Archives for category: DRTV

It is hard to believe that it has been 10 years since the launch of the Obama Coin program.  October 2008 was an interesting time with the upcoming Presidential Election.  The Barack Obama campaign seemed more like a movement than a campaign, with individual events filling arenas and drawing as many as seventy-five thousand people.  There was a buzz around the candidate, and the campaign, that was unlike prior recent Presidential elections.

By late October, Obama appeared to be the strong front-runner (We did not bother to do a McCain commercial as we didn’t think he would win and even if he did, his supporters did not seem to have the same level of passion as Obama supporters). The products were created, offer developed and scripts written over a weekend.  The commercial was produced from start to finish in five days and cost a modest $5k.  The spot could probably flow perfectly in a Saturday Night Live skit, but I really liked the attention-grabbing opening “Own a Piece of American History”, and felt the spot had a decent chance for success.

Media test schedules were booked on the condition to run if Obama won, tapes arrived at stations the day before election day.  A little luck never hurts. The Presidential election results were announced the day after Election Day and the first Obama Coin commercial ran on MSNBC at 9:57 Thursday morning.  The results were obvious instantly as the CPO of that initial spot came in at under a dollar. By that afternoon we were already booking the roll-out. We were fortunate to have a week head start before competitors aired other Obama collectible commercials.  We tested dozens of stations, analyzed results several times a day and expanded to the strongest stations as soon as we had reliable reads.  The program received 100,000 orders in the first ten days and over 250,000 within about 45 days.

I was originally told that the Obama commercial would never work for numerous reasons.  We had tested Obama coins in print twice earlier in the year, once versus Hillary Clinton and once versus John McCain.  Both times the test failed miserably, but black & white print is not necessarily a good predictor of TV success.  The economics of the product also did not fit the typical DR formula.  Typical DRTV markup was 5:1, but we were at 3:1 since both coins were gold layered, colorized and had intrinsic currency value.  To combat the tough economics, we developed five strong, complementary upsells which helped the campaign bring in an average rpo of $66 from the original $10 plus s&h offer.

Overall it was a phenomenal lesson on maximizing an event.  We were a marketing led organization, but back-end operations were also vital to the program’s success, and provided numerous lessons as well.  Successful campaigns can quickly turn into true disasters if back-end operations do not ramp efficiently.  The Obama Coins were a simple product, but it still offered fantastic logistical experiences.  The 250,000 orders came in quickly, but there were significant production issues to solve (originally only 10,000 coins could be produced per week, and we would need nearly two million coins).  The presidential dollars and half dollars were acquired directly from the US Mint (we bought the entire remaining supply of 2008 halves, and at one point needed to wait until 2009 to purchase additional half dollars).  After receiving batches of coins from the Mint, they were sent to the gold plater, from the gold plater the coins went to a contract manufacturer to add the colorization.  The coins were then shipped to a newly created make-shift workshop to encapsulate the individual coins (Thinner capsules were specifically designed to make the encapsulation process more efficient), batch them together along with a certificate of authenticity, and seal everything in cellophane packages.  Finally finished product was shipped the fulfilment center.

It took until March 2009 to fulfill the final orders, but we kept in constant communication with customers (mainly through postcards).  Fortunately, our creativity and adaptability allowed us to successfully fulfill the large influx of orders, while keeping cancellations to a minimum.

The Obama Coin Program was a fantastic educational experience.  The success of the campaign was due to a passionate audience, fortunate timing, strong complementary upsells, maximizing marketing opportunities, a flexible and adaptive supply chain, as well as, collaborating with strong vendors whose turnaround times were exceptional.

#MarketingLessons #DirectResponse #Collectibles #Direct-to-Consumer #Fulfillment #Operations

An area which companies do not focus enough attention on, yet is just as important as the offer, is the upsells.  Most companies focus on customer acquisition, because it determines the viability of a campaign, but it’s the back-end of a successful campaign that truly determines your bottom line.  Optimizing the back-end can be the single most important aspect to increase a company’s profitability.  The back-end is broken into two parts.  The first consists of the upsells (to the TV product) offered during the IVR/web order.  The customer is calling because he/she is excited about the TV offer; therefore, sell her more of what she wants.  Deluxe versions typically work best, then offer additionals at a discount with free shipping. The upsells should be extremely well connected to the initial TV offer.  Continuities can be very successful in the upsell stream of collectible products.  A well-designed continuity can receive 25% response and can account for 50% of your overall RPO (revenue per order), depending on the offer and it’s location in the upsell stream.  Continuities typically do not lend themselves to low priced, mass-market products.

The target RPO from a $10 TV offer should be about $60, much higher than that will likely cause significant problems with credit card charge back and returns.  Each upsell takes away from the response of future upsell offers as the customer’s attention span wanes; too many upsells causes the IVR length to lengthen unacceptably.  I have listened to IVRs that can run 18 minutes.  This causes significant frustrations for the customer and can easily lead to customer input errors that again lead to increased charge backs and returns.  It is important to A/B test upsell position order as well as price points to optimize your upsell stream.

If you are involved in the direct marketing television industry, you probably already read The SciMark Report.  If you don’t, you definitely should.  The SciMark Report is Jordan Pine’s blog about the short-form DRTV industry.  Jordan reviews most new short-form direct response spots and also semi-annually compiles a comprehensive list of the top fifty direct response spots (based on media spend).    When he reviews new spots he typically provides a synopsis of the spot, his thoughts and predictions, as well as a link to the spot’s landing page. The site is a fantastic resource for keeping up on the industry, as well as, a great tool for researching what has previously been tried.

You need to watch the pricing of your various television spots, as well as, when they air.  For station XYZ, late night runs from 11pm to 2am and costs $1200, while overnights run from 2am to 5am and cost $300.  If your spot airs at 1:53 am, and you are charged $1200, it is highly unlikely that your spot will be profitable as the number of viewers towards the end of late night is substantially smaller than the number of viewers during the beginning of late night.  A good media buyer will be watching this for you, but, as with everything, its important to watch the details.

Do you BOGO (Buy One Get One Free) or give a different item away as the freebee?  Every DRTV offer needs to be tested to find the optimal approach and the economics of the item can effect how you create your offer.  As a starting point, for short form mass market $20 or under items, BOGO has proven strongest as it gives the TV viewer psychologically the best price, while giving maximum retail flexibility.  For child items, I stay away from the BOGO, as a BOGO cuts down on multiples, thereby hurting your RPO (Revenue Per Order) as parents typically buy one item per child.

For collectible or niche products, I have found that a second similar item as the freebee works best, rather than a BOGO.  This is stronger than simply doubling the original offer, as the similar bonus item decreases the customer’s cost per item, but does not cheapen or lessen the exclusivity of the original item.  This also allows for the depiction of a second strong visual image of the event.  For Horticulture I have had success with buy 2 get 1 free as well as giving away a second similar item.  Both approaches have achieved a higher RPO than the BOGO, due to upsell multiples.  As always, the answer is to test, test, test.

It’s easy to make the mistake that more is always better.  If we add in an extra freebee, of course response will increase, but in reality the freebee can be detrimental if it takes focus away from the main item offered.  When creating your offer, you need to watch out that your amazing offer doesn’t turn into ‘the kitchen sink’.  This is one occasion were more can actually hurt rather than help response.

We created a beautiful 6*9 mail package for a die-cast car offer.  The offer consisted of a free die-cast car with the purchase of two other cars.  Each car also came with a free glossy trading card.  The offer was successful and rolled-out.  On an expansion mailing we decided to test adding in an extra freebee.  For the program, we had produced a leather display wallet to show off the trading cards.  It sold well inshipment, as well as an upsell to phone orders, so it seemed like a logical freebee to test.  For the mailing we A/B split, with 2/3 getting the original offer, and 1/3 getting the free display wallet in addition to the original offer.  Normally the test portion of the mailing would be much smaller, but we went with a larger test size because the response to the second offer had to be better, as the customer was receiving everything from the original offer, plus more.

Response from the test group dropped by 20%, while the control group continued to perform the same as prior mailings.  The original offer was great and focused overwhelmingly on the free car.  The test offer, distracted some of the customer’s focus away from the free car and shifted it to the less impressive free display wallet.  In hindsight, the results made sense.  When we created the offer we fell into the trap of more is always better, but the math proved sometimes less is more.

A collectible is a niche product; this has its advantages and disadvantages.  I have found a success rate for collectible television spots of better than 1 in 4 while successful mass market spots range from 1 in 20 to 1 in 40+.  Collectibles will never do the overall sales of a mass market product, however, product niches can often be targeted very successfully.  For the Obama Presidential Coins, one individual station accounted for 50,000 customers.

Programming also is more impactful on a niche product.  On a recent campaign, spots airing on a profitable station did 2.5x to 3x when the spot ran on a program that was related to the genre of the collectible and over 7x when the programming concerned the actual subject matter of the product.  Typically it was only an additional 10% expense to make sure that we aired during specific shows.

Niche products require more of an exacting pinpoint rather than shotgun approach.  They do not offer the retail opportunity, however niche product customers have a higher lifetime value, as they often continue to purchase similar products in the future.  Niche products do not offer the home-run potential of a mass market product, but they definitely offer a better batting average.

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