In the Chinese calendar, the Ox
is the sign of prosperity through fortitude and
hard work. In a time where a barrel of oil costs
more than $130 and the national average for a
gallon of gasoline is $4.10, direct response marketers,
much like the ox, will need both fortitude and
hard work to find opportunity and success in 2009.
As we enter the third quarter of 2008 and begin
planning for 2009, one can’t help but contemplate
the impact of the economy on the direct response
industry. According to the consumer price index
(CPI), the aggregate of all major consumer categories
for the first half of 2008 increased by 4.2 percent.
The areas of major concern include proliferating
food and beverage costs, which have risen 5 percent,
and the astonishing 17.4-percent increase in energy
costs. Such increases in the CPI can significantly
impact household discretionary income and considerably
decrease consumers’ buying power. More importantly,
inflated pricing on these and other staples could
severely hinder consumer confidence. After all,
consumers will see little appeal in spending more
to get the same.
In addition, slumping home values combined with
a faltering stock market have crushed consumer
confidence. All of this has resulted in a retrenchment
of spending, which in turn has contributed to
recent unemployment and pushed the economy in
the direction of a recession.
Yet, with every negative lies a positive, and
this is why we should welcome the good will of
the Ox. However bleak the state of our economy
may sound as we head for 2009, there are many
opportunities for direct response marketers in
the year to come.
Recent results reported by TNS Media Intelligence’s
Broadcast Verification Services (BVS) show that
while the overall advertising market was stagnant
in 2007 with a 0.2-percent rise from 2006, direct
response (including DRTV, print DR, DR radio and
internet DR) grew 17 percent in 2007.
Adding to this positive research is the Response
Magazine media hypothesis for 2009 — a strong
correlation between industry and economic phenomena
that will result in direct response leading the
advertising industry in the upcoming year.
The Response Hypothesis
In 2009, marketers should find more than $1 billion
dollars of available media not consumed by the
political machine. With the completion of the
2008 elections, media outlets will need to find
new content and advertising to fill time purchased
in what has been defined as the most intense media-driven
political race in the history of our nation. Furthermore,
outside of the Super Bowl and the World Cup few
world sporting events demand such advertising
attention as the Summer Olympic Games, which is
causing major media spend in 3Q 2008 — but
will be a non-factor in 2009. Finally, the softening
of the economy and a potentially weak holiday
shopping season will result in a decline in advertising
spending by brands that have traditionally consumed
this space.
What does this mean for direct response? More
availability, more opportunity, more eyeballs
— all for reduced rates. Dwindling general
advertising spending will put downward pressure
on rates, and, as the supply of available advertising
opportunity expands, networks will look to direct
response marketers to fill the void created by
the shift in the economy and environmental factors.
In addition to increased media opportunities for
direct response marketers in 2009, direct response
advertising should become more effective. A soft
economy generally comes with higher unemployment
rates and lower household disposable income. However
with more people staying home to watch TV, your
captive audience will feel the emotional pull
of direct response advertising. As we look back
at the history of our industry, tough political
and economic times have often led more consumers
to purchase products from TV.
Although long-form media and radio should yield
much opportunity for DR marketers in 2009, it
is the short-form side of the business where real
movement will happen. According to Response Magazine’s
research, 4Q 2007 short-form results represent
the first time in Response’s media billings
research history that all categories reported
increases over the previous year’s quarter.
This may be the strongest testament yet to the
increasing popularity and importance of the DRTV
medium as the logical advertising alternative
in light of all recession variables.
As we prepare for 2009, direct response marketers
should praise the Year of the Ox, as prosperity
through fortitude and hard work should be imminent.
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