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A CONVERSATION WITH CCM MARKETING SLO firm has found comfortable niche in advertising world; billings in 2003 reached $25 million By Leslie E. Stevens Originally published September 29, 2004 by The Tribune CCM Marketing, one of the largest buyers of advertising time on the Golf Channel, handles a national roster of clients, but it is little known in its hometown of San Luis Obispo. The company places direct-response ads on network and cable television stations for the likes of Cleveland Golf, Sony Music and Balance Bracelet. Earlier this year it closed a $300,000 deal with Bell helmets for a three-week ad campaign and projects year-end bookings of about $28 million. Despite the firm's current success, it got off to an inauspicious start. Company founders, Suzy da Silva, 32, and Nicole Licata, 34, launched their 3-year-old company only two months before the Sept. 11 terrorist attacks sent the advertising world into a tailspin. Recently, da Silva and Licata talked with The Tribune about how they guided their company through that turbulent time and how they view the future of direct-response advertising. How does direct-response advertising work? Licata: If you have a product, we look at who you want to target and in what locations. We take the commercials and put together a media buying plan based on your budget and put your ads on TV. Da Silva: We track all the phone calls that come in and the orders received. We also do up-selling in addition to the product you are offering on TV. If a customer buys your golf clubs, for instance, we might also offer to sell them a training video to go with it. For some clients, it is like free advertising -- they sell their product and get their name out there at the same time. Direct marketing is becoming more popular -- the Home Depot, Dell and Gateway all use 800 numbers as a way to generate orders and add names to their databases so they can sell directly to known customers. How do costs for direct-response ads compare to traditional brand advertising? Licata: Direct-response advertising typically costs a quarter of regular brand advertising because stations know they have to generate sales from 800 numbers that run in wide time slots, say from 4 p.m. to midnight. It uses up open programming slots, so you can buy more spots for less money. Say you have a budget of $5,000 and you want to do a local TV test. We set you up with the television people, and ideally you will generate enough sales to recoup all that money and then some. You also get a customer database you can mail additional information to. How does tracking advertising response differ between direct marketing and brand advertising? Da Silva: With regular television brand advertising, it is hard to measure how much additional business you have done based on the advertising dollars you spent. With direct marketing, you can measure that by the next day with the calls and orders you get, rather than when the next Nielsen numbers come out. What we are best known for is our direct response. But we also do branding ads and use Nielsen, too. With over 100 stations available nowadays, there is a lot more inventory that allows direct marketing to run. It's a very good way for our advertisers to target their audiences. How did the fallout from the Sept. 11 terrorist attacks affect your new company? Licata: It was awful. We both gained 25 pounds and lived off credit cards. We didn't take a paycheck for a while. We already had client relationships established since both of us had been in the advertising industry for 10 years each. That helped a lot. People would ask for us and found out we were here. Da Silva: The Golf Channel needed people on television to get their ad revenues. The three of us got together to look at what our clients could do to be profitable -- maybe the station had to lower its rates or give bonuses. We also went back to our clients and said you can't get off the air, or you won't sell your product and you won't be able to stay in business. Every TV station had to compromise to help advertising clients survive -- without them, none of us would survive. How did you fund your business until it became profitable? Da Silva: I called my credit card company and asked them to increase my credit limit to $40,000. I hung up and purchased our computer system. That was our biggest expense. As we got media placements, we paid off the credit cards. Licata: We started with four or five good clients who had been with us for years. We have increased our bookings every year since we started by about 50 percent annually. The first year we booked about $5 million, and this year we expect to book about $28 million. Da Silva: Last year, 2003, was our first profitable year. It wasn't much, but it was still profitable. Are there any drawbacks to running a national ad agency from San Luis Obispo? Licata: No, so much of our business is done with e-mail, fax and the telephone. Da Silva: It makes a great place to visit. Our clients love coming here. Some clients have actually stayed in one of our two homes or we put them up at a nice place like the Cliffs in Shell Beach. What are your future plans for the company? Licata: We have such a stronghold on golf, we never want to lose that, but we would like to add more and different types of products. Da Silva: We hope to do more Fortune 500 companies. Right now, we do mostly TV and radio. Maybe we'll expand into print and possibly international sales. We would also like to work locally with Web designers, and we want to expand our contacts to work with more local clients. Do you see any barriers to your expansion plans? Da Silva: There could be if the whole advertising area changes. TiVo and video on demand eliminate a lot of advertising. For the most part, I still see everything functioning as networks. I think we will have some ups and downs while everyone learns which technologies will survive. Will that lead to new advertising outlets? Licata: When you rent videos, for example, you are seeing more ads before the movie, but you have to be careful because they can be so irritating. Da Silva: They actually have advertising in toilet stalls -- you can advertise virtually anywhere. One interesting option is advertising on airlines. You have such a captive audience with airline magazines and on-flight movies and videos. Leslie E. Stevens writes about business and agriculture for The Tribune. Reach her at lestevens@thetribunenews.com or 781-7962. |