Response Magazine - September 2008

a price that will allow them to maintain an attractive selling price and a sustainable model for DRTV? Lee: It is definitely affecting the marketer’s margin and forcing more and more marketers to move to subscription-based modeling.

Orsmond: What we have seen is more U.S. companies considering setting up DR operations here in the U.K. The immediate advantage for U.S. companies is that they will benefit from the sterling-to-dollar exchange rate which still stands at $1.95:£ 1. The stronger pound definitely makes the U.K. an attractive market for American and Canadian DR advertisers right now.

Sarnow: From August 2007 until May 2008, the dollar dropped almost 20 percent against the Euro. For marketers that have products manufactured in Europe trying to sell those products in the U.S. market via television has become more difficult because of the rising cost of goods sold. From August 2006 until now, the exchange rate against the Chinese Yuan has only dropped about 15 percent, but the largest drop has been in the past 12 months. These numbers make it clear that marketers must have a downstream revenue alternative besides DRTV to make their projects profitable.

Stacey: Goods from China and many other places are priced in U.S. dollars. However, as the cost of steel, fuel and other imports has skyrocketed, manufacturers have had no choice but to pass these increased product and shipping costs onto the importer who may or may not be able to pass them onto the consumers or resellers. It’s important in this environment that marketers plan into their forecast and pricing models the probability of continual cost increases.

How are changes in the retail marketplace affecting DR
products that are seeking to find that ever-yearned-for
shelf space?

Bruckheim: Latin American retailers are becoming increasingly open to DR products, especially considering the amount of television exposure the products are getting. Concurrently, local distributors are multiplying their owned-and-operated stores in many countries, and adding to traditional retail sales significantly also.

Eden: It’s creating a more expensive entry to market. Many are finding that having a continued presence with one product or another is helping to break into major retailers.

Medico: Retailers love DR. The more an offer is seen on TV, the greater the sales at retail. Getting consumers into the store to buy is what our mutual goal should be.

Stacey: The retail marketplace has consolidated significantly, so there are fewer retailers but they are very large in size. Small marketers with “one-off” items will need to work through estab-

lished retail vendors or reps to get placement. It is increasingly important to have a differentiated and competitively advantageous product, with good media support, good packaging, good margins and good price/value proposition.

Given the current state of the DR industry, what would you change to ensure its continued health and growth? Bruckheim: In Latin America, pan-regional cooperation has always been an important key to success. That will never be more important than in the coming year, or we’ll quickly price ourselves out of the market. With a cooperative approach by product and media suppliers, we can ensure a more stable and profitable future for the clients we share.

Fays: My largest concern is ensuring networks and agencies take the time to hire young, bright, energetic people to support the business. Fair and just compensation needs to be discussed in our business to ensure some of the best and brightest young minds come our way as opposed to national ad sales. We, as an industry, have to invest in people or we are only fooling ourselves.

Lee: As a marketer, I would make sure that my vertical has touchpoints in all the various marketing channels.

Medico: As an agency, our ability to adapt to a client and his or her individual need is key. Having skilled workers to execute a plan in as nimble a way as possible is also crucial. There is enormous pressure on traditional marketers to succeed in developing a market for their products, and they see DR as a means to this end. It’s a golden opportunity for the DR industry.

Orsmond: In the U.K., it comes down to changing the OFCOM Broadcast Rules to allow a wider range of advertisers and products to be sold on TV channels. OFCOM also must allow infomercials to generate leads rather than just selling products within the so-called home shopping windows that are available on a growing number of U.K. cable and satellite TV channels.

Sarnow: Health and growth in the DR industry depend on consumers that believe the products that are offered on TV are reputable, well priced and deliver on the promises made. When marketers take shortcuts, looking for ways to make a quick buck instead of taking a long-term consumer-centric perspective, our entire industry suffers. If consumer confidence falls, then buying products on TV will take a backseat to the Internet and other alternative outlets.

Savage: Growth and prosperity will come with increased media availability across all channels and sellers willing to price their media affordably, based on its real value to the marketers who need it to reach their consumers. It’s up to the marketers and agencies to create compelling products and advertising to keep the consumers interested.