Making the Best of a Bad Hand
Members of the global direct response community share how their businesses overcame the strain of yet another international crisis — the COVID-19 pandemic — to grow stronger.
By Thomas Haire
Though 2020 was an incredibly difficult year, one group of leaders in the performance marketing world seemed able to overcome the year’s ups and downs and — in some cases — post record-level success: "As Seen on TV" product marketers using traditional direct response methodologies across various media.
It’s no secret that direct response marketers have — in the past — turned difficult eras into boom times, using their ability to quickly bring products to market that meet the demands of the times and their agility in media planning to capitalize on an otherwise-shaken media marketplace.
Last year was no different as — according to PDMI research partner DRMetrix — "As Seen on TV" marketers’ media spend exploded in the United States, reaching heights not seen in more than five years. According to DRMetrix’s figures, during the initial stay-at-home orders last spring, "As Seen on TV" advertisers increased their TV media expenditures by 376 percent over the prior year period. In the initial post-quarantine period last summer, those massive increases continued, as the same marketers’ expenditures continued to be up 200 percent. (For more information from this report, click here).
As we considered this success, we began to wonder: what can the leaders in this space tell us — not just in the U.S., but also globally — about how their businesses fared during 2020, and why? So, we reached out to a select group of global direct response leaders with a series of questions. Four companies responded with intriguing feedback. The respondents include:
Tracy Coleman, head of international, High Street TV (United Kingdom)
Ken Daly, CEO, JML (United Kingdom)
Amit Khubani, vice president of international sales, Ontel Products (United States)
Andres Sunnah, partner, A3D Chile S.A. (Chile)
Read on to hear from them about their fears, successes, opportunities, challenges, and more during the past year.
What do you consider the biggest moment — professionally or personally — during the past year in living through the coronavirus crisis?
Tracy Coleman, head of international, High Street TV (United Kingdom): Thankfully our industry is entrepreneurial, multi-category, multi-advertising medium, and has the ability to reach our customers at the very time when they needed us most.
It may sound like a joke, but for some Brits, the closure of the traditional pub signified the very first sign of how grave the situation really was and brought the reality to our own doorsteps — as opposed to just a news story. The pub is somewhat of an institution and a very traditional part of people’s daily routines, where communities and friendships thrive. For me, personally, this signified the beginning of a new way of life for the Brits, and everything changed forever.
Ken Daly, CEO, JML (United Kingdom): It was the day in March 2020 that Boris Johnson the prime minister, went on TV and announced a national lockdown. Most of us had not experienced anything like this in our lifetimes, and at that stage we had no idea what to expect as a result of the pandemic. People thought that food could run out, and possibly infrastructure — such as power and water supplies — could collapse. It was a very frightening time.
Amit Khubani, vice president of international sales, Ontel Products (United States): The biggest moment for me was the realization that we were rapidly moving to a non-centralized workplace. Mobility software was being adopted by all generations of workers, even the generally slow-to-adapt baby boomer set. This impacted me both personally and professionally: personally, as to how to manage productivity with three children ages five and younger running around the home; and, professionally, on how to manage myself and a workforce working completely remotely, with likely similar but unique homeplace challenges of their own.
Andres Sunnah, partner, A3D Chile S.A. (Chile): Last year, without a doubt the most difficult moment for all of us was the uncertainty and the scope of the virus. From the family point of view, it was the uncertainty regarding our health. From the company point of view, we were not clear what the consequences would be, and we were not sure we would have the facilities to be able to protect our business. That is where the entrepreneur comes to the forefront — through spontaneous decisions, we managed a year that seemed very complicated.
What are the two key reasons that "As Seen on TV" marketers have fared so well during recent international crises?
Coleman: With closure of retail stores, more traditional shoppers were forced to other means of meeting their needs. Consumers were faced with being at home and occupying themselves with television — they were somewhat captive.
Consumers have also found comfort in getting deliveries of products they may not otherwise have considered, with more time on their hands to experiment with trying new ways of keeping fit, new styles of cooking, changing their routines, or even improving their home and garden.
Daly: We sell the kind of products that people need or want when they are stuck at home.
In addition, advertising has become more effective — particularly TV — as a result of more people watching and the reduction in competition, with many brands cutting their marketing budgets.
Khubani: The obvious here is increased TV viewership among our traditional best customers. The age-55+ customer, being the most vulnerable, has taken to spending evenings watching TV and cooking at home, rather than risk heading out. With increased viewership, response was bound to rise along with it. At the same time, mass marketers initially pulled ad budgets citing uncertainty — and we were able to secure media at very preferential rates.
Sunnah: The main thing is that this pandemic caused a clear increase in TV consumption — and also in online shopping.
What were the two biggest opportunities the upheaval presented to your business — and how did you capitalize on them?
Coleman: This was an ideal time to increase media spend on sale/clearance items, and we were able to capitalize early in the lockdown to clear through slower moving lines.
A massive spike in e-commerce activity opened the opportunity to do more with key online marketplaces, including refreshing content, and embracing new e-commerce initiatives — and even applying focus to new, more available, product categories.
Daly: To take advantage of the opportunities I noted above, we increased our TV advertising exposure, and we focused our marketing on the most appropriate products — categories such as fitness, personal grooming, home storage, do-it-yourself (DIY), cleaning, and pet care.
Also, we adapted our creative to highlight uses of our products in the home.
Khubani: The first opportunity was that the uncertainty of market conditions caused all importers and retail suppliers to initially scale back on the amount of product they were bringing in. This created a tremendous opportunity to take some of that retail space, and — because we had enough product in inventory already — we have been able to maintain that space with a consistent flow of product.
The second opportunity was likely the change in people’s buying habits and demand for the types of products they were buying. We saw an opportunity in certain categories (home office supply, outdoor, hardware, toys) and we were able to capitalize on the increased demand with both direct response commercials and targeted digital marketing, as well as supplying essential retailers with these heavily media-driven items.
Sunnah: The marketing opportunities came from the internet and social media side. Internally, the opportunity came from "teleworking" since it allowed us to lower office costs that were previously unthinkable. Our operators worked perfectly remote, and the online business grew 300 percent! We saw cost-saving opportunities in infrastructure and much development in systems and software.
What were the two biggest challenges the upheaval created for your business — and how did you face them?
Coleman: Availability of product from manufacturing sources was a bottleneck early on, and we moved quickly to support our manufacturing by investing into increased capacity and support high-volume stock flow.
Consumer confidence was uncertain at times, with so many unknowns going on in the world. We worked with our customer service teams to increase our consumer engagement and increase social media discussions to promote that we are always here, always available, and absolutely committed to supporting our customers.
Daly: The safety of our staff: we moved to home working for many of our team and provided a range of PPE solutions for those who continued to work in the office or warehouse.
Second, the closure of retail stores: we focused marketing on driving traffic to our website and the essential retailers that remained open. We accepted the government’s help by temporarily furloughing some staff whose roles were to visit retail stores.
Khubani: Uncertainty was the first. We have a responsibility to our stakeholders to maintain our business, and with mass retail closing up, the uncertainty in our ability to maintain a business was a huge challenge. Another challenge was maintaining the well-being of our employees. We were facing a public health crisis, and the bottom line is not as important as the people that make our business work.
We were able to overcome both challenges by remaining nimble and responsive to the market. We immediately instituted a work-from-home program, ensuring that our employees could operate in a safe and comfortable environment, and we responded accordingly to how the market was looking to consume products. Our direct-to-consumer business became a huge focus, as did becoming key suppliers to the retailers the world deemed essential. Being an entrepreneurial enterprise helped us stay focused, nimble, and responsive during a very uncertain time.
Sunnah: Undoubtedly, the permanence of the employees and the closure of retail for a period of five months were the main problems we encountered, especially on top of the social upheaval in Chile that began in October 2019. But, on the other hand, our negotiations with the retailers left us in a very good position for the next few years.
Was there anything new that your business tried during this time that worked? Anything new you tried that just didn’t?
Coleman: We enhanced online content and refreshed utilizing repurposed video assets to engage with customers in using their purchases, such as recipes, how-to videos, and creative ideas. This really worked and helped to build our database, generate repeat purchases, and build consumer confidence.
Daly: We started using shorter formats of DRTV that allowed us to advertise in a different way and to new audiences. This has worked well.
We’ve also increased social media and influencer activity. And we debuted numerous new products. Some worked, others didn’t. That’s the industry we are in!
Khubani: What worked for us was to lean into the essential retailers. With the ability to meet their demands, we solidified our position of becoming a key supplier. It worked very well because we were able to come up with new programs with large retailers that would become a huge part of our business. Instead of trying to be everything to everyone, as we had historically done, we focused on a few retailers and went deeper than we traditionally go.
What didn’t work is that we hopped on a few trend items in the PPE space that never panned out. Although there was great initial interest and purchases from retailers, we did not run these through our normal database selection model, and — ultimately — the customer did not respond by purchasing what we had to offer. We should stick to the data model that made us successful instead of jumping on the next "fidget spinner."
Sunnah: Basically, there were products that didn’t work in the past that became top-five products now — in the kitchen, exercise, and cleaning spaces.
How did shifting media inventory availability help your business find success during 2020 and into early 2021?
Daly: We have benefitted from availability of media as a result of some advertisers reducing their budgets.
Khubani: Tremendously! With mass marketers pulling their ad budgets, it allowed us to pick up remnant media at an incredible value. We are seeing that slow down a little bit, as mass marketers now are spending a ton on TV to capitalize on increased viewership, but we do expect it to still be somewhat favorable compared to years past.
Sunnah: That was the major issue: many big companies stopped investing on TV and turned to social media. That is an opportunity that we took advantage of 100 percent. We also were helped by the big portion of consumers staying home. TV plus social media was important.
How did you overcome the issues caused by retail store shutdowns?
Coleman: It was vital that we were fluid enough to pivot very quickly to the retailer e-commerce platforms and have a suite of enriched content to support that. We were in a very fortunate position, whereby a previous environmental strategy of migrating all of our packaging to be both MOB and retail store ready within one design.
Daly: Our business in the U.K. was 75-percent retail before the pandemic. COVID accelerated the growth of our D-to-C business, and our strategy has been to focus more heavily online and to expand our international distribution. We continued to service stores but had to temporarily reduce staffing and media exposure for retail at the start of the pandemic.
Khubani: The essential retailers that remained open had unprecedented demand, and when the retailers that were closed opened up, they also had incredible traffic and demand. Overall, we did better at retail this year than many years past, and we attribute that to stimulus checks, lack of spending on vacations and dinners, and the increase in our DRTV spend driving awareness. Oh … and Amazon.
Sunnah: We took advantage of new and big opportunities on the internet and in social media.
As 2021 unfolds, how are you planning for the stabilization of the media market and how that might restrict your company’s buying opportunities?
Daly: We are not anticipating significant changes to the cost or availability of TV media in the U.K. during 2021, so we are going to maintain our strategy that was successful throughout 2020. We continue, however, to increase our spend online.
Khubani: We expect a portion of customers to maintain 2020 habits, especially our key customers who are the most vulnerable to COVID. TV viewership will be high and — with that — our outlook on driving a business using TV remains bullish. Our marketing efforts are more omnichannel these days, as well, so we do see increases in budgets for smart TV media, and digital media in general.
Sunnah: We still believe in retail, but our own retail. Our plan to grow on our own retail and media — adding social media and online presentations — has worked very well since 2019. This means a big investment in software in order to improve during the next five years in digital sales.