Increasing Return on Marketing Dollars

A Newsletter Published by Lee Marc Stein, LTD.
January 2003 Issue

Contents

• Humor in Direct Response Advertising
• TV or not TV? That’s NOT the Question
• Offer Authoring

Humor in Direct Response Advertising

In the January 6th DirectNewsline, Richard Levey, one of the top journalists covering the field, brought up the topic of humor in direct response copy. Yes? No?

Here’s my short answer, which Richard published in his column the next day:

"Essentially I agree with you. When I started my first job as a copywriter for Prentice-Hall in 1964, I was handed a set of guidelines written by Richard Prentice Ettinger himself. One of those rules was: ‘Don't use humor. There's nothing funny about separating a man from this money.’

"However, since 1964 we've experienced increasing clutter in the mailbox and in other media. Consumer radar to sales pitches is at a peak, and so is disbelief. Humor, done properly, can break through the clutter and suspend the disbelief. The humor must relate directly to the situation and cannot be a joke per se. Actually, humor done through graphics -- photos or illustrations -- works better than humor done through copy. Think about the personalized cartoons that were used for years by such mailers as Ad Age."

The subject deserves further exploration. First, let’s tackle the absolute "No Nos."

1. Though I’ve been called the fastest pun in the West, punning just does not work in direct response efforts. If the pun is a good one, it immediately brands the copy as "clever", and that is antithetical (and uncle-thetical) to selling. If the pun is awful, it evokes "Oh no!" instead of "Oh yes!"

2. Avoid double-entendres, particularly those of a risqué nature. In fact, have someone read the copy to make sure you’re not committing one unconsciously.

3. Parodies tend to backfire, especially those that parody the particular medium you’re using. There was a famous credit card mailing (from the now-absorbed Chemical Bank) a decade ago in this category. The OE had no teaser on it other than being labeled "The Envelope" and all the other elements were similarly labeled. It was a flop.

4. Do not do say anything or show anything that may demean prospects or customers in any way. You wouldn’t do that to your own product… and in direct response advertising the prospect is the hero, not the product.

5. 5. Do not try to bring humor into the following situations: insurance, loans, health issues, management decisions. Your first reaction may be: "What about the GEICO commercials?" Yes, they’re quite humorous, and yes they have an 800#, but they’re more branding than direct response. Take a look at Geico’s direct mail – the humor has almost totally disappeared, replaced by tried (and tired) direct mail technique.

So When and How Can Humor Work to Increase Response?

Here are some guidelines to follow if you’re even thinking about using humor -

1. As indicated in the short answer, the humor should be closely tied to what you’re selling and to the prospect segment. You have to have double knowledge of your prospects – not only what makes them buy, but what makes them laugh.

2. A corollary is don’t be funny for the sake of being funny. Use humor to get the prospect to your key selling point.

3. Your goal should be a smile (of recognition), not a belly laugh. The latter can absolutely destroy the path to response, while the former achieves the same nod of affinity that an audience-targeting headline might.

The best humor is often incredible insight into the human condition. Think of the two great Bill Jayme envelopes teasers for Condè Nast Traveler and for Psychology Today:

• "How much do you tip the waiter when you’re planning to steal the ashtray?"
  
  
• "Do you still close the bathroom door when no one else is home?"

4. Again, graphics are often better received than words. Here’s the outside of a self-mailer I received some 2 years ago. I don’t know how well the piece pulled, but the company (etrieve) is very much alive.

5. Humorous quotations from the famous or infamous can hedge the risk you take. If Yogi Berra, Groucho Marx, Woody Allen, or H.L. Mencken said it, that may brand it as funny and non-threatening.

6. Get a reading on it. If you don’t have the time or money for formal focus groups, comp up the idea and send it to 20 of your best customers. Then call, and probe for a negative reaction.

TV or Not TV? That is NOT the Question

The more relevant questions: Can direct response TV pay off on its own? Can it improve ROI for other direct response media used in the portfolio or for non-direct channels of distribution? Or is TV strictly for branding?

If you’re using TV to sell, you need to have a number of factors going your way -

1. A product or service that can be explained in the course of 60 seconds. While classic short-form spots were always :120s (and you must still test them), there’s an increasing trend toward :60s. The exception, of course, is if you dare test an infomercial. I say "dare" because so few of them pay off from a pure direct response perspective.

2. The ability to up-sell or cross-sell on the inbound 800# call. There’s a limit to the price you can put on the original product or service. To make TV work financially, you generally have to get more revenue from those who do call. The up-sell can be more of the same product ("Take two years for an extra $5.00); the cross-sell can be a related product or something else that particular prospect may have an interest in.

3. The possibility of selling something else later on to these buyers via outbound phone, direct mail, or through a website. Some would argue that television buyers are television buyers, but all the new studies on multi-channel buying indicate that sometimes television buyers respond to catalogs.

4. An understanding of lifetime value. It may be less expensive to acquire customers through DR TV. However, their frequency of purchase and the length of time they stay active compares unfavorably with customers acquired through other sources.

5. Other distribution channels. If you advertise a product on TV, it will drive retail sales, and get more people to click onto your website. That may allow you to live with a higher Cost Per Order from the spots.

Direct response TV should also be considered for lead generation. Here the product/service should be broad-based. Some keys to success:

1. Make sure you have proper tracking set up. You not only need to know where the calls originated, but how many convert from each station/cable system. There can be dramatic differences based on programming and day-parts. Six years back we did a major TV test for one of the big auto insurers. Overall, the cost per lead was acceptable, but the company had a computer problem and could not recover the source for nearly 40% of the leads generated. We had to stop the program.

2. Watch conversions very closely. One company – involved in a fairly expensive teeth-whitening procedure -- was euphoric over how many leads they were getting. They bragged about how low their costs per call, particularly from their infomercial, were. They did not understand they were getting impulse calls from people who could not afford the procedure. Today, you can buy the company’s stock for two bits.

When The Money Store was operating at its height, it was spending close to $35 million a year on TV. In some ways (the way time was purchased, for example), it wasn’t direct response TV, but it did have a strong call to action. Cost per call was about 50% less expensive than calls driven by direct mail. However, many who called as a result of TV were not homeowners, others were "A" borrowers who wound up at a bank, still others were later rejected. Result: cost per thousand dollars loaned was actually lower through direct mail.

3. Don’t stop at one conversion attempt. If the TV spot says "call for your free booklet," send it out immediately, and then do follow-ups by phone and/or mail. If the ad says "call for your rate quote" and prospects don’t convert on that first call, send them a "keeper" they can use if they change their minds.

4. Make sure that your follow up mailings or emails refer to the fact that they made the decision to call from your TV spot. TV has credibility that you want to continue to leverage (no one says "as seen in direct mail")

Offer Authoring

For many marketers, deciding upon and structuring the offer is the action that can have the most impact on their business, short- and long-term. Some of you may say "We know that the right list is by far the most important factor in direct mail success." Ah, but if you make a mistake on one or two lists, you can survive. The wrong offer can be far more dangerous.

Example: those publishers who took the sweepstakes route decades ago have really never been able to escape. Now legislation has removed their edge, and response rates declined precipitously. Sweeps people will say publicly that sweeps generated orders are as good as any other, but that’s just not so. Pay-up and renewals are at the lowest end of the scale.

Offers must be structured with the business goals and financial condition of the company in mind.

We’re working now with a software provider that sells its products to consumers for under $30. In planning for its first direct mail acquisition test, we had strongly recommended testing (and giving a lot of weight to) a continuous service offer. With conversion rates fairly low, we believed it important to lock in two years or more of revenue to justify the acquisition expense. At first the client agreed wholeheartedly. However, as it was getting close to production of the test, they backed completely away from continuous service and went with a straight sale and premium offer.

The first reason they gave was "we think continuous service should be tried on those who already bought from us." There used to be a truth to that statement years ago, but it’s no longer valid. Marketers of all types are testing continuous service offers on new business and making it work.

The second reason was the important reason for the decision. "We want the revenue now, and we’ll worry about conversions later." In most cases, continuous service office will lower response – sometimes very slightly, sometimes significantly.

For our client that markets renter’s insurance, we went the other way. Here the client was so concerned about the retention numbers on the control offer – the new policyholder pays just one month’s premium upfront – that we decided to test an upfront quarterly premium. We well know that response is going to be lower, but we also know retention has to be better. We’re waiting for results now.

In lead generation, the question becomes "what resources do you have to follow up the leads, and what do those resources cost?" If you have a large, totally on commission sales force, you want to generate a lot of leads. Your offer is going to be relatively generous. If you have a complex product/service that takes a lot of sales time, you want your offer to do much more qualifying.

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