Will DRTV save television?

January 5, 2009

The headlines just don’t stop. Channel 5 announced that ad revenues fell year-on-year during the first three quarters of 2008 whilst ITV made a similar annoucement announcing a 5% decline over the same period from a year before.  Is TV’s decline terminal?

That, of course, will depend on whom you’re talking to. But with the IPA’s latest Bellwether Survey not making pleasant reading, all signs point to an increased decline as the recession becomes more entrenched. Michael Grade himself took the stand late last year to forecast a drop of 9% in ITV advertising revenues in the fourth quarter – this comes despite the Christmas uplift - pointing to an even deeper decline.

For direct response DRTV specialists such as ourselves, what do we make of the situation? Well, whilst we don’t wish revenue declines on any media owner, we’re privately thrilled. Why? The cost-per-thousand on TV is falling sharply which suddenly alters the whole business model of DRTV. Put simply, DRTV becomes very viable.

DRTV advertisers are of a certain breed. They are not interested in raising awareness except as a by-product of their advertising. What concerns them is that for every ad they run, there is a response from people interested in either learning about the product/service further or buying direct over the phone or online. It’s a sum total game whereby the cost of running the ad needs to be covered by the responses and sales generated.

But there’s the thing. The last few years have seen television ad spots rising in price as advertisers have jostled for the best spots. This has busted the cost-per-response model that so many DRTV clients rely on to make their business model work. However, with cost-per-thousand rates now declining rapidly, DRTV suddenly becomes viable.

You might argue, quite rightly, that whilst the TV cost per thousand might make DRTV more attractive, the actual recession conditions engulfing us would negatively hit responses. That’s true for some products, certainly, but for direct specialists the old mantra remains true – with the right cost of media, you can make any advertising work.

One has to remember that huge swathes of the UK populace have a high dispensable income, especially the older generation with no children, no mortgage and a retirement nest-egg. That’s why newspapers such as the Daily Telegraph (800,000 ABC1’s with an average reader age of 61) still pull in solid responses for luxury offers like fine wines even during a recession.

The same applies for DRTV. One just needs the right channel, with the right show at the right cost-per-thousand to make DRTV work. And what is happening is that TV spots are cheap enough to now make DRTV work. Those clients who have had to remain on the sidelines are now venturing back into the medium, mopping up the spare ad inventory that Channels like ITV desperately need to sell.

Therefore, don’t listen to the scaremongers. Sure, television is being hit, as are most offline media by current economic conditions, but by making DRTV viable there could be a renaissance in DRTV which will help brands and also TV media owners ride out the recession. DRTV is about to make a comeback.

Alice Buttling-Smith

Media Director

Attinger Jack