The Brave New World of Direct-Response TV

Mortgage Banking, March, 2001 by Louise L. Schiavone

LET'S BEGIN THIS DISCUSSION about the mortgage industry, the Internet and marketing in general with a look at the "Contour Pillow." Anyone who has ever watched cable television has seen the advertisement in which a restless, pajama-clad model struggles for a comfortable sleeping position, even as X-ray-style animation portrays her neck and backbone in excruciating, disfiguring contortions. You can barely stand up straight after seeing that commercial, knowing what you do to yourself every night without the "Contour Pillow."

That's where Home123.com comes in. Home123[R] Loans Direct, Ponte Vedra Beach, Florida, is the brainchild of the same businessman who first marketed the "Contour Pillow"--Joseph Doyle. Doyle is president and chief executive officer of Home123, a mortgage-lending conduit that-- like the "Contour Pillow"--is working its way into public consciousness through cable television advertising. Its pitchman is Bob Vila, formerly of Public Broadcasting's "This Old House" show, widely respected for walking homeowners through the rocky shoals of home repair.

In the Home123 television ad campaign, this avuncular home expert promises to walk homeowners through the rocky shoals of home financing. Doyle says it's a marketing direct hit. "Television has been grossly profitable," Doyle adds. "If I hadn't gotten Bob Vila, I wouldn't be in this industry. He basically says to homeowners, 'Here's something you wouldn't tackle on your own. I'll show you how to do it, how to make it simple."'

The Home 123 strategy is to use direct-response television. In one fairly typical commercial, Vila is stripping an old chair--the sort of thing you might have seen him do on "This Old House." "Hi, I'm Bob Vila," the ad begins. "This chair has layer after layer of paint on it. You might know the feeling if you don't pay your full credit-card balances every month: Layers of expensive finance charges on top of principal, until it seems like you'll never get out from under. But you can, if you own a home--or are about to. It's as easy a one, two, three. 1-800-Home-123. Call them. You may be able to borrow up to 125 percent of the equity in you home for cash to make those credit card and loan payments disappear almost immediately. Instead, you'll have one easy monthly payment--probably less than you're paying now." The advertisement concludes; "Call 1-800-Home-123. 23. Now." According to Doyle, they do.

Another mortgage company with a similar strategy, ditech.com, Costa Mesa, California, says direct-response television really works--even without a famous pitchman. Ditech.com, part of the GMAC Mortgage Corporation, Horsham, Pennsylvania, advertises aggressively on cable television as well. One simply produced ditech.com ad features an upward-climbing arrow, a picture of a house and a laundry bag with a big dollar sign on it. "If the value of your home has risen over the past couple of years," the ad goes, "now may be a great time to refinance and cash out some of your equity. Just log on to ditech.com. Or call us at 1-800-71-fixed ... apply online or call us now at 1-800-71-fixed."

The Home123 target audience is mainly customers with some credit troubles. Ditech's aim is somewhat broader, accommodating those with desirable credit, too. Both strategies, though, shoot for the quick response. But for as much as they seem to have in common, ditech.com and Home123 take a dim view of one another. Ditech.com's general manager for direct lending, Michael McCarthy, says he'd never even heard of Home 123 until he was asked about it for this article.

For his part, Home123's Doyle says he is not impressed by ditech's advertising--or by its name, for that matter, commenting that "ditech" sounds more like a computer company than a mortgage company.

But make no mistake: These two companies are selling to the same audience.

Home123 and ditech advertise heavily on cable television. "If you can afford cable and have it hooked up to your house, we want to talk to you. You're probably a homeowner," says Doyle. He uses all the cable news channels, seeking network deals that minimize his costs and maximize the exposure of his advertisements. Doyle hasn't hired an advertising agency. Freelancers write and shoot the commercials. He sees himself as building the brand along the way. "We don't run an ad unless it makes money," says Doyle.

Are you imagining a Home123 call center and 100 or more Home123 employees processing borrowing inquiries as they tumble in from eager cable viewers? Think again. The hardened viewer knows that--with the exception of the California Highway Patrol chase of O.J. Simpson's white Bronco--most things are not as they seem on television. In reality, Home123 is run by two people: Doyle and his partner and chief financial officer, John Marshall. Funding for Home123 loans is provided by Conseco Financing Corporation, St. Paul, Minnesota. "We do all the marketing; we make the phone ring," says Doyle. "They write the loans. We divide the spoils."