Why Clients Overlook Direct Response Advertising

When most people think about advertising, they think about TV commercials.

They’re the most obvious type of ad. They have the highest production values. The ads are often entertaining (even if they don’t improve sales). And they’re the easiest format to talk about with other people.

Direct response ads, on the other hand, tend to be made fun of. They’re the goofy infomercials on TV, the ads that show up next to your search results, or remnant ads that make crazy claims about magic berries or collectable coins.

They’re also written into things that are part of the fabric of everyday life that you might not even think about, but are critical for many blue chip brands. Coupons, special promotions, unique phone numbers, catalogs, loyalty programs, newsletters, and other methods are used to get customers together in a more measurable way.

The dichotomy between ‘brand’ and ‘direct response’ advertising is generally over-stated. The go-to man that most experienced advertising people choose is David Ogilvy to explain how to bridge the gap:

“We Sell Or Else”

Creativity is one of the most-abused words in advertising.

What clients need to know is that the end of advertising is not to be creative. It’s not to make funny ads. It’s to make sales. Every other proxy metric is not relevant relative to sales. Brand awareness doesn’t matter if you’ve made everyone both know about your brand and hate it.

When creativity is employed in advertising, it only makes sense if it leads to more cash for your business.

The difference between direct marketing and general marketing is that direct marketing has a direct connection to the selling process. It’s always possible to directly attribute sales to that particular ad, which makes it possible to do more accurate testing.

The direct response ad acts like an automatic salesperson. It either closes the deal or it doesn’t. If a direct response ad doesn’t out-earn its costs, it gets fired in the same way that you’d fire an under-performing sales rep.

Part of what Ogilvy argued for was to treat even general ads as if they were direct response ads. You can often tell the difference between a well-made ad and a bad one by whether or not the ad actually asks the viewer to do something at the end of it.

The one and only thing that makes advertising different from other kinds of media is that it’s designed to drive action. Any jerk can make up funny slogans that don’t actually get someone to do something. What you’re paying for is to measurably change the behavior of your target customers. Not to feel like a clever client for commissioning a piece of media. The media is just a means to the end of making more sales.

In industry jargon, this is the ‘call to action.’ If there is no call to action, the only way to measure the impact of the ad itself is to conduct awareness surveys and other metrics which are imperfect in terms of being able to establish impact on sales.

Big Corporations Aren’t Advertising Like You Think They Do

Marketers often cite Proctor & Gamble as the gold standard for product development and product marketing. What you don’t see when P&G wins awards for creative TV commercials is that it’s all connected into a more sophisticated back-end with an enormous direct response element. They test their TV commercials against internet components, print coupons, and store sales. Their ad agencies are not just coming up with big, creative ideas — those ideas are being held accountable using a mesh of direct response methods that collect a ton of data.

The boring coupons are there to back up and test different product lines, calibrate pricing, test packaging, and gather demographic information to help other aspects of their marketing.

Where small businesses tend to go wrong in emulating the creative ideas that they see on TV and hear on the radio is in going for the big idea without that back-end of data collection to support it.

What this usually results in is thousands or tens of thousands of dollars spent on design, logos, and other methods without any sort of accountability built into the system. On the other hand, there are some advertisers that ‘get it,’ using call tracking, coupons, and other methods to hold their general advertising accountable to their bottom lines.

Establish Direct Response Campaigns First

So, the trouble is not necessarily that small businesses tend to try to emulate the big guys and fail: it’s that they misunderstand what the big companies are really doing with their budgets.

It’s also not entirely accurate for direct response partisans to slag on Super Bowl commercials for being expensive and difficult to measure. It’s an enormous waste of money if it’s not backed by the before-mentioned mesh of direct response efforts that can help the company measure the impact of its other spending.

By establishing direct response campaigns first, you can discover what kind of language, imagery, and selling points resonates with your customers. One of the first questions I ask all my clients is what kind of language that they use to close sales, and what language customers use when discussing the product. When you have established direct response ads that make sales, you can transplant those words and images to general advertising, and those general ads (like TV, radio, display, and print) will be more likely to improve your bottom line.

Are Social Media Cynics Correct?

The Ad Contrarian thinks that most of the hype around social media is false.

Is he right?

To recap his arguments:

  • Most people are not interested in having conversations about brands.
  • Those conversations are not meaningful drivers of sales.
  • Spending money on big social media initiatives is likely to backfire.

I broadly agree with his thesis here:

You can see this most clearly on Facebook. Facebook calls itself a social medium, but its advertising model is good old-fashioned paid advertising plastered all over the page. Compare the number of paid ads you see on your Facebook page with the number of “conversations about brands.”

YouTube calls itself a social medium but it sticks pre-roll (mostly recycled TV spots) everywhere it can.

The reason is clear: marketers are finding that they can get more value out of these websites by treating them as avenues for advertising, not conversations.

People have cared more about commerce privacy than many people have anticipated. People don’t want to have all their purchases shared. They also would rather talk about their friends than about brands, especially when those brands are day-to-day consumer products with established brand awareness like Pepsi and Budweiser.

Facebook’s dramatic curtailment of Pages, essentially turning it into an ad product, is an admission that users are not biting with respect to the great-social-media-revolution.

While you might be able to bribe people into liking pages or commenting on things, what tends to perform better is traditional advertising translated to a digital format.

Just because your magazine-style ad is on Instagram does not make it especially ‘social’ or different from a magazine ad, even if it has a calculated lo-fi look to it. Just because people are using a social media website’s ‘comment’ function on your ad does not make it terribly different from a real life verbal comment, although the former might be able to travel a little farther than the latter.

The sales pitch that you could ‘reach customers for free’ on social media increasingly rings hollow, as every platform curtails unpaid access to their services for businesses, and demands a cut through new paid advertising channels.

Social Media is Still Media

Where I think this can be misleading is in discounting what I call intent-based social media. ‘Intent’ is the key word in search marketing, and it’s really a key word in social marketing as well. You just have to ask yourself if the group of people that you’re marketing to have expressed an interest in your product category.

If the answer is ‘yes,’ then you should target them. If the answer is ‘no’ or ‘I don’t know,’ then you should avoid going after them unless you’re a major brand advertiser.

There are dedicated communities all around the internet that just discuss products. Going to these communities which have advertised their interest to evaluate products still works.

There are legitimate enthusiasts who do actually want to talk about your brand extensively. It’s just that your product can’t be a commodity, because commodity products are boring — there just isn’t much to discuss about them. Complicated products with high price points for their category are fun for people to talk about. Simple, cheap products are boring, and bad topics for discussion.

While these communities of enthusiasts are enabled by technology, they’re not caused by technology. Niche magazines and newsletters have existed for a long time. It’s now easier to find these groups than ever.

Amazon.com is built around user reviews of products, which includes verified purchaser badges to discourage fake reviews.

What these groups do is less to drive sales of your brand directly, but to act as evaluators for your marketing. If there is any discrepancy between what you promise and what you deliver, enthusiasts will tell their friends about the disconnect. They’re gatekeepers, in the same way that professional reviewers were (and still are in some markets) gatekeepers. If your marketing and advertising matches with the product, they will let you pass through to the larger market. If there’s a mismatch, they will run interference on you and drive up your costs, perhaps higher than the product is able to bear.

If they like your product, the customer will drive down your sales costs. If enough people don’t like it, they will drive them up.

This is the same as it’s always been, but technology makes it easier to survey and read customer opinion without going through the additional hassle of hiring specialized researchers.

A Contrarian Take On Print Advertising

Newscorp CEO Robert Thomson provoked some scoffs among the technology elite today by proclaiming that print advertising will begin to command higher premiums again, amidst skepticism about digital advertising.

The article buttresses this point by taking some pot shots at Buzzfeed for low content quality, and pointing out that the assessment has been shared by WPP, which also expressed optimism about print.

The chatter about this on the web is essentially taking Thomson out of context. He was also speaking about the value of premium digital properties to advertisers, of which the Wall Street Journal in particular owns one of the most successful properties on the web.

It should be pointed out that not all print advertising is quality advertising. Free newspapers tend to have terrible ads put down on low quality paper. They have to be low quality, because the only ads that can succeed in a free paper have some kind of direct response component to them, and the majority of local advertisers don’t know how to get the most out of direct response advertising. Because it’s free, advertisers can’t get accurate circulation numbers from free publications.

A similar dynamic is at play with free websites.

The key difference is really about premium content as compared to free content. When the content is paid, advertisers know the circulation numbers accurately, they know the demographics of the subscriber base accurately, and they don’t have to rely on sophisticated audience modeling to figure out who sees their ads.

This is another reason why cable TV still commands high ad rates: those subscriber numbers are accurate, and for better or worse, the viewers trust the stations on which the ads appear to provide a consistent level of content quality.

The web is still a young medium. Hypertext, the language of the web, was developed to make the lives of academics easier: it was not created to be a media platform. Google itself was built on the basic idea behind the web, which is that the link is a metaphor for the academic citation, and that a broadly-cited article by prestigious authors and publications is probably more relevant to researchers.

This is partly why people are moving towards consuming more news using apps, rather than through websites directly. The web was built to make citations simpler. It was not built to create a magical media consumption experience. Although the web’s being used for many more things than it was ever planned to, its essential structure was not built with the needs of advertisers in mind.

Newscorp and companies like it know much more about the business of premium media  than almost anyone else.

Arguments about print versus digital and TV/radio versus digital tend to be more tribal than based on the fundamentals of what the publications are, how they reach people, and how it impacts the functioning of the advertising.

Advertisers have to think harder about analyzing different mediums and different technologies to reach customers. The real conflict should not be about print versus digital, but premium versus free, and applications versus the web.

In general, ads against applications tend to be more reliable than ads placed on the open web. The most successful digital advertising platforms are ads against web applications. Google Search is a web app. Youtube is an app. Facebook is an app.

The advertising with the most mixed track record is web display advertising placed on web sites that charge nothing to users. Enormous amounts of energy has gone into trying to get digital display advertising more worthwhile, and there have been some successes — but the overall attitude among publishers has been one of disappointment.

A lot of work still needs to be done to justify higher ad rates for online display ads. Newscorp and WPP are just recognizing that fact.