be more effective to make up the corresponding loss in response volume.
Testing proved to be the path to optimizing effectiveness, and testing programs are a staple in any good modern direct mail program. The simple act of changing a color on an outer envelope could have notable, significant impact on response, so wide spread testing programs have become common.
Direct response is not limited to the postal system. Direct response radio and television hit a huge wave of popularity in the mid-80s, when direct response, long-form television was developing. Pioneers like Ron Popiel (of the famous Ronco company), started pitching products on TV in larger blocks than the traditional :30 and :60 spots, using product demonstrations to highlight the product’s benefits, and aggressively urging viewers to “Call now, operators are standing by to take your order,” creating urgency and driving response ever higher.
These ads were usually run in the very late evening, and early morning hours, primarily because media costs dropped disproportionately with viewer numbers, and a block of thirty minutes could be had for pennies on the dollar compared to daytime, prime time viewing hours. In the hands of skilled pitchmen, these products looked extremely powerful and valuable, painting scenarios in which ordinary people could easily envision themselves, and offering a solution for just a few dollars.
For Just $19.95 . . .
The leading price point for most of these products was $19.95, on the assumption that if you broke out of the $20 ceiling, you would lose a predictable portion of the potential buyers due to risk aversion among the late night, post-2AM audience profile, largely blue collar, often night shift workers, security guards, insomniacs and nursing mothers.
Some of these ads took on a new direction in the later 80s after many of the basic functions had been put in place and the infrastructure to support the burgeoning DRTV industry had grown more robust. With very low-price point products, the cost per unit was so low, that you could literally sell two or three of the product for the originally advertised price, and the additional volume would outweigh the additional cost. Sales soared, and clones came out of the woodwork.
Value Addeds reached the point where if you could capture the personal information from a potential buyer by getting them to respond to virtually anything, then you had captured unlimited marketing use of that bit of data, and huge house lists of buyers developed based on buying a $4.99 – $9.99 product range. They were essentially giving away the product to capture the name. The key is to find a product that reveals something useful about the buyer, like selling a cleaner that works well on teak boat decks to uncover a niche of boat owners to sell sails or fittings to.
A landmark study conducted by the Communications Department of the University of Oklahoma showed that after a certain level of frequency, virtually any advertisement could be used for branding, and shown to increase recognition for the brand it carried, which translated to retail sales of the product even in a direct response situation. In short, if you sold products in retail environment that had been previously available only through DRTV, the brand carried, and it took with it extra cache for having been “seen on TV”.
Products like Ginsu Knives, the Pocket Fisherman, Juice Tiger, and others entered the popular vernacular, often synonymous with cheap or just entertaining, but nonetheless moving units in record numbers.
The net result of this is more units sold for the product manufacturers and marketers, at a minor cost of the dilution of the direct response pool of data. By this time, however, list analysis technology and consumer information and data modeling had become so prevalent, available and cost effective; the effect on direct marketers was minimal.
DRTV remains a viable channel to launch new products of any price point, thanks to the breakthrough of some high-ticket items adopting the strategy of breaking the price into credit payments.
Products such as the Bowflex exercise gear, a giant machine promising fitness benefits beyond belief, is currently available via retail, e-bay, and direct online, but started out as a DRTV staple. It sells for thousands of dollars, but the ads still cling to the Easy Payment model, at the $39.95 price point – they’ve just increased the number of payments.
Together Is Better . . .
The Oklahoma Study opened the doors to brand ads to extend their reach into the direct response realm, and conversely, for brands that didn’t have a good hold on the broad consumer market to gain a foothold through high frequency buys and shorter adapted blocks of time. 2-minute spots that both push brand and offer a phone number have increased their prevalence, and are working well for established products with solid order processing infrastructure.
Direct buying via the Internet has increased the general public’s comfort level with buying through alternate channels to retail. The rise of credit availability, and America’s accompanying indebtedness as a result, has also boosted the confidence of direct retailers and built sales dramatically for some products. All these factors delivered together have formed sort of a “perfect storm” of retail sales, allowing directly sold products to develop brands more readily, and to allow for branding ads to engage the audience more directly through the internet.
Drive to web branding ads have become commonplace, and nearly every product on the shelves today in the traditional retail environment has a web address on it somewhere, whether for customer service purposes or for more product information.
Cross-selling opportunities abound through this channel, as real estate on the Internet is relatively cheap and virtually unlimited, and a full range of products can be presented in multi-media fashion, offering both advertising and a direct marketing channel in one instance through a single website. It’s the perfect blend of branding and direct response, and it can come to full fruition now that broadband access has risen to a common level nationally and globally.
Predictions Are Worth Their Weight . . .
Based on the factors related above and a landmark study conducted by media specialists at Michigan State University that showed that retail purchasing on the web will eclipse all retail in volume by the year 2015, it appears the future could be now . . .
Clearly, the media mix is changing, differentiators between media are blurring and blending, the power of selectivity and targeting is on the increase across all media, including print, and the power of one-to-one marketing will finally become a full-scale reality, as brands drive reputation once again, and response can be measured accurately. As systems converge and centralized media monitoring becomes possible and later practical, media rates will stabilize, and a new scheme for media payments will develop, based solely on audience participation.
Product purveyors will do well to keep on the cutting-edge as this convergence develops, as the sidelines are widening and getting further from the center of relevance, and the speed of convergence is accelerating beyond the ability of large firms to catch up if they get too far behind.
David Poulos, Chief Consultant at Granite Partners has been offering marketing guidance to firms for over 25 years. Specialties include non-profit marketing and full-scale strategic marketing campaigns. He can be reached at http://www.granite-part.com, or 410-472-4570.