Bridging the Media Fragmentation Gap: What's on the Horizon? (Part 2 of 2)

Media fragmentation refers to a range of media options that has more options and content sources than ever before.

Today’s fragmented media playing field is a result of, among other forces, an ever-increasing amount of choices and devices that deliver media to each of us. This presents a “good news/bad news” scenario.

A recent ADOTAS discusses blogs, ad networks and all sorts of solutions. One solution, SRDS, has been used within the ad industry in recent years. It has been recently updated and is now equipped with an improved function and online tools allowing media buyers to navigate the fragmented media environment more effectively.

Media buying and planning solutions. Many seasoned (and newcomer) companies are also offering media buying and planning solutions. They include media research tools and other valuable resources to fit various advertising channels – online, print, events, outdoor, mobile and more.

These solutions include the ability to provide advance planning, knowledge, management and communication features like SRFI and RFP functions for contacting publishers directly.

Media fragmentation will continue to challenge the advertising industry, but new technologically advanced tools along with the increasing number of organizations providing innovative solutions are making great strides toward bridging the gap.

Bridging the Media Fragmentation Gap: What's on the Horizon? (Part 1 of 2)

Media buyers and sellers are constantly trying to determine the best solution to deal with media fragmentation and the departure from the traditional buying model that advertisers followed successfully for years.

What causes media fragmentation? Consider the following:
• According to Neilsen's “Television Audience 2007” report, the number of TV channels has increased over 53 percent from 1985 to 2007 going from 18.8 channels to 118.6.
• Blog tracking authority, Technorati, reports that every day more than 175,000 new blogs are created.
• A July 2008 Netcraft Web Server Survey reveals that there are more than 175 million unique websites, and the Internet is increasing by 3 million new sites per month.

As these figures show, the media explosion over the past 20-plus years has left both buyers and sellers ill-equipped to deal with the growing number of media options available. It is difficult for media buyers to reach every available media outlet. Media sellers are also left to figure out how to represent an increasingly fragmented audience and guide them towards the relevant buyers.

Ad networks. Ad networks were once heralded as a solution. Buyers would benefit from the way ad networks aggregate smaller audiences and provide much more impressions cheaply for a single purchase. The sellers benefited from how ad networks aggregate buyers, offering a simple process for monitoring any left over inventory.

Still, ad networks were only a short-term solution. They don't effectively deal with the root issue behind media fragmentation. Networks provided no solution for making targeted media purchases more efficient in spite of media fragmentation.

How an Infomercial Can Generate Thousands of Leads

The perception of the infomercial has changed tremendously since the 1990s.

Now, many mainstream businesses in the mortgage, healthcare and insurance industries can maximize lead generation by producing an infomercial as long as the product presented is good and resonates well with American viewers.

Thousands of leads. Daytime advertising spots are very popular for “nine-to-five” industries like mortgage, healthcare and insurance. A good product and infomercial can generate thousands of leads within the first 10 to 15 minutes that it’s aired.

At least 30 to 40 percent of DRTV infomercial orders are placed online. Most consumers choose to place their product orders online because they have already spent some time on the web getting more information about the product and company after seeing the spot advertised on TV.

Each customer who purchases a product or requests additional information is a viable prospect and a qualified lead. An infomercial is a powerful tool for lead generation because it attracts such a wide audience.

Consider these statistics: Ninety-eight percent of U.S. homes have at least one television, and 60 percent of all television viewers have some cable service providing a much larger channel selection.

According to Advertising Age, 23 percent of women ranked watching TV as their number-one leisure activity. Advertisers are responding by targeting their ads to these (and other relevant) demographics to increase lead generation and, ultimately, sales.

Measuring Audience Engagement

Measuring Audience Engagement

Some advertisers are starting to look at audience engagement, instead of viewership (eyeballs), as a measurement of the effectiveness of TV programming in connecting with viewers, according to the April 28 issue of Broadcasting & Cable (B&C). Chief Marketing Officers are under pressure to come up with new metrics to measure advertising initiatives and the engagement metric is apparently more acceptable than ROI among general advertisers and their agencies.

IAG Research has come up with a ranking for the top 12 programs by engagement. This ranking reveals some surprising findings. A CW series One Tree Hill is ranked 184th among primetime network series among adults 18-49, based on ratings, however it is tied for sixth place in the IAG engagement rankings. More familiar shows comprise most of the other slots in the top rankings, such as Heroes (ranking #1), Lost, Prison Break and 30 Rock. However, there are other, lesser-known shows, such as Welcome to the Captain and Chuck that also make the list. Heroe’s had an engagement index of 121, which means that viewers of this series are 21% more attentive than viewers of the average primetime series, according to B&C. It’s interesting that Prison Break has more than twice the audience of One Tree Hill, but they are tied in terms of audience engagement.

To read more visit our media buying archives.

DRTV Ads Viewed More Than Others

More sophisticated marketers, TV networks and their media-buying firms will start looking at data from multiple sources, including Nielsen, TNS and TiVo to better assess viewing patterns. The increased competition may be forcing these companies to improve their measurement techniques. TiVo is recruiting viewers who are willing to provide demographic data, so they can report viewing patterns by demographic groups. Nielsen is working on something called "Anywhere Anytime Media Measurement" that measures all forms of video media consumption. And Nielsen is now measuring DVR data, which looks at programming and commercial minutes most watched in real time and up to seven days later. Even CBS recently teamed up with TiVo to develop new ways to deliver better results for advertisers.

DRTV Ads Viewed More Than Others

One surprising finding from TiVo's data was that direct response TV ads were some the most viewed commercials. Who would have guessed that direct response TV ads would be viewed more than more expensively produced ads with celebrities? Todd Juenger from TiVo, "surmises that the celeb-laden commercials may not do well in TiVo because they tend to be purchased for maximum reach across a broad rather than targeted audience, and targeting appears to be a key ingredient for TiVo viewers," according to Jack Myers’ Digital Video Report.

It's encouraging to see several new companies now competing to provide a more comprehensive profile of TV viewing habits. Infomercial media buying firms armed with this type of data should be able to further improve their client's ROI in today’s more fragmented media environment.

Direct Marketing Success Story Pt. 6

JDS: What are your thoughts about having and/or dealing with business partners? Some businesses partnerships seem to thrive, while it destroys others.

Peter: In the previous ad agency I worked with I was one of four partners. We each had our own area of expertise, so each partner provided unique talents to the company. We all started off as friends, but I found that over the nine years we worked together we started to grow apart and egos got in the way of working effectively together. I think you need to choose your partners carefully and make sure you feel you can work with those partners through both the good and bad times and that you have similar philosophies about how you plan to manage and grow your business. A partnership is like a marriage, so you need to be prepared to live with your partners over an extended period of time.

JDS: What's the best advice you've received?

Peter: My wife told me it was a great idea for me to start my own business and go out on my own. At the time I started my business I had a fair amount of anxiety and fortunately she had the confidence in me to know I had what it takes to make my business a success.
>
JDS: What most impresses you about a person?

Peter: I admire people that are self-starters and who work hard to achieve their goals. We've had several people in our company who started out as receptionists and worked their way up into important positions within Koeppel Direct. My COO started working with me as a college intern and eventually worked her way up to a top position in my company. I'm also impressed with entrepreneurs who have a great idea and are able to do whatever it takes to bring that idea to market. Often this type of person has the ability to bounce back from rejection and has the ability to maintain their drive and desire to succeed through some trying periods.

JDS: If you had it to do all over again, would you do anything differently?

Peter: I probably would have started our online division sooner than I did, looking at the tremendous growth in online advertising over the last five years. I also would have invested in an advanced, direct response media buying and tracking system sooner than I did. The system we have today gives Koeppel Direct some definite competitive advantages.

JDS: Who inspires you now?

Peter: I think that Donald Trump and Donny Deutsch are two successful entrepreneurs that have some good advice for people looking to start or grow their own business. I'm also think that Steve Jobs is a marketing genius and the guys that started Google seem to have a real vision and the resources for growing their business over the long term.

JDS: Do you have any pointers or words of wisdom to give Entrepreneurs and small businesses that want to follow in your footsteps?

Peter: Get involved in a business that you enjoy, since it will consume a big part of your life. Also, surround yourself with smart people that you like to work with and understand their strengths and help nurture those strengths.

JDS: I would like to thank Peter for taking the time to share his insights and story with all of us.

Direct Marketing Success Story Pt. 5

JDS: How has today's technology helped you?

Peter: It helps us tremendously. We try to hire the best people no matter where they live. So this requires us to communicate with these employees through online and other technologies that weren't around when I started my business. For example, technology allows us to rapidly communicate ideas, strategies, results, etc. both internally and with our clients, which results in us running our business and our clients' direct response media campaigns more efficiently. New technologies have also enabled us to create a proprietary media-targeting platform that allows us to track, analyze and optimize results in real time, which gives us a leg up on our competitors.

JDS: How have things changed in marketing since you started, and how has it stayed the same? What do you think the future holds for marketing your company?

Peter: There's been a definite shift from offline marketing to online marketing over the last five years. I see the online portion of our marketing efforts continuing to grow. The media industry is undergoing profound changes. There's been a dramatic shift in the way marketers are advertising their products and services over the last 10 years. When I first got into the direct response advertising business it was generally thought to be a medium where people would sell slicers and dicers on late night TV. Today, marketers have seen the way that advertising can be measured on the Internet and now they are looking for this same type of measurement in their offline media, such as TV, radio and print.

In addition, the average tenure of a CMO is now only 23 months and they are under increasing pressure to deliver a ROI from their marketing efforts. So marketers are now looking for the type of measurable advertising programs we can offer through direct response marketing. Koeppel Direct's positioning in the marketplace has also evolved over time. We started off as a direct response television media buying agency. Now we've branched into offering our clients multi-channel direct response media buying, including TV, online, radio, mobile and print, in order to efficiently reach consumers through a wide range of media options available to them in today's more fragmented media environment.

JDS: What are your future goals for your company?

Peter: I feel that we are well positioned to capitalize on the trend of clients demanding more of a return on investment from their marketing expenditures, which should translate into continued growth for Koeppel Direct. However, there will always be new challenges that we will face, such as TiVo's affect on consumers viewing of commercials, Google's impact on the media business and consumers gaining more control over the media they consume. So we are constantly assessing theses challenges and adapting our business strategies to address these types of changes in the marketplace.

JDS: How educated do you think you have to be to start and build a business? Do you think you need a college education to be successful? Or do you think any average person can start and build a business in today's world, if they work hard and are persistent?

Peter: I don't think you necessarily need a college education to be a successful entrepreneur. There are many examples of successful entrepreneurs who didn't attend college or dropped out of college to start their company. Both Bill Gates and Mark Zuckerberg, who started Facebook, dropped out of Harvard and Steve Jobs dropped out of Reed College. And all three of them are billionaires today. I went back to school to get an MBA because I didn't have a formal business background and I thought it would provide me with the basic business knowledge needed to effectively run a business. I also thought it would allow me to be considered for certain jobs that require that type of degree. A good business education can be helpful, but many people have built great companies without a college degree.

Direct Marketing Success Story Pt. 4

JDS: How did you first start promoting your company?

Peter: Our early growth was primarily through one client, Hair Club. I realized this was a dangerous position to be in, but the client was demanding, which didn't leave us much time to pursue business development.

Based on the strong growth of Hair Club, the owner decided to sell the company and the new owners thought they could save money by forming an in-house agency, so we lost the business. (The in-house agency was eventually shut down, so I guess it didn't end up saving the company money.) That year we made about $40,000 in profit. I decided to invest all that money in an annual ad campaign in a direct response trade industry journal and I was able to negotiate a favorable rate by pre-paying for the advertising in advance. During that year a new prospect responded to the ad in the trade journal. That client ended up being one of our largest clients and spent a substantial amount of money with us over the next three to four years.

JDS: Was there any big break that really got you off the ground?

Peter: Our big break was the opportunity to take over the Hair Club corporate advertising in 1997, based on our performance for their franchisees. At the time we started working with Hair Club they had stopped advertising, so we started from scratch rebuilding their marketing campaign, starting with radio advertising, then we got them back on national cable TV and finally we helped them develop a successful infomercial campaign. We proved ourselves each step along the way and worked closely with the client helping return the company to profitability.

JDS: What was the toughest time you had in your business, and how did you get through it?

Peter: I would say there were three tough periods. First was the start up phase. During that phase, our head media buyer quit because our key client was too demanding and during that period we had to scramble to cover our overhead. The second tough period was the loss of our biggest account when their company was sold. A third tough period was when one of our largest clients ran into legal problems, which forced us to resign that business. I would say that we were resilient in all those situations and never gave up and continued to work hard for our clients and simultaneously pumped up our business development efforts. As a result, we also were able to replace the business we lost and continued to grow. During these difficult times we also learned an important lesson about diversifying our client base, so that the loss of any one account would not seriously impact our business.

JDS: What do you think was/is the key factor that made YOU successful, when so many others have failed in starting and building a business? Were you just lucky?

Peter: I think it was a combination of factors that contributed to our success, including doing something I really liked, never giving up, providing a quality service, employing talented people and aggressively marketing our DRTV company. Luck played a part in the process, but it can only carry you so far. I believe if you work hard. It puts you in a position to be lucky more often than usual.

JDS: If you had to choose between good luck and good instincts, which would it be?

Peter: I would have to say that good instincts played a bigger role in my success than luck. Different instincts come into play as the company developed, but being able to guide the company through the inevitable ups and downs and having a vision and direction for the company has been crucial to our success.

JDS: When you're making business decisions, are you more likely to go with your head or your gut?

Peter: I try to look at all the facts, solicit input from key members of our management team and then go with my gut in making business decisions.

JDS: When do you do your best thinking?

Peter: I tend to do my best thinking in the morning while working out and on weekends. I'm constantly jotting down notes to myself regarding new ideas or information that I want to pass onto our management team.

Direct Marketing Success Story Pt. 3

JDS: How did you get into the "business you're in now"? How did the "Big Idea" come to you?

Peter: I feel that my background working for a diverse range of companies in various marketing positions, including large Fortune 500 companies, a large ad agency, a start up ad agency, combined with my Wharton MBA in marketing, provided me with a strong background for starting and growing my business, Koeppel Direct. When starting my business it wasn't really a big idea that came to me, but more that I liked how direct response advertising allowed companies to measure the ROI from their marketing investments. It was more of a niche area of advertising at the time I started, but I saw firsthand the potential for companies to transform their business utilizing direct response, when I started working on the Hair Club business. Over the course of five years, we were able to help take their business from near bankruptcy, to a high level of profitability. This allowed the owner to sell his business for a high multiple of earnings, and the amount he received for the company greatly exceeded what he had been offered for the company when we first started working with them.

JDS: Did you layout a detailed business plan for it, or was it more a napkin-sized outline?

Peter: I didn't really have a detailed business plan when I started. I liked the direct response business and I saw the potential for growth. I liked the fact that if the client did well you could also do well, so you were really looking out for the client's best interest. In contrast, I had seen brand-advertising agencies spend huge amounts of a client's money, but they couldn't provide their clients with a way to accurately measure the impact of their advertising campaign on sales.

JDS: How did you finance your start up? i.e. Savings, Family, Mortgage, Bank/SBA Loan?

Peter: Fortunately, in the direct response TV business clients pay for their media time in advance, since at the time they tended to be higher risk, start up type businesses. I was able to use the float on the prepayments and the media commissions earned, to initially fund the company. I also put some of my own money into the company and I didn't take a salary for six months, so I could cover the payroll.

JDS: Did you have a detailed spending plan in place for the money you started with? If so, in ballpark percentage terms, how was the money spent; (product/inventory, marketing, employees, tools/equipment, location of operation.) Or was it more, I have this much money to start and I'm going to wing it the best I can?

Peter: I didn't have a detailed spending plan. My strategy was to improve the ROI for the client's I had, which would enable them to increase their advertising spending. I realized early on that the more money they made from their direct response media campaigns, the more money Koeppel Direct would make on media placement. Many of the successful infomercial marketers at the time were hard-core entrepreneurs that were highly demanding and still are today. We always kept in mind that we were spending their money, not a big corporation's money, so it was very important for us to be able to account for every dollar spent and demonstrate how that spending translated into profits for the client. Right from the beginning, I decided we would differentiate ourselves by offering better service, advanced analytics and superior performance, because I knew that was what successful entrepreneurs demanded from their media buying firm.

JDS: As your business progressed, was your growth self-financed through its own success? Or, did you need to raise outside money to grow? If you needed outside capital, how did you get it?

Peter: Our growth has been primarily self-financed. Later in our development, we established a line of credit with our bank, but we rarely have used that line of credit to fund growth.

Direct Marketing Success Story Pt. 2

JDS: Were you entrepreneurial at an early age? For instance, did you sell lemonade on the corner, shovel sidewalks or deliver newspapers? And if so, did your parents push you that way, or was it more part of your DNA?

Peter: I was not particularly entrepreneurial at an early age, but some of the jobs I had as a kid growing up peaked my interest in a business career. My parents wanted me to be a doctor. My mother often said to me, "If you're not going to be a doctor what are you going to do?" So there was definitely pressure on me to pursue a career in medicine or to pursue an advanced degree or become a professional in some field. I think that was one of the reasons I was motivated to earn an MBA in marketing from The Wharton School. I think the Wharton degree helped to establish my credibility with employers and new business prospects, but once you started working with a company or client the bottom line is the type of performance you can deliver for them and most could care less about your degree.

JDS: Were you ever involved in any other business before you started the infomercial business you're in now? If yes: What happened with it?

Peter: I worked as a brand manager on the Heinz Ketchup business when I got out of Wharton and then I worked at a large advertising agency, The Richards Group, before three other guys from that agency and I left to form our own ad agency, which I discussed earlier. We worked together for nine years before I broke off to form Koeppel Direct. That agency is still in business, but my DRTV agency has grown significantly and is now much larger than that agency.

JDS: Did you ever have a business idea you didn't act on? If yes: Do you ever catch yourself thinking, "Why didn't I do that?" or was it more, "Thank God I didn't do that."

Peter: I've definitely have had business ideas I didn't act on. I decided a number of years ago it was more fruitful for me to concentrate on ideas for growing my business rather than developing new businesses that might be outside my field of expertise.

Direct Marketing Success Story Pt. 1

Starting from scratch, Peter Koeppel has grown Koeppel Direct into one of the leading direct response media-buying firms in the U.S. Peter is a Wharton MBA, with over 25 years of marketing and advertising experience. Koeppel has helped Fortune 1000 businesses; small businesses and entrepreneurs develop direct marketing and infomercial campaigns to increase profits. Here is part one of an interview of Peter Koeppel by John D. Schulte.

JDS: What was your life like when you were a kid? Were your parent's business owners, or show other entrepreneurial traits?

Peter: My father was an entrepreneur. He owned a car dealership. It was a family business. I worked there growing up doing everything from answering the phones, to moving cars, to helping out in the service department. My parents believed in a good education, so they moved to an area with a good school system in New York. Many accomplished entrepreneurs lived in the area, so I was exposed to a wide range of hard working business people that had achieved financial success by starting their own business.

JDS: Did you have any business people you looked up to, or wanted to be like?

Peter: I was greatly influenced by my uncle, who was an extremely successful entrepreneur. He was a son of an immigrant, who started with nothing and built a banking, real estate and hotel empire. Starting as young boy and through the time I was in college, I worked at his hotel during the summer in various positions, such as a caddy, being in charge of the golf carts and working as a front desk clerk. This experience gave me insight into how a successful business was run and it also gave me the opportunity to see how my uncle conducted business. My uncle was a very hard nosed and intimidating businessman, but he had a soft spot for kids and enjoyed helping them with their careers and other life issues. So he was definitely a mentor to me during my formative years.

One lesson my uncle taught me still stands out in my mind today. My cousin and I were running the driving range at his hotel one summer. While we were picking up golf balls on the range, we left the cash register (it was actually a cigar box) unattended. Later on that day, our boss came by and asked us for the proceeds from the register and then we noticed that the money was missing. He informed us that we were in big trouble and that we needed to tell my uncle about this. My cousin and I were quite nervous about telling my uncle about the loss. We decided that I would be the one to tell him. After he listened to my story, he let us know that my boss had taken the money when we weren't looking to teach us a lesson about keeping track of the company's money. It's a lesson I never forgot.

JDS: What made you want to start your own business?

Peter: I helped build a general ad agency business over nine years with three other partners prior to forming Koeppel Direct. I started working with a few of the franchisees for direct response television marketer, Hair Club for Men, towards the end of my time at that agency. I really liked the accountability of direct response advertising, but the other partners at the agency were more brand advertising oriented and were more interested in winning awards than generating results. They, like many other general ad agency people, looked down on direct response advertising and considered it more selling than advertising. At that point, I felt it would be best if I parted ways with that agency and I decided to start up a direct response media buying business, where I could focus on working for clients interested in measuring and tracking the ROI from their advertising campaign.

It was scary breaking off on my own at a time when I had two young children and my wife wasn't working. My wife was supportive of my endeavor and believed that if I worked hard I could make it a success. It turned out to be a good move. Based on strong results, I was able to secure the media buying for most of the Hair Club franchisees within a year of starting Koeppel Direct. The franchisees then introduced me to the parent company, which was struggling, and they tested my company against their current agency, a big direct response media-buying firm in New York. We were able to reduce their cost per sale by 75% and eventually won their entire business.

The Writers’ Strike: What might it mean for DRTV advertisers?

As the Hollywood Writers’ Strike continues on without the likelihood of an acceptable compromise in the near future, many wait with anticipation to see how television will hold up.

Even in the face of emerging competition of digital media by way of YouTube and MySpace and the proliferation of shows created exclusively for online distribution, television networks have maintained a position of stability, not considering these additional media outlets to be significant competition.

The Writers’ Strike could change all of that.

Television execs were perhaps unconcerned by the competition of new media because the networks continued to deliver quality, innovative programming that consistently and even increasingly drew viewers and advertisers. But, without the writers, these fresh shows will be no more. Instead, viewers will be subjected to re-runs and more reality-based programming. This could, down the road, lead to decreased ratings and in turn, decreased advertising dollars.

Does this mean a gloomy death for television? Absolutely not!

DRTV marketers would be wise to hold off on reallocating all of their advertising dollars right now. Instead, they would be best served by taking advantage of lower television advertising rates and ramping up dollars spent in online advertising and other new media outlets.

The outcome of this event will be a direct response advertising diversification of sorts, representing a great opportunity for advertisers to take advantage of a growing trend while it’s still in this early stage.