The "Oh's," the "Aughts," the "Naughts," the "Double O's" - seems no one is quite sure what to call or how to characterize the decade recently retired. Globalization, war on terrorism, everything Apple, reality TV, emerging BRIC economies, web 2.0, global warming. Is there a tidy zeitgeist to be found? Some suggest it was the Age of Turbulence end-capped by 2 major recessions: '01 and '08-'09.
The DRTV media rollercoaster surely blessed riders with its share of thrills and chills over the last 10 years, with no dip or rise untouched. Where rising rates were once the only predictable variable in the industry, everything from new cable channels to an influx of brand advertisers to changes in buying methodologies impacted the way DRTV media buyers do their jobs, producers create commercials and marketers generate profits.
Rewind 10 years and the scene was quite different. The country's economy, fueled by "irrational exuberance," was booming. Taebo and Popeil's Showtime Rotisserie were completing record breaking DRTV campaigns. Consumers had discretionary income - and weren't afraid to spend it. And while the Internet had already established itself as a profitable partner in a marketer's television campaign, it would be years before words like "online video" and "YouTube" would roll off their tongues.
Sea Changes
Much changed during the "Oh-Oh's." DRTV outlets exploded. More than doubling, cable networks running short and long form DRTV hit four score or more. Broadcast outlets proliferated daily, as stations flipped the switch on their digital D2 and D3 sub channels, with little else but DRTV media to sell. Direct TV, Dish TV, ATT's Uverse and Verizon's FiOS TV launched multiple 24/7 wall-to-wall DRTV channels. Online video went main stream with 8 billion videos uploaded to the Web every month. DRTV driven internet orders pushed beyond the 50% mark as consumers will make over 0 billion in 2010 epurchases. Soft offers advanced; hard offers retreated. Media buying companies ran riot, mushrooming from half a dozen major players to over 25 shops. And DRTV media became the "cash cow" for many stations and cable networks - dependable revenue, through bull and bear.
Most dramatic, though, has been the drop in media rates across broadcast and cable outlets, as much as 40% from pre-recession levels - a dramatic decrease not seen in the DRTV industry for over 2 decades.
Storm Clouds
Yet not is all Shire-like merry and mirth in DRTV land. DRTV media buying was never easy; now it's laboriously complex. The proliferation of DRTV media outlets, agencies and brokers has brought intense competition, fragmentation and impersonalized dealings to the marketplace. Multiple media players drive artificial rate increases, advancing prices rapidly toward pre-recession levels. Inconsistent results require weekly schedule changes and renegotiating. DVRs cannibalize late night viewers. One-step offers are virtually extinct in short form. Inexperienced buyers and reps destabilize markets. Broadband internet's 70% penetration steals away valuable TV eyeballs as consumers spend 2+ hours per day online. Agency media commissions continue to drop to agency life-threatening sub-10% averages. Indubitable DRTV seasonality has crumbled.
And response for standard DRTV impulse products (fitness, beauty, business opp, household appliances) is frighteningly fickle. Potential buyers hesitate to order in a dicey economy, especially high-ticket items. "People are spending less money, and don't necessarily have to buy what's being presented on TV," says David Chaladoff, president of David Chaladoff Media, Inc. "If it's not food or toilet paper, they don't need it and they won't buy it."
The Devil to Pay
In this destabilized media world, media buying best practices are changing. A decade ago, seasoned DRTV media buyers from the six dominant DRTV agencies had long-standing personal relationships with network/station sales reps who granted their preferred buyers a heads-up on the best avails, at the best rates. That 20th century relationship-based buying practice benefitted marketers, who knew that their short-form spot or infomercial running at a specified price and in a certain daypart would generate a consistent number of sales.
But the cherished buyer/salesperson personal relationship has dissolved - gone the way of Bennifer, Spederline and Jimeny. Due to recession and industry consolidation, fewer broadcast stations have staff devoted to selling time, instead moving this responsibility to rep agencies who now carry 50-60 stations instead of a dozen. Reps are jammed, so forget about getting them on the phone for a half hour of bonding. Emails only, please. One industry veteran lamented, "Ten years ago, I received many more phone calls with fire sale opportunities. Now, I can't even get a rep to pick up the phone. Everybody is so busy that email has trumped personal relationships. That's what I miss the most."
And where half or more of all buys were transacted directly a decade ago, now buyers may be speaking to a station directly only 25% of the time. In their place are blackberry wielding station reps. One media buyer observed, "Some are great at customer service while others make me feel like just a number. When it comes to rates with those reps, the highest bid wins; less work for them."
Three Sheets to the Wind
DRTV "seasonality," once the buyer's mainstay and friend, has become as erratic as a drunken sailor. Today, media buyers feel they're hanging on for dear life as the seasons roll by with little predictability of response. Traditional seasonality meant a great 1st quarter; April was soft; bit of a rebound in May and June; growing response in 3rd quarter; September would fall off; then a horrific "Red October," and a strong November/first half of December. For the past few years, that's all changed: January is no longer "black January." Because it's booked up front at the highest rates, reflecting hoped for dynamite response, buyers have been paying too much and getting clobbered by playoff football. February is the "new January" because buyers jump in and hammer the rates down from January heights. Then March can be full of landmines. Beautiful weather this past mid-March, after a hard winter, sent everyone outside and response tanked.
In fact, all year long DRTV results are capricious. Buying strategies need revamping monthly or even weekly. Today's buyer has to be nimble, more watchful, even fearful, on the phone weekly renegotiating. The days are long gone when you could book a strip, throw in 2 titles and be done for the quarter. Deterioration and volatility are the enemy; it's no longer a given when a time slot pays out the first couple of spins that results will hold; results might go up, or nose-dive on the next outing. Orders are inconsistent week to week. Buyers and sellers are having to tier the rates - negotiating down or up based on the week and month: pay 0 in October then 0 in November and 1st two weeks of December, then drop back for the last 2 weeks before Christmas.
Buyers are using every strategy in the book to control time and keep their clients on air: purchasing blocks of media upfront at overly high rates to control time, then going back in for rate reductions after the first couple of weeks of miserable results, sacrificing some losses to secure 13 weeks of time; paying cash plus a revenue share per unit sold after target sales are achieved; buying packages with "no charge" spins built in; scoring bonus runs on stations' D2 and D3 affiliates; even persuading local TV news personalities to promo an infomercial that runs immediately after a morning chat show.
Of course, media sellers are struggling too, with station revs down over 30% in 2009. Their nightmares come alive in the constant renegotiation, the price drops, the dozens of agencies angling for time. Their concern: buyers are not crediting internet sales to individual telecasts, thereby devaluing their time. Of course, the real reason for time devaluation is industry fragmentation - hundreds of DRTV channels today vs. dozens yesteryear. Case in point: one of the top cable networks Saturday AM media slots selling now for ,000 was priced at ,000 15 years ago. Why? A very efficient DRTV marketplace has measured its performance and found it wanting.
Caught in the Web
Economic woes aside, if there's one outside force that's affected the media buying industry the most over the last decade, it's the Web. Anywhere from 15 to 70 percent of orders are coming in via the Web right now, and - unlike the highly accountable DRTV - lack an accurate, visible tracking method. "When you get an order from Los Angeles, you don't know if it came from the USA Network or from the local KCOP spins," says Chaladoff. "You can track half of them to the telecast, but you'll never know which telecast actually generated the Web sales." Without that information, it's virtually impossible to allocate future buys in a way that maximizes those sales. Networks are also impacted, and unable to adjust rates based on campaign successes. "It's a complete mystery to everyone at this point," says Chaladoff.
The fact that using the Web in conjunction with TV goes against DRTV's highly accountable grain begs the questions: With so many viewers ordering online, what will TV's purpose be in the future? Will the 800 number become obsolete at some point? Will someone come up with a way to accurately tie TV viewing into Web buying? These questions may remain unanswered right now, but will certainly lead to even more changes within the DRTV media buying industry. Stay tuned...
