Editor's Note: Last week, MDN's sister pub Just an Online Minute reported on a research study, which found that most advertisers are still using click-through data to measure effectiveness of their campaigns, knowing full well that there are better metrics available. So we asked our readers, "Are we, as an industry, too stubborn to let go of the familiar formulas?" Greg Sarnow, CEO of the Direct Response Academy, had some strong opinions on the subject:
Are we too stubborn? I think you are right. We are afraid to change! Until new information becomes common knowledge, the accountant in all of us takes charge when it comes to spending.
Coming from an accountable advertising background in Direct Response Television, I see parallels in the development of e-commerce and direct response television that are strikingly familiar.
New opportunities for marketers opened up in the mid eighties when President Reagan de-regulated television advertising. With unlimited advertising and the development of 800 number technology, as well as the acceptance of credit cards, an industry was born and a whole new way of marketing emerged.
Much like the e-commerce world of today, we saw an industry that created tremendous wealth for people in short periods, an industry that had no idea of its power to impact marketing outside of the moment at hand, and also an industry that was shaped by pioneers totally entrepreneurial creating the rules as they went along.
Two incredible, revealing examples.
Avon Corporation: Avon was one of the first corporations to try Direct Response TV program length advertising. At first we found the results of their campaign to be mediocre at best because they were evaluated on the revenues of orders taken vs. the price of media, a reliable but old model.
Ms. Morgan Hare (now at HSN) being the visionary that she was, understood the "lifetime value of a new customer," continuity programs, and traditional customer acquisition costs. She also understood the impact the TV campaign had (and this was measured) with Avon's direct sales force in markets where TV ran. Also, she was convinced from the beginning about the brand awareness that the Anew Skin Care system was gaining as well as the positive buzz Avon created with this form of marketing.
Only about 6 months later, when all the sales in each market were tallied, (sounds like a Presidential election), did management understand the total results. Ms. Hare was correct about the total impact her direct response marketing campaign had on the entire Anew Skin Care division. Sales were up, profits were up, morale amongst the direct sales force was up. Morgan was so ahead of the game that she could not convince the bean counters because they were unwilling to look at or project the numbers the way she did.
The second example was a woman in Southern California who had a breakthrough ha