Analysis: It´s Latin and It´s Direct, But Does It Work?

As technology is making advertising ever more measurable and companies increasingly demand quantifiable results, direct response advertising is growing in leaps and bounds. Definitely in the Latin market. The number of Latin direct response agencies has been increasing over the last few years.

Direct Response Advertising is designed to solicit a direct response which is specific and quantifiable. In addition, the delivery of the response is direct between the viewer and the advertiser.

Direct response advertising accounts for about 80% of all ad dollars spent online, while in off-line media the situation is reversed. Branding dollars in off-line media are estimated to make up about 75% of the market, Gian Fulgoni, chairman and co-founder of comScore, Inc., writes in an article on the ComScore blog. But also the off-line market is clearly moving to more direct response advertising. “Image/branding only campaigns are a thing of the past for most products. There has to be a direct response element that is measureable”, says Warren Zeller, Director of Strategic Partnerships at Eclipse Marketing Services, a Morristown, NJ based company that specializes in providing results-driven, direct marketing solutions to the cable TV and entertainment industries.

Branding and DR, an artificial difference

Marcelo Salup, Media Director at Miami based DMG Solutions, says that “many times, so-called experts will make artificial differences between brand advertising and direct-response advertising. There are differences only on the timeframe of the results, but good advertising, whether branding or DR is always geared at results. In DR we would like the result to be here and now and, because the advertising is more product oriented, we might not care to build a brand. In branding we still want results, but might want them next week instead of right now. I can't conceive anyone building a brand without wanting to use the brand to build a business selling premium priced products. When we speak about performance advertising, as opposed to only DR, we consider results both, from the branding side and from the “results right here and now perspectives.”

DMG Solutions buys media for clients including DirecTVMás, Continucare and Mapfre. DirecTVMás, the Hispanic satellite TV broadcaster, lures potential subscribers through direct response advertising receiving many thousand of phone calls per month.

How has the Latin Direct Response market evolved over the last 20 years, what are the most salient changes? To Vincent Andaloro, CEO and president of Latin Pak “What has evolved are the products we can use to reach them. Ten years ago we could use FSI, Door hangers, and Direct mail. All three of them are great vehicles that are used today. What has been added is email and mobile marketing which when used properly can be very effective. My emphasis on the word “properly” should be first in mind, since all of these services are great but each one offers a unique style of results based on the type of product being marketed.

There is a time to use mobile and another time to use e-mail. But when sampling or promoting a coupon, it's advised to use direct mail, door hangers or FSIs.

Direct mail (solo and shared mail) was one of Latinpak's main products when it entered the market in the midnineties, it has since adapted its product portfolio to the digital age. Direct mail, as a direct response oriented product, is still in the running.

Pay Tv for Latin Americans

Pay-TV is a classical media vehicle for direct response advertising. “Paid TV spots/direct response have proven a key vehicle for marketers. It is measurable down to the nth degree, it provides instant feedback, and can be a self-sustaining marketing support as products move to retail after proof of concept,” claims Randall Anderson, VP – Sales and Business Development at Listen Up Español, a Spanish language call center for the U.S. Hispanic market. Eclipse Marketing's Zeller agrees: “Pay TV's very targeted audiences allow for direct response companies and products to tailor ads that fit that group. $3million dollars for a 30 second spot in the Super Bowl will reach a lot of Hispanics across the US.” But take that same $3million and spread it across certain Spanish language networks over a period of time and I guarantee you will get a higher return on your investment.”

There are more than a dozen major media and telecommunications companies vying for the Latin consumer via Pay-TV. From spectrum reaches from Satellite TV providers like DirecTV and Dish, to MSO's like Comcast, Discovery and Time Warner Cable to Verizon FIOS, which is a bundled Internet, telephone, and TV service which operates over fiber optic communications networks.  “We are very bullish on the continued high growth of Latin cable because of the value it offers in a market that demands more ways to engage consumers. The public is also demanding more choices.

The pay-TV model sharply contrasts with the broadcast model by effectively delivering desired viewer segments that consume more and that demand better TV options”, says Victor Parada, Vice-President, International and U.S. Advertising Sales at Discovery Communications. Denira Borrero, VP of Operations at Omni Direct, a Miami based direct response agency that includes Ellezza, Xtreme Bra and Franklin Electronics among its client roster agrees with Parada: “Pay TV allows the DRTV marketer to target different group segments. For example, if a marketer wanted to target certain ethnic groups (e.g. Mexicans, Caribbean, and South Americans) or age profiles with various ethnic channels, Pay TV allows them to reach their preferred audience in a more precise and cost efficient way compared to open broadcast.” To the viewer, Pay TV gives the option to view original programming from their country of origin — keeping them connected and informed, in a familiar way, to their home culture. Borrero adds that also very important “to a DRTV marketer, is that Pay TV subscribers have typically a higher level of income and higher concentration of credit card usage.”

Most of the campaigns Omni Direct does for clients, utilize Pay TV as its primary media channel, particularly for testing. “It allows us the quickest, most efficient, mass market read for testing new DR campaigns.

With a proliferation of properties coming into this space over the past few years, it also gives us the scalability to ramp up and roll-out those campaigns that work. Despite the growth of alternate media channels, it still remains one of the most critical media channels in an integrated media strategy for direct response marketing.”

Eclipse Marketing's Zeller sees opportunities in a Latin channel for televised home shopping. Zeller provides advice to media entrepreneurs: “QVC and HSN are the best examples of successful direct response on Pay TV. If I were starting a cable network today, I would start a Hispanic version of QVC and HSN (Home Shopping Network). Not a channel that has Spanish SAP, but I would build the channel from the ground up. Focus on products that fit the younger more family oriented environment that characterizes a vast majority of Latinos today.”

Up to 30% lift in response with multichannel…

Multichannel campaigns can substantially increase response rates. Omni DirecTV's Borrero says that “We've seen anywhere between a 10 – 30% lift in overall response when we roll out campaigns to additional channels versus any one channel alone.” This number can increase significantly as frequency and recall have a compound effect over the life of the campaign.

Integrated marketing strategies tend to have a “surround sound” effect on consumers. That is, more and more, we see that high frequency on offline channels tend to drive sales on online channels.” “More is better, but not always affordable.” says Warren Zeller at Eclipse who takes the costs of running multimedia campaigns into account.

Print: Direct Mail, FSI´s, Magazines, Coupons, Etc…?

Print media, be it through direct mail, as discussed above, or newspapers and magazines can also have a strong appeal for direct response advertisers: FSI's (Free Standing Inserts), also called preprints ads, are inserted in to newspapers and shoppers as stand alones. FSI inserts are great for coupons and special offers which provide the consumer a direct call to action.

Despite all the talk about the demise of print media, Free Standing Insert Coupon Activity increased by more than 7.2 percent during 2010 versus the previous year to more than 291 billion Coupons dropped. This is the highest level of activity observed during the past decade by Marx, a Kantar Media company.

FSI's also work well when tied in with digital coupons. In Eclipse's Zeller experience “a video plus a digital and print campaign with a coupon available is the best way to increase traffic and measure its effectiveness at the same time. “The number of digital coupon events increased by 33.6 percent in 2010 as compared to 2009 across key websites tracked by Marx.

Additionally, 290 manufacturers distributed digital coupon offers in 2010, an increase of 17.4 percent compared to the 247 manufacturers that were active in 2009 across these key websites.

Home delivered or not? 

An important aspect impacting the response to advertising in newspapers and magazines is whether they are home delivered or not. Home delivery can more than triple distribution costs versus rack distribution. Hispanic newspapers Impacto USA (Orange County) as well as Hoy's Fin de Semana (Los Angeles and Chicago) and Impremedia's Contigo (New York, Chicago and Los Angeles) are free home delivered publications. Other publishers have a different model.

Orange County's Excelsior has an interesting model: 22% of its distribution is home delivered to requesters. Home delivered magazines in the Hispanic market include Nexos Latinos, published by Eclipse Marketing, Nexos Latinos is a quarterly magazine which is designed to entertain, educate, and create relevant value for cable products. The magazine was launched in the fall of 2009 and is distributed nationwide with a circulation of 900,000. Eclipse's Warren Zeller tells Portada that “there is no question that delivering anything to the home is more effective than leaving a publication in a rack in a retail environment “It also gives the home/apartment dweller the feeling that you “care enough for them to mail them” your publication. Mailing is definitely more expensive, but in the case of Nexos Latinos, we think it is worth it.”

Randy Novak, Director of Strategic Insights/Marketing at NSA Media, which has major retailers as its clients including WalMart, Office Depot and Sears, says that matching up messaging to the right audience, leveraging neighborhood insights, is a priority to him.

“FSIs are a major investment for our clients, so ensuring pieces are delivered direct to households that want them is critical. Our preference for any FSI delivery is always through a homedelivered product. To take it one step further, we also prefer paid or “Opt-in” based products that are audited. Most Single-copy/Rack products do not have 100% sell-through/pick-up rates, so any that remain with inserts included are waste, and costly to the advertiser. In addition, many rack delivered products are not dailies, so the product itself may outlast the sale cycle for the FSI. Most of our advertisers prefer to deliver within a day of the actual sale start date and many rack-delivered products do not align with preferred days of week.”

Established Habits Novak recognizes that the newspaper readership experience may differ based on established habits specific to certain geographic areas and cultural backgrounds. Therefore, we take these usage habits into consideration when evaluating the most effective FSI buy.”

Omni Direct's Denira Borrero notes that because most direct response campaigns rely on media vehicles to inform, sell and motivate the consumer to an impulse buy versus a pure branding effect, she has found advertorial formats or large, content rich ads to work best in a newspaper medium. “FSIs are not commonly used as a primary direct response tactic within either home delivery or rack distribution newspapers. However, they can sometimes reinforce content advertisement particularly for DR products that are also available in retail stores”, Borrero concludes.

This article was published in Portada's q2 2011 print issue. You can read it in digital magazine format here.