• How Video Direct-Marketing Can Help You Grow Your Business
• Effective Doesn't Mean Expensive

• For products that are distinguished by motion or sound; prospects can see and hear the benefits
• For products that are complicated to explain or need to be demonstrated; you can be sure your message is getting through completely and accurately
• For big-ticket and prestige items; a video says "you are important"
• When you want to show prospects how you perform a service or manufacture a product, to demonstrate quality, precision, etc.
• For big products; a video lets you bring it right into the prospect's home, at their convenience
• When you have great testimonials or expert endorsements to share

From Florida, Bob Steele Chevrolet reports:

You don't need a degree in statistics to figure out that a 4-10% response rate is better than 1/2 - 1%. That's the difference between direct-mail video and a brochure, according to a number of car dealers in Florida.

Vaughn Communications' Tampa office teamed with CAR Advertising of West Palm Beach and Digital Domain of Tampa to provide an affordable turnkey solution to help car dealers get more customers out to their lots for special sale events.

"What we are able to do is make video direct-mail very easy and very cost-effective. By leveraging our size and experience, we can take costs out of the system and still provide a top-quality product. With our resources and facilities, we can get a title out the door literally over the weekend," commented Vaughn Sales Rep Ric Everett.

"This type of video is not going to win any Academy Awards," said Doug Olzenak, Vice President, who heads up Vaughn Communications' Video Duplication Division. "It doesn't have lots of special effects or big-name actors. What it does have that makes it a winner is good, clear communication and a message that gets to the right people at the right time. At the right price. That's the value we add."

How Effective IS Video?

Many studies over the years corroborate the persuasive effectiveness of video. The Wharton School of Business showed that video boosts comprehension and retention by 50% over a live presentation. Other industry studies have shown that video expedites buying decisions by 72% versus print. And that six times as many people prefer a video to printed information.

Recent case studies indicate that 97% of videos are watched at some point. Because of their high perceived value (roughly $10) videos have staying power - unlike a print piece that will more often than not be trashed upon receipt. Some studies suggest that as many as 94% of video direct-marketing recipients will pass their copy along to another viewer.

An obvious advantage of video over print is that video involves more of the senses; it sells your product or service using sight, sound, and emotion. So your prospects are more engaged, and thus more likely to be convinced.

Three Uses For Direct-Marketing Videos

Begin thinking about how to use video for marketing your product or service by understanding three basic types:

• Video Direct-Mail; you mail your video directly to a targeted list
• Video Direct-Response; you send your video to prospects who request it after seeing your "free video" offer in another media (e.g., an infomercial, a direct-mail brochure, a magazine ad, an Internet homepage)
• Video Premium; you offer a video either free or at a significant discount as a purchase incentive

Each one of these types has its most appropriate applications. For instance, to build traffic quickly, a twin cities grocery chain uses video direct-mail when they open a new store. They send videos directly to most of the households in their sales area, because they know that consumers shop where they are familiar. It's hard for people to go into a new store and orient themselves to a new layout, different graphics, etc. Essentially, the video takes them on a personal tour, in the comfort of their own home, at whatever hour of day or night they want to go. That makes potential customers feel comfortable trying the store, so comfortable that up to 40% of them come in (response varies with incentives; 40% achieved with a video including a $5 off your $25 purchase if you bring this video in offer).

Video direct-response makes most sense for companies with limited audiences (e.g., for big-ticket items, exercise equipment, recreational vehicles). By allowing customers to self-select the target audience, video becomes a very cost-effective tool. Lexus automobiles, for example, knows that only a small percentage of the population will be interested in purchasing one of its luxury cars. So they started with a print piece offering a free video. From the 11% who responded, an amazing 5,500 cars were sold - over an 8% conversion rate for a truly big-ticket item.

Giving a premium as a purchase incentive is a time-honored promotional tool that needs little explanation. Videos make exceptional premiums due to their high perceived value, and the high percentage of homes with VCRs (over80%). Time-Life and Sports Illustrated are noteworthy examples of businesses that have exploited the potential of video premiums to the fullest. Generally, video premiums are most cost-effective when a company has existing video footage (e.g., bloopers) to edit.

What's It Cost?

Many people dismiss video due to the misperception that it will be too costly, but it doesn't have to be. In fact, in terms of cost per conversion, with today's new lower cost technologies video may be cheaper than print.

Production costs vary greatly, depending on quality, length, locations, special effects, etc. Industry experts generally use $1,000 - $2,000 per finished minute as a starting point to estimate costs. Many companies already have video footage (from sales meetings, training programs, and corporate orientations) which can help keep production costs down. New shooting and editing technologies are also making video production more affordable than ever.

Mailing lists costs vary greatly. You may have a house list that you can use for the cost of maintaining and printing it, you can purchase lists that reflect specific demographics, or you can create a self-selecting list using a direct-response front-end device.

Duplication costs have come down dramatically in the last five years, partly because new technology has made extended play (EP) a quality playback-mode choice; that means less tape and less time.

Packaging costs are another variable with a huge range, from simple to extravagant and everything in between. Prices start at about a dime for a basic slip-case, to $3 on up for elaborate presentations.

Distribution costs include mail handling and sorting, plus postage. Small, relatively lightweight packages typically cost 35-40¢ for standard bulk-rate postage; large packages often require first-class postage due to size.

A ballpark estimate for duplicating, packaging, and bulk-mailing a 10-minute EP videocassette in a standard package is between $1.50 - $2.00.

Back-end fulfillment includes whatever you plan to do to close the sale; telemarket, follow-up, respond to reply cards, whatever. Again, costs vary greatly depending on what you do.

Not Just For Big Companies Anymore

All of this is to say, direct-marketing video isn't just for big companies with huge budgets. With new technologies making both production and fulfillment more affordable, businesses from car dealerships to photography studios are finding that even small campaigns reap big rewards.