Backchannelmedia

Gulfshore Business, May 1, 2004

The tech advantage: DRTV firms integrate advanced software systems in an effort to work better, smarter and faster. (Software)

By Bridget McCrea

Just five years ago, customers calling Moulton Logistics in Van Nuys, Calif., to find out where their orders were could expect a response that went something like this: "It was shipped four days ago, and you should be receiving it in another day or two. If you don't get it by then, let us know."

Fast-forward to 2004 and that same call is handled in a much different fashion, from the accuracy of the information to the way that information is accessed. With just a few computer keystrokes, the customer service agent accesses Moulton Logistics' order management system, which is tied to the freight carrier's package tracking system. Using the Internet, that agent can pinpoint the exact ship date, the current location of the package and a precise delivery date.

The end result is satisfied customers who know exactly when their DRTV products will arrive on their doorstep. "Thanks to technology, we can tell customers as much as the carriers themselves can tell us," says Larry Moulton, president and CEO of the full-service DR fulfillment company. "With major carriers, you can pretty much pinpoint the delivery to a specific day, or even a two-hour window in which the shipment will be delivered."

Moulton Logistics, which also uses technology-based reporting systems that its DRTV clients access via the Web--both in batch and real-time formats--is one of many fulfillment firms that saw technology as a critical business tool several years ago. Until recently, the firm's software supported the functions to get product in and out the door. "We've gone beyond that," says Moulton, "to hosting Web sites, answering customer service calls, coordinating freight, supplying retail sales, authorizing credit cards and managing continuity programs."

In the DRTV world, technology usage isn't limited to a campaign's back end. Everyone from the script writers to the producers, from the media agencies to the payment processing firms and everyone in between are using the Internet, software and sophisticated hardware systems to gain an edge in today's competitive business environment.

At the heart of the movement is the Internet--a "large player" in every firm's business strategy, says Moulton. "The Internet is giving everyone crucial information in a timely manner," he says. "The faster the information can be digested the faster adjustments are made to squeeze profits out of a [campaign] that might otherwise die."

Tech Budget

New York-based E&M Advertising has had its own in-house media tracking system for about 10 years now. Originally, the vertically integrated DR marketing and advertising firm used a Windows-based system, designed years before Microsoft would take its stronghold in the operating system space. After tweaking that application several times over the years, E&M developed its current, more flexible "MMS" system.

"The original program didn't allow for the kind of flexibility that we needed to work with the growing DRTV industry," says Michael Medico, E&M president. "We needed a system that could look at information in different ways, and our previous system couldn't accommodate that."

Where companies like E&M have had to jump through hoops, says Medico, is in budgeting for technology investments and finding programmers who can create programs that meet the needs of the DRTV industry. "We've learned to budget at least twice as much money for our technology investments, so if a new program costs $100,000 we'll figure on spending $200,000," he says. "Getting programmers who truly understand DR and who can think like a DRTV media buyer hasn't been easy, although most of the ones we've used have been quick studies."

In return for what he calls an "enormous financial investment" and the learning curve that comes with any new technology implementation, Medico says his media buyers are now more efficient than ever, mainly because they can review and analyze media quickly and accurately. "It's automated a process that previously was handled manually," he explains. "These days when we go into new business presentations, our technology is an important part of how we try to distinguish ourselves from our competitors."

One company that has helped media buyers achieve that kind of competitive advantage is COREMedia Systems Inc. of Fairfield, N.J. As the developer of CoreDirect, a complete buy management and response analysis that more than 75 DR agents and in-house buying services are using, the company helps advertisers measure and analyze calls and track sales cycles, then COREMedia ties that information back to the media execution.

Company CEO and founder Glenn DeKraker says the fact that an increasing number of Fortune 1000 and brand advertisers are turning to DRTV makes technology all that much more important to the industry. "Advertisers who traditionally used Nielsen ratings as a measure of performance turn to DR analysis to truly measure media results," says DeKraker.

Follow the Leader

DRTV companies seem to approach technology in the same way that they approach the direct response industry itself: no one wants to be the guinea pig on a new piece of expensive technology, but if someone else tries it out and it works, they'll jump on the bandwagon. Compare it to the way knock-offs come out of the woodwork in the wake of a successful show and, well, you get the picture.

"Once one person does it, everyone else jumps on," says Medico. "We were one of the first to use spot monitoring technologies, because as soon as we found out about it and adjusted our systems to accommodate it, we jumped on it."

"There's a lot of this 'I don't want to be the first guy to do this,' mentality in the industry," says Doug Winslow, CEO at Advanced Interactive Sciences (AIS) in Palm Harbor, Fla. He's seen that mentality firsthand, as the maker of a "virtual human agent" speech recognition tool used for marketing applications.

Early on, Winslow says convincing potential customers of the technology's value for upselling and cross-selling by phone, without the overhead expense of a live operator, was challenging. "Now that we have some traction, we're seeing more activity," says Winslow, whose products sell for a $1,500 to $4,000 set-up fee plus eight to 14 cents per minute for usage time, depending on volume.

Integrating Technology

When a DRTV company does decide to install new technology applications, the rewards can be significant. Take Backchannelmedia Inc. of Boston, for example. The company spent seven years trying to find a better way to run a media-buying company, taking into consideration fragmentation and Web technologies. According to President Michael Kokernak, that meant developing a proprietary suite of software applications that rely on Web-based functionality.

"It was a hard process, with years of sleepless nights," says Kokernak. "The result is a system that incorporates all major processes from the telephone, fax, E-mail, Web and internal applications into a flexible and customizable suite of media buying and planning services."

For DRTV firms that have yet to realize what technology can do to streamline their processes and improve efficiencies, Kokernak says, "take any preconceived notions you have about the DRTV industry out the window and start with a blank piece of paper." He also suggests first getting buy-in at the executive level, instead of starting with the part-time information technology guy who maintains your Web site.

"It really has to come from the president down, and not the other way around," says Kokernak. "You must also be willing to take the time to make it work, and continually update company stakeholders, including clients and vendors, about how the development and implementation are going."

And instead of trailing behind as an "also-ran," Kokernak advises companies to become more progressive in their thinking, and to be more proactive about integrating technology into paper-intensive operations that have traditionally been handled in a manual fashion. "Companies are going to be forced to keep up with innovation, and will eventually adapt out of necessity," says Kokernak. "That doesn't mean just buying a single software application and plugging it in, but truly changing and improving processes."

But remember, says Michael Ross, vice president of business development for Los Angeles-based inQ, what's hot today in technology circles is probably going to be cold tomorrow--an environment strikingly similar to that of the DRTV industry.

"The DRTV world understands that once you launch a campaign, you have to watch the metric for a few weeks, then pull back, tweak it and roll it out again," says Ross, whose firm develops chat-based upsells or "chatskins," served to online customers following a transaction. "Technology has facilitated the study of the analytics and the numbers, the ability to get real-time results from a Web presence--just like you can now in a call center environment--and ultimately determine the success of a show."

Ultimately, Moulton says the customer will drive DRTV firms to adopt more technology in their operations, with an eye on delivering information and knowledge to those clients in a seamless, affordable fashion that just 10 years ago was inconceivable. "The better everyone gets at digesting information, the more they thirst for [it]," Moulton explains. "The firms that can best understand that demand will flourish. If you can't pass information that people need to manage their business, then you're not going to be a player."

Slow to Adopt?

Some industries get technology; other industries don't. Just where the DR world stands on the adoption scale depends on whom you ask. "I'd say they all embrace it very quickly," says Larry Moulton, president and CEO of Moulton Logistics in Van Nuys, Calif. "If anything, once you offer them something new, they say, 'This is great, can you do more?'"

Once in a while, Moulton Logistics will take on a client who needs more education on the value of technology in the DRTV world. But once they realize how much information is at their fingertips as a result of technology, they ask for even more specific information.

Michael Kokernak, president of Backchannelmedia Inc. in Boston, comes at the technology adoption issue from a different angle: that of a media-buying agency that spent seven years developing a proprietary system for handling the process. In his eyes, the industry as a whole is behind the times, though he sees a change in the cards.

"I think what we will be experiencing over the next few years is a 'changing of the guard,' as the founders of the industry begin to take a lesser role and new companies begin to fill the technology vacuum and bring in a more robust platforms," says Kokernak, who adds that many DR companies struggle with the integrating new technologies because it takes years of dedication to understand how everything links up."

Michael Ross vice president of business development for inQ in Los Angeles, says a recent E-tailing conference in Palm Springs paints a picture of an industry that's already embracing technology. "Everyone from the traditional DRTV firms to the online retailers to the bricks-and-mortar companies with a Web presence," says Ross, "are keyed into the value of analytics, numbers and conversions."

Take the DRTV spot, for example, which in the past relied on a toll-free number to drive sales. Today, Ross says more marketers are driving customers to Web sites, knowing that the acquisition cost online is significantly less than using a call center. "Online conversions, analytics, cost-per-order and search engine optimization are all critical for DRTV firms," says Ross. "They know that if they can roll that same return on investment into the equation--with the additional revenue falling to the bottom line--that it can only help the success of a campaign."

Copyright 2004 Advanstar Communications, Inc.

Copyright 2004 Gale Group Inc. All rights reserved.