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SmartResponse today launched their new company website - www.smartresponse.tv SmartResponse have redesigned their website to promote their specialist full service offering within DRTV advertising including creative production from script to screen, TV media buying/planning and dynamic in campaign optimisation. The new website showcases many of their most current DRTV adverts, publishes their latest blogs and also includes details regarding their new press buying/planning and creative division - SmartPress.

SmartResponse Media, the full service specialist DRTV advertising agency, are pleased to announce they have launched a new press and inserts media buying/planning and creative division called SmartPress. They will now offer their incumbent and new clients a specialist press direct response focussed media buying/planning and creative service. SmartPress will be buying across 350 press titles in the UK to offer the best value in the print marketplace to their growing client base. Typically both press and DRTV advertising are indexed heavily against the mature audience segment. SmartResponse believe that by co-ordinating print and broadcast media both in terms of creative execution and media buying/planning they will give their clients a strong competitive advantage looking ahead to drive the profitability of their future direct response campaigns. Pete Mills, Managing Director of SmartResponse, commented: “We are very excited by the launch of the new SmartPress division and look forward to extending the success of our clients across DRTV and press platforms looking ahead”.

Thinkbox, the marketing body for commercial TV in the UK, has just published a detailed case study for the DRTV advertising activity of Kärcher the premium home and garden brand - SmartResponse couldn't be prouder to work with this great company producing their DRTV adverts, coordinating their DRTV media buying/planning and campaign optimisation. Kärcher’s DRTV business – Success Upon Success Key Points Kärcher wanted to drive their direct-to-consumer business in the UK They tested longform advertising to assess which products were the most responsive As a result, the UK D2C business has grown significantly and they have seen a halo effect across retail Challenge Kärcher are innovators, known for their quality and design, with a big foothold in the Pressure Washer sector and a lot of love for their Window Vacs. However, there was also a feeling that Kärcher’s depth of range was little known and this was an area they wanted to address. Kärcher UK had high aspirations for their direct-to-consumer business, recognising this as an area they needed to grow. As a regular TV advertiser with 20 and 30 second brand adverts, TV was not a new concept to their marketing team, but they had yet to test the waters with direct response TV advertising. The challenge was to drive awareness of the Kärcher D2C website and grow D2C sales. There were also specific objectives which were to deliver a sales to advertising ratio of 3:1 (£3 in sales revenue for every £1 spent on media) and to grow brand awareness and desirability. The TV Solution SmartResponse Media were tasked with developing Kärcher’s inaugural DRTV programme. With such a depth of range, SmartResponse’s advice was to find out as much as possible as quickly as possible about which product lines were the most responsive. The client and agency taskforce created a strategy to find the winning product lines and then to push forward with an ‘always on’ strategy with the proven winners. Working with SmartResponse, Kärcher selected ten different products to test with DRTV. The creative was filmed across three days in a studio setting to create an ‘as live’ format, which was then combined with Kärcher’s existing footage to create eight 4.5-minute advert segments, two 9-minute advert segments and two 30 second promo elements to run between the product segments. These segments were then formatted into two 30-minute infomercial shows to showcase the products and to test whether Kärcher was going to be as successful in DRTV as the team believed. The Plan The advertising first launched in 2020 with the aim of educating people about the range of products and high quality that Kärcher offers and engaging as many people as possible on a limited test budget. The 30-minute longform media test was planned across a broad range of both Editorial and Shopping Channels. The majority of longform ads aired early in the morning, where the fixed costs per spot are inexpensive and was therefore the optimal time to test multiple products within the same parameters. The advertising drove an immediate discernible sales uplift from day one of the campaign launching. As with all DRTV campaigns, as the campaign built, so did response. Three very clear winning lines were identified (SC 3 EasyFix, FC 3 Cordless Premium and K 4 Premium Full Control Car & Home) within ten days and these then went into the next phase, which involved a DRTV campaign of 180-second spots. These three-minute ads continued for the remainder of 2020, through 2021, 2022 and into 2023. The continued programme of the three-minute DRTV campaigns were planned to reach the desired audience depending on the product being advertised. Kärcher’s product range targets a wide variety of audiences, so stations were selected based on this. The spots were placed in daytime only, as this was the timeband that had been proven to deliver the optimum return on investment. An average monthly weighting was in the region of 80 TVRs across two product campaigns. Campaigns were continually optimised by day of week, upweighting key times within the month (e.g. around payday) and by TV channel. All optimisations were analysed and proven to have a pronounced effect on the client’s ROI, whilst also delivering longer terms benefits of brand awareness and affinity. Results Kärcher increased their whole online D2C business by 400% in sales in the first year of running Direct Response TV advertising, very much aided by the unusual Covid19 lockdown and shift in working from home lifestyles Kärcher have continued to see D2C growth on 2020, in both 2021 and 2022 DRTV campaigns continue to perform very well for Kärcher despite a challenging economic environment, with Dec ‘22/Jan ’23 campaigns delivering a 313% increase in Daily Sales Revenue for the advertised products during this key sales period, a 71% improvement in Conversion Rate and a Peak Sales Revenue vs. Advertising Investment Ratio of 10:1 The campaign created significant search volumes and improved traffic to their D2C website dramatically DRTV products account for a significant proportion of the overall web sales There was a halo effect of TV seen across other products and in an uplift of retail sales Kärcher have seen some incredible results from DRTV, the top response drivers delivering Sales to Advertising ratios of 25:1 at the peak “The team at SmartResponse are professional, know their stuff and deliver outstanding service. They are great to work with and we at Kärcher have all had fun working with the team whilst more than meeting our business objectives”. James Gordon Marketing Director, Kärcher Databank Sector: Homewares Brand: Kärcher Campaign objectives: To drive sales and profitability through the Direct-to-Consumer website Target Audience: ABC1 Adults Budget: initial budget £80k for creative and £90k for the initial two-month longform media test Campaign Dates: The test campaign ran from 1st Jan to 28th Feb 2020 and the campaign has continued since then with DRTV ads on in most months TV Usage: 30-minute longform DRTV airtime, followed by three-minute spots ongoing from April 2020 right through to 2023 with some 90-second and 120-second cut-downs Creative Agency: SmartResponse Media Ltd Media Agency: SmartResponse Media Ltd

There is an ongoing debate on whether marketers are increasingly spending too much of their advertising budget on Performance marketing and not enough on Brand. The argument being that focussing on the short-term will be at the detriment of longer-term building of brand equity. Some say that while Performance media delivers immediate measurable results, it is very difficult to use it to drive that all-important brand awareness, affinity and trust. Direct Response TV (DRTV) doesn't fit neatly into either of these terminologies. Despite driving both immediate measurable returns and brand effects, it is all too often a missed opportunity. · DRTV is mass market, can deliver brand messages, emotional response, awareness, differentiation and trust; and ultimately long-term brand growth…but it isn’t categorised as Brand advertising. · DRTV delivers immediate, measurable and often huge impacts on search volume, site visits, retail sales (both online and offline) and that all important pound for pound return on investment…but it isn’t Performance marketing per se either. So, is DRTV a hybrid then? Do we even care? I suppose what really matters is, for those who can put the historical connotations to one side and are ready to dip their toe in the DRTV waters, DRTV really does deliver. In an era where every penny needs to count, this lesser used form of TV advertising is a media that can be used to satisfy both short and long-term business goals.

During recent meetings with senior retailers in both traditional bricks and mortar and online space SmartResponse note how much of a concern, not a commercial benefit, this relatively recent consumer buying annual event of Black Friday is perceived to be by ‘the trade’. Retailing has and will always continue to be both a seasonal and ‘event driven’ business. Since the advent of Christmas commercial urban myths – and some reality – dictates that the last two weeks of trading pre December 25th are often the key determinates in whether household name retail brands make annual profit, or losses. Black Friday has fundamentally changed the profile of Christmas forever… The layman’s view of Black Friday – now established in both retailers and the public’s mind alike as a key marquee date akin to the imminent Father’s Day event profile – from recent SmartResponse observations is nothing less than a ‘poison chalice’ from a commercial and operational perspective. In essence the US imported Black Friday phenomenon of offering standard discounts of up to 20% on the last Friday of November has distorted Christmas retail trading that is already becoming increasingly unpredictable as the consumer continues to adopt an increasingly multi channel buying behaviour. So Black Friday not only changes the buying and stock management dynamic of Christmas for any retailer at a macro level – as discounted sales are inevitably brought forward – it also challenges the multi channel capacity and operational efficiency of any retail business. There are a myriad of stories circulating that retailers just could not cope with consumer demand in 2014 for Black Friday and this year are bracing themselves for an even greater ‘spike’ in sales for Black Friday 2015. SmartResponse has yet to hear an entirely positive view from the trade about Black Friday – in essence it appears to be a competitive obligation and must have event for key retailers. Any successful Black Friday will therefore be governed by any given retailers ability to embrace the operational challenge and to be able to deliver the initial Christmas rush.

Bricks and mortar retail is undergoing a significant accelerated contraction with 17,000 physical outlets closed during 2022 in the UK alone. This figure is predicted to grow during 2023 driven by several concurrent factors: continued growth in online consumer purchasing, punitive operational costs for retail stores and broader sector competition. Many Retailers and Brands alike have been over dependent on their high street presence to drive their businesses forward for too long. However, this material sector wide change also signifies a growing commercial opportunity to expand their own online sales operations, by adopting a profitable performance-based business model in the future. Retailers can capitalise on this by concentrating more on bolstering their web presence to reflect the consumer profile of purchasing habits - 26% of all UK retail sales are now being made online - and to drive a more consistent ‘lifetime value’ business model. Ongoing direct contact and promotion with their customer base will build online business and greatly reduce future operational costs. Brands who focus on building online business can enjoy cashflow, margin and the longer-term benefits of dealing directly with their end-customer. They can also loosen dependence on high street retailers, who have been known to dictate consumer pricing and demand increasingly higher margins than can be generated from their own online direct sales operation. In addition to the high street becoming increasingly less significant the growth of Amazon, with 90% of UK shoppers using the platform and over 13million using the Prime service, has also dramatically altered the overall UK retail landscape. Some of SmartResponse’s clients have seen that this significant shift in purchasing behaviour has also led to consumers often buying from Amazon as a result of seeing TV advertising campaigns, even if the platform has not been specifically mentioned as a listing outlet in the TV commercial itself. In fact, the online direct sales achieved have in some instances been greater via Amazon than on their own advertised dedicated websites. Whilst clearly a percentage of Amazon sales generated from a DRTV advertising campaign will be replacing existing online sales there can also be no doubt that a proportion are also incremental too as the total UK digital retail economy continues to mature both in terms of scale and consumer preferred buying behaviour. Over the festive period when footfall was disappointing and sales were reported down in many high street outlets, those clients who continued to be on air with DRTV advertising campaigns not only generated significant increases in profitable direct sales via their own and other digital platforms, but they can also now nurture lifetime value with their growing online customer base. During challenging economic times those Retailers and Brands that continue to adapt to the rapidly accelerating changing environment will prosper especially if their marketing campaigns are augmented with effective and attributable DRTV. Those whose presence remains too dependent only on the high street will inevitably find commercial life increasingly difficult in 2023.

The constant barrage of bad news from both government and all areas of the media leads to the unwelcome conclusion for UK based companies that a deep and potentially lengthy economic recession has already started. Many high street retailers exhibited extreme caution this year in wholesale stock ordering for the key final ‘Golden Quarter’. Added to this Amazon reported a quarterly loss in October (the first since 2015) coupled with several recent significant high-profile casualties in Eve Sleep and Made.com. Marketing budgets for brand TV advertising are being materially cut in the future as companies brace themselves for a potentially bumpy road into 2023, and beyond. The future, however, is not dark for all marketers as a recessionary environment has typically been kind to those brands, products and services that rely on direct response marketing as a means to drive their profitable sales and market share. The consumer during tough economic times typically cuts back on discretionary spending for entertainment and spends significantly more time watching TV at home. This change in behaviour coupled with brands cutting back on their marketing spends in TV then drives the cost of TV airtime down for advertisers. The increase in online purchasing behaviour and engagement – which grew dramatically during the pandemic years of 2020-2021 – will create a perfect storm and welcome opportunity for direct response TV (DRTV) advertisers in the coming months in the UK. Previous recessions, including after the global financial crash in 2008, teaches those in the DRTV advertising industry two pertinent commercial lessons: 1. There is a significant opportunity for those brands who are willing to embrace direct marketing and take commercial advantage of the soft TV airtime market during recessions. 2. DRTV advertisers due to the inherent supply/demand dynamics of TV airtime pricing and change in consumer behaviour prosper during challenging macroeconomic times. With the assistance of lower media costs, DRTV planning/buying and campaign optimisation the future can indeed be bright…

This week Meta Platforms, the owner of Facebook, for the first time in its quarterly financial reporting history found itself in very unknown territory – passing on bad news to the markets. This update resulted in the company share price plummeting by 26.4% in one day leaving Mark Zuckerberg struggling by on a reduced $90billion estimated personal net worth. The primary drivers behind this extreme nervousness from Investors is two-fold – reduced daily users on the Facebook platform that are clearly now being attracted to younger and more desirable competing social media platforms, including TikTok, and also a significant drop in advertising revenue. Since the introduction of the App Tracking Transparency Policy by Apple in April 2021 the effectiveness of Facebook advertising has been materially reduced. Many consumers opted for privacy in the iOS Apple update last year, therefore greatly reducing the amount of information that Facebook can collect on their users for targeting purposes. This was previously their standout strength as a media owner. This has made Facebook a much blunter advertising proposition for many companies and brands that primarily measure success by the hard financial metric of Return on Advertising Spend (ROAS). By way of comparison, since the onset of the pandemic in March 2020 direct response television (DRTV) advertising has experienced a significant renaissance with markedly increased viewing audiences especially during daytime, lower commensurate media rates and a growing consumer propensity for online shopping for products and services. Many established and new DRTV advertisers are now seeing record profitable ROAS from their broadcast activities with some recent campaigns in Quarter Four 2021 producing a ROAS of over £10 sales for every £1 invested on DRTV airtime. Prior to the pandemic linear TV was, in some circles, being written off as yesterday’s marketing. A huge amount of brand investment was migrating to digital media buying activity and in particular paid for social media. However, this marked shift in 2021 looks set to be here for the long term, and many brands are now looking to the potential of DRTV advertising to grow their businesses profitably whilst concurrently driving mass awareness. Times are certainly changing in this new privacy restricted dawn.

Facebook has enjoyed incredible commercial success with their advertising services allowing brands to target their audiences precisely, cost effectively and in volume. Historically, their unique algorithms have generated some of the best returns on marketing investment for many UK companies. In the past weeks and months, however, there has been a very significant decline in performance for a large percentage of Facebook UK advertisers, driven primarily by the introduction of the recent Apple iOS 14 upgrade. In short, if a user opts into this new Apple software upgrade on their phone then this effectively prevents Facebook from tracking the user’s behaviour, therefore undermining the efficacy of the Facebook pixel that is placed and operational on advertisers’ websites. Whilst Apple may argue this move is to protect consumer privacy, their new iOS system undermines all Facebook reporting, conversion tracking, lookalike generation and dynamic remarketing – the platform’s key differentiating strengths – and ultimately advertiser performance. As 80% of users access Facebook via their phone, this development from Apple is causing a great deal of commercial harm. Whilst a proportion of all Facebook users may opt in to being tracked and sharing all their personal information with Facebook, looking ahead there can be no doubt that recent well publicised controversies around their poor privacy policies and data leaks cannot be helping the take up of this option. In the UK many advertisers in recent years have opted to launch and scale their brands on the Facebook platform, and have to date achieved great success prior to this aggressive move from Apple. Business confidence has already taken a major hit in the last quarter with some industry observers predicting 60% fewer website sales on a like for like basis from Facebook advertising investment, due to the now diminished key personalisation of their media delivery. The good news is that, in the ever-adapting pandemic media landscape, TV remains very good media value. Since the initial national lockdown in March 2020, TV has grown in terms of audience levels and continues to deliver excellent cost per thousands and return on investment for clients. Facebook has been a great direct marketing medium for brands and advertisers utilising audio visual content in recent years, but this severe dip does not look like it is going to be resolved in the near-term. Many marketers are now looking to move their valuable media pound into advertising that continues to offer excellent returns on their investment. Seeing this is an opportunity to take their learnings and invaluable experience in direct selling on this online platform, and instead invest in the established medium of Direct Response TV advertising to drive their businesses forward in 2021 and beyond.

Systemic societal changes brought on by the pandemic have caused growth in TV viewing and buoyed the DRTV advertising industry in the UK. At the outset of the global pandemic in March 2020 there was certainly fear in the UK TV advertising markets about what the future would hold in terms of both audiences and respective revenues. Whist many major TV advertisers pulled out of the market almost overnight in Quarter Two 2020, as the first national lockdown was ordered by Government, an unexpected surge in home TV viewing occurred. This was driven by the vast majority of people now working from home as staff deserted their offices, coupled with mass news consumption. These concurrent macro market influences drove down the costs of TV airtime to levels unseen since post the dot.com crash in 2001. This has meant that many advertisers who operate their own D2C business, particularly those in the DRTV sector that traditionally broadcast during daytime, have flourished in the past year. Thinkbox, the marketing body for commercial TV, have recently published their audience viewing summary for 2020 that shows traditional linear TV remains in rude health with increases in viewing of both live TV and Video on Demand (VoD). This is despite the fierce competition from the key players in the Subscription on Video Demand (SVoD) field; Netflix, Amazon Prime and Disney+, amongst a myriad of other digital platforms vying for viewer’s attention. The headline news is that live TV and VoD have both seen significant increase in viewing against both the 16-34 year old demographic, and also ‘all adults’ in the last year. In terms of viewing, 92% of all video advertising was consumed on both live TV and VoD. Some major broadcasters are reporting year on year audience uplifts of 30% during the daytime daypart, and DRTV advertisers have on the whole enjoyed a bumper start to 2021. Looking ahead, the Government continues to grapple with the fine balance of opening up the UK’s economy, including the extension of the furlough scheme to September, and managing the mass vaccination programme and the potential existential threat of a third surge of COVID. This material societal uncertainty has continued to drive a sustained systemic change of culture of working from home, and TV audiences are predicted to stay at enhanced levels for the foreseeable future. In many recent surveys, of both employers and employees, up to 50% of workers will be unlikely to returning to the office in the foreseeable future. This migration and fundamental change in daily working habits will continue to drive incremental audience ratings of television in the months ahead, but in particular during the daytime daypart. Whilst the COVID crisis of the last 12 months has had a devastating impact on the economy and the vast majority of the entertainment industries, it has also strengthened and grown traditional TV viewing as well as growing streaming platforms in the UK – so the future is starting to look brighter for TV advertisers and particularly those in the DRTV sector.

As Jeff Bezos stepped down this month as CEO of Amazon in many ways his ubiquitous brand has reshaped the retail landscape forever, customer expectations have been raised beyond all recognition and become the standard by which the sector as a whole now is judged. It is easy to be distracted by the monopolistic sales figures that Amazon now enjoys with over 50% of all online sales in the US being transacted through their platform and over 125million Amazon Prime members in that country alone. The UK is not far behind with one in three online sales being handled by Amazon. This truly global business, which now delivers over 10 billion items per annum and employs 840,000 staff, has been built on simple principles; always putting the customer first, innovation and being patient. From starting as a standalone online book retailer Amazon has achieved its goal of becoming a mass market retailer that offers an unrivalled range by category backed with highly competitive pricing and unmatched customer service and efficient delivery. In addition, as a brand Amazon has successfully managed to extend into data services, entertainment production, audio devices and most recently ventures on the traditional high street retail with the purchase of Whole Foods and now opening its own fully branded stores. At the very core of its commercial proposition Amazon has been a combination of burning ambition and relentless consumer focus. Its ability to enter new markets with both efficiency and precision and to take a long-term view with both the public equity markets and investors – it took 14 years for it to book a net profit – place it now in an unassailable dominant market position. For traditional high street brands Amazon was undoubtedly underestimated in the first instance at its inception in 1994, when the internet was in its infancy, and has increasingly grown into a very difficult competitor to cope with and left many traditional retail brands struggling or buried in its wake. Brands also quickly realised it was virtually impossible not to list their products on Amazon and maintain market share and, either as wholesale customers or adopting their hugely successful Fulfilment by Amazon model, migrated en mass to their platform – further undermining the bricks and mortar retail business model. For those retailers willing to adapt to the market presence of Amazon they’ve been a key motivating factor in upping their multichannel offering and customer service. It has been encouraging to see in recent weeks several UK retail brands including Dixons, Dunelm and JD Sports delivering excellent financial results for 2020 despite the epoch changing challenges presented by COVID, and the continued growth of UK pureplay retailers including Boohoo and ASOS who are experiencing exceptional growth and profitability. No doubt all retailers now measure their own service levels and execution against that of the ever-evolving Amazon. As Jeff Bezos takes up his Chairmanship and focusses on the myriad of his other interests including space travel and publishing, both customers and the retail sector alike are respectful for the pioneering, exacting and constantly disrupting spirit of Amazon that has created a standard that all retailers now need to aspire to in order to succeed. As the exiting CEO described in his letter to Amazon shareholders in 2019: “We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.” The unrelenting process of growth for Amazon will undoubtedly continue after the founding CEO now steps upstairs…

During the year 2020 there have already been many fundamental changes to the UK retail landscape with consumers radically changing their buying behaviour from March-June during the first phase of the Covid-19 pandemic crisis. As Government enforced restrictions limited choice on the high street, many customers have reverted to buying their products and services from direct to consumer retailers and brands. With the latest announcement from Government regarding the lockdown from November 4th-December 2nd the traditional bricks and mortar retail sector, which in recent months in the UK has shown some shoots of recovery, will again greatly suffer in the coming four weeks which typically are some of the most lucrative in the annual calendar in the run up to Christmas during the so called Golden Quarter. For many traditional retailers who have embraced Black Friday in late November they will now also will miss out on this pre-Christmas sales phenomenon entirely in 2020. In recent months we have already seen many household name retail brands submit to the financial pressure brought on by the global pandemic entering administration. Coupled with wider macro-economic pressures of increased unemployment and low commensurate forecast GDP growth in 2021 we can only anticipate further casualties on the high street next year. It is currently very unclear whether the latest lockdown will in fact cease on December 2nd according to some senior Government Ministers who openly question the ever-optimistic Prime Minister’s assertions. More worryingly there does not appear to be a clear policy looking ahead that can deal with Covid-19 on a mid to long term basis without endlessly reverting back to a cycle of opening society for limited periods with significant restrictions followed by subsequent stringent lockdowns until a vaccine is both proven and widely circulated nationwide. This level of uncertainty spells extreme pressure for multichannel retailers especially those who are over exposed to high street locations and retail space, but who’s direct to consumer marketing policy and operational infrastructure is still not aligned to the requirements and expectations of the ‘new normal’ retail customer. Since March 2020 direct to consumer brands and retailers have in many cases experienced unanticipated expansion – Amazon have recorded 37% growth in sales growth in the third quarter alone – but many brands and retailers have also faced unexpected operational challenges presented by this new growth opportunity that has occurred so suddenly and are struggling to cope. Looking ahead into the highly unpredictable year of 2021 it would appear that the online pureplay retail businesses will expand yet further in terms of the overall percentage of the retail market. During the coming decade the tipping point of 50% of all retail purchases being online will inevitably become a reality much quicker than any industry forecaster had previously predicted. Traditional brands and retailers can certainly take advantage of this rapidly changing commercial environment in terms of selling considerably more of their merchandise directly via online and DRTV advertising, but it is also inevitable that those who have been slower in recent years to adopt a strong direct to consumer marketing approach prior to the pandemic will need to act fast and invest in D2C to be able to survive and thrive in the coming period.