Direct sales TV hindered by regulations

The following column, which appears each issue, looks at new and emerging trends in direct marketing. Alternating columnists are Barbara Canning Brown, a leading figure in the Canadian direct marketing industry, and David Foley, a specialist in database marketing programs.Any enquiries...

The following column, which appears each issue, looks at new and emerging trends in direct marketing. Alternating columnists are Barbara Canning Brown, a leading figure in the Canadian direct marketing industry, and David Foley, a specialist in database marketing programs.

Any enquiries about this news section should be directed to Mark Smyka, editor, (416) 408-2300.

Isn’t it great that we can turn on a Canadian tv station and know the Canadian Radio-television and Telecommunications Commission is protecting us from all those risque inventions such as infomercials, video shopping programs and direct response commercials?

Unless you are a chronic insomniac, you will never see an infomercial.

The Canadian Home Shopping Network (chsn) offers some nice products, but the presentation format is about as compelling as Uncle Harry’s slide show of his trip to a miniature golf range.

Hyperspeak

And to respond to a 60-second direct merchandise offer, you have to first understand hyperspeak (faster than the speed of sound), and be ready to pounce on a pencil to speedwrite the company name, address and 800-number in the three seconds or less it is flashed on the screen.

What is the problem?

Well, there is a dusty old piece of legislation called the Broadcast Act, policed by the crtc, that puts some heavy-duty restrictions on Canadian direct marketers’ access to these new marketing vehicles.

Canadian infomercials are restricted to the unregulated midnight-to-6 a.m. timeframe, while u.s. stations run infomercials at any time of the day or night.

Creative content

The longer format allows more creative content and more time to close the direct sale.

In effect, some extravagant u.s. productions, complete with Hollywood stars, are often akin to paid programming.

Shorter direct response commercials must fit within the current crtc restricted timeframe of 12 minutes of commercial time per hour.

Compare this with radio, in which some stations run commercial-free programming, and then group commercials together.

Plus, the tv home shopping services are limited to still pictures and alpha/numeric displays with voiceovers. No wonder chsn makes The Friendly Giant look like Star Wars.

You might ask who cares?

Certainly not those in the marketing/advertising world who are still ‘hunkered down’ in the trenches of good, old mass broadcast advertising.

They have not peeked over the edge since the advent of the 15-second spot. If they did, they would find the war ended, the battlefield overgrown and the noise they are hearing coming from a whole new battle they have not even joined yet.

Where is the new battle? Think about this.

The notion that targetted, directly measurable advertising is effective, cost-efficient advertising is catching on.

For direct marketers, this concept is, and always has been, the Holy Grail.

Some general advertisers are now joining the crusade.

In the u.s., about 20% of all tv spots fall into the direct response category. And, nearly one-third of all cable tv spots are direct response.

In 1990-91 in the u.s., direct response television (drtv) generated revenues of $6.45 billion: $2.2.billion from home shopping; $750 million from 30-minute infomercials; $500 million from two-minute direct response commercials and $3 billion from other drtv.

And how much of that revenue was generated from Canadian consumers watching spillover programming? Good question.

That is not all.

According to Advertising Age’s annual survey, agency revenue from drtv increased 15.2% in 1990 and another 13.4% in ’91 at $4.1 billion.

By comparison, agencies’ overall growth for the period was only 2.9%.

Comparable Canadian statistics, as is often the case, do not exist, or are sketchy. Simply applying the 10% rule means the Canadian revenue potential could be $645 million.

The fact remains that Canadian consumers are already buying products from u.s. infomercials and direct response ads. That means revenue lost to Canadian marketers.

And, I have not even touched on the future impact of interactive tv, direct broadcast satellites, digital video compression and fibre optics.

Fortunately, the news is not all bad.

Hearings

The crtc is in the midst of conducting public structural policy hearings.

The purpose of these hearings is to examine the crtc’s mandate to regulate the industry and the role of communications regulation in Canada.

It is hoped the outcome will determine how to restructure the industry in view of new technologies, the influx of u.s. signals and the need for additional services.

On their own

Canadian direct marketers, advertisers and agencies are on their own when it comes to winning the competitive war for new sources of revenue offered by new technologies.

It is hoped the crtc commitment is there to, at least, allow them the chance to get into the battle.

Barbara Canning Brown, a 20-year veteran of the direct marketing industry, is a direct marketing consultant specializing in catalogues. She was named Direct Marketer of the Year in 1990.