How to succeed with ‘As Seen On TV’ products
By Joseph Gray
Among the best-selling items in retail stores are “As Seen on TV” (ASONTV) products. Heavily advertised with 1-800 numbers and branded web addresses, these items hit store shelves with strong brand recognition and built-in customer demand. Experience tells us that for every consumer who orders an ASONTV product directly, another 10 will purchase the product at a retail store. So for retailers, ASONTV products can be quite lucrative, especially products that are most frequently advertised. Unfortunately, determining which products have been advertised the most is not as obvious as it should be.
Many third-party monitoring services don’t truly understand the ASONTV industry and, as a result, are providing inaccurate and/or misleading data. This is especially true when it comes to national cable advertising. An understanding of how this type of TV media is purchased and reported is essential for retailers who want to maximize their ASONTV sales.
Ad spending reveals product popularity
The number of consumers ordering from TV directly impacts how much media a marketer can afford to buy, unlike traditional advertising, which is based on budgets rather than results. For this reason, it’s important for retailers to track ASONTV television spending accurately; it represents the true popularity of a product and correlates well with eventual in-store sales. A key metric in ASONTV circles is the media efficiency ratio (MER), calculated by dividing total TV (or direct) sales by TV advertising costs. It essentially expresses the ROI of a campaign or, more precisely, the return on advertising investment.
Marketers of ASONTV products start with small budgets and scale spending in tiers as MER goals are achieved and maintained. When retail buyers have accurate data from this industry, TV spending and retail sales levels closely correlate. The more the ASONTV marketer spends, the higher the eventual retail sales should be.
As a result, ASONTV marketers promote their spending data to retailers. This data may appear to have credibility if it comes from a third-party monitoring service, but research companies make common mistakes that often result in unreliable data. Some unscrupulous marketers have also found ways to trick research companies into reporting spend levels that are hundreds of times greater than reality. Today, consumers in the top 100 TV markets, which generate the vast majority of retail store sales, are not being reached by some so-called “As Seen on TV” campaigns.
DPI ad break skews results
In terms of advertising ROI, the most efficient of all TV media is on the national cable networks. This is the vast majority of what ASONTV marketers buy. A critical fact often overlooked by TV research companies is that there are two types of ad breaks on these cable networks.
- In terms of cost, the national ad break is the most expensive. On major cable networks (those with higher levels of TV viewership), buying the national ad break is the only way to ensure that viewers living in the top 100 TV markets will see a commercial.
- The second type of ad break is less understood: digital program insertion (DPI) ad breaks, which are sold at a significant discount, often 90% less than the cost of a national ad break. DPI breaks are understandably popular with ASONTV campaigns, but they’re deeply discounted for good reason: They typically reach less than 10% of national viewers and are often only seen in small rural markets.
While it may seem unfathomable, most TV research companies don’t differentiate between these two types of ad breaks. They report DPI airings as regular national airings and, in so doing, inflate their value by a factor of 10. Of course, it’s impossible to get a fair understanding of how much was spent to promote a certain ASONTV product in the top 100 TV markets if a TV research provider is treating all national cable airings equally, without distinguishing break type.
Those top markets are critical because nearly 90% of TV households reside in these markets. The absence of break-type data is a telltale sign of poor data quality, and retailers also should be aware of other less obvious pitfalls to avoid being misled. A white paper on this topic is available for retailers attempting to increase their success in ASONTV sales.
ASONTV sales explode in 2020
Understanding ASONTV advertising is more important than ever because sales have exploded during the COVID-19 pandemic. Earlier this year, many traditional TV advertisers pulled back their TV buys due to the difficulty in justifying expensive TV buys during significant marketplace disruption. Even while TV viewership levels were increasing due to home quarantine, media rates were in a freefall. Yet traditional brand advertisers had no way of measuring consumer sentiment and whether consumers would continue to buy products and services.
Enter the ASONTV industry. With its unique ability to measure consumer sentiment in real time via direct sales, ASONTV marketers were uniquely positioned to capitalize. Most ASONTV campaigns experienced unprecedented MER levels and were able to take advantage of low media rates to purchase more TV time than ever before. In a recent COVID-19 ASONTV research study, media expenditures of the top 50 ASONTV advertisers last year were compared with their spending during the quarantine lockdown period of March 9 through May 10. These advertisers increased their expenditures by an astonishing 376% over the same period in 2019. Even in the post-quarantine period, ASONTV expenditures continue to be up more than 200% over 2019. This has been an historic year for ASONTV marketers, and all of this extra media buying bodes well for ASONTV retail sales for the foreseeable future.
Strong ASONTV sales to continue
Those who understand the ASONTV industry shouldn’t have been surprised by this outcome. ASONTV sales are often countercyclical, performing best when the economy is in a downturn and/or TV media rates are disrupted. That said, 2021 should be the perfect time for retailers to capitalize on the historic spending levels of ASONTV campaigns, especially as TV media continues to be negatively impacted well into next year. When retail buyers have accurate TV spending data, spending levels and retail sales should correlate. Unfortunately, most do not have reliable data. As a result, retailers can easily become more successful in this category by choosing a TV data partner that provides them with accurate information.
Joseph Gray, CEO of DRMetrix, has more than 30 years’ experience in the television advertising industry. DRMetrix provides insights and competitive data to the direct-to-consumer television industry and produces a weekly ASONTV Spend Index.