Category Archives: Direct Response

Advertising Response Rates by Channel

Published / by Simon Foster

Understanding response rates by media channel is a vital component of marketing and media planning. If you know the response rates, media costs and likely conversion rates of each channel you are using, you can forecast the ROI of your planned activity – before you spend any budget. This helps to de-risk your marketing activity and optimise how budgets are deployed to maximise ROI.

Unfortunately, many marketing and media channels are planned, negotiated, delivered and evaluated in silos. This means it can be difficult to get a set of comparative response rates which allow you to forecast how well any one channel may work for your business or brand. If you can’t compere them side by side it’s difficult to optimise budget distribution – particularly for customer acquisition activity.

Guide to response rates by media communication channels

With over twenty years’ experience of planning, managing and evaluating campaigns across practically all mainstream media channels, I thought it would be useful to share the metrics that I use as standard response metrics. These are given as percentage response rates of the audience seeing the ad.

Note: These are the response rates I would expect to see based on my experience. They should be used  as a guide and are not a guarantee. They are subject to the caveats listed below.

The caveats

  1. Response rates are driven by a number of factors including the product, offer, the creative treatment and the audience selection (media). Ideally, you should work to the highest possible standard in each of these four areas. Compromise on any of these factors will reduce response rates.
  2. Most channels have sub-sets of response rates depending on how the channel is being used. For example, TV ads can be “brand awareness” ads, “brand response” ads or “direct response ads”. Each of these have different levels of responsiveness. Brand awareness ads which are designed to change attitudes rather than short term behaviour will not deliver a high response rate.
  3. You must factor in the cost of media on a per audience basis. A favourite mistake of response rate observers is to look at response rates without factoring in channel costs. Here’s an example; the response rate from DRTV is about 100 times lower than the response rate from DM, but remember, DM costs around 100 times more per person than TV. In reality, both channels may produce a similar cost per response. That’s why it’s important to look at both factors when analysing and forecasting responses.
  4. Response rates aren’t everything; what generates revenue is sales so you need to factor in a conversion rate from response to sale.  As a general rule, personal channels like DM tend to convert at a higher rate than broadcast or online display. You can have a channel with a low response rate and high conversion rate performing as well in cost per sale terms as a channel with a high response rate and a low conversion rate.
  5. Marketing activity is subject to diminishing returns; response rates will fall as budgets increase.

Examples of brilliant Direct Mail

Published / by Simon Foster

Been digging around for examples of outstanding direct mail. If you’re tired of running emails and banners ads, and you’re looking to make a real creative and intelligent impact, you might want to consider something like this, especially if you have a discrete high value segment and want to get seriously noticed.

yr-air-force-radio

The Australian Defence Force wanted to hire engineers. So George Patterson Y&R Melbourne developed this DIY radio kit to engage engineering students as potential recruits without instructions.  It won a D&AD Gold in 2014.

Here’s the story behind the campaign

 

 

Direct Mail Response Rates

Published / by Simon Foster

What response rates can you expect from Direct Mail?

Warm Direct Mail – mailings to your active customer file: In our experience, warm direct mail, i.e. DM sent to your customer file should deliver a response rate of between 1% and 5%. The average figure is around 3.5%.

Cold Direct Mail – DM send to prospects via a “cold” list: Response rates here are lower as the consumers you are mailing are less familiar with you and your brand. Typically 0.5% to 1.5%.

The DMA in the UK cites a response rate of 4% and claims that overall 7% of recipients will take some kind of action as a result of receiving direct mail.

The DMA in the US has produced a lot of information in its 2015 Response Rate Report and cites response rates of 3.7% for a house list and 1% for a cold prospect list.

How to get the best from DRTV

Published / by Simon Foster

Many advertisers are returning to Direct Response Television (DRTV). Whilst the goal today is to maximise web response as opposed to phone response, many of the rules of traditional DRTV remain constant. Here’s a summary of how to get the best from Direct Response TV:

  1. Remember all DRTV begins with the offer. Whilst issues around DRTV performance are often seen as “creative” or “media” we need to remember that the proposition to consumers is key to DRTV success. If you are offering free Ferraris you will not need to think in terms of creative or media optimisation. The offer will work. Equally, if you are offering a poorly differentiated product or service, you will find it difficult to sell. Your problems will be exacerbated further if you are in a mature market packed with established offers.  So ask yourself the “so-what” question against every line of copy. If you wouldn’t buy it, no-one else will.
  2. Develop compelling DRTV creative. DRTV seeks behavioural change, and consumers need to be given good reasons to stop what they’re doing and do something else. You need to talk in terms of meaningful benefits. There are certain category rules that are helpful. If you’re selling a financial product don’t use jokes. For most people, talking about their hard-earned money is not a funny business. Concentrate on explaining what the product is different, what it offers that is new and why your target audience should find out more.
  3. Be careful with emotional sales messages. Most mainstream advertising seeks to build emotional connections between people and brands. For many brands this is the right approach, but if you want to sell off the screen, stick to promoting the benefits that make you different and giving good reasons to buy.
  4. Make sure the creative identifies your target audience. Everyone watches broadcast media. The trick to making DRTV work is to create a sense of identification between you and your target audience. Show people and situations that your target audience will identify with. Create the impression that your target audience belongs in the ad.
  5. Understand the economics of broadcast media. TV companies use every possible device to maximise the yield on the audience they are selling. Yield is the revenue generated by advertising over the cost of attracting that audience i.e. producing or buying the programming.  High quality peak programming is expensive to produce or buy. More people are at home available to view during peak viewing times (5pm to 11pm) so audiences are higher. So TV companies put their highest cost, highest quality programming into the times of day when most people are available to view.  Moreover, ad agencies want high reach, so there is high demand for high quality, high audience programming. All this makes peak airtime expensive both in terms of unit cost and capital cost. The premiums embedded in peak mean it sells at rates that rarely work for DRTV advertisers. But off-peak airtime is an entirely different matter….
  6. Unlock the benefits of off-peak airtime. Everybody watches off-peak TV; young, middle-age, old, affluent, less well off, single, married, students, working people and those who’re retired. People take holidays and have days off. But most importantly, the homemaker watches daytime TV and the homemaker is often the person who researches and makes financial plans.  Daytime can be ideal for reaching family decision makers. Daytime can be ideal for reaching students and it can be ideal for reaching affluent grey markets. Off-peak is the place to test your product in DRTV.
  7. Test, measure and learn. DRTV is direct response marketing and the lifeblood of direct response is quantified planning and control. Using BARB data it is possible to match minute by minute audience data with your minute by minute click traffic. This allows advertisers to build a response database which matches TV audience with web response. Each spot can be defined by a number of planning variables that can be controlled: day of week, time of day, channel, proximity to previous spot, length of spot and creative execution. All these factors can be combined and used to optimise future DRTV media buys.

What can a database record tell us about customers?

Published / by Simon Foster

Your customer database is a potential fountain of opportunities to improve campaign targeting, creative messaging and return on marketing investment. Good database analysis can have a huge positive effect on your business. Your database can tell you who your customers are, where they live, what kind of people they are, what they buy, how they pay, what they might buy next and how you should advertise to them to maximise sales. Let’s look at each of these in turn.

At the most basic level your database should contain a name and address for each record. The name and address can give you valuable information. The postcode in the address opens up the potential for geodemographic analysis using tools like ACORN or MOSAIC. These tools work by grouping consumers into clusters of similar people based on the types of neighbourhoods they live in. The principle behind these systems is simple; birds of a feather flock together. The owners of these segmentation systems undertake research into the clusters they have developed. For example, Cluster 1 may contain people who are known to be affluent pre-retirement couples with children who have left home. Research may show that these people are three times more likely to drive a certain car, purchase certain electrical products or take holidays to certain destinations. So from just the address record you can build a much wider picture of the record in question.

But the full name and address have even more potential.They can be used to match your customer file with an external data file containing more information about the same person. This data can come from many sources, but more often it comes from lifestyle surveys. If a customer in your database has completed a lifestyle survey then you can buy supplementary information to significantly expand what you know about that person.Here’s an example. You may only know the name, address and age of a customer. But if that record can be matched with a respondent to a lifestyle survey then you can see the answers to tens or even hundreds of other purchase preference questions that person has shared. For example, you may be able to see what type of car they own, when it was bought, when they intend to replace it. They may even tell you what type of car they are considering next.

If you have transactional data then you are able to undertake an analysis of the types of products and services bought by the customer. From this data you would be able to say that a customer owns products X, Y and Z and you will probably know when they bought those products. You will be able to see how the often products are purchased and the preferred means of payment. If there is cyclical behaviour in the purchase pattern you may be able to predict when this customer is likely to purchase those products again.

With these high levels of customer understanding you are able to take a lot of the guesswork out of marketing. You can be much more focussed in terms of selling specific products to specific individuals. As a result you response, conversion and customer value rates are likely to improve significantly.