The success of direct marketing in the broadcast industry has been truly remarkable; over 77 percent of the U.S. population report that they have viewed a direct-response appeal on TV.21 Direct-response TV is estimated to have generated more than $79.3 billion in sales in 2002—with projections of $108.2 billion by 2006. However, forecasts are for slower growth in the next few years, averaging 8.8 percent through 2007.

Two broadcast media are available to direct marketers: television and radio. While radio was used quite extensively in the 1950s, its use and effectiveness have dwindled substantially in recent years. Thus, the majority of direct-marketing broadcast advertising now occurs on TV, which receives the bulk of our attention here. It should be pointed out, however, that the two-step approach is still very common on the radio, particularly with local companies.

Direct marketing in the broadcast industry involves both direct-response advertising and support advertising. In direct-response advertising, the product or service is offered and a sales response is solicited, through either the one- or two-step approach previously discussed. Examples include ads for magazine subscriptions, CDs and tapes, and tips on football or basketball betting. Toll-free phone numbers are included so that the receiver can immediately call to order. Support advertising is designed to do exactly that—support other forms of advertising. Ads for Publishers Clearing House or Reader’s Digest or other companies telling you to look in your mailbox for a sweepstakes entry are examples of support advertising.

Direct-response TV encompasses a number of media, including direct-response TV spots like those just mentioned, infomercials, and home shopping shows (teleshopping). And as noted in Chapter 10, Internet TV has recently been introduced.

Infomercials
The lower cost of commercials on cable and satellite channels has led advertisers to a new form of advertising. An infomercial is a long commercial that ranges from 30 to 60 minutes. Many infomercials are produced by the advertisers and are designed to be viewed as regular TV shows. Consumers dial a tollfree or 900 number to place an order. Programs such as “Liquid Luster,” “Amazing Discoveries,” and “Stainerator” (the so-called miracleproduct shows) were the most common form of infomercial in the 1980s. While this form of show is still popular, the infomercial industry has been adopted by many big, mainstream marketers, as noted in the lead-in to this chapter.

As to their effectiveness, studies indicate that infomercials get watched and sell products. This profile is consistent with research conducted by Naveen Donthu and David Gilliland profiling infomercial viewers and buyers. These studies demonstrate that this advertising medium is indeed effective with a broad demographic base, not significantly different from the infomercial nonshopper in age, education, income, or gender. Infomercial sales in the year 2002 were expected to exceed $20 billion, three times the amount spent in 1995.23 Retail stores are benefiting from infomercials as well, as brand awareness leads to increased in-store purchases. For example, a $500,000 print campaign combined with an infomercial for the George Foreman Grill led to more sales at retail stores than through Direct TV.

However, some people are not sold on the idea of ads disguised as programs. For example, infomercials disguised as “ultrahip” TV shows have been targeted at teenagers, raising fears that kids under the age of 13 will be susceptible to their lure. Consumer complaints are on the rise, and the FTC has already levied fines for deceptive endorsements against infomercial sponsors. Four consumer groups (the Consumer Federation of America, Center for the Study of Commercialism, Center for Media Education, and Telecommunications Research and Action Center) have asked the FCC to require all infomercials to display a symbol that indicates a “paid ad” or “sponsored by” so that viewers won’t confuse them with regular programming.

TV Advertorials
In 1999, Peugot took its first step into TV programming by developing a series of advertorials to show the public its entire model range. Peugeot is the first auto manufacturer to use TV advertorials. The company developed eight 5- minute films positioning the autos as “The Drive of Your Life” while providing comprehensive information on test drives, technical specifications, and demonstrations. In addition, the auto company developed advertorials for its website, with each advertorial targeted to different target audiences.

Teleshopping
The development of toll-free telephone numbers, combined with the widespread use of credit cards, has led to a dramatic increase in the number of people who shop via their TV sets. Jewelry, kitchenware, fitness products, insurance, compact discs, and a variety of items are now promoted (and sold) this way. The major
shopping channel in the United States (QVC) accounted for over $3.9 billion worth of sales in 2002, reaching over 84 million households and fielding more than 130 million calls. Industry studies project a 5 percent growth rate, to $15.6 billion, by 2006. QVC is pursuing international markets (including the United Kingdom, Canada, and Latin America) to follow up on its successes in Germany and Japan, partnerships (United signed on as official airline of the “Quest for America’s Best” program), and sponsorships (for example, Geoff Bodine on the NASCAR circuit).

Print Media
Magazines and newspapers are difficult media to use for direct marketing. Because these ads have to compete with the clutter of other ads and because the space is relatively expensive, response rates and profits may be lower than in other media. This does not mean these media are not used (as evidenced by the fact that expenditures totaled over $9.8 billion in 2001.) Exhibit 14-10 shows a direct ad that appeared in a magazine. You can find many more in specific interest areas like financial newspapers or sports, sex, or hobby magazines.

Telemarketing
If you have a telephone, you probably do not have to be told about the rapid increase in the use of telemarketing, or sales by telephone. Both profit and charitable organizations have employed this medium effectively in both one- and two-step approaches. Combined telemarketing sales (consumer and business-to-business) totaled over $661 billion in 2001—with $274.2 billion in the consumer market. Telemarketing is a very big industry and still growing. Consider these facts:
• Over 6.3 million people are now employed in the telemarketing industry.
• Telemarketing accounts for 45.2 percent of all b-to-b marketing sales.
• Marketers spend an estimated $76.2 billion a year on outbound telemarketing calls.

Business-to-business marketers like Adobe Systems, Kaiser Permanente, and Hewlett-Packard are just a few of the many companies that use this direct-marketing medium effectively. B-to-b sales are expected to reach $588 billion by 2006.

As telemarketing continues to expand in scope, a new dimension referred to as audiotex or telemedia has evolved. Tom Eisenhart defines telemedia as the “use of telephone and voice information services (900, 800, and 976 numbers) to market, advertise, promote, entertain, and inform.” Many telemedia programs are interactive. While many people still think of 900 and 976 numbers as rip-offs or “sex, lies, and phone lines,” over

7,000 programs are carried on 900 numbers alone, including Tele-Lawyer, a legal information services organization; Bally’s Health & Tennis Corp., the nation’s largest health-club chain; and NutraSweet. Figure 14-6 shows more specifically how 800, 976 and 900 numbers are used as marketing tools.

Problems associated with telemarketing include its potential for fraud and deception and its potential for annoyance. (Doesn’t it seem as if every time you sit down to dinner you receive a phone call from someone trying to sell you something or asking for a donation?)

Those in the telemarketing and telemedia industry have responded to public criticisms. Dial-a-Porn and its ilk hold a diminishing share of 800, 900, and 976 offerings. As more and more large companies use telemedia, its tarnished image will likely brighten up.

Electronic Teleshopping
Unlike infomercials and home shopping channels, which have relied on broadcast or cable TV, electronic teleshopping is an online shopping and information retrieval service accessed through personal computers. While we will discuss e-commerce in detail in the next chapter, it is important to reiterate that Internet shopping is a direct-response medium that traditional direct marketers are adding to their businesses as well. For example, QVC, the home shopping channel, has started iQVC, an Internet home shopping channel that complements its cable TV channel and adds incremental sales (the cable channel drives customers to the website). The company was one of the first “Web department stores” to turn a profit. QVC’s Internet shopping channel did $400 million in sales in 2002. Other direct marketers have met with less success, finding out the hard way that selling on the Internet requires different strategies. One such company, K-Tel, Inc., a highly successful direct-response TV marketer (Top 40 music, Veg-o-matic), has had much less success in adapting its traditional methods to the Web.