Direct Response Vs. Branding

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Are You Trying to Brand Your Yellow Page Ads?

More and more folks are trying to get into Yellow Page ad branding than are trying to get out of it. By definition, direct response advertising has more hard data to support it and the process of branding doesn't. Some of you folks are steamed at me by now, so I should say there IS a place for branding in the marketing process.

Large companies want to keep their “Name” in front of customers at all times. But the advertising process has been corrupted to the point where the focus becomes brand exposure rather than a more worthwhile goal of getting the customer to do the talking FOR you.

Obviously I'm focused on Yellow Page advertising results. But you should understand every advertising campaign should have a solid base of direct response tied to it. This isn't to say branding is "bad." But it should be understood, branding and normal public relations is more about keeping shareholders happy with their stock than any direct ties to profits.

Those managing to make the needed changes have discovered a Gold Mine resulting in larger purchases, more profitable purchases, and multiple, ongoing, repeat sales.

The cost of Yellow Page marketing marketing plummets when you create happy, raving customers who pick up the phone and call their friends and do even better promotion for your company than a room full of “marketing professionals” ever manage. Sure, it takes work to please customers.

And you, being the smart ones out there, know customer's are what it's all about.

Yellow Page Directory listings can be the one of the most trackable forms of advertising a business has. And since the cost is on-going and copy can't be changed for months, it makes no sense to not track it. Most every market has multiple directories with different deadlines.

There is always room for improvement and testing your advertising is the route to better results. It takes a lot of effort to make an extra 20% profit on your product or service. But if you can make a 50% to 500% improvement ( or more ) in your advertising and lower cost per new customer with effective, direct response advertising, doesn't that sound better?

Why spend advertising money in an attempt to make "impressions" if getting people to call you up and place an order is a better option?
Yellow Page Directory listings can be the one of the most trackable forms of advertising a business has. And since the cost is on-going and copy can't be changed for months, it makes no sense to not track it. Most every market has multiple directories with different deadlines.

There is always room for improvement and testing your advertising is the route to better results. It takes a lot of effort to make an extra 20% profit on your product or service. But if you can make a 50% to 500% improvement ( or more ) in your advertising and cost per new customer with effective, direct response advertising, doesn't that sound better?

Why spend advertising money in an attempt to make "impressions" if getting people to call you up and place an order is a better option?

Branding vs. Direct Response in Small Business Marketing and Advertising

Think your small business's advertising and marketing need to build your brand? Have you considered these important reasons why you should get some direct responses to pay the bills before dedicating resources to branding?




Too often, small business advertising and marketing campaigns prioritize branding at the expense of direct response--i.e., actually getting leads and/or sales right now. That is almost always a foolish and even dangerous proposition.

Small Business Branding Advertising and Marketing an Oxymoron?

Unless you're a ubiquitous consumer products company, the value of branding is far, far less than the value of direct response. What good is impressing someone with your brand if he or she never comes into contact with your business again—and why would they come into contact with your business again if you haven’t gotten a direct response?


Branding is essential for Coca Cola and Microsoft and Sheraton and all the other consumer giants because they don't need direct response. Their offering is available every time you drive down the street, so burning their logos into your eyeballs will actually make you more likely to buy. But if you have to search out the business, having a logo floating in your consciousness won't be enough to motivate you.


Even if branding alone could drive business, how long will it be before that logo or slogan or jingle has left your memory forever? A few hours? A day? One of the basic requirements for branding is repetition. Numerous repetitions. Like seeing the little Microsoft flag every single day, in the lower left corner of your screen, on your computer's case, in magazine advertisements and on television commercials. One visit to your website or one glimpse of your advertisement won't accomplish this—and remember, unless you have Coca Cola’s budget, one exposure is all you’ll likely get.


In reality, even numerous exposures to your brand might not be enough--you've got an awful lot of deep-pocketed competition in this game. People must be exposed to your brand again and again and again, not just for a certain span of time, but forever. Otherwise, your brand will get pushed out of their minds by all the logos that do appear again and again and again.


In contrast, if someone requested a whitepaper from you, or called in for more information, you would have their attention for much longer.


The two cases when branding make sense in marketing your small business

Direct Response Advertising, Is Everybody Really Doing It?

Many of products you use today got their initial launch through DR advertising: TheraBreath; OxyClean, the Ab Roller®… and the list goes on.

Ironically, many people think they know nothing about it and are not affected by it. It is the most unsuspecting, yet highly workable, marketing method today. Why? TV. A newsblaze.com article Why You Can't Ignore the Power of Direct Response Ads to Boost Sales, cites television as reaching a whopping 98% of the homes in the U.S.

And according to a study from the Electronic Retailing Association, called The Evolving Role of Direct Response Television in Multichannel Marketing Execution, multichannel marketers are growing the DRTV industry. (Multichannel marketing is offering customers more than one way to buy something -- for example, from a website as well as in retail stores.)

Bob Francis, the Vice President of Commercial Production for Event Management Services, Inc. is a pioneer in the world of direct response. With 25 years under his belt in the DR advertising industry and accolades like having been the creative genius behind the well-known 8-Minute Abs campaign, when Francis comments on what it takes to be successful in DRTV, people listen.

To hit it big with Direct Response, one needs:

• A product that has mass appeal

• A good ratio between hard cost & retail price

• An irresistible, generous offer -- give away way more than what the consumer pays for (Victoria Principal’s skin care line is a great example).

An added advantage is to have a consumable product. “Once they [consumers] like it, wear it or use it and get compliments three days in a row, you can guarantee when they run out they will buy it again.” says Francis. “Consumable products have lifetime customers.”

DRTV is not just for celebrities. Today’s small to medium businesses can reap the rewards. The benefits include:

• Building brand name recognition

• Retail backup – in other words, take your product with proven DR advertising and sales backing it up, that retailer is already ensured they have a product that is going to sell in their stores.

What’s the ultimate goal of DR advertising? Going to retail. George Foreman made millions before taking to retail. Jane Fonda’s videos were once sold via Direct Response – now you can even rent them at video stores.

Francis’ acumen lies in not only writing, producing and directing Direct Response ads, but also in assessing what products are viable candidates for this type of marketing approach. He imparts his knowledge to entrepreneurs from many different industries nationwide at marketing boot camps organized by Joy Gendusa, CEO of PostcardMania, and Marsha Friedman, CEO of Event Management Services, Inc.

One factor Francis claims he loves is disabusing entrepreneurs of the misconceptions of direct response advertising. Direct Response advertising is very workable today because:

• The costs of production is low

• With the advent of cable TV, media time is inexpensive

• You can target your audience with cable like never before

“You can’t just utilize one channel of advertising these days,” says Francis. “DR advertising coupled with an aggressive web and retail presence can boom your business.”

Bob Francis is one of the pioneers in the direct response advertising industry. Bob began his career in 1983 as the producer of the hour long infomercials for the Lowry Group and National Super Star, two Real Estate seminar companies. Bob's biggest and most notable TV commercial hit was "8 MINUTE ABS" which he wrote, produced and directed and which sold over twenty million dollars in the first eighteen months it aired. It is still being sold on the internet today.

Karla Jo Helms is the Vice President Public Relations for PostcardMania, (www.PostcardMania.com) named one of the fastest growing privately-owned companies by Inc Magazine. They help small businesses all over the country to expand through the use of direct mail marketing techniques. For more information on Bob Francis’ educational seminars, visit www.PowerMarketingMania.com

Are You a Direct Response Gazillionaire-in-Waiting?

There are more ways to get rich today than any of us can possibly imagine. And you don't have to accept lottery odds (one in 175 million against you) to do it!

• Everytime you turn on the TV and see a direct response commercial or infomercial for the gazillionth time ...
• Everytime you see a direct mail package or email blast that you've seen many times before ...
• Everytime you crack open a favorite magazine only to see an ad you can almost recite from memory ...
• ... You're watching someone win the direct response lottery -- and getting rich!

And I don't mean "copywriter" rich -- a measly one, two or three million a year. I mean filthy, stinking, obnoxiously rich. The kind of rich that gets you your own custom Boeing 767, 120-foot yacht and your own Caribbean island!

It's happening all around us. Ron Popeil, Billy Mays, Tony Little and scores of other folks -- none of whom is a single IQ point smarter or works one bit harder than you -- are raking in hundreds of millions of dollars through the Internet, direct mail, print ads, TV and radio. And they're living lives that you and I can only dream about!

A few years ago, Jay "The Juiceman" Kordich visited me in Florida. Over lunch, he said he'd sold more than $120 million-worth of his juicers in a single year.

120 MILLION buckeroonies!

Subtract, say, 50% for marketing costs, 25% for product costs, and you'd still have THIRTY MILLION SMACKERS left over every year -- just for promoting a contraption that turns apples into apple juice!

Gawd I love this country !

What's even better is that all these amazing entrepreneurs had to do was, 1) Find a product that brings value to people's lives, and 2) Offer it to them!

OK, OK ... so there's slightly more to it than that. Like finding and negotiating a fair price for the product ... perfecting your sales pitch and offer ... creating and testing your ads, blasts or TV and radio spots ... and making sure order-taking and delivery of the product goes smoothly for customers.

But the simple fact is ...

A few years ago, I heard a story about a poor inner-city family that inspired and shamed me at the same time ...

Nobody in the family was even close to being qualified to be an entrepreneur. There wasn't a single sheepskin from Harvard Business School hanging over the mantle. All they had was a passel of kids, precious little closet space and a boatload of common sense.

To make more room in each closet, Mom simply connected three coat hangers with twine, and -- Voila! -- she had instantly TRIPLED the family's closet space!

Next thing you know, that family wasn't poor anymore. They found a manufacturer who'd chain coathangers together and ran a small ad in their local paper. Then, they ran more.

Before long, they had a national infomercial -- and sold more than $100 million-worth of Mom's brainstorm in a single year!

Now, when I first heard this amazing true story, I was feeling sorry for myself. My main client had just been bought out by a bunch of nitwits ... I told them where they could shove it ... and my income had fallen to zero.

But this story humbled me. After all: If a poor family with no understanding of direct marketing and zero ad writing experience could make $100 million in a year, what in the hell was I moping about?

I was a direct marketing guy ... a copywriter with years of successful promotions under my belt ... living in the freest country on the planet! My only limitations were the ones I had placed on myself. My future could be just as rich and rewarding as I wanted it to be!

And so I picked myself up, dusted myself off, went to work, and in no time at all, I was earning MUCH more than my former client had ever dreamed of paying me!

If you answer, "A medium of exchange" or "The root of all evil," I beg to differ.

Money is nothing less than life itself.

I know -- that sounds terribly materialistic -- but please hear me out ...

See, when you first came into this world, you were naked and flat broke. Your parents may have been as rich as Rockefellers, but you personally had no posessions whatsoever. All you had was time -- a strictly LIMITED amount of it.

The average baby being born today comes into the world with a life expectancy of about 76 years. Since a third of that time -- nearly 220,000 hours -- is for sleeping, that leaves somewhere around 445,000 hours to spend any way it likes.

You can choose to spend each one of those hours playing, loafing, learning, loving, hanging out with family and friends or just experiencing life. Or, you can can chose to spend some of those precious hours working.

If you choose to work, you are choosing to trade chunks of your life in return for money. That money represents your life.

When I got my first job, I agreed to sell each one of my 445,000 available hours for $1.60 (the minimum wage at the time). For the princely sum of $64, the company bought the single most valuable limited resource I had: A week of my life; time that I would never recover.

At this moment, you are doing the very same thing. If you work, you are selling time that can never be reclaimed -- every working day of your life.

The only question that matters is: Are you getting a fair price for the precious chunks of your life you're selling?

... Or could you -- should you -- be getting much MUCH more for that precious time than you are now?

You may think of yourself as a marketing exec, copywriter, designer -- whatever. But what if you're wrong? What if you're really a direct response tycoon waiting to happen? What if just making one slight change in how you think about yourself could open the door to freedom and possibilities beyond your wildest dreams? Granted, direct response entrepreneurship is NOT for everybody. It may not be for you. But how can you know? Here are 7 quick questions that could help you find out ...

1. Do you believe you're worthy?

I'm often amazed at how many folks are convinced that they don't deserve anything better in life. Somehow, somebody along the line made them believe that success is for "other people" -- not them.

How about you?

I'm lucky: Early on, Mom convinced me that I was the smartest, handsomest, best-hearted kid on the planet ... that God Himself put me on Earth to fulfill a great purpose ... and that not only could I accomplish anything I set my mind to, I had an obligation to do great things.

Mom's appraisal of me became a self-fulfilling prophecy of sorts. Not because she was right -- but because she made be believe she was right. And so I set out expecting to be wildly successful in all that I did.

What about you? What do you believe about yourself? Are you worthy? Do your belief filters tell you that you're not worthy of the kind of success others achieve?

Or do you believe with all your heart that it's only a matter of time before you hit the big time -- until your entrepreneurial brilliance is revealed for all to see?

If you said, "I DESERVE to be just as successful as those guys on TV," -- and if you believe it with all your heart -- congratulations: You've taken the first step towards making it happen!

2. Do you have a dream?

Bad question. Everybody has dreams. Heck. I dream about talking Catherine Zeta-Jones into a hot tub. Think it's ever going to happen? HAH!

A better question would be ...

"Do you have a dream that so excites and motivates you that you're willing to invest the energy and the time necessary to make it a reality?"

I'm not talking about just the dream of building a successful business here. I'm talking about a healthy obsession with all the rewards that come along with success: The prestige ... the money ... the posessions ... the freedom ... and most importantly, the exciting, rewarding life experiences that all those things will put within your grasp.

If the thought of these things keeps you up nights ... if you feel a little tingle inside when you envision yourself enjoying them ... if your heart skips a beat when you imagine yourself having accomplished all this and more ...

... And if you're convinced beyond the shadow of a doubt that your obsession is powerful enough to keep you going when things get tough -- there is an excellent chance that you have what it takes!

3. Are you willing to learn what must be learned to succeed?

Every successful entrepreneur I've ever known shared one stand-out trait: They were willing, even eager to learn new things.

Now, my guess is, you already know a lot about direct response marketing. The question is, are you willing to recognize that you don't know it all -- and eager to do the legwork necessary to fill in the gaps?

Unless you're already rich and can afford top people to do the work for you, you're going to have to know how to create a business plan and a marketing plan ...

You'll need to figure out what you're going to sell, how to get it produced or where to get it wholesale ...

You'll need to know which media is most promising for your product, sales message and offer -- and how to buy it ...

You'll need to know how to construct an effective ad for your products (or how to improve the copy hired guns produced for you) ...

You'll need to learn the best ways to process orders and deliver your product ...

And of course, much, much more.

The great news is, the Internet gives you hundreds of ways to learn all this and more.

If the thought of going to school -- learning as you grow your business and growing personally as you learn -- excites you, you just may have what it takes!

4. Are you willing to take a risk?

Sure it takes money to make money. But that doesn't mean you have to have a million to make a million!

Promoting a product on the Internet takes next to nothing. You can get an html editor like 123 WysiWyg for under a hundred bucks and then create as many web pages as you like for nothing. You can drive prospects to your web pages using search engine optimization, pay-per-click campaigns and affiliate arrangements. And you can use onesource.com or oneshoppingcart.com to collect money from customers

Or if you prefer, you can do it all on eBay for just a couple hundred bucks per listing!

Or you can test local newspaper ads ... TV spots on local cable systems ... and radio spots in local markets for a song.

However you do it, you're going to have to invest -- and risk -- some time and some money to get started.

How does that make you feel? Terrified? Timid? Discouraged? If so, do yourself a favor: Do NOT give up your day job!

But if your heart races at the thought of risking a few hundred or a few thousand bucks to make tens of thousands or even millions, you just may have what it takes!

5. Are you willing to be patient and persistent?

Somewhere in the Bible, some guy wrote something like, "Despise not the day of small beginnings." Now, I'm no theologian, but I'm pretty sure that means, "Don't be too proud to start small."

With great advice like that, it's no wonder the Good Book's been on the best-seller lists for 2,000 years!

A few years ago, I spent a day at Bill Guthy's home in Los Angeles. Bill and his partner Greg Renker are the geniuses behind Guthy-Renker -- one of the world's most successful informercial companies.

But they haven't always been rich and successful. Once upon a time they were poor college students, trying to figure out what to do with a cassette tape duplicating machine one of them had inherited.

At first, they produced a series of "how-to" tapes and advertised them locally. Soon, they were advertising them on TV from coast to coast -- and being so successfull at it, they decided to begin promoting other products on TV.

Today, they sell hundreds of millions of dollars-worth of stuff on TV every year ... they're married to movie stars and live next door to rock stars.

But they wouldn't have a dime to their names if they hadn't made the decision to take a risk those many years ago.

Direct response marketing is the BEST when it takes to starting small. You invest, say, $2,500 to run an ad. You plow 100% of your profits into running two ads ... then 100% into four ads ... and pretty soon, your $2,500 is generating hundreds of thousands of dollars a month.

If you answered "YES" to all five questions above, maybe you should rethink your career ...

... Or at least augment it!

As a direct response marketer, you have an advantage that few of today's TV, Internet and direct mail millionaires had.

You have the tools to make yourself rich!

Instead of thinking of yourself as a copywriter or marketing exec, try thinking like an entrepreneur. It could make all the difference between dreaming about that big lottery win -- and actually living like a lottery winner!

Food for thought ...

Clayton Makepeace is a working direct response marketing consultant and copywriter who has helped his clients attract more than 3 million new customers … quadruple their profits … and rake in more than $1 billion in direct mail and internet sales. His daily e-letter, The Total Package, shares his proven response-boosting techniques with younger writers, business owners, and marketing pros. Find out more at http://www.makepeacetotalpackage.com.

Direct Marketing On The Internet

Direct marketing, unlike traditional marketing, is all about achieving a return on investment from your advertising spend and tracking the response from each individual campaign.

Direct marketing focuses on producing immediate profits or results. Traditional marketing is about ‘branding’.

The biggest difference between traditional marketing and direct marketing (apart from the immediate, identifiable profits) is that you can achieve all the benefits of traditional advertising with direct marketing, such as branding, but you can’t achieve all of the benefits of direct marketing from traditional marketing, such as immediate profits.

For example, let’s say you advertise in magazines, and you have ads in BRW, Forbes and Times, with each one costing you $8,000 for a full page. Traditional marketing would spend the advertising budget to advertise in each paper for the purpose of ‘branding’ with no real purpose except to let the public know about one of their products or, even worse, to let them know the company exists.

Direct marketing would spend the advertising budget in each paper but they would have a clear reason for advertising, would offer something of value and would provide clear instructions on how the reader can redeem that value, such as a free gift or a coupon. They would use different phone numbers in each of the advertisements so they could track how many sales were made from each ad, and what the ROI was for each ad. With this information, they can identify which ad produced profits and which ad produced a loss, then continue advertising in the profitable medium and stop advertising in the others.

Online marketing is the same. There are those companies which use traditional marketing methods (the vast majority) and there are those that use direct marketing methods (the successful minority).

In the offline world, direct marketing means tracking the results from newspaper ads, magazine ads, pamphlets, radio advertising and TV advertising… so that you know exactly how much profit you make from each advertising medium.

In the Internet world, direct marketing means tracking the results from pay-per-click advertising campaigns, search engine optimisation campaigns, email marketing campaigns, banner advertising campaigns, contextual advertising campaigns, affiliate marketing campaigns and everything you do to drive new sales to your business.

One of the advantages the Internet provides to direct marketers is the speed and ease of tracking all marketing campaigns, identifying profit centres and loss centres and then continually improving ROI from each marketing avenue.

Before the Internet, and even now, tracking response from offline advertising involved setting up multiple phone numbers and waiting (sometimes months) to see the results. On the Internet you can see results in as little as 24 hours and then adjust the marketing spend to suit.

If you want to generate maximum profits from online marketing then you must think like a direct marketer, where every dollar spent must bring back at least two or three times the investment.

Web Profits specialises in search engine optimisation, online marketing & web design, helping businesses generate profits from the Internet. For a free report on 'The Secrets of Online Marketing for Offline Businesses' visit Search Engine Optimization

The Fundamentals of Direct Response Radio Advertising

Direct response radio advertising, at its core, works in the same way regardless of what type of business you are in. Whether you own a direct-to-consumer model business, a retail business, a web business, or some combination thereof, direct response radio advertising can help you grow. And grow profitably. The fundamentals of direct response radio, then, must start with a discussion of how radio advertising works within the context of a basic business model. The purpose of this article is to convey the fundamentals of direct response radio advertising that apply across businesses.

First, Two Important Concepts

Throw out all you think you know about advertising, radio advertising, and especially direct response advertising. It's best to begin with a clean slate, a blank whiteboard so-to-speak. There are two important concepts I want to introduce before moving forward.

Concept One: Radio as A Highway From Your Business to Your Potential Customers

Think of radio advertising as a 5,000 lane highway from your business to groups (station audiences) of your potential customers. The many lanes on this highway are the many different radio stations and radio networks that are available for you air your radio advertisement. It is on these "lanes" that you send your message to your customers.

The lanes are clustered in such a way that they reach groups collections of customers who have similar tastes and demographic profiles. Therefore, some of these lanes lead to groups that have a high concentration of people who match your target customer profile. As a result, advertising on those lanes (stations) is more profitable than others with a lower concentration of your target customer profile. These groupings are the radio formats, which are used in radio advertising to enhance the efficiency of, or return on, advertising efforts. For more about radio formats, see our summary at http://www.strategicmediainc.com/radio-advertising.php.

Concept Two: Radio Advertising is a Profit-Driver, Not a Cost Center

At this juncture, the one thing many business people can't seem to put out of their mind is the one of "how much does it cost" to advertise on radio. We've written extensively about this question because it is one of the most common that we get. The problem is that imbedded in this question is the presupposition that radio advertising is a cost. The concept that one needs to fully grasp is that radio advertising is not a cost center. That is, it does not stand alone without any relation to revenue or profit. It is detrimental to think of direct response radio advertising as a cost because that leads to managing as though it's a cost, which means minimizing or eliminating it. Contrast this with managing it like it's an investment, and maximizing the return you realize on it.

Direct response radio advertising - by its very definition - is a profit-driver. If it's not driving a profit, it would not exist - or at the very least it would not be called direct response radio advertising but instead "brand" or "awareness" advertising. Profitability is a fundamental aspect of direct response radio advertising.

On To the Fundamentals

Now that we've cleared our minds and allowed for two basic concepts about how to think about radio advertising, let's move on to the meat of the fundamentals of direct response radio advertising.

The Basic Formula

We'll begin with the basic formula involved in all direct response advertising:

You buy placement in radio media to air your radio ad, which gets your message broadcast to a certain number of people. This results in a cost per person reached with your message. In advertising this is known as CPM, or cost per thousand impressions of your ad.

Some percentage of those people will respond (call, visit your web site, visit your store), giving you a response rate.

Of those who respond (otherwise known as leads), a percentage will be converted into customers (orders), and by that conversion rate generate profit and revenue.

From this formula, you will derive your media "CPO", or "cost per order", which is found by dividing media spend by the number of orders achieved with that spend (media spend in the numerator/number of orders in the denominator). This is the amount it costs you in radio advertising to acquire one new customer, which is why it is also called "cost per acquisition" ("CPA").

The important question at this point is this: Is the lifetime value ("LTV") of each of your customers, on average, greater than this CPO? This fundamental question applies whether your business is a direct response advertising business (which includes radio advertising, print advertising, DRTV, catalog, or internet) or a traditional retailer. Every business pays to acquire a customer, and every business has a certain propensity to retain that customer over a period of time in a relationship consisting of subsequent purchases and therefore profit streams. Regardless of whether your business uses direct response radio to acquire new customers, or it uses one of the other approaches to customer acquisition, your success will be fundamentally based on whether your business model facilitates a strongly positive lifetime value. If it does not, there is little that radio advertising, or any other form of advertising, can do to change this.

If your LTV is not greater that your CPO, your business isn't profitable and you'll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you'll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.

Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let's look at three of the main ways:

1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn a lot from this. Identify widely appealing, complementary items and ensure they are offered as part of the sales process.

2. Increase repeat purchase. You have paid to acquire that customer, now develop a relationship and continue to meet their needs to drive repeat purchase. If they only buy once from you, you don't have a very viable business unless that first purchase is incredibly high margin.

3. Reduce your cost structure. Take advantage of your increased volume to negotiate better product costs, shipping costs, etc.

Improving Cost Per Order

Just as there are a number of ways to increase LTV, there are also many ways to decrease the CPO.

1. Reduce the media cost per person reached. Also known as CPM, this is a standard metric used in advertising. It reflects the cost to reach 1000 people. (remember that CPM stands for "cost per thousand" impressions of your message). This is a constant focus of any good direct response radio agency, and the element in direct response radio advertising that has received the most attention. This is why every dollar of media in direct response radio is remnant advertising. But that's not all that should be considered when looking to reduce CPM. Leveraging database technology and using scientific testing methodology, it is possible to identify the optimum schedule to use in placing the media. Thus optimizing the media schedule can meaningfully reduce CPM.

2. Increase response rate. Again, media scheduling will play a role here. In addition, use of radio formats to effectively target the right customers is vital to optimizing response rate. But perhaps the greatest impact on response rate in direct response radio advertising is the messaging in the radio ad itself. Great direct response radio ads significantly enhance the responsiveness of the media dollars spent. Your radio agency's ability to create radio ads that elicit response from your potential customers is a crucial element in direct response radio advertising success.

3. Increase conversion rates. Increasing the percentage of inquiries that become customers can have an enormous impact on campaign profitability. The factors that will most impact conversion rate are your sales scripting, web copy, product offers, pricing, and your guarantee or return policy. As much as any other variable, these factors need to be tested and continuously refined.

Implications and Conclusions

Now that you understand the fundamentals of direct response radio advertising, let's look at the implications and conclusions that these fundamentals illuminate:

1. The role of database technology and analysis
By now it is clear that optimizing both lifetime value and cost per order maximizes your business profitability. But doing these things also requires capturing and analyzing an enormous quantity of data. To do this in a way that allows for distilling insights requires a robust database specifically tuned for direct response radio, along with well-refined analysis approaches. Fortunately, database technology and robust analysis are a part of the services your radio agency will provide for you.

2. The importance of ongoing testing
Any discussion of the fundamentals of direct response radio advertising (or any type of direct response advertising) would be incomplete without addressing the topic of testing. When you look at the above approaches to maximizing campaign profitability, you see the key metrics that must be impacted. But how do you actually impact them? How do you know whether offer A is better than offer B? or C? How do you know whether copy D drives a better response rate than the control? How do you know whether the sales scripting or the pricing structure could be improved by certain changes? The only way to know these things is to test. As a result, testing is a never-ending element in direct response radio advertising efforts. If you are not testing, you are slowly going out of business.

3. Success in direct response radio advertising is about more than costs
As we've mentioned, one of the biggest questions we get is "how much does it cost to advertise on the radio?". Done correctly, direct response radio advertising is not a cost center, it's a profit center. It's a very efficient way to acquire new customers at a low CPO. To learn more on the topic of radio advertising costs and how to budget for radio advertising, see our article at http://www.strategicmediainc.com/radio-advertising-articles/.

4. Nearly any business can grow profitably with direct response radio advertising
It is difficult for me to think of businesses that cannot benefit from the kind of radio advertising that we are involved in. Direct response radio advertising is different from other forms of advertising because it is accountable for results, and the only way it can be accountable is to leverage a set of technological and human systems and processes to accurately capture, analyze and interpret results of the advertising. Once you have that in place, you have established a continuous improvement loop. Therefore, provided you have a profitable business model and a good product that delivers on a unique and relevant promise, your business can profitably acquire new customers with direct response radio advertising. That's the ultimate promise of direct response radio: the ability to grow your business profitably at the rate you want to grow it. Once you establish profitability, you need only increase your media spend to drive higher revenues and profits.

The Fundamentals in Perspective

Direct response radio advertising does not stand alone in creating a business. It works in combination with your business model to acquire new customers at a low, and therefore profitable, CPO. What makes direct response radio advertising so attractive is its efficiency and flexibility, which results in comparatively low CPO's relative to other mediums.

This article explains the fundamental elements involved in how nearly any business can use direct response radio advertising to acquire new customers and grow both profitably and rapidly. Once you understand the fundamentals of radio advertising, you're ready to embark on the process of building a direct response radio advertising campaign. That process involves developing a radio advertising strategy, creating radio ads that drive response, and implementing a radio media plan that delivers your message to the right people for the right cost.

Jeff Small, CEO of Strategic Media, Inc., a leading direct response radio advertising agency. Jeff Small has over a decade of experience building profitable direct response radio advertising campaigns. Learn more about profitable direct response radio advertising strategies at www.strategicmediainc.com or by calling (207) 871-9958.

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