After spending 18 years developing products and running operations for several DRTV (Direct Response TV) companies that brought you products like “The Shake Weight”, in 2011, I launched a campaign management and consulting business. I wanted to offer my experience to start-ups and medium size businesses looking to enter the world of DRTV marketing.
Having spoken to hundreds of inventors, investors and small business owners since then, one thing has become abundantly clear: there is a lot of misinformation being shared throughout the industry. The information isn’t bad, but the interpretation can be. The lesson is this: one size doesn’t fit all when determining how to move forward with a new product.
Newcomers not seeing the DRTV picture
Newcomers to this industry spend weeks and months researching including talking to many DRTV industry professionals, which is great. But they talk to people who rarely have access to all the data or who have the full picture, such as a media agency, contact center or a web developer. These insiders provide valuable insight into segments of the industry through having been exposed to so many products. But they rarely see behind the curtains of their respective clients’ full operations. Because of this, they have incomplete pictures and they tend to fill in the blanks or repeat the stories that their clients are telling them.
We all know that people tend to brag more about their successes and talk less about their failures. Although these vendors are often well intended, they aren’t so well informed. As an example, I often hear things like, “you can’t make money on TV these days” or “you have to load up retail to make money with a DRTV product”.
These comments aren’t inaccurate for the most part. But this information has come from the strategies being employed by the well-established DRTV marketers with existing retail relationships and shelf space. They load retail shelves with a considerable amount of inventory and blast hundreds of thousands of dollars-worth of TV media for several months. Their goals are to ignite retail sell-through and maintain sufficient sales velocity: after they pull their ads off the air.
Here’s my advice to businesses who are new to DRTV:
Employ certain DRTV strategies with caution
The standard strategy employed by established players fails more often than it succeeds for newcomers even though the water cooler gossip says otherwise. Not only is this a huge risk for companies new to the DRTV space, but it is virtually impossible to execute.
Why? Because in most cases the viewing customers have not heard of the newcomers, which gives potential buyers scant reason to tune in and watch. Moreover, retailers will not establish new vendor accounts for new entrants without a very good reason, which would require them to generate massive sales to convince them: a very tall order. Mass retailers understandably only want to work with companies they know will be around at the end, so that there will little, or no inventory left on their shelves.
The branding pitfall
“It’s going to be a brand” or “It is a brand”! This is a big hole that newcomers can easily fall into. They make the mistake of falling in love with their own products.
You must be objective when looking at your marketing, for as soon as you start believing your own hype you’ve lost the game. Your product is not a brand until you have achieved critical mass and consumers think of you as a brand.
A very low percentage of products have launched on TV and have become a brand. So be objective and hope for the best, but don’t discount worst. Knowledge is power, but not all knowledge makes you feel good.
Another area of misunderstanding has to do with continuity/auto-shipping. The story I hear on a regular basis is, “We will sell this widget now and get rich on the back-end”.
This is true for many products that deliver on the promise and have low attrition rates. But the dark side of the story is that this strategy too fails much more than it succeeds and requires considerable capital. It will also run at a loss for many months, even up to a year, before running profitably. There are a few well-established companies who thrive on this model, but they have the data, experience and, most importantly, the capital to pull this off.
For example, selling a fitness product at a loss, hoping to turn a profit selling supplements through an auto-ship program sounds great in theory. If the campaign is close to a break-even on the front-end, this model has a highly likelihood of success for a start-up.
But to run this model requires considerable patience. You need to run your test, pull back and wait months to properly measure your attrition rates so you can determine your LFTV (lifetime value) and long-term profitability. Not doing so i.e. rolling out immediately after the initial testing, hoping your assumptions are accurate can and has cost companies a lot of money. Instead be smart, patient and “follow the process”.
No short cuts, only hard work
There are no short cuts in any business, including DRTV. Trying to be a big brand before a company or product is even a brand or copying a model that the big players are following is usually a recipe for disaster. You can’t get around the fact that you must crawl before you walk, then walk before you run.
To succeed you need to take a conservative approach when testing new products, minimizing variables while conserving capital with the goal of collecting solid, quantifiable data. You can’t build a house without a solid foundation. Launching a new product isn’t much different.
Finally, be careful about the advice from companies that are trying to land you as a new client. If they make it sound too easy, that might be a sign. Be aware that many people will tell you what you want to hear rather than what you need to hear.
Bryan Sweeney is Founder and CEO of BS Direct Management Consulting
www.BSDirectManagement.com. Bryan is a highly accomplished DRTV industry veteran with over 25 years of experience in operations, campaign management and product development. Bryan currently runs a campaign management and consulting business, offering his 25 years of experience to small and medium size companies looking to enter the world of DRTV.