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Jun 09, 2005
Case Study

Can Late-Night Cable TV Ads Sell Online Subscriptions? Mixed Results

SUMMARY: What with paid search costs rising sharply in many niches, and the ever-hungry mouth of churn-rate to feed, subscription sites are testing TV ads. Can 60-second ads on late-night cable really sell subs? Discover one site's results. (Yes, includes creative samples and cost-per-media buy).
CHALLENGE


Launched in July 2003 by a team of ex-HotJobs executives, TheLadders bills itself as the source of ‘the most $100K+ jobs’ on the Internet.

However, unlike other job sites, TheLadders charges job seekers a subscription fee for access. There's no cost for employers to post an ad (however it will be reviewed by editorial and posting isn't guaranteed unless the job meets criteria).

The site doesn't accept any other ads either -- so everything depends on convincing job seekers to pay a subscription ... something they're not used to doing.

"That model, by itself, is our biggest marketing challenge," says Alex Douzet, Co-Founder and VP Operations. "We’re always fighting the belief that the job seeker shouldn’t have to pay." Subscribers have the choice of recurring (autorenew) payment plans: * $25 monthly * $100 for six months * $150 for one year.

According to Douzet, total registered membership -- an undisclosed mix of paid subscribers and free email newsletter opt-ins -- crossed the 400,000 mark in May, 2005. (Note: We conservatively estimate roughly 10% of these are paid.)

Job seeking by its nature has a built-in shelf life for most people. The site's churn rate is high for a business-related content -- the average subscriber lifetime value is 4-12 months. So the marketing team must constantly acquire new subscribers for the lowest cost possible.

Naturally they tried all the typical online tactics: paid search, Internet advertising, affiliate relationships, and email. But, following a wave of online sub offers from eDiets to NetFlix, in 2005 Douzet decided to test direct-response TV ads.

The media cost for off-peak cable ads was fairly cheap -- especially compared to rising prices for paid search. Plus, he hoped a 60-120 second commercial could educate and help convert subscribers more effectively than an online campaign someone might eyeball for a few seconds.

Douzet notes, "The goal was not to make money, but to get the learning and prepare for a rollout later in ’05 and ’06."

CAMPAIGN


Douzet decided to run a 10-week cable TV ad test from the second week of January through the end of March 2005. Job hunting is a seasonal process, with the month of January being the best and the first quarter relatively strong overall.

(Note: The fall is the second-biggest season for job hunters, with the summer and the months of November and December being the weakest.)

Tactic #1: First test medium not creative

In direct response, list always impacts results more than creative.

So, with a limited budget, Douzet decided to focus the test on the media buying side of the equation rather than the creative approach. "We didn’t have the budget to shoot three creative concepts," he says. "We shot one commercial in such a way that we could edit it into 60-second and two-minute versions." (Link to sample below.)

The bulk of the budget -- 60% to 70% -- went to the media buy. The 60-second commercial shows a man behind a desk. A male voiceover says, "Life is good, but have you taken your career as far as it can go? Because there are better jobs and better money out there." As the male actor looks out his office window, job titles and salary figures come into view.

The scene changes and the announcer stands beside a television set that displays key phrases. He says, "We’re the most comprehensive source for $100K plus jobs on earth. Each month, we present more than 14,000 new opportunities in marketing, finance, sales, law, HR and technology." This is followed by two video testimonials. The commercial ends with the original man in a large corner office.

Tactic #2: Buy lots of spots cheaply

The basis of most DRTV advertising is the ultra-cheap media buy. You don't care about which station, program, or time the ad runs -- all you care about is measured ROI. "We bought random rate. You don’t choose the time or the program, but you get a tremendous cost advantage," Douzet notes.

The team tested two distinct types of cable networks:

Test A: National cable networks including MSNBC, Fox, CNN, Discovery, and ESPN.

Test B: Regional news channels in key markets, including NY1 in New York City, Las Vegas 1 in Las Vegas, CLTV in the Chicago area, RNN (Regional News Network in the greater New York metro region), and CN8 in the mid-Atlantic region.

Douzet staggered the start dates for the commercials, which began running on the national cable a couple of weeks earlier than the regional stations, which didn't launch until January 30.

At the beginning of the campaign, Douzet estimated that the media budgets for the national and regional buys were about even. Once the first results came in, the team shifted the buys toward the stations that worked best.

Douzet set a budget of roughly $200,000. With the random rate, spots cost as little as $400 or $800, and TheLadders was able to run 2,500 one- and two-minute spots on national and regional cable television.

With a large sample of placements, "we were able to see how the commercial performed during many day parts, with different programs and on national and local stations," Douzet notes.

Tactic #3: Give viewers a reason to act now

The problem with the Web is that everyone knows it's available 24/7 ... forever. So, the team needed a way to move butts off couches that wasn't just "visit our site." Douzet says, "We decided to tie an extra-value offer into the commercial" to give viewers a reason to act -- and act quickly.

The offer was a 28-page downloadable PDF, ‘TheLadders Guide to Smart Career Moves,’ which the company produced in-house at a minimal cost. TV viewers were told to call or log on "in the next 10 minutes" to get a free copy. (Link to sample below.)

Since different spots had different toll-free numbers, TheLadders was able to track response by individual commercial -- the time, the network, the program, and the percent of incoming callers who claimed to make $75k a year or more already.



RESULTS


Regional cable networks beat the national networks in terms of ROI, hands down. After only four weeks, "we stopped the national cable and put 100% into local cable news programming," says Douzet.

Confirming his original hypothesis that TheLadders.com's upside-down business model required some explanation, Douzet found that the two-minute commercials were "much better."

"We ran the two-minute spots as much as we could, depending on the inventory available with certain channels," he notes.

"We estimated than 10% of the traffic during the period was related to TV ads, factoring for seasonality, and conversion was better on the Web than over the phone," he adds.

The commercials running on the regional cable news networks "generated 1,000 calls to the toll-free numbers and 300 phone leads" per run. Roughly 50% of those callers reported incomes below $75K.

Douzet explains that "the phone conversion rate was 20%-50% lower than online advertising (banner, search, affiliate) because we acquired mostly passive job seekers over the phone and people who only wanted the Free Career Guide." On the other hand,"people who came from the TV ads by typing our address in their web browsers in the regions where we ran the regional TV commercials had a better conversion rate than online ads," he says, adding that those conversions were 150%-200% better.

The site saw a 10% lift in traffic over the 10 weeks. The team also noticed an increase in the number of Google searches for the keywords TheLadders, the ladders, theladders.com or ladders.com. For the regional commercials only, "we were able to run baseline analysis comparing the traffic from two to three weeks prior to the campaign and two to three weeks post campaign."

For a day-part perspective, "what worked best was the end of the week and the early morning, between 5 a.m. and 8 a.m." (In comparison, Douzet notes TheLadders's biggest search marketing day online is Monday.)

Among the regional news networks, "CLTV and CN8 achieved the best cost per lead, $22 and $29, respectively. The national cable stations had a cost per lead that was five to eight times greater than the regional cable news channels."

Regional news networks such as CLTV, CN8, RNN, New York1, and Las Vegas 1 "performed at a slightly below breakeven, with some of the segments being above breakeven. This is good for a test and it gives us the learnings we need to optimize and plan for a rollout," Douzet says. "We are planning a second-phase campaign in the fall of 2005."

Useful links related to this article

Creative samples related to this campaign: http://www.marketingsherpa.com/ladders/study.html

Inter/Media -- The soup-to-nuts DRTV agency who handled this campaign from production to media buying for TheLadders.com: http://www.intermedia-advertising.com/

Electronic Retailing Association (DRTV association): http://www.retailing.org

TheLadders.com: http://www.theladders.com/theLadders

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