Remember when DRTV was new and exciting? Strategy Magazine February 22, 1993

Isn’t it nice that we can turn on a Canadian TV station and know the CRTC is protecting us from all those risqué marketing methods and new-fangled technological inventions such as infomercials, video shopping programs and direct response commercials?

Unless you’re a chronic insomniac, you’ll never see an infomercial.

The Canadian Home Shopping Network offers some very nice products, but, the presentation format is about as compelling as Uncle Harry’s slide show of his trip to Kanata.

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 3 seconds or less it’s flashed on the screen.

What’s the problem?

Well, there’s 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. time frame while American stations run infomercials at any time of the day or night. 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 time frame of 12 minutes of commercial time per hour. Compare this to radio where 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 haven’t peeked over the edge since the advent of the 15-second spot. If they did, they’d find the war ended, the battlefield overgrown and the noise they’re hearing coming from a whole new battle they haven’t even joined yet.

Where’s the new battle? Think about this

The notion that targeted, directly measureable 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. today, about 20 per cent of all television ads fall into the direct response category. And, nearly a third of all cable TV ads 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 spill-over programming? Good question.

That’s not all. According to Advertising Age’s annual survey, agency revenue from direct response TV 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, don’t exist or are sketchy.

Simply applying the 10 percent rule means the Canadian revenue potential could be $645 million.

The fact remains that Canadian consumers are already purchasing products from U.S. infomercials and direct response ads. That means revenue lost to Canadian marketers.

And, I haven’t even touched on the future impact of interactive television, direct broadcast satellites, digital video compression and fibre optics.

Fortunately, the news is not all bad.

The CRTC is in the midst of conducting public structural policy hearings. The purpose of the hearings is to examine the CRTC’s mandate to regulate the industry and the role of communications regulation in Canada. Hopefully, the outcome will determine how to re-structure the industry in view of new technologies, the influx of American signals and the need for additional services.

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. Hopefully, the CRTC commitment is there to, at least, allow them the chance to get into the battle.

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