NOT SO LONG ago, cable and broadcast networks relegated direct response television advertising to late-night programming.
Those days are gone. Now, they’re more likely to run DRTV spots during-and for products featuring-top prime-time shows.
Thanks in part to the fact they aren’t making as much as they used to in their primary business, networks like A&E and NBC are offering merchandise tied to programming. And in some cases, they’re even stepping outside their own medium to sell.
Take NBC, which in May consolidated the Internet assets it held with Xoom.com and Snap.com to form a new company, NBC Internet (NBCi). The venture will provide e-commerce, e-mail and search- engine capabilities. But in some ways, it is an extension of what NBC has already done.
“NBC has been into direct response for almost two years,” says Elisabeth Sami, NBC’s vice president of business development. “Our first launch was a set of videotapes for ‘Merlin.'”
As with most business start-ups, the move into DR was driven by a desire to develop new revenue streams. But it has also provided side benefits, like a better understanding of the network’s viewers.
Thanks to the growing NBC database, “We have a sense of what the consumer relates to,” Sami says.
The database is relatively small-between half a million and a million customers, mostly female, according to Sami. But it has already enabled the program development team “to make better programming decisions,” based on which merchandise is most popular, she says. “They wouldn’t develop a program if it didn’t warrant it, but they wouldn’t walk away from a leveraging possibility either.”
For the most part, the products have been videos of movies and “event” miniseries. The offerings are sometimes packaged with free CDs or scripts or the book on which the program may have been based. For example, the network sold 890,000 copies of its Dawson’s Creek CD in the first week of its release, and 260,000 of the CD for its 60’s mini-series (60,000 by direct response and 200,000 through retail.) Beyond CDs and videotapes, NBC is now in talks with several publishers looking to develop an imprint.
NBC usually places DR spots at the end of the related program; on occasion, it will also put spots on CNBC, the network’s cable affiliate. The spots feature a toll-free number (the telephone closing rate is high-85%, compared to a norm of below 75%), and a URL for the NBC Web site (www.nbc.com).
The site has a lower cost per sale and promotes the number of sales of products. NBC is also using the site to get viewers’ opinions on programming,, in some cases sending out copied of pilots to viewers’ to get their feedback on show the network is considering developing.
“The Internet is the purest form of direct response and really its greatest vehicle today,” Sami explains. “Developing it as a core competency is one of our goals.”
NBC has also invested in ValueVision, a home shopping network, and will position it to better deliver products to viewers who order products. While the specifics are still being worked out, the general plan is to develop an entertaining home-shopping program to sell products or auction off props and costumes from movies and series.
NBC views its brand as distinct from its programs’ brands. “NBC is a great umbrella brand,” Sami says. “It’s associated with high quality programming. But the focus of direct marketing is to target consumers with specific products.”
A&E Networks Of course, NBC isn’t the only network trying to extend its brand through DR. “Direct is a bold and appealing form of economics for television networks,” says Elissa Myers, head of the Washington, DC-based Electronic Retailers Association. “In the 70s and 80s, cable and broadcast networks had enough money to do what they wanted. These days, they’re finding themselves financially restrained, and have become more creative about revenue sources.”
A&E Networks, which includes A&E, the History Channel, goes even further than NBC-it has six Web sites, and also builds relationships with programming-related magazines.
“We have the ability to leverage across media,” says Todd Tarpley, A&E’s director of new media.
For example, Biography has a program, a magazine and a Web site (www.biography.com). The magazine is promoted on the Web site which is promoted in the magazine, and the TV program is promoted in both. “E-commerce floats somewhere in the middle of all that,” Tarpley says.
A&E started its home video offerings in 1992. The TV spots were so successful that the network expanded onto the Internet three years ago, selling home video and various “collectibles. Secure online ordering was in place by 1997.
“What sells best for us on line comes under the $100 price point,” Tarpley says. “It’s difficult to sell a $50,000 autographed document by direct response.”
Web orders tend to be higher because of the wide variety of products being offered. “If the customer calls the 800-number, the customer buys the program. If the customer goes online, the customer might be enticed by other programs.”
The customer database mirrors A&E’s viewing demographics: buyers are slightly more likely to be female (although viewer demographics are closer to 50/50). They are over 35, and both upscale and educated. And, online customers are younger.
The Web sites are visited for content more than commerce. Of the 15 million hits A&E’s sites get a month, only 10% is “store traffic.” Of course, on some sites, a can download a program quiz, buy a video, or get a sneak preview of a new show.
The history, mystery, and biography sites Tarpley describes as “stand-alone genres,” supporting the underlying brands. The history site (www.historychannel.com), is visited by people who love history, but do not necessarily have access to the cable channel; that may explain why it has the heaviest traffic of all the sites. Tarpley estimates that about only 60% of its visitors have access to both the channel and the Web site.
The A & E site (www.AandE.com) is the most active e-commerce site.
“They know the brand and they know it’s the place to buy the videos,” Tarpley says.
But some visitors don’t order online-there are dedicated toll-free numbers for both the TV spots and the Web site. Since the audience is unduplicated, Tarpley believes that “the Web doesn’t cannibalize the on-air audience.”
Though it was the opposite only two years ago, A&E now gets more orders online than it does via telephone.
In addition to the sites, A&E keeps in touch with its viewer/customers once a month or so by e-mail, announcing new programs or new products, using the Web, like NBC, to get viewers more involved with the programs.
Does this break down the barriers between selling and entertainment? No, Myers says, “as if it weren’t all about selling things anyway.”
Myers notes that while most networks try to keep a church-and-state separation between programming and DRTV, ultimately the whole operation is about sales. Remember, while advertisers sell products to audiences, networks sell audiences to advertisers.
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