DR on the Web.

“Ads like this will be history – that’s when we’ll know that the media market is coming back,” said my good buddy. The ad he was referring to was a DR commercial for some sort of electric hairbrush.

“Maybe,” I said. “Odds are that the malt beverage stuff will disappear too.”

It’s easy to tell when ad dollars are flowing through the TV marketplace. And when things are not so hot, we tend to see a lot of infomercials and DR ads for products that probably wouldn’t be showcased on TV when the ad market is healthy. Our conversation turned to the online ad marketplace.

“Will I be seeing ‘Shear the Sheep’ ads when things turn around in the online sector?”

My initial thought was that these ads would go the way of the brontosaurus when things picked up. After all, why would site publishers accept performance-based ads if they have CPM advertisers to take their place? But I thought about it some more and came to a different conclusion.

Direct response ads won’t be fleeing the web anytime soon, even if brand advertising picks up next year. In fact, DR advertisers are seeing advantages in web advertising that aren’t present in other media. For one, the web seems to be a relatively stable channel from a cost perspective.

Postal rates in the U.S. have been going up the past few years. Doesn’t it seem like yesterday that the cost of a first class letter was a quarter? Of course, most direct mailers don’t pay these rates, but their costs have nonetheless been steadily increasing. Increased costs mean increased acquisition costs, and thus direct mail becomes a less attractive option for marketers.

Outbound telemarketing costs are going through the roof as well. Compliance with “do not call” lists has raised costs. Not to mention that the occasional “do not call” name slips through the cracks and telemarketers end up paying tremendous fines for contacting these numbers. I’ve had a number of DR companies that traditionally relied on outbound telemarketing ask our agency to put together comprehensive online plans because of the relatively recent cost increases associated with telemarketing.

But what does this mean for online media? I tend to think it means that DR is here to stay for the time being. CPAs are not increasing online like they are in offline DR. Not to mention that CPAs for online are a bit more predictable than they are offline. VPs of marketing and ad agencies can assume that CPAs will remain pretty much where they are, assuming they can cut long-term deals. They don’t have that luxury in direct mail, where fuel costs may or may not bring about another postal rate hike. Nor do they have that luxury in telemarketing, where fines can vary from month to month, depending on how up-to-date “do not call” databases are and how effective information systems are at cleansing these names from files.

So we may actually witness a new rush of DR advertisers to the web. I wouldn’t say this is a bad thing. Increased competition for inventory rarely is.

By Tom Hespos
Courtesy of http://www.MediaPost.com