BATAVIA, Ohio (AdAge.com) -- For years, direct-response agencies have toiled in the shadows of their more glamorous peers at conventional ad agencies. Now, direct-response TV shops are finding their place in the sun as the recession darkens the outlook for most of the marketing industry.
The definition of a direct-response agency is as fluid as the media schedules that define the space. There are new-age independents and major players owned by the top agency-holding companies striving for respectability in a marketing-services world that long has looked down its nose at hard-sell pitches. And then there's old-school "yell and sell" practitioner pitching the Ped Egg and the Snuggie -- production companies that shoot ads directly off client briefs and make no pretense of being "agencies."
But as the downturn rolls on and marketers increasingly start to look at ways to increase return on investment, the lines are starting to blur.
Prominently adorning the website of Sullivan Productions, run by well-known pitchman Anthony Sullivan, the man who helped make Billy Mays an even-better-known household name, is a quote from David Ogilvy: "If it doesn't sell, it isn't creative."
Meanwhile, the agency that bears Mr. Ogilvy's name at WPP owns what's regarded by many as the largest agency in the business, A. Eicoff & Co., Chicago. It would seem that it doesn't get any more old-school in DRTV than the 50-year-old shop that claims founder Alvin Eicoff coined the phrase "or your money back." But having become a division of Ogilvy in 1982 and with a client list that includes Procter & Gamble Co. and Sears in addition to the Scooter Store, Eicoff also has its foot planted firmly in the new-school camp of shops seeking mainstream respectability. "If you look at the Snuggies of the world, we kind of look at that as the old-school kind of DRTV," said William McCabe, exec VP-business development at Eicoff. "But frankly, that may not be where the business is today. Today it's Fortune 100 companies that are using this."
Fred Vanore, exec VP of Blue Moon Studios, a West Paterson, N.J., production house that shot last year's Snuggie ads that were adapted loosely off a brief from the marketer, All-Star Marketing Group, begs to differ. He's also produced ads for the likes of P&G, Johnson & Johnson and Church & Dwight.
Sandy French, CEO of Northern Lights Direct Response, Toronto (slogan: "DR Campaigns that Sell and Build Brand") is one of many DRTV players who sees a convergence of brand advertising and the hard-sell of direct response. "Our commercials look like brand commercials," he said, but with benefit-driven copy designed to deliver immediate response.
One thing that often divides the so-called old and new schools is compensation. The traditional players are far more likely to accept, or even demand, compensation as a cut of revenue. The more-established shops attached to holding companies are far more likely to work for fees or retainers.
Mr. Sullivan, in fact, insists on a royalty for most ads he produces, and Mr. Mays likewise gets his cut.
That's not, however, the way shops such as Halogen Response Media, a direct-response unit of Publicis Groupe's Mediavest, operate. "There are companies [working off royalties] and there's a huge upside if they succeed, obviously," said Steve Friedman, senior VP. "But we're after long-term relationships with world-class brands that we can have a partnership with."
But Mr. Sullivan believes the royalty system gives him plenty of incentive to make his commercials work, in addition to giving smaller or start-up companies a chance to get on air that they otherwise might miss if they had to make big upfront commitments.
On the other hand, since he still does work for OxiClean marketer Church & Dwight, which doesn't go by the royalty model, he also charges more conventional upfront fees for more conventional clients. "At the end of the day," he said, "they'll be paying Billy and me a million dollars either way."
How to succeed at DRTV
STEAL WITH PRIDE: Neither your product nor the approach has to be entirely original to work. "At one time in the 1990s there were six ab machines that all looked substantially similar, cost substantially the same amount and had different celebrities promoting them, and all of them were doing well," said Gerald Bagg, CEO of Quigley-Simpson, a Los Angeles direct-response shop. "It validates the category. If there's one player only, people start to wonder, How valid is this?"
FAIL FAST AND CHEAP: The ratios vary, but it's one of the keys to direct-response success. Only about 1 in 5, or -- if they're lucky -- 1 in 3 products tested by multiproduct marketers such as TeleBrands or All-Star Marketing Group show potential for commercial success.
DON'T FORGET THE ONLINE COMPONENT: Increasingly, as many as a quarter to a third of sales of DRTV-advertised products come online, not through the toll-free number, according to Doug Garnett, CEO of Atomic Direct, Portland, Ore.
Increasingly, that makes search optimization crucial, since many people type a brand name or sometimes just a product description into Google rather than going direct to a brand website, said Tim O'Leary, CEO of R2C Group, also based in Portland, and one of the largest DRTV shops in the U.S. Search, therefore, gives competitors an opportunity to intercept consumers drawn by your ad, and an opportunity for you to close the sale.
For some high-ticket items, response to DRTV ads comes 85% online, Mr. O'Leary said. Increasingly, DRTV drives orders to Amazon, too, meaning daily Amazon sales also need to be tracked to measure ad effectiveness.
PRIME TIME MAY NOT BE PRIME FOR DRTV: Prime time has in some cases opened up to direct-response advertisers in recent months, but it's not clear yet it's right for them. "I don't think DR even belongs in prime time," Mr. Bagg said. "When you're watching prime time, you're not at your most disarmed state. You're in a state where you're watching content."
TWO-MINUTE ADS MAY WORK BETTER: WPP's A. Eicoff & Co. has always specialized in the 120-second spot, but it sees a particular surge in it now because of the avails. Whatever the media-cost implications, 120-second spots work better for DRTV because they often give the advertiser all or most of a pod and more time to drive home complex benefits, an 800 number and website URL, said Francie Gordon, senior VP-media.