Direct Response Radio Advertising – Direct Response Marketing Articles | Strategic Media, Inc.

The Biggest Mistakes in Direct Response Radio Advertising

Wed, 20 May 2009 14:22:03 -0500

Updated for 2009

One of the most popular articles we've written is titled "The Five Biggest Mistakes in Direct Response Radio Advertising.' Here are the mistakes we listed in that article:

1. A Faulty or Non-Existent Testing Process
2. Inadequate Data Capture and Analysis
3. Flying Blind (Proceeding before knowing what success is defined as in terms of your key campaign metrics)
4. Using Vendors Who Don't Know Direct Response Radio (even though they claim to)
5. A Corrupted Creative Process

Looking at this list today, we'd have to say that these five mistakes are still among the top mistakes we see people make. However, there are some new "top" mistakes, and some more refinement we'd make to those on the list.

The testing process remains a point of relatively low understanding. In general the conflict that seems to arise is where the client wants to test using a very low budget, but still wants to learn the answer to a large number of questions with a high degree of reliability. Those goals are conflicting.

The issue of "inadequate data capture" remains, however it has changed in a fairly dramatic way. Since we first wrote the "Five Biggest Mistakes" article, the web has catapulted to the top data tracking issue. Why? Because we've learned that radio advertising drives a boatload of online leads and orders. In our testing we've found that for every dollar we see coming through a phone center, there is between $.35 and $1.00 coming via the web. It's actually more complicated than that, because that assumes nobody is trying to pick off your customers with their own PPC and SEO efforts - which is a bad assumption that gets worse as your campaign gets more successful. Other companies will try to reap the benefit of your advertising, and they'll succeed if you don't do something about it. We now require all clients to meet minimum web tracking benchmarks before proceeding with testing.

For whatever reason, "Flying Blind" is not as big an issue. People seem to know their key metrics.

Using vendors that don't know direct response radio, particularly when it comes to the call center, remains a significant challenge. The good news on this front is that over the last few years some of the more well-known call centers have become much better at closing radio calls. In the past, they had become used to the layups that come in from TV infomercials and their sales skills were not as sharp.

The creative process remains under threat on a few different fronts. The most meaningful seems to be clients who perhaps don't have enough trust in the experts they've hired to create radio ads for their business. This is an understandable situation since the client is the one spending the money and it's their product so they know it best. But our recommendations are based on years of experience with what works and what doesn't in direct response radio. We combine that with what we learn from the campaign brief provided by the client to produce an a radio commercial (or commercials) that we believe will produce the best results. The best way for us to describe how to avoid this mistake is this: provide the agency a full and complete campaign brief up front. Then, when you're asked for feedback on copy or the final produced ad, do your best to restrict that feedback to a) customer insights that you feel were missed, b) incorrect facts in the ads, and c) legal requirements that need to be met.

The Top Ten Keys To Creating Great Radio Ads

Mon, 27 Oct 2008 17:54:36 -0500

Insights From a Decade of Direct Response Radio Advertising

By Jeff Small, CEO and Brett Astor, Vice President
Strategic Media, Inc.

Profitable direct response radio campaigns are a product of excellent strategy, skillful media buying, and insightful radio commercial development. This article will address the radio commercial development piece, presenting the top ten concepts that interact to produce successful radio advertisements.

We make a few assumptions as we define the scope of this article.

First, we assume the creative process is infused with sound strategy - a careful consideration of customers, the company's offering, and competitors. The creative process starts with a brainstorming of possible alternatives, and then is narrowed down into a short list of approaches that you hypothesize will produce the best results based on some rationale.

Second, we assume you'll employ the ongoing testing that direct response advertising requires for success. We're not going to get onto the topics related to testing and how you continuously dial in on what works best for your campaign. You can learn more about this here and here. Or by emailing us.

Lastly, we define success in terms of profitability, not awards won or popularity or entertainment value. In our view, only one question matters: Does the ad elicit response in the form of cost per lead (CPL) and cost per order (CPO) that results in the client acquiring the most profitable new customers?

With that in mind, here are the top ten keys to creating great radio ads:

10. Production value and voiceover talent.
Contrary to popular belief, these are not the most important element in great ads. Yet they are what clients often use to determine whether they "like" an ad. From the data we've collected through ten years of testing radio ads we've found that there is very often an inverse relationship between production value and ad performance. Yes, that's counterintuitive. Production value shouldn't "hurt" response, right? There are a number of possibilities for why this is true. Maybe good production value distracts ad developers from the right amount of focus on great copywriting. Or, perhaps good production value creates an ad that is so "slick" that it doesn't stand out. As Seth Godin puts it "perfect is boring".

Nonetheless, production and voice are still important. Production must enhance believability, catch attention, and ensure the message can be ingested by the audience with minimal effort. And the voice talent's read must be evaluated for it's non-verbal communication, not just what the words mean as they're strung together.

9. Distinctiveness of the offering.
The greater the "me too" factor, the lower the potential for the campaign. If your product is another of the hundreds of weight loss products or diets, then you're likely going to have a difficult time coming up with something new to say to people. Distinctiveness applies not just to the product benefits, but also to the creative approach, the offer, and any other element of the campaign.

8. Effective use of the interplay between emotion and logic.
There are points in the ad where emotional appeals are appropriate, and there are other points in the ad where logical appeals are potent. Few people make a purchase decision based solely on one or the other. Quite often we're "reeled in" with emotion, and just before we buy we look for a logical reason to rationalize our emotional decision. Successful radio ads recognize this dynamic and flow accordingly.

7. Articulation.
There are a number of different ways to express your message. Any one can get the message across. But only one is the optimum formula that presents the combination to the lock on the door of your customers' minds. Changing just one word or a few words in an ad can have an amazingly large impact on results. We've seen this over and over again - some key insight that produces a small copy change that dramatically boosts results. Or the opposite. Articulation matters. One of the biggest mistakes we've seen is using wishy-washy, non-specific language. Saying something "Product A is designed to do X" is not as strong as saying "Product A does X".

6. Simplicity.
You have sixty seconds. Packing too much into the ad overwhelms the listener, triggering the natural cognitive processes that minimize sensory overload. Leave the kitchen sink in the kitchen. If the kitchen sink is what's so impressive about your product or service, then at least test a focused approach next to it so you can learn which performs better.

5. Use of sound elements to enhance the message.
This is radio. The theatre of the mind. In TV you can just show someone. In radio, you show them with sound. It's both a burden and a benefit of radio advertising because it's both harder to do but more impactful when done well.

We've separated this from #10 because we're not talking about a slick production value, rather the use of a specific production technique to help the ad stand out. This can't be done at the last minute. Use of sound must be considered as the ad is written, and the use of sound that is irrelevant or detracts from the believability of the spot is a detriment to ad performance.

4. Authenticity.
This is hard to do because we're so conditioned to look outside our business for clues as to how to succeed. The result is inauthenticity. Me-too-ism. All things to nobody or nothing to everybody. The best radio ads flow from an authentic connection to a product or service's uniqueness, passion, and identity. Authenticity is influential, believable and enhances credibility. It is also a differentiator (unfortunately). See our blog posts on this topic for a lot more about authenticity in radio advertising.

3. The offer.
As with nearly any direct response advertisement, there must be a call to action that is relevant, compelling and simple enough to grasp quickly. Relevant means it matters to a potential customer - it reduces my risk, makes picking up the phone a no-brainer, or gives me a reason to go with my emotions instead of my logic. Compelling means it has a "wow" factor. As in, "wow, they must really believe in their product to do that. And simple means it's ... not complicated. It doesn't make me stop and think too much. It doesn't confuse me with language that's spun to sound like it's a great offer but really isn't. One insight is pivotal here: the business model must be built with the potential offers in mind. Think about it - you can't make an offer in an ad that you can't afford to make.

2. The opening attention grabber.
The first impression of a great radio ad must provoke a desire for further exploration. If not, the radio ad will be categorized by the brain as the same old noise it always hears. And it will be blocked out - a victim of the cognitive processes that ensure we don't experience sensory overload. The challenge of grabbing attention is huge. Don't underestimate it. This is a difficult thing to do. Why? Because we're all bombarded relentlessly by huge number of other advertisers who are trying to do it.

One way to think about this is 'don't bury the lead'. Make sure that the most impactful aspect of your ad is expressed early on. Don't wait until 20 seconds into the ad to make your first point.

1. Benefit orientation.
One of the biggest mistakes made is assuming people care how something works before they care what it does for them. You must only say how if the what is so incredible that you need a "reason to believe" in the ad - and then you do it in one sentence or less. Clients seem to love the how, but it typically doesn't sell.

The ad must answer the question: what's in it for me? How will it impact my life in a way that I think it will make my life better, happier, or easier? This requires understanding and tapping into the fundamental human beliefs around these topics. A product that prevents a problem I don't yet have? I don't care about that because I have current problems that matter more to me. Prevention doesn't sell. What does sell is something that solves my problem quickly, safely, better and more conveniently than anything else. If you use your 60 seconds in any other way, you're wasting time.

The Current Radio Landscape and What it Means For Direct Response Radio Advertisers

Tue, 01 Apr 2008 12:34:12 -0500

Posted March 2008

Don't look now, but there are some exciting new developments in the radio industry, one not known for a lot of change. Let's take a look at some of these developments and how they could impact direct response radio advertisers.

In The Short Term

The economy: Typically a soft economy helps direct response radio advertisers. Many traditional businesses cut their advertising budgets during economic downturns, which results in a reduction in demand and a corresponding fall in pricing power by the radio industry. This is an opportunity for direct response radio advertisers because more inventory and lower rates help make for huge profits.

The political races: Political campaigns are entitled, by law, to the advertising rates offered to the lowest-paying advertiser on a station or network. The political window starts sixty days from the general election, or September 1st, and forty-five days out from the primaries. Demand from political advertisers can often have an upward impact on advertising rates. However, we're seeing the soft economy offsetting this dynamic. The impact on rates and inventory availability is varying depending on the market, station, format, and timing. Political windows are different for each market because of the timing of primary elections and party conventions. Moreover, certain formats, and therefore stations, are in higher demand than others for political advertising. By using a little creativity it's possible to secure profitable media time that wouldn't otherwise be available to remnant media buyers.

Looking Long Term

A possible merger between satellite radio providers XM and Sirius: The Justice Department recently approved the merger but as of this writing the FCC has not yet made a ruling, so let's look at both possible outcomes. If the merger does go through we expect to see a consolidation of the airtime inventories and a smaller number of available spots. This would theoretically be offset by the larger audiences they reach. At this point we don't anticipate a significant upward movement in rates without some offsetting benefit to radio advertisers. Sources inside the companies tell us that even should the merger be approved, it will be several years before the technology required for integrating their signals is ready.

If, on the other hand, the merger does not go through, both companies will be fighting for survival because while both have shown good revenue growth neither has been able to translate that to bottom line profit. Satellite radio is a profitable channel for direct response radio advertisers so at this point we're rooting for the merger to go through.

Bain Capital's pending purchase of ClearChannel and other related assets: Bain has not only pursued Clear Channel (the largest radio station owner), but also some related assets in the internet radio and mobile direct to consumer spaces. The first thing we'll be watching is whether Bain will ditch the silly "Less is More" approach of Clear Channel and return to offering more 60-second spot inventory - the kind that is more effective for radio advertisers. When they launched "Less is More", Clear Channel also moved to mostly 30-second spots while not adjusting pricing accordingly. This move might have boosted short term profits for Clear Channel, but it didn't help Clear Channel's paying customers because thirty second spots don't work as well as sixty second spots. Therefore the move will certainly backfire in the long run.

Beyond correcting that strategic misfire for Clear Channel, Bain's involvement will mean stronger management and more visionary leadership for the radio industry. This may be most noticeable in the arena of integrating web and streaming technologies with current radio capabilitiees, which could allow radio to offer advertisers more effectiveness in reaching and eliciting a response from potential customers. Bain's involvement in the radio industry will be beneficial for direct response radio advertisers.

Arbitron and the PPM: Many in the radio industry have been angered by Arbitron's new and supposedly more reliable "Personal People Meter", or PPM, which tracks radio listening electronically and passively. The PPM is intended to replace the diary system, which relied on listeners to remember and write down their radio listening. In many cases the PPM is showing lower listenership numbers than the paper diaries did, which is having a negative impact on station pricing power. This is clearly good for direct response advertisers and not so good for the radio stations. Some stations don't want to show advertisers their demo-specific numbers because they feel Arbitron's numbers are so far below the actual audience sizes. Stations argue that certain demos are statistically underrepresented in the data Arbitron is collecting. Arbitron has indicated that some sample sizes may be too small, and is pledging improved data collection.

For direct response radio advertisers this is a mixed bag. In one sense it doesn't have much of an impact because we already know, through our own data from advertising with the stations and networks, what rate is profitable for a particular schedule. Additionally, we always test, and there is nothing more reliable than directly collecting your own real-time CPL and CPO data. In reality, though, the PPM is creating a lot of confusion and anxiety for the radio stations and that is something that we are seeing the need to work with as we work with them.

Google and GoogleAudio: Google continues to attempt to extend its reach beyond online advertising. Google Audio, a radio advertising offering, remains nascent and still has many issues to address. Most primary of those is the trackability of advertising results. GoogleAudio recently unveiled an online tracking tool meant to do for radio advertisers what its Pay Per Click analysis tool does for online advertisers. But a closer look revealed its shortcomings, specifically the inability to attribute web traffic or sales specifically to radio advertising verses other marketing efforts. GoogleAudio remains a viable option for small, local, infrequent, or inconsistent advertisers who want to explore radio advertising. It falls short, though, in the areas of national scalability and knowledge about what works in the arena of radio creative.

HD Radio: We hesitate to even mention HD radio - which is a move from analog to digital signals - because it's not clear exactly what value this technology will be adding for radio advertisers. However, the radio industry is strongly promoting this new technology in both on-air ads as well as online and retail. At this point we believe this will have a neutral impact for radio advertisers.

While it may be difficult to see exactly when or how these developments will play out, what we do know is that the radio industry overall is evolving in ways that will ultimately create more value for direct response advertisers.

By Jeff Small, CEO, and Brett Astor, Vice President of Strategic Media, Inc. Together they have over twenty years of experience in direct response advertising. They are also co-authors of the new book "Direct Responses Radio: The Way to Greater Profit with Measurable Radio Advertising." See www.directresponseradio.com for more information about the book. Learn more about profitable direct response radio advertising strategies at www.strategicmediainc.com or by calling (207) 871-9958, x 206.

Integrating DRTV and DR Radio: Clearer Understanding for Greater Profit

Fri, 04 Jan 2008 17:23:23 -0500

By Jeff Small and Brett Astor

More and more frequently, businesses are testing direct response radio after experiencing success with DRTV campaigns. One client we work with came to us after establishing a successful DRTV spot campaign to fill their educational seminars. They wanted to test DR radio to determine whether it could be an additional, profitable source of new seminar attendees. They didn't expect radio to do as well as their TV campaign.

After the initial testing with radio, the results were just about where the client expected, with a higher CPR (cost per registrant) than their DRTV spot campaign. However, after a few weeks of refining the radio campaign, DR radio began outperforming DRTV. The client was surprised that DR radio could produce results on par with DRTV. "How is this possible?" they wondered.

It's possible because of the way DRTV and DR Radio work together. Or rather, how they don't.

Marketers, it seems, tend to subscribe to the classical "integrated marketing" theory, which suggests that there will be a "synergy" between the advertising mediums. This view is that radio might be a profitable customer acquisition channel because of the media exposure established through DRTV - radio will convert all those who've seen the TV campaign and have yet to buy.

However, in our experience this synergy-based theory doesn't at all describe the interaction of direct response radio and DRTV. You don't need TV exposure to be successful in radio, nor does significant TV exposure itself guarantee DR radio success. Consistently we see that regardless of the amount of TV exposure, DR radio campaigns work because of their own strengths, not as a result of wide TV exposure.

Why is this so? Because DR Radio delivers your message to an audience that is distinct from a DRTV audience - not one that significantly overlaps. This makes sense when you think about how much media people would have to take in to see your infomercial a few times as well as hear your radio ad at least once. For successful campaigns, that would require a lot of both TV watching and radio listening by a lot of people.

So, if radio and TV don't work in the "synergistic" way originally thought, what accounts for the success of campaigns that begin with DRTV and add DR radio advertising to the advertising mix?

In a word: New. When you expose a new audience to a new, well-crafted message about a product for which there is proven demand, you have the ingredients for a very successful campaign.

That means that even while a DRTV campaign may be maturing, and CPO's edging up, there's still a profitable customer acquisition channel that will give you access to a new audience who'll hear your message as fresh and respond to it with corresponding eagerness.

There is another implication of the "separate audience" insight. It also means that you can't assume you'll capture the untapped radio demand for your product just because you have a successful DRTV campaign. It'll require creating a radio-specific ad and going through the process of testing and refinement. But it's very much worth the effort because leaving radio advertising out of your mix provides competitors with an attractive avenue to establish a profitable foothold in your category. Since it is often costly to displace an established radio campaign, it makes sense not to wait too long to establish your radio presence when you've built a successful campaign with DRTV.

By Jeff Small, CEO, and Brett Astor, Vice President of Strategic Media, Inc. Together they have over twenty years of experience in direct response advertising. Learn more about profitable direct response radio strategies at www.strategicmediainc.com or by calling (207)871-9958 x201.

After the Phone Rings: 4 Tips for Maximizing Direct Response Radio Advertising Profits

Thu, 28 Jun 2007 09:53:26 -0500

By Jeff Small and Brett Astor

Media buying and ad development topics tend to dominate the discussions about successful direct response radio advertising. Yet the most successful DR radio campaigns - defined by profitability and longevity - have all acted on the need to extend their focus well beyond the media and creative aspects of the campaign. Why? Because while it is indeed vital to efficiently drive qualified leads, it is also true that low cost leads alone won't achieve a direct response campaign's full potential.

Often referred to as the "back end", what happens (or doesn't happen) after the call arrives at the call center has an enormous impact on campaign profitability.

To shed some light on the tactics involved in maximizing DR radio profits, we talked to an expert about common mistakes and oversights that undermine the success of DR radio campaigns.

"I continue to be amazed at how many advertisers 'set it and forget it' when it comes to managing their 'back end'. I've consistently found that with a little digging, some thoughtful promotion set up, and a commitment to disciplined execution, advertisers can literally add an additional 1.5 to 3 percentage points of profit to their bottom lines (net income as a % of sales)"says Scott Badger, principal of KPI Direct, a DR marketing management agency. "As a percentage increase in profit, this is a very meaningful number - at least 15%, and often double or triple that figure" he says.

With this in mind, we talked with Mr. Badger about the top four opportunities he most routinely sees for maximizing DR radio campaign profits.

Tip #1: Pick the Right Kind of Call Center

"Direct response radio-specific call centers often deliver results that are 2-3 times better on key metrics than non-radio experienced call centers" Mr. Badger says.

As a radio agency, we've seen this first hand when new clients have come to us with a call center already in place. Perhaps they've been running direct mail, TV, print or online campaigns. When we test radio, we see a wide variation in performance across these different call centers. Some are far superior to others when it comes to direct response radio campaigns.

This is because radio leads are different in some important ways than TV, print or online leads that make up a large percentage of the call volume at many large centers. Radio leads are calling as a result of a 60 second ad (most often) that aroused them and compelled them to want to try something out. "To convert that lead to a sale, complete with cross-sells and continuity elements, requires skilled salesmanship, not just an order taking script" says Badger.

According to Mr. Badger, the best call centers for radio campaigns are going to have a few common characteristics. They're not super-sized centers with thousands of agents and hundreds of clients. They're smaller boutique centers with between 100-500 seats and fewer clients. "Some clients become concerned about out-growing the capacity of a smaller center, but there are ways to effectively mitigate this issue without much difficulty."

Second, these boutique centers specialize in "soft offer" promotions, the type often most effective in direct response radio. Soft offers don't discuss a price in the ad. Hard offers are more typical to TV and to a lesser degree print, where a price is shown in the ad. Soft offers work best in radio for a whole host of reasons outside the scope of this discussion.

"Commissioned sales agents do a better job at establishing a rapport, identifying the customer's needs, and building value around the highest value product offers - in short, they do a better job of 'selling'".

Third, the call centers that perform best for radio campaigns have commissioned sales representatives, not hourly workers. "Commissioned sales agents do a better job at establishing a rapport, identifying the customer's needs, and building value around the highest value product offers - in short, they do a better job of 'selling'" says Badger.

Mr. Badger cautions that while choosing the right call center is vital for maximizing both conversion and average revenue per order on the initial sale, it's important to note that choosing the right call center marks just the beginning of the process of maximizing the profitability of a DR radio advertising campaign "after the call" begins. "There are a host of opportunities to significantly boost ROI in the leads generated from soft offer DR Radio" he says.

Tip #2: Go After Non-Buyers

Mr. Badger's experience indicates that one of the largest opportunities for capturing additional profits involves implementing programs to convert your non-buying leads into buyers. How impactful can this be? Using some round numbers, let's say the conversion rate for your campaign is averaging 30%. That means that for every 100 leads you drive with your advertising, 70 of them don't result in any revenue or profit for you. That's 2.3 times the number that do buy! Converting just ten or twelve percent of these non-buying leads can increase your overall conversion rate by over 25%, resulting in an enormous percentage lift to revenue and profits. Why? Because you've already paid for the leads and they are, by definition, interested in trying your product. "That's why one of the first things I recommend to a client is to design and implement a non-buyer conversion program" Badger says.

Tip #3: Convert Try-ers to Believers (and Repeat Buyers)

Mr. Badger says that typically 15% or more of a soft offer campaign's buyers will take the lowest price (and sometimes "free") offer that is being pitched, without an autoship enrollment, and won't reorder down the road. "Unless you do something. Time and again we see that with the right message, method of contact and follow up offer, a good percentage of these 'try-ers' will be converted to loyal 'believers'" he says.

Tip #4: Reactivate "Customers on Hiatus"

"I call them "inactive repeaters" - customers who have received two or more shipments (whether auto or not), but none in the past 30 to 60 days" Says Badger. These people often represent a meaningful percentage of a marketer's customer list and they are often the most likely candidates to "come back to you" if given the opportunity through a reactivation program.

Connecting the Dots

Why is the 'back end' profitability supremely relevant to a discussion of successful direct response radio campaigns? Because together with the 'front end' profitability stemming from media and creative efforts, the back end profitability contributes to the key business metric of customer lifetime value.

And here's where it all comes together: Without a high enough customer lifetime value, a business can't compete for new customers. The media CPO (to pick just one key business metric) required to achieve profitability will be too small. In any product or service category, the business that can pay a $50 media CPO to acquire a customer and still be profitable will achieve far greater scale, longevity, and profits than the business that can only pay a $35 CPO.

By Brett Astor, VP and Jeff Small, CEO of Strategic Media, Inc. (www.strategicmediainc.com) the leading full data direct response radio advertising agency, with Scott Badger of direct marketing management firm KPI Direct (www.kpidirect.com).

Are You Ready for Direct Response Radio Advertising?

Fri, 04 May 2007 11:39:23 -0500

These Six Questions Tell You How to Make the Answer "Yes"

By Brett Astor, Vice President and Jeff Small, CEO of Strategic Media, Inc.

Direct response radio advertising is an amazingly under recognized way to grow a business quickly and profitably. For one thing, it's fully accountable, so every dollar spent can be tracked to the revenue it generates and unprofitable spending can be eliminated. In addition, it's extremely scalable. Once you figure out what works, you can increase your revenues and profits simply by increasing your media spend. It's nearly as easy as stepping on the gas pedal. Direct response radio advertising is truly a powerful engine for profitable growth.

When it is done properly.

Most of the time, radio advertising is not done right. The first step in "doing radio right" is not to do it until you're ready. The questions in this article will help you determine whether you're ready to take advantage of direct response radio advertising. If you're not ready, this article will tell you the steps you need to take to get ready.

Do you know how you will define success?

How much, in profit, is each customer worth to your business over the course of that customer's relationship with your company? This is the customer lifetime value question and it is vital to know this before you go into direct response advertising. Why? Because the definition of success in direct response radio advertising is acquiring a new customer at a cost that allows for a profitable relationship with that new customer. If you don't know the lifetime value, you cannot know how much you are able to pay to acquire a customer.

Think about the day when you run your first ad schedule on a station. The results come in. How do you know whether they are good or bad? Are they good because there is revenue? Are they good because the phone is ringing or because visits to the web site went up? These are not sufficient to understand and evaluate the performance of your advertising. You can only evaluate advertising performance within the context of your customer lifetime value.

But knowing your customer lifetime value is not enough. You have to break this down into the metrics that you'll use to evaluate and manage your campaign. These metrics are part of the formula for lifetime value, metrics like "cost per lead" (CPL), cost per order (CPO, also known as CPA or cost per acquisition), conversion rate, and average revenue per sale. Do not begin a direct response radio advertising campaign (or a business of any sort using any kind of demand generation tactics) until you know your business profitability metrics very well.

Are you prepared to test?

We have often heard people say "We tried radio advertising and it doesn't work for us".

Here's the problem with that statement: Developing a profitable direct response radio advertising campaign isn't something that is accomplished with a "trial". It is far too complicated an endeavor, with far too many variables, to assess its effectiveness for your business with a "trial". There are creative variables and media variables, and together they present a daunting number of possible combinations to achieve success.

To properly assess the potential for direct response radio advertising to generate profitable new customers for your business, you must approach direct response radio advertising with a testing mindset. That calls for a patient, methodical approach.

What does this mean for you? It means that you need around $20,000 to test multiple ads over a 4-8 week period before you'll know which approaches will (and won't) yield more profitable results. Don't go into direct response radio advertising with a "dabble" mindset. Go into it with solid business goals: a) To assess the potential of direct response radio advertising to drive profitable new revenues, and b) to understand which approaches - both creative and media - produce the best results for your company. While you'll generate revenues and profits during the test, the real benefit of testing is in the learnings that can be applied to a larger campaign over a long period of time to drive significant sales and profits.

Do you have a compelling offer?

The offer in your direct response radio ad is one of the most important elements for success. But why do you need to be thinking about that before you even approach radio advertising? Isn't that something your radio advertising agency should come up with? Well, yes, but... The "but" here hinges on the fact that any offer must be something that's possible given the business profitability structure, and possible given the systems and processes that run the business. These are constraints that only you know about. It will take time to alter existing systems or processes should that be necessary to support a compelling offer in your advertising. Your agency might recommend you give away a free DVD player with each order. That would drive a lot of orders, but would they be profitable? You need to define the playing field for the agency and then engage in the dialogue of getting the most out of what's possible given the constraints.

What is a compelling offer? It's different, it's relevant, and it's meaningful. A free complimentary product or service is a good example. For example, if you're marketing a skin care product that fights acne, you can give away a skin softener product as a bonus. Others use free trials with conversion mechanisms. These can work well provided the product performs as promised. Still others employ the 'risk free trial' approach, which essentially positions the 30 day money back guarantee as an offer - a "risk free trial". The possibilities are many.

Is your business infrastructure set up to support direct response advertising?

The most important aspect of preparing for direct response radio advertising is ensuring you're ready for the volume of leads and orders that can result. The easiest way to project this is to know your CPL and CPO projections (see above) and then assume a specific weekly media spend. For example, say you're running $25,000 in media per week in direct response radio. This is considered a relatively small campaign. If your business model shows that you expect a CPL of $15, then you'll be driving 25,000/15 = 1667 calls per week. Can your sales call center and fulfillment center handle this volume? More importantly, can they handle more, because when you're profitable while running a $25,000 weekly radio campaign, you'll undoubtedly want to grow to five to ten times that size as soon as possible.

There's another vital piece of infrastructure you absolutely must have in place before you begin direct response radio advertising. It is a firm requirement because without it you're wasting your money and ruining your reputation with the vendors you've hired to help you build the campaign. That requirement is excellent data collection and transmission to the radio media buying department at your radio agency. By this we mean that you absolutely must have a mechanism for capturing the lead, order, and revenue data by the unique identifier (such as the toll-free phone number) for the media buy that generated the call. If you're sending calls to a call center, this is no problem. They understand this need and are already set up to accommodate it. If you're trying to take calls in house, most of the time you've got work to do to ensure you can provide your media company with the information they need on a timely basis (usually first thing every morning). If you are sending leads to a web site, which is happening with increasing frequency, you must set up data capture and transmission mechanisms via a web tracking software program like Google Analytics before the campaign begins, preferably before you even contact a direct response radio advertising agency to get started. It's amazing how many times we've been told that this tracking mechanism is in place and that we'll get daily data exports from the web tracking software, only to begin the test and find out we won't be receiving data for many days and what we do receive will not be complete.

Are you aware of your biases and assumptions?

This question probably sounds a little different than the rest but it's well worth spending some time on. What you must understand is that you, the client, lead the show. As the agency, we will tell you want we recommend based on our expertise in the field of direct response radio advertising. It's up to you to make sure we're making those recommendations with all of the necessary information. Biases and assumptions can damage this important aspect of the client-agency relationship.

Biases and assumptions underlie beliefs you have about key campaign questions like why your customers buy from you, or what appeals in advertising will resonate with the target audience. If you inject these into the process as facts, your agency will likely take them as such. The agency is unlikely to argue strongly with you - - it's just the nature of the "the customer is always right" tendency in client-agency relationships (as well as many others).

Let's say you've been advertising online with banners and pay per click (or with TV or with print - the medium doesn't matter). You want to test radio. One common mistake is to do a survey of your existing customers and ask them why they buy. The results show that the reasons these people buy match up very well with the appeals in the advertisements that you've been running. You conclude that the exact same approach will work in radio and you require that approach be followed by the agency. But you've overlooked the fact that your survey was very biased. Why? Because the people you surveyed were prompted to become customers by the ads you ran. Of course you're going to find people who validate the ads you've run - they responded to them to become customers! The non-biased way to do a survey is to collect data from a random sample of people (not current customers) matching the target customer profile.

Notice the point is not to eradicate your biases or assumptions, but to become aware of them. It's nearly impossible to get rid of biases. However, if you're aware of them you can then test them methodically and you won't be in danger of leading your agency down the wrong path - one that often leads to the failure of radio campaigns.

Are you different?

Me-too products or services don't work, period. In direct response you find this out quickly. You must be different. One important twist to this is that you can be different in any one of a number of different ways. As a certain marketing professor liked to say "you can innovate anywhere in the value chain...the more places the better". Did Dell Computer make innovative new computers? Not at all. Dell found a way to put computers together faster, with higher reliability and at a lower cost than any other PC maker. That, among other things, translated into a super low cost structure which meant Dell could beat competitors on price and still make more money than those competitors. There are other examples. Maybe you're marketing a product in the diet aid category. There are "support" food programs (Weight Watchers), pills (Trimspa) and informational/diet regimens (the Atkins diet). Do you have to have the latest breakthrough pill to compete? That would be nice but there are only so many of those to be discovered. So you can be different in another way. Your spokesperson could be a celebrity. Your marketing angle could be radically different. Your offer could be unique. Your cost structure or overall business model might allow for an incredible free gift or a very low price. Your customer retention program might be so strong that you can give away a free trial to acquire large numbers of customers. There are many, many ways to be different. How you're different - while important - is still second to the fact that if you're a me-too product you'll not last long.

The Customer Benefits of The "Full Data" Direct Response Radio Advertising Agency

Wed, 28 Mar 2007 14:56:40 -0500

If you are reading this you're probably interested in whether direct response radio advertising can help your business grow profitably. To find out the answer, you'll have to go through the process of selecting an agency and conducting a test. But where do you start? Which agencies do you talk to? First you should know that there are two basic "kinds" of direct response radio agencies: Full Data and Black Box.

The Full Data and Black Box models sit on opposite ends of the spectrum in their approach to and philosophy about direct response radio advertising. Yet, as different as they are, they are the same in one crucial way: they are both successful at procuring the discounted, remnant media rates required by all direct response radio advertisers. They differ in their tactics, which can have enormous implications for your business. As we'll show you, the Full Data agency offers a number of customer benefits that are worthy of serious consideration.

Comparing the Black Box Agency and the Full Data Agency

With the Black Box model, the radio agency commits to buying a certain amount of remnant media over the course of a year if, in return for that commitment, the station sells it to them at a super-low rate. The Black Box agency, now obligated to that amount of media, resells it to its clients for a marked-up (and possibly variable) amount. Black Box agencies won't disclose what they're paying for the media before they mark it up and resell it to clients. As a result, clients don't see detailed station-by-station or spot-by-spot reporting. Instead, they only see metrics based on the entire media spend over a particular period. This is where the "Black Box" name comes from - clients are not given any level of detail about what's going on behind the curtain, only basic "dollars in - dollars out" reporting.

Full Data agencies also obtain remnant media rates. However, instead of negotiating for the full year and taking on a large and possibly risky obligation to the radio station, the Full Data agency negotiates on behalf of each specific client during the week or two prior to airing. This labor-intensive "last minute" approach allows the Full Data agency to obtain remnant rates, but without the inflexibility or conflicts of interest that stem from a long term contractual obligation. As a result, the Full Data agency can provide detailed reporting of media performance , including station, day, daypart, format, geography, call center, adcopy and so on. Full Data is the only way for a client to understand the answer to the questions "what works, when does it work, and with whom?" This transparent approach is where the name "Full Data" comes from.

The Customer Benefits of the Full Data Radio Agency

Fee Transparency vs. Floating Rates

With Full Data agencies, the agency fees are fully disclosed, reconcilable, and don't change unless agreed upon in advance with the client. Since the Black Box markup is variable, or floating, the agency can increase its margin to take more profit if a client's campaign is performing better than expected. Without visibility inside the black box, there is no way for the client to know when this floating margin occurs.

Accountability for Profit Optimization

Full Data agencies show clients reporting detailed to the individual station level. They can therefore demonstrate that they are optimizing the profitability of a campaign. With the Black Box approach, the client loses the ability to hold the radio agency accountable for profit optimization. The client can't know that the Black Box agency is cancelling unprofitable media because the client isn't able to see the full station by station data. In a direct marketing business, data tracking and reporting is what enables the very foundation of direct response advertising: testing and continuously improving the profitability of a campaign. Without visibility into the data, clients of Black Box agencies cannot know for sure whether their campaign is providing the maximum return on media dollars.

Input into Business Improvement Initiatives

Every dollar spent in direct response radio advertising will generate valuable data that can be used to improve not only the campaign but also the business. Calls, close rate, average revenue per sale, credit card decline rates, customer retention rates ... these are all areas that can be linked back to certain media buys to optimize profitability. With the Full Data approach, the client can see the detailed results data, and therefore has the ability to benefit in many ways from its own radio media spending. With the Black Box approach, this is not possible. The client loses the ability to learn what's working and why. The client can't know which audiences its campaign is working best (and worst) on, because the client doesn't have visibility to station formats, days, dayparts, and other data that can yield important - often vital - insights about the client's customer and campaign. Without this information, the client is often left without guidance as to where to focus efforts to improve radio advertising results should they be falling short.

Freedom to Choose or Change

What if the client wants to engage another radio agency? With a Black Box agency, the client doesn't have the knowledge of its campaign that makes it possible to pick up with another agency where it left off with Black Box. The client's campaign knowledge stays visible only to those inside the Black Box agency, forcing the client to start from scratch if they decide to use another agency. Full Data agencies, in contrast, provide the client with all of the information needed to test with another agency.

Better Access to High-Performing Media

Full Data agencies buy media just before it becomes remnant, which allows them access to media that is a combination of lower cost and higher quality - the sweet spot for direct response radio advertisers. A Black Box agency can only place a client on a station if there is remnant time available - that is, radio airtime that is left over and unsold -- in other words, bottom of the barrel inventory. Nobody else, including the Full Data agency, wanted it.

More Effective Media Schedules

Full Data agencies work with detailed data and have tested different schedules to determine which schedule configurations work better. Buying media according to those station- and product- or service- specific schedules reduces the client's cost per lead and cost per order which increases profits. With the Black Box approach, the ability to buy specific placements in specific days and dayparts is seriously hindered because the Black Box agency clients simply have to take whatever airtime is leftover - in whatever day or daypart it falls, regardless of whether that happens to be a time when the target audience is listening or ripe to pick up the phone and buy.

No Conflicts of Interest

Full Data agencies have one customer - the client. This creates a very close alignment of interest between the Full Data agency's success and the client's success.

Conflicts of interest are inherent in the Black Box radio agency model because agency has two customers -- the client and the radio station. The commitment to the radio station requires the Black Box agency to buy a certain amount of media from each station. They must fulfill the obligation by selling to a client or paying out of its own pocket. As a result, the agency might book a client on underperforming stations just to satisfy the needs of the Black Box agency. The client would never know, because the poor media would be buried in a total media buy that achieves the client's minimum profitability objectives. The result could be that a client's campaign could have been more profitable, not just profitable enough.

There can also be a conflict of interest among Black Box clients. If one Black Box campaign is performing better and is therefore allows Black Box to charge more for the media, the lesser performing campaign might find itself without access to the same opportunity for quantity and quality of media placement.

Media Budgets Customized By Client That Maximize Campaign Profitability

Full Data agencies can take full advantage of radio's ability to target a specific demographic and quality of listener, because they negotiate specific schedules (i.e. number of spots by time of day and day of the week) with individual stations and networks. This greatly increases the efficiency of the media, delivering leads that are more likely to convert to sales, have methods of payment, and remain customers over the long term.

Full Data agencies negotiate each media buy with a specific client/campaign in mind. As a result of this approach, a 100% customized "pool" of media is built for each campaign, thus optimizing profitability. The whole idea of media profitability management is based on the process of continuously refining media buys, weeding out the stations that perhaps once performed well but are fading and replacing them with new high performing stations. This is a process completely enabled by the Full Data agency model, and which is nearly impossible to either do or monitor in the Black Box agency model.

Black Box agencies, in contrast, don't know specifically what product or client they're buying for when they negotiate the annual media contract. As a result, they generally have to buy their media based on 18+ CPM 's, which is a shotgun approach that always includes wasteful media. Plus, remember that Black Box agencies don't get to place their media according to a specific schedule. They only get to choose from unsold slots (generally the least desirable schedule) on that station.

Call Forecasting Maximizes Monetization of Leads

Forecasting calls and orders is imperative to a smooth running direct response campaign. From staffing call centers to managing inventory and procuring enough product to fulfill orders, having accurate and smooth volume is very important. For example, call centers are used in many direct response marketing businesses. The radio ads entice people to call a toll free number as the call to action. If the call center is not properly staffed, many calls will go unanswered and the media spend will be a waste. On the flip side, if the call center is overstaffed with idle agents, the center will lose money.

In the Full Data model, call forecasting is much more effective because the Full Data agency places media according to a specific schedule, not just whatever time is available. This greatly decreases the percentage of wasted calls due to call abandonment. In addition, because the Full Data agency is placing specific media schedules, the client knows their call and order volume will not fluctuate wildly.

Under the Black Box model, call forecasting is difficult because there is no way to know ahead of time when the stations will air the remnant rates. In addition, the Black Box model is very vulnerable to wide call volume fluctuations that create a nightmare scenario for clients. Call volume can suddenly fall in the latter half of each month because stations give bonus airings to their high-paying customers (called "rate card" advertisers) at the end of the month. Also, the sales teams at the stations try to meet their numbers toward to end of the month so some additional remnant inventory goes to rate card advertisers and to Full Data agencies. The Black Box agency as no control over this because they're the last to receive inventory.

Flexibility and Working Capital Management

Full Data agencies require only one week's worth of media one week ahead of time. This enables the client to better manage its cash flow and working capital. Many Black Box agencies require large up-front media commitments, often up to a month's worth of media spending. This is to mitigate their own risk due to their large media commitments. This strategy transfers the agency's risk to the client. The difference can often translate into hundreds of thousands of dollars in the client's working capital.

A Full Data can make adjustments in campaigns with relatively short notice. Let's say it's week one of the four week month and the client's campaign experiences a dip in performance that needs to be diagnosed and remedied. The Black Box agency has committed the next three weeks of the client's media spend, whereas the Full Data agency has the flexibility of selectively booking the following week's media until a solution is found to the campaign performance problem. The Full Data agency's flexibility saves the client a lot of money and time.

Summary and Conclusion

For some radio advertisers, the Black Box approach probably works just fine. As the client, you simply hand over your money for media and as long as you always get a certain amount of revenue or a certain number of orders in return, you're happy. If you're a company that doesn't particularly care about data analysis or the insights your advertising dollars produce, and you have a very profitable campaign that minimizes the need for diligent profitability optimization, the Black Box approach may meet your needs.

But you must also be comfortable with the fact that the Black Box approach concentrates a lot of information and power in the agency's hands and away from the client's hands. An over-concentration of power combined with a misalignment of interests (incentives) can lead to problems. Add-in the known conflicts of interest and there is increased potential for substantial issues.

Fortunately, there is a better radio agency choice for business people who require accountability in their agency and relish the insights and information produced from their media spending.

With the Full Data approach, all of the "catches" are for the agency. This method to obtain remnant media rates is much more time intensive than the Black Box agency approach. Nonetheless, the hard work pays off for the client. Not only does the Full Data agency obtain remnant rates, they also provide additional important benefits.

You do have a choice when it comes to radio advertising agencies. At first it may seem overwhelming to decipher the similarities and differences between the available alternatives. We hope that this paper proves useful in assisting you with your selection process.

What Works in Direct Response Radio Advertising?

Wed, 21 Feb 2007 13:56:53 -0500

It's one of the questions we hear most frequently. It's also one of the most difficult to answer.

One reason it's a difficult question to answer is that the list of what works is so long. Much longer than what doesn't work. One look at the following list of businesses, products, and services categories that have found success with direct response radio advertising shows how true this is.

Financial Services (loans, insurance - think GEICO among others, debt consolidation offerings, different brokerage product offerings and the like), Intellectual Property or informational products (wealth building, parenting, fitness, anxiety/stress reduction, weight loss, and other similar types of products), Nutritional Supplements (solution specific products targeted at any of the various top health concerns), Beauty (skin, hair, teeth, weight), Fitness (promotions for various home fitness products and routines), Seminars (promoting an upcoming seminar in specific markets), Hard Goods (computers, radar detectors, other new or specialized productions), Retail, driving traffic in support of bricks-and-mortar as well as web retail sales. Examples are sites like Priceline.com, eHarmony.com, and Overstock.com. Retailer Home Depot is one of the biggest radio advertisers. Other business categories include auction web sites, discount buying sites, music, computer repair, employment, and Lasic eye surgery.

This is also a difficult question to answer because the question itself is a bit misleading. It carries two underlying assumptions: one, that that radio advertising itself is the center of the business success, and two, that there are hard and fast rules about what will or won't (or can or can't) "work" in radio.

We can see the first assumption more clearly when we realize that the type of advertising employed is a tactic in support of achieving business goals, not a business model itself. Radio advertising, like any advertising medium, can most powerfully impact one part of the business: the customer acquisition. Direct response radio, TV, and print can primarily promise to deliver a new customer at the lowest possible cost, or CPO. It's up to the rest of the business model to cultivate that new customer into one that has as positive a lifetime value as possible.

The second assumption is dispelled when we recognize that the desire for hard and fast rules is misleading when it comes to assessing the potential of direct response radio advertising. The biggest misconception that we hear about radio advertising is the one that goes something like "if a product has to be demonstrated before anyone will be interested, it won't work on radio". Yet this has been disproved many times. Let's take the classic direct response category of skin care.

There was a time in the direct response world when everyone thought that skin care products could only be successfully advertised with DRTV or DR print because potential customers just had to see the before and after results. But that assumption has been proven to be completely incorrect as many skin care companies have made - literally - hundreds of millions of dollars (in profit, not just revenue) resulting from direct response radio advertising.

These skin care marketers have proved the one fundamental axiom of direct response radio advertising: When the radio creative is done expertly, it is possible to do two key things that are required for success in direct response radio: 1) create a vivid impression in people's minds that captures attention, and 2) to convey information that entices the potential customer to take an action that the business has a plan for turning into a long term customer. When a campaign reportedly fails in radio, it's usually not a failing of radio per se, rather a failing of the application of radio advertising to the campaign in question.

For those direct response marketers or business owners who just want to know whether their product or service has a chance of achieving profitable growth with direct response radio, we offer this advice.

First, make sure you have something unique to offer the world - whether it's a unique product, product characteristic, offer, or otherwise. You can be different or innovative in many different aspects of your offering, but if you bring a "me too" offering to the table, you'll get poor results.

Second, have a plan to maximize lifetime value of the customers you'll acquire. The focus can be on the first sale, with upsells and conversions from free offers. Or the focus can be on cultivating additional transactions with each new customer. The best approach is a combination of the two.

Third, test - because as we've demonstrated above, the list of what works in radio advertising isn't set in stone; it's long and growing. You can't know for sure whether you'll be successful until you test. One of the most attractive aspects of direct response radio advertising is that relative to TV and print radio requires so little money and time to learn of the profit potential of your campaign.

Jeff Small is CEO, and Brett Astor is Vice President of Strategic Media, Inc., a Direct Response Radio advertising agency responsible for building a number of the industry's most successful campaigns. They can be reached via the web at www.strategicmediainc.com, or by phone at (866) 488-3456.

The Ten Key Questions in Direct Response Radio Advertising

Mon, 22 Jan 2007 18:12:03 -0500

The 10 Questions Asked By Every Successful Direct Response Radio Advertising Campaign

Introduction

Successful radio advertising campaigns require that certain fundamental pieces of information about the product (or service), customers, and business be clearly understood by everyone involved in the effort. Sales, marketing, customer service and the radio advertising agency should all have the chance to provide input from their perspective, and all of these groups should be operating with the same set of complete information.

Without this foundation of common understanding, the chances of your radio advertising campaign being successful are diminished. Why? Because you slip from a methodical, disciplined approach to building your business profitably with direct response radio advertising to a more haphazard and risky approach that relies on luck. Successful direct response radio advertisers earn their way to great wealth by taking a disciplined approach. The questions we'll outline below are to be answered as part of just such a disciplined approach and they are meant to be addressed during the pre-launch phase of building your radio advertising campaign.

In many respects, building a successful direct response radio advertising campaign requires a mentality akin to that of a researcher. Researchers uncover knowledge about a particular topic. The first step in research is identifying the problem you are trying to solve. In the case of direct response radio advertising, you are trying to solve the following "problem(s)":

• Creative: which advertising appeals will result in the highest number of most qualified leads?
• Media: which target audiences are most responsive to the product's advertising appeals?

Answering these questions will minimize your media CPO, thereby maximizing your radio advertising (and overall business) profitability.

The list of questions that follows is aimed at guiding any potential radio advertiser down the road to solving the above "problems". The answers to these questions are the input into creating and testing a hypothesis (again, thinking like a researcher) about which combination of radio advertising appeals and radio media targeting will result in the most profitable radio advertising campaign.

The 10 Key Questions

Note: we'll use the word "product", however the following thought process is also applied to services, events, and other items that are promoted in direct response radio advertising campaigns.

Product Questions:

1. What benefits does the product provide to its users? What problems does it solve? In what ways does the product make the user's life better? Be sure to identify key claims that can legally be made about the degree of benefits to the product user.

2. How does the product work? It is important to note that this is input information only. One of the biggest mistakes in creating advertising of any type is an over-emphasis on features and not benefits. Discussing how the product works can lead advertisers astray, into the world of the "neat" factor and out of the world of what matters to your target customers - what the product does for them.

3. How is the product different? Be sure to compare the product to alternatives or substitutes, as well as to competing products. Also include information about any patents, trademarks or clinical test results.

4. What offers may be used in the radio advertisement? For example, is there a free trial, free shipping, or a bonus quantity with purchase?

5. What are the distribution channel(s) that will be used for the product? (Web, retail, direct)

6. Are customer testimonials, expert endorsements, or a corporate spokesperson available for use in the radio ad?

Customer Questions:

Answering the following questions requires at least some customer research. It may be primary research (for example, conducting a qualitative focus group or a quantitative survey), or secondary research (reviewing qualitative or quantitative research compiled by others about your product category that you can apply to your specific situation). Don't overlook your current customer base and results from prior tests as a source of valuable customer information, but be aware that this data will not be randomly collected (i.e. to some degree your current customers will be a reflection of the advertising that brought them in). In any case, research will not spell out the exact appeals that will be successful for your specific direct response radio advertising campaign, which is why in-market testing occurs in the next phase.

7. Who is the target consumer segment? Describe them in terms of age, sex, socioeconomic, demographic, geographic, or other relevant dimensions.

8. What are the strongest motivations for this customer segment to buy this type or class of product? What does the customer hope to gain by purchasing, and what loss would the customer avoid by purchasing?

9. What objections or excuses might the customer use to delay or avoid buying the product? What is the answer to each of the objections or excuses?

Business Question:

10. How will you measure success? This a very important question and the one most often unanswered going into the testing phase. Ideally, you will know exactly what media CPO (cost per order) is required for you to achieve break-even profitability. Armed with this information, you'll have a context with which to view the results of advertising tests. Without it, you are in danger of either pulling the plug on a profitable campaign or rolling out an unprofitable campaign.

Conclusion

Once you've answered these questions, you're ready for the next step. It's time to pull together a well-rationed hypothesis about which set of appeals, distilled into a creative approach that ultimately ends up as a radio ad, is likely to work the best. This is a challenging phase because it entails dealing with a large amount of information and a large number of alternatives. Additionally, identifying appeals is only the first step - articulating those appeals is also very important and nuanced. Most often your radio advertising agency will conduct this exercise because they're experienced in dealing with these challenges, but it should be iterative with the client team.

Almost always it turns out that more than one creative approach seems to make strong sense. This is appropriate because you will ultimately test a minimum of two approaches (two different radio ads) since what we are trying to learn is which approach works best. As this is a comparative exercise, it requires comparing two ads. For more information on how to conduct a successful testing phase in building a direct response radio campaign, see our article on that topic. It's located in the Article Library on our web site (www.strategicmediainc.com).

The Fundamentals of Direct Response Radio Advertising

Mon, 11 Dec 2006 19:07:18 -0500

By Jeff Small, CEO, Strategic Media, Inc.

Direct response radio advertising, at its core, works in the same way regardless of what type of business you are in. Whether you own a direct-to-consumer model business, a retail business, a web business, or some combination thereof, direct response radio advertising can help you grow. And grow profitably. The fundamentals of direct response radio, then, must start with a discussion of how radio advertising works within the context of a basic business model. The purpose of this article is to convey the fundamentals of direct response radio advertising that apply across businesses.

First, Two Important Concepts

Throw out all you think you know about advertising, radio advertising, and especially direct response advertising. It's best to begin with a clean slate, a blank whiteboard so-to-speak. There are two important concepts I want to introduce before moving forward.

Concept One: Radio as A Highway From Your Business to Your Potential Customers

Think of radio advertising as a 5,000 lane highway from your business to groups (station audiences) of your potential customers. The many lanes on this highway are the many different radio stations and radio networks that are available for you air your radio advertisement. It is on these "lanes" that you send your message to your customers.

The lanes are clustered in such a way that they reach groups collections of customers who have similar tastes and demographic profiles. Therefore, some of these lanes lead to groups that have a high concentration of people who match your target customer profile. As a result, advertising on those lanes (stations) is more profitable than others with a lower concentration of your target customer profile. These groupings are the radio formats, which are used in radio advertising to enhance the efficiency of, or return on, advertising efforts. For more about radio formats, see our summary at http://www.strategicmediainc.com/radio-advertising.php.

Concept Two: Radio Advertising is a Profit-Driver, Not a Cost Center

At this juncture, the one thing many business people can't seem to put out of their mind is the one of "how much does it cost" to advertise on radio. We've written extensively about this question because it is one of the most common that we get. The problem is that imbedded in this question is the presupposition that radio advertising is a cost. The concept that one needs to fully grasp is that radio advertising is not a cost center. That is, it does not stand alone without any relation to revenue or profit. It is detrimental to think of direct response radio advertising as a cost because that leads to managing as though it's a cost, which means minimizing or eliminating it. Contrast this with managing it like it's an investment, and maximizing the return you realize on it.

Direct response radio advertising - by its very definition - is a profit-driver. If it's not driving a profit, it would not exist - or at the very least it would not be called direct response radio advertising but instead "brand" or "awareness" advertising. Profitability is a fundamental aspect of direct response radio advertising.

On To the Fundamentals

Now that we've cleared our minds and allowed for two basic concepts about how to think about radio advertising, let's move on to the meat of the fundamentals of direct response radio advertising.

The Basic Formula

We'll begin with the basic formula involved in all direct response advertising:

You buy placement in radio media to air your radio ad, which gets your message broadcast to a certain number of people. This results in a cost per person reached with your message. In advertising this is known as CPM, or cost per thousand impressions of your ad.

Some percentage of those people will respond (call, visit your web site, visit your store), giving you a response rate.

Of those who respond (otherwise known as leads), a percentage will be converted into customers (orders), and by that conversion rate generate profit and revenue.

From this formula, you will derive your media "CPO", or "cost per order", which is found by dividing media spend by the number of orders achieved with that spend (media spend in the numerator/number of orders in the denominator). This is the amount it costs you in radio advertising to acquire one new customer, which is why it is also called "cost per acquisition" ("CPA").

The important question at this point is this: Is the lifetime value ("LTV") of each of your customers, on average, greater than this CPO? This fundamental question applies whether your business is a direct response advertising business (which includes radio advertising, print advertising, DRTV, catalog, or internet) or a traditional retailer. Every business pays to acquire a customer, and every business has a certain propensity to retain that customer over a period of time in a relationship consisting of subsequent purchases and therefore profit streams. Regardless of whether your business uses direct response radio to acquire new customers, or it uses one of the other approaches to customer acquisition, your success will be fundamentally based on whether your business model facilitates a strongly positive lifetime value. If it does not, there is little that radio advertising, or any other form of advertising, can do to change this.

If your LTV is not greater that your CPO, your business isn't profitable and you'll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you'll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.

Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let's look at three of the main ways:

1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn a lot from this. Identify widely appealing, complementary items and ensure they are offered as part of the sales process.

2. Increase repeat purchase. You have paid to acquire that customer, now develop a relationship and continue to meet their needs to drive repeat purchase. If they only buy once from you, you don't have a very viable business unless that first purchase is incredibly high margin.

3. Reduce your cost structure. Take advantage of your increased volume to negotiate better product costs, shipping costs, etc.

Improving Cost Per Order
Just as there are a number of ways to increase LTV, there are also many ways to decrease the CPO.

1. Reduce the media cost per person reached. Also known as CPM, this is a standard metric used in advertising. It reflects the cost to reach 1000 people. (remember that CPM stands for "cost per thousand" impressions of your message). This is a constant focus of any good direct response radio agency, and the element in direct response radio advertising that has received the most attention. This is why every dollar of media in direct response radio is remnant or highly discounted airtime. But that's not all that should be considered when looking to reduce CPM. Leveraging database technology and using scientific testing methodology, it is possible to identify the optimum schedule to use in placing the media. Thus optimizing the media schedule can meaningfully reduce CPM.

2. Increase response rate. Again, media scheduling will play a role here. In addition, use of radio formats to effectively target the right customers is vital to optimizing response rate. But perhaps the greatest impact on response rate in direct response radio advertising is the messaging in the radio ad itself. Great direct response radio ads significantly enhance the responsiveness of the media dollars spent. Your radio agency's ability to create radio ads that elicit response from your potential customers is a crucial element in direct response radio advertising success.

3. Increase conversion rates. Increasing the percentage of inquiries that become customers can have an enormous impact on campaign profitability. The factors that will most impact conversion rate are your sales scripting, web copy, product offers, pricing, and your guarantee or return policy. As much as any other variable, these factors need to be tested and continuously refined.

Implications and Conclusions

Now that you understand the fundamentals of direct response radio advertising, let's look at the implications and conclusions that these fundamentals illuminate:

1. The role of database technology and analysis
By now it is clear that optimizing both lifetime value and cost per order maximizes your business profitability. But doing these things also requires capturing and analyzing an enormous quantity of data. To do this in a way that allows for distilling insights requires a robust database specifically tuned for direct response radio, along with well-refined analysis approaches. Fortunately, database technology and robust analysis are a part of the services your radio agency will provide for you.

2. The importance of ongoing testing
Any discussion of the fundamentals of direct response radio advertising (or any type of direct response advertising) would be incomplete without addressing the topic of testing. When you look at the above approaches to maximizing campaign profitability, you see the key metrics that must be impacted. But how do you actually impact them? How do you know whether offer A is better than offer B? or C? How do you know whether copy D drives a better response rate than the control? How do you know whether the sales scripting or the pricing structure could be improved by certain changes? The only way to know these things is to test. As a result, testing is a never-ending element in direct response radio advertising efforts. If you are not testing, you are slowly going out of business.

3. Success in direct response radio advertising is about more than costs
As we've mentioned, one of the biggest questions we get is "how much does it cost to advertise on the radio?". Done correctly, direct response radio advertising is not a cost center, it's a profit center. It's a very efficient way to acquire new customers at a low CPO. To learn more on the topic of radio advertising costs and how to budget for radio advertising, see our article at http://www.strategicmediainc.com/radio-advertising-articles/.

4. Nearly any business can grow profitably with direct response radio advertising
It is difficult for me to think of businesses that cannot benefit from the kind of radio advertising that we are involved in. Direct response radio advertising is different from other forms of advertising because it is accountable for results, and the only way it can be accountable is to leverage a set of technological and human systems and processes to accurately capture, analyze and interpret results of the advertising. Once you have that in place, you have established a continuous improvement loop. Therefore, provided you have a profitable business model and a good product that delivers on a unique and relevant promise, your business can profitably acquire new customers with direct response radio advertising. That's the ultimate promise of direct response radio: the ability to grow your business profitably at the rate you want to grow it. Once you establish profitability, you need only increase your media spend to drive higher revenues and profits.

The Fundamentals in Perspective

Direct response radio advertising does not stand alone in creating a business. It works in combination with your business model to acquire new customers at a low, and therefore profitable, CPO. What makes direct response radio advertising so attractive is its efficiency and flexibility, which results in comparatively low CPO's relative to other mediums.

This article explains the fundamental elements involved in how nearly any business can use direct response radio advertising to acquire new customers and grow both profitably and rapidly. Once you understand the fundamentals of radio advertising, you're ready to embark on the process of building a direct response radio advertising campaign. That process involves developing a radio advertising strategy, creating radio ads that drive response, and implementing a radio media plan that delivers your message to the right people for the right cost.

By Jeff Small, CEO of Strategic Media, Inc., a leading direct response radio advertising agency. Jeff Small has over a decade of experience building profitable direct response radio advertising campaigns. Learn more about profitable direct response radio advertising strategies at www.strategicmediainc.com or by calling (207) 871-9958.

Navigating the Radio Advertising Landscape for Maximum Performance

Fri, 06 Oct 2006 08:16:45 -0500

Understand Fourth Quarter Hazards to Maximize Profit and Strategic Advantage

Like all mediums, radio has various structural characteristics that make certain times of the year more or less favorable for advertising performance. Knowledge about these aspects of radio advertising is of tremendous value in maximizing campaign profitability and achieving long term success.

Don't Miss Q1
The first quarter is nearly always the best quarter of the year for radio advertising performance, mostly because of factors that lead to an abundance of inventory supply. That oversupply forces radio outlets to be aggressive in pricing their inventory. As a result of this dynamic, Q1 is always an important time of the year. You want to "get while the getting is good", so to speak, and Q1 is certainly that time. Strategically speaking, Q1 is also a time when campaigns can either grab a foothold or be displaced by a competitor who has come well-prepared to do battle.

So how do you make the most of the favorable conditions in Q1? The most important thing is to make sure that you've spent Q4 testing and refining both media and creative variables so you can be very aggressive when the first week of the new calendar year arrives. Most importantly, you want to avoid going into Q1 with "tired" creative.

Challenges in Q4
However, while Q1 is one of the best times of the year, Q4 is one of the most challenging. In Q4, a number of factors combine to increase demand for radio advertising, which reduces the quantity of inventory available and sets a higher bar for remnant rates. October marks the start of the political season, when political groups advertise heavily leading up to the mid-term elections. In November, we experience the fall TV sweeps when the TV networks and local stations look to radio advertising to draw viewers in an effort fatten their ratings. Then Thanksgiving marks the beginning of the holiday season, a period that extends for the most part through the New Year's holiday. During the holiday season, retailers are advertising at their highest levels to capture the potential of their most important time of year.

All of these factors necessitate a very diligent campaign profitability approach and careful navigation of the quarter on a weekly basis. As we've said, Q4 is an important time for testing to ensure you're prepared to make the most of Q1. That means you can't simply sit on the sidelines because the advertising landscape is peppered by politicals, TV sweeps, and the holidays. You still have to test and prepare for Q1 if you want to maximize success.

Tips For Success
The key to testing during Q4 is to understand how the various Q4 challenges impact performance results. You can do this by looking at historical data for your category and/or product. This information is something your agency should be able to provide for you. Once the impact is understood, Q4 testing results can be "calibrated" or normalized so they can be compared to historical testing from other times of the year to identify the relative performance of the variables (creative or media) that you are testing.

Intelligent navigation of the challenges in Q4 will allow you to conduct the testing that is necessary for taking full advantage of the favorable conditions in Q1. While conducting a campaign in Q4 is not a simple task, the rewards for those who approach with discipline and determination are large.

By Jeff Small, CEO, and Brett Astor, Vice President of Strategic Media, Inc. Together they have over twenty years of experience in direct response advertising. Learn more about profitable direct response radio advertising strategies at www.strategicmediainc.com or by calling (207) 871-9958.

Radio Advertising Costs - How Much Should I Budget?

Mon, 25 Sep 2006 11:35:33 -0500

Perhaps the most common set of questions we frequently hear pertain to radio advertising costs. How much should I budget for testing direct response radio advertising? And, with that budget amount, how many radio stations would air my radio ad? How many radio spots would air?

These are understandable questions, but we feel there's a better way to think about costs and direct response radio advertising. The purpose of this article is to provide the not just the answer to these questions but also the background information necessary to understand how to best think about direct response radio advertising costs.

In general, it's helpful to think about radio advertising costs by breaking it out into two parts.

1. Advertising Strategy and Creative Development
The first part is the advertising strategy and creative development of your radio ads. These get lumped together because to charge off creating a radio ad before conducting a basic strategy exercise is a big mistake and a total waste of time and money. That's the fire-aim-ready approach.

Thanks to technological advances, the costs of radio ad development have come down dramatically over the last decade. A good ballpark range for a single-voice radio ad is $850-$900. This includes creative strategy, copywriting and production. For additional voices, figure in another $150-$200. It's not necessary to ever pay more than $1,000 for a radio ad unless you have an unusually complex production requirement, like many different voices or special studio requirements - or, if a lot of copy changes are made and significant re-voicing and re-editing is required.

Budget the cost to create two spots to test. The one that performs the best becomes the control ad. At this point refine both the ad and the media elements to maximize the performance of the ad. If neither of the first two ads performs above your break-even level, more tests of copy and the presentation of different appeals are needed to produce that outcome.

You want the proper incentives in place to align your interests with your agency's interests so you get the best creative strategy, the best copywriting, and the right voices and production. This is not the place to pinch pennies. If you have budget constraints, discuss them with your agency because if the strategy and creative process fails, the rest of the campaign will fail.

2. Media Planning & Media Buying
The second component of radio costs is the media budget. The media budget has two phases. Phase one is the weekly testing budget spent early in the campaign which focuses in on the strategy, creative and media variables that result in maximum profitability. When we do a test, we establish a weekly test budget over a four week period. Typically, the budget is around $6,000 per week for the first week, and includes testing of two ads, each with half of the total budget. The second week is typically a lower spend. Here we take time to thoroughly analyze the results from week one to identify the variables we'll test next. In weeks three and four, we continue testing with a budget in the $3,000 to $5,000 range. In total, you should plan to spend at $20,000 to conduct initial testing that will provide you with guidance on the fundamental aspects of success in direct response radio: what works, with whom, and where.

This testing period isn't all just cost. The media spend during the testing period will generate calls and revenues.

The second phase for the media budget is the roll out, when you exceed your break even return on advertising. When you're operating at greater than break even profitability, you'll want your budget to grow because the more you spend on media, the greater your profit. That's the velocity effect of direct response radio advertising.

Of course, there are logistical issues (inventory, manufacturing, fulfillment, etc.) that need to be ready for the increased volume. In the roll out phase, grow your budget at a rate that takes into account:

a) your business' readiness for growth
b) the building of a customized pool of profitable media for your campaign

Number of Stations & Radio Ad Frequency
Now that you have a basic understanding of how to think about radio advertising costs, let's address the other two common sub-questions we get about radio advertising costs. "With my budget, how many radio stations will my ad run?" and "How many times will my spot air for that budget?"

The answer to both of these questions is the same: It depends.

Generally, between six and ten radio stations will air the ads in the initial test budget. But, specifics get determined based on:

a) client preferences for speed of learning and client business volume constraints
b) the testing design and media plan - which are both determined in reviewing the product, target customers, and other information provided to us in a creative brief document

Keep in mind that the cost of being on a station is a function of that station's audience size. Stations with larger audiences will cost more than stations with smaller audiences. We will test the number of stations we feel is necessary to answer the questions that yield the most information about what will work and what won't for your campaign.

As far as the number of airings, direct response radio advertising has a range of optimum number of airings needed to deliver the highest return on advertising dollar. The key is to start within that optimum range, and then customize it to each campaign, format, and station using testing methodology. We've tested a large number of variables to determine the optimum schedule range - in terms of spot frequency as well as the distribution of spots across days of the week and dayparts. A good agency will have conducted similar data-driven research, and that's part of what you're buying when you hire an agency -- their ability to arrive at the optimum schedule for you.

The Bottom Line
With all of this as background information, how much does it cost to advertise on radio? You should budget around $1,750 for creative development plus $3,000 to $6,000 per week over a 3-4 week test period for the initial media test. Commit to a $20,000 media test. If the test media delivers revenues at or above your break-even profitability level, then you've gained significant learning at essentially zero cost. If the test media delivers revenues at just 75% of your break even profitability level, then for less than $6,000 you still gain significant learning about how to leverage direct response radio as a profitable venture for your business - gaining invaluable insights about how to build a direct response radio advertising campaign that takes full advantage of the opportunity.

Questions or comments? Please email Brett Astor at brett@strategicmediainc.com.

The 5 Biggest Mistakes In Direct Response Radio Advertising

Wed, 30 Aug 2006 16:42:28 -0500

Avoid these and your chances of a blockbuster hit rise exponentially!

By Jeff Small, CEO, and Brett Astor, Vice President of Strategic Media, Inc., a direct response radio advertising agency specializing in building large radio advertising campaigns that deliver profitable new customers.

How do we know what the 5 Biggest Mistakes are?
During our tenure in direct response radio advertising, we have been in a unique position - one that has allowed us to see "under the hood" of hundreds of direct response advertising campaigns across every type of business service or product category imaginable. Sometimes a new client will come to us after a failed attempt elsewhere, or simply to get a second opinion on whether their campaign was or is being run optimally. As a result of this extensive experience, we've seen not only which decisions make direct response advertising campaigns successful, but also which decisions sentence direct response campaigns to a certain underachievement of their potential.

The most difficult part of writing about the "5 Biggest Mistakes" in direct response radio is narrowing down the list. It would be easier to write about the "Top 20 Mistakes". Nonetheless, this paper presents the blockbuster mistakes that are some combination of a) way too commonly made, b) sure to doom a direct response radio advertising campaign, and c) relatively easily avoidable. In other words: get these things right, and you'll live to face the lesser challenges with greater strength and greater knowledge.

Biggest Direct Response Radio Mistake #1: Faulty or Non-Existent Testing Methodology
There are many ways for a testing methodology to fall short, which is why this is #1 on the list. Testing the wrong variables, testing in the wrong order, testing too many variables, testing too few variables. The list is long. The point to remember is that success requires a scientific approach. That means disciplined and well thought out - a "ready-aim-fire" approach verses "fire-fire-fire". Any good direct response agency has staff that understands the process for conducting scientific research, particularly research methods, statistics, and database management. The best direct response agencies have applied this knowledge to many campaigns over time and as a result have developed a proven testing methodology that yields the quickest and most reliable results, along with the supporting technological infrastructure that will get you from testing to profitability with the least amount of up-front time and money.

If you don't follow a well-defined, proven testing methodology, you are throwing your ad dollars away. Period. You simply will not know why - or even whether one ad works better than another or whether there are other approaches that could work better. You will just be out of money before you can determine whether your campaign has legs.

Biggest Direct Response Radio Mistake #2: Inadequate data capture and analysis
The power of direct response radio stems in part from the ability to collect and analyze results from the bounty of data that can be collected - and from that process to distill insights that drive further refinement of the campaign. As all experienced marketers know, it is the insights that lead you to grand successes. With the right tools, technology, and processes, it is possible to conduct station-by station analysis, look at performance by market, format, day of the week, daypart, and a whole host of other variables to understand what's working and what's not for a particular campaign. This is vital to the process of optimizing campaign profitability.

Yet many avoid this process, shield it from their clients, or conduct "analysis lite" on the data. The problem is that they're missing the key insights and as a result perfectly viable campaigns are being deemed failures. This is one of the situations when people declare "radio just doesn't work", and proceed to run away as fast as possible. Avoid this mistake by making sure your media buys are backed by thorough, detailed analysis, not a cookie-cutter approach cloaked in formulaic assumptions.

Biggest Direct Response Radio Mistake #3: Flying blind
It still astounds us how many people, smart businesspeople, ask us to move forward with advertising before they know the basic key metrics associated with their business. We refer to this as flying blind. It is not unlike deciding to fly a plane surrounded by instruments that are providing you data you can't use to make important decisions about flying the plane. Should you turn left, turn right, speed up, climb, or descend? Scary thought? It should be, because it spells sure death absent a tremendous amount of luck. Every direct marketing business using direct response advertising has a similar set of key profitability metrics and each one has a hurdle or break-even level that must be met in order to achieve some level of profitability. The big mistake is spending a dime before these metrics have been identified. Why? Because when you get the test results back, you won't know what to make of the data. You won't have a context within which to assess whether what you are looking at is good, amazing or awful. Bottom line: model the campaign, identify the key metrics, and know what those numbers have to be. And by all means, make sure your agency knows, too, so they can maximize the profitability of your media campaign.

Biggest Direct Response Radio Mistake #4: Having the wrong people on the bus
Each direct response advertising campaign is comprised of similar vendors. You have some combination of a manufacturer, a creative and media buying agency, a sales, a customer service and a fulfillment center. You can poll any one of these groups of vendors and there is one thing they would all agree on: no one of them alone can make the campaign a success. This is a classic team situation, where if one member drops the ball, the whole team fails. As the client, perhaps the single biggest impact you'll have on the success of the campaign is how you decide to choose the members of your team - who you put "on the bus". Sales centers will always tell you they will meet the needs you've expressed (guess what, they're good at sales!). Big agencies will always try to convince you that only they can get the lowest rates and only they can grow your campaign really big (as if suddenly the laws of market economics don't apply). Will you choose the ones who say they've been around since the beginning of time and believe they know all there is to know, or the ones who are experienced but also unassuming enough to be constantly learning, improving, and giving birth to new ideas? Will you choose vendors who play nice with the other team members, or those who throw the others under the bus the first sign of trouble? If you don't choose wisely, your campaign could fail for reasons you won't even know about.

Biggest Direct Response Radio Mistake #5: A corrupted creative process
The biggest mistake in the creative development process for developing direct response ads is assuming something is known and not subjecting it to testing. There are many ways for this to happen, but one that is both too common and easily avoidable. It's making an ad that makes you feel proud, one you'll feed good about sending to your friends (even though they aren't the target), the underlying, unspoken assumption being that if the ad makes you feel proud, then it will sell your product, too. The problem is that very rarely is an ad designed with this orientation the same kind of ad that will produce CPL's (cost per lead) and CPO's (cost per order) that result in a profitable direct response advertising campaign. To avoid this mistake, you've got to very clearly communicate one thing to your direct response agency: how do you as the client define success? Agencies, after all, want to please the client. If you ask for an ad that will make you happy (even though you aren't the target and "happy" doesn't mean "buy"), and this is what you communicate to the agency, then you'll get exactly that. If you ask for an ad that sounds and/or looks like all other ads, you'll get that. You'll get an ad that takes no risks, won't stand out, won't offend anyone, and one that isn't created according to the direct response wisdom available. And the ad will bomb. Every time. A professional direct response ad creator is someone who learned a tremendous amount about what works and what doesn't on millions of other people's dimes. We've built a large database of direct response wisdom that can save you a lot of time and money. If you define success as an ad that reaches a certain CPO, and trust in the creative process, you're much more likely to get successful results.

Final Words
Now that you are armed with knowledge of the top 5 Biggest Mistakes in Direct Response Radio, you are well on your way to boosting your chances of building a successful customer acquisition campaign using direct response radio advertising. To be sure, there are other mistakes to avoid. Knowing about these mistakes is half the battle. Knowing how to avoid them is the other half. How do you produce and apply insights? How do you approach testing methodically? How do you know which vendors to choose? How do you develop breakthrough creative? How do you get the remnant rates on the best performing time slots?

Radio can be an enormously profitable customer acquisition channel for many businesses. We build and manage campaigns that range in size from $1 million to over $20 million in annual advertising spending, generating well over twice that amount in revenues. If you'd like to learn more about how to use direct response radio to generate immediate results and profitable new customers, contact us at 1-866-488-3456 or by email at the5biggest@strategicmediainc.com.

You can also learn more about us at www.strategicmediainc.com.

The Eight Ways Direct Response Radio Enhances DRTV Advertising Campaigns

Tue, 15 Aug 2006 13:13:22 -0500

Considering or currently running a DRTV advertising campaign? Here's why you should read this paper.

Direct response television (DRTV) advertising can be very effective at driving profitable sales. However the high cost of creating and modifying the ads and the lead times associated with DRTV leave room for another more nimble medium to serve a significant purpose. Radio fills that void extremely well, and done right it can significantly enhance the profitability of any DRTV effort.

DRTV is the bread and butter of any huge success. Why? Because you can make the most money the fastest via TV. It's also the most expensive and risky channel - so one has to consider the risk/reward tradeoff. As you'll learn, radio plays the role of "risk minimizer" - that's why including radio in your marketing efforts is such a smart business move.

We routinely work with DRTV agencies to craft a strategy that allows radio to provide the most strategic value to a DRTV campaign. Below you'll find out why the most successful, most profitable DRTV campaigns also include radio advertising.

The State of Direct Response Radio Industry: It's Data or Die

Tue, 28 Feb 2006 20:28:02 -0500

By Jeff Small, CEO, and Brett Astor, Vice President of Strategic Media, Inc.
This is a reprint of an article that appeared in Response Magazine in February 2006

In the early days of direct response radio advertising, much like with DRTV, it seemed you could put nearly any ad on the air with some level of media buying acumen, and it was profitable.

As with any profitable industry, however, competition increases as others attempt to get in on the action, forcing market players to innovate in ways that give them an advantage.

A number of factors in today's direct response marketplace are driving increased competition for remnant time on the best media outlets. The fragmentation of TV audiences, the targeting ability of radio, and the demand for advertising accountability are steering more advertisers toward direct response radio. Others are learning the advantages of DR radio for driving web traffic and for supporting retail sales.

So the key question is: What kind of innovations in the coming decade will provide the most sustainable competitive advantage to DR radio marketers? New ideas for copy creative, fresh twists on offers, and new back-end profit centers have sustained DR radio marketers over the last decade. However, the ability of these moves to produce a dramatic or sustainable lift in profitability is becoming increasingly limited.

There is one arena that is both relatively untapped and capable of providing a meaningful advantage: Data. Over the next decade, the most successful marketers will conduct more elaborate testing of a greater number of variables and develop more sophisticated analysis of the data that is produced. We will see greater customization of media schedules and creative elements that together drive leads that are more likely to convert, whose credit cards will clear, and who tend to stay in continuity programs longest.

More testing, more data, more sophisticated analysis. This is the future of DR radio because those who leverage the systems, processes and skill sets required to capture, analyze, interpret and apply data-driven insights will get the maximum profit per advertising dollar.

That increased profitability will allow the data savvy to pay slightly more than competitors to be on each station while remaining as, or more, profitable. As a result, they'll win the most attractive conduits (radio stations) to new customers while preventing competitors from gaining a foothold. At that point, it's "Game Over" for the data averse. That's why in DR radio, it's "data or die", and the winners will be the ones finding and applying the insights that live within the data their campaign produces.