Direct Response Keeps Fast-Growing Housewares Brand Efficient

Few marketers have the distinction of appearing in their own campaigns, but when budget is paramount, you do what you must. Nancy Go was accustomed to big budgets when she marketed new product launches and innovations at Procter & Gamble. In her role as senior director-brand marketing for online-housewares retailer Wayfair, she's learned to keep production costs lean and embrace direct-response marketing models. "We were trying to be as scrappy as we could to get off the ground," Ms. Go said about the brand's first ad (below), which debuted in September 2012. "At a small company there's no difference between the production budget and the media budget. On a test you squeeze production costs. ... Pre-production was done in house. We got there and realized our storyboard [called for] a hand turning on a lamp, and there was no actor coming in that day. It was the electrician, the CEO or me." The brand has evolved quite a bit in the last 18 months, hitting 35% awareness behind ten TV ads in 2013. Ms. Go is determined to stay close to the company's direct-response roots, however. (The company's brands also include Joss & Main, AllModern and DwellStudio.) The challenge, she says, is growing efficiently and fast. Here, Ms. Go talks about what traditional brand marketers can learn from direct-response marketers and how she makes the case for growing her marketing budget. Ad Age: What appealed to you about Wayfair? Nancy Go: When I started it was CSN Stores, a federation of taxonomically named websites, tvstands.com, cookware.com, all sorts of categories. They needed a new brand, and they were trying to evolve their strategy as well. I came in to help them with that. When you took a step back and looked at everything, it's a huge catalog, with logistics and technical infrastructure to support it, but it went to market in a really fragmented way. We have the largest collection of home furnishings under the sun, more than Amazon, more than any store you could walk into. These kinds of claims are really powerful, but we never went to market with that asset at hand. Ad Age: How has marketing evolved since the launch of the Wayfair brand two years ago? Ms. Go: We spent our first year trying to figure out how to go to market as one brand, how to make this a really great shopping experience and uniting all the policies. We started TV advertising in September 2012, one year after launch. We didn't start mass marketing until the end of 2012, so in my mind we've really only been in market for about a year and a half. We're on probably 80 to 90 cable networks now -- Lifetime, Hallmark, ABC Family, HGTV -- with a pretty big national campaign. People that watch murder mystery shows are responding really well -- I wouldn't have guessed that -- and children's networks do really well for us. Ad Age: As you grow, how do you make the case for a bigger marketing budget? Ms. Go: The marketing budget doesn't go up with sales, it goes up based on how effective that marketing channel is at acquiring customers. At P&G a percent of sales went to advertising costs. Now we view it as every dollar I spend in advertising, does it bring back enough revenue to make it ROI break even? My dollar on TV is up against a dollar anywhere else. It's hard to make that case, especially for TV, because it requires so much early investment into production. You could spend half a million dollars, and you don't know if the campaign will work or not. That's really scary for a company like Wayfair. Our first ad was not a brilliant ad, but it was cost effective -- I acted in my own first ad. "Traditional manufacturers like P&G have a lot to learn from companies like Wayfair." Ad Age: How does what you're doing at Wayfair differ from your experience at P&G? Ms. Go: One thing about home furniture that's different from the business I came from, a brand like P&G has high margins, furniture is low margin, so we're operating efficiently, marketing efficiently. Everything is scrutinized with a direct response or ROI lens. Not that you don't want to acquire high-value customers. But there's not a lot of fat to cover your sins. [With new product launches] one of my goals at P&G was, 'Let's get to 98% awareness in the first week, literally.' One hundred percent distribution was almost a given. Here we're saying 'How do we acquire people efficiently and effectively?' We're dipping our toe in, understanding how to optimize and scaling only when we figure it out. Traditional manufacturers like P&G have a lot to learn from companies like Wayfair. There's no reason why they can't go to market with all hands swinging. Ad Age: What do they have to learn? Ms. Go: Wayfair has done really well with direct-response marketing. We have strong SEO teams. We do a lot of work with Google even outside of search -- product listing ads, affiliate marketing. ...There's consumer knowledge built into keyword campaigns. There's tons of insights there that should be managed on a regular basis, but it's being managed by someone who's an arm's length away from the consumer research. The DNA of a direct-response marketer is just different than the DNA of a branded marketing organization, and it's just hard to adapt. A branded marketer is looking for the big idea that will move the needle. They're developing the next big campaign. Direct response marketers are thinking about acquiring the next customer. It's a totally different orientation.

Direct Response Keeps Fast-Growing Housewares Brand Efficient

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