Self-regulation Key to E-retail Legitimacy - Column

Brandweek, April 19, 1999 by Elissa Matulis Myers

Elissa Matulis Myers is president & CEO of the Electronic Retailing Association in Washington, a trade association for direct response television, radio and Internet marketing. She can be reached at (202) 289-6462 or emyers@retailing.org.

In an article in Wired magazine, executive editor Kevin Kelly wrote the following passage: "Major U.S. retailers refused to pay attention to TV home-shopping networks during the 1980s because the number of people watching and buying from them was initially so small and marginalized that it did not meet the established level of retail significance. Instead of heeding the new subtle threshold of networked economies, the retailers waited until the alarm of the tipping point sounded, which meant, by definition, that it was too late for them to cash in."

At the Electronic Retailing Association, as we appraise these bold developments in the retailing business, we don't think it's too late to cash in. A revolution in retailing is here, and it is now. According to the U.S. Bureau of the Census, retail sales in the U.S. in 1998 hit some $2.69 trillion. Direct response television was responsible for more than $90 billion of those sales, with another $30 billion-plus generated by Direct Response Radio. And although the facts and figures are still coming in, it is estimated that business to consumer Internet sales this past year will have reached close to $19 billion. That's a total of about $140 billion in electronic retail sales, or a little better than 5% of total retail sales. To say that I am excited about the potential of our industry is a gigantic understatement. But, that said, I'm also worried.

I am appalled by many of the shows that are currently airing as "direct response television." My levels of disquiet range from slight bemusement to sheer outrage at shows that run the gamut from silly to criminally deceptive. I saw a show earlier this week that drove me to the angry end of the spectrum. It didn't explicitly say so, but it clearly, unmistakably and repeatedly implied that the product that it sells cures cancer and that it does so better than any other medical technique available. Knowing the desperation and extreme vulnerability of individuals struggling with this affliction-and the desperation of those who love them- just thinking about this show brings tears to my eyes.

I knew when I took this job that I was jumping into an industry that not only had a wretched reputation, but, that, taken as a whole, had earned that reputation. I took the job because I believe that the medium, the art form, the tool that the direct response television industry is using, is the most exciting and powerful advertising medium in existence. And I think that what electronic retailers do and how they do it is going to transform the ways in which goods get bought and sold. But every time a direct response advertisement abuses a consumer, the whole medium is damaged.

We've made a commitment to building a reputable and vibrant industry. We are working to establish a strong self-regulatory process, with help from the Better Business Bureau, the Federal Trade Commission and others. Some days the progress seems slow, but if we move precipitously, we run the risk of losing the audience. A trade association isn't meant to regulate its members, but rather to help members succeed. And one important way to do that is to help them regulate themselves, out of enlightened self-interest. Our job is to get all of our members into the safety zone, and if we succeed in doing that, the members are better off and so is the public.

The payoff of legitimacy can be massive. In an era where stockholders want more accountability, direct response advertising shines. An advertiser has an immediate and absolute measure of the return on the advertising investment. Consumer behavior can be tracked quantitatively. The more that marketing expenses and media usage can be shown to move the bottom line, the better a marketer's lot within his company. And that tide lifts all boats.

Keep in mind, only a small fraction of what the average consumer buys can be classified as a necessity. The vast majority of our purchases are motivated by emotional response. And the real revolution in electronic retailing will occur when the emotional power of salesmanship and marketing can be harnessed to efficiency. There is no more powerful emotional medium than television and, for that reason, we believe the revolution in mass retail will take place not just on your computer but also on your TV The Electronic Retailing Association represents that dynamic and exciting seam, where TV and the Internet overlap.

Over the past few months there has been a flurry of publicity around the Internet and online sales. This past holiday season clearly illustrates that the Internet as a shopping mall has come of age. Similarly, pure Internet sales shine because of their efficiency. They allow the consumer to shop efficiently for product and for price. If you can reduce your product to a commodity, and can manage the economies of scale, then the Internet as it exists today may be the perfect sales platform. But most consumer purchases are made not analytically, but emotionally.