We suppose their lack of alarm is not all that surprising. The FCC currently estimates the registry may reach 60 million—roughly 22 percent of the population—by the end of this year, leaving plenty of Americans open to telemarketing. And naturally, there are loopholes in the regulations: political organizations, charities, telephone surveyors, or companies that have an existing business relationship with a consumer are exempt. So, as Fortune tech reporter Peter Lewis noted, "you'll still receive calls from charities, Republicans, Democrats, Libertarians, nutcase fringe action groups, people conducting telephone surveys, and anyone who has already called you at home and established a 'business relationship.'"

"We don't do a lot of outgoing telemarketing anyway," a Sprint spokesperson explained to CNN about their attitude towards the registry. "Our view is that if people don't want to be called, they won't be good sales prospects anyway," added a representative for Verizon, the largest local telephone service provider. Never mind that, for any given marketer, among the 60 million Americans expected to join the registry there could be highly profitable customers, marketers who dismiss it with an, "oh well, we'll just do something else," are missing the point.

Rather than pass off the "Do Not Call" Registry as a minor nuisance, marketers should heed the message consumers are trying to send: Pay more attention to how we want to be reached with information about products and services. Marketers need to develop a better understanding of how to most effectively and efficiently reach key targets. After all, it's not just about whether or not to do outbound telemarketing; it's about developing a marketing communications plan that gets people to buy, builds the brand, and returns the highest ROI.

Start by asking buyers in the category a battery of media habits questions that not only probe what a buyer is watching, listening to, and reading and when, but also about direct mail, email, and phone solicitations. If forms of direct marketing are tactics under consideration, ask buyers if they read direct mail and email solicitations. If so, how many? What do they do when they get a phone call from a marketer—do they listen or do they just hang-up?

With several state legislatures passing or pondering their own do-not-call, do-not-mail, and do-not-email bills, and at least one organization lobbying Congress to create a national "Do Not Mail" Registry, marketers need to see the growing momentum behind the do-not-contact-me movement for what it really is: Not a condemnation of direct marketing per se, but a wake-up call to figure out how better to communicate with buyers.

At the end of September, the Food and Drug Administration (FDA) held a two-day public hearing on the future of direct-to-consumer (DTC) pharmaceutical advertising. FDA officials heard from companies inside and outside the pharmaceutical industry who had conducted research on the effectiveness of DTC advertising and its effects on public health. "The ongoing question," explained the Director of the FDA's Center for Drug Evaluation and Research Janet Woodcock, "is can [DTC ads] be made better or more useful."

Though DTC advertising is big business, growing 32% to $5 billion in 2002, the jury is still out on whether it is an effective marketing tool. By effective, we of course mean it increases prescriptions and sales of a particular pharmaceutical drug and produces a positive ROI.

A study commissioned and presented by the FDA earlier this year reported that 92% of the doctors surveyed said they had been asked for advertised drugs, yet data presented at the hearing confirmed what we have found in our own work with DTC campaigns—the vast majority of consumers aren't responding. According to a study conducted by health publisher Rodale Inc., 70% of adults did not respond to DTC ads. The 30% who did ask their doctors for a prescription—and we have evidence that this figure is wildly overstated—represented only a 1% increase from 1997 when broadcast advertising began in earnest.

Meanwhile, we've found that the conversion rate from awareness of a drug to asking a physician for a prescription is actually closer to 10%, much lower than what Rodale reported. On the bright side for DTC marketers, however, we've observed that the awareness-to-asking-physician-for-a-prescription conversion rate varies considerably depending on how "involved" a consumer is in the product category. For instance, a consumer who talks to their doctor on a monthly basis about different ailments is far more likely to ask for a prescription after seeing an ad than a consumer who visits a physician only when he or she is very sick. In fact, DTC campaigns may have a greater impact on the physician than on their patients, which explains why in many cases, pharmaceutical companies observe prescription and sales increases for a drug without seeing significant shifts in patient awareness and behavior.

The Rodale study also found that consumers were not taking away important health information from broadcast spots and had some difficulty in identifying which disease a drug was used to treat and its serious and common side effects. We've discovered that the inability of DTC ads to imprint the brand name and its raison d'être—what diseases it treats and how it is different from other treatments—contributes to the poor awareness-to-behavior conversion rate.

This suggests an answer to the FDA's initial question: "Yes, DTC advertising can be made better and more useful." If pharmaceutical companies take the time to test the performance of a DTC program BEFORE a real-world launch—using available modeling tools to forecast performance—they could diagnose and treat problems before they undermine a potentially successful campaign.

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The industry's big guns took notice: Coke introduced Fruitopia in 1994 with a hippie-ish ad campaign and packaging and Pepsi came late to the party with the introduction of FruitWorks in 1999. Though Fruitopia went on to become one of Time magazine's top new products of the year it was introduced, by 2002, it had trailed off to 19 million cases per year, less than such small-time soft drinks as Coke's 23-million-case Fresca, and Fruitworks had registered insignificant sales.

But are Fruitopia and FruitWorks merely the casualties of a fizzling fad? We don't think so.

For one thing, over the past few years, the alternative beverage category has shown more growth than classic soft drinks such as Coke and Pepsi, though they continue to dominate the market. New Age drink makers have introduced new products, line extensions, and more flavors and occupy an increasing share of cooler space in convenience stores and of vending machines. Snapple has recovered from the management missteps of former corporate parent Quaker Oats, launching new flavors and line extensions including a popular line of smoothies, and the "energized" segment of the New Age drinks, which feature ingredients such as caffeine, taurine, guarana, vitamins, botanicals, and amino acids, has become the fastest growing beverage segment.

For another, Fruitopia and FruitWorks were undifferentiated entrants into a very crowded category. Fruitopia tried to replicate Snapple's edginess with a flower-power image and clever flavor names like Strawberry Passion Awareness®, Kiwiberry Ruckus®, Fruit Integration®, Peach Out™, Orange Undercurrent™, and Cherry Vanilla Groove™, while FruitWorks had no image—it was completely nondescript. Strangely, given their names, neither Fruitopia nor FruitWorks had all that much fruit—an obvious point of possible differentiation—each with only about 5% fruit juice. The flavors were less innovative and not any tastier than Snapple's or one of the other New Age entrants. There was just no reason to buy them.

Fruitopia and Fruitworks are not the casualties of a passing fad, but examples of quickly conceived "me too" products that didn't have a leg to stand on.

For more insightful marketing discoveries, visit http://www.copernicusmarketing.com/discover/index.htm

Have a hot discovery for our next release? Contact us at ami.bowen@copernicusmarketing.com

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The American Marketing Association Foundation (AMAF), the non-profit arm of the American Marketing Association (AMA), has just announced Will & Vision: How Latecomers Grow to Dominate Markets (McGraw-Hill College Division) by Gerard J. Tellis and Peter N. Golder, is the 2003 winner of the Berry-AMA Prize for the Best Book in Marketing. The award, established by Dr. Leonard L. Berry, a distinguished author and professor at Texas A&M University, annually recognizes the top books in marketing that present innovative ideas and have a significant impact on the practice.

Will & Vision challenges the concept that the first company to enter a market has an almost unshakable advantage. Drawing from historical research and case studies of successes and failures at well-known companies, the book identifies five principles that drive true market leaders: vision of the mass market, managerial persistence, relentless innovation, financial commitment, and asset leverage.

The AMAF also named as runners up the other four Berry-AMA Book Prize finalists :

• Counterintuitive Marketing: Achieve Great Results Using Uncommon Sense, by Kevin J. Clancy and Peter C. Krieg
• Convergence Marketing: Strategies for Reaching the New Hybrid Customer, by Yoram Wind and Vijay Mahajan with Robert E. Gunther
• Loyalty Rules! How Leaders Build Lasting Relationships in the Digital Age, by Frederick F. Reichheld
• The Myth of Excellence: Why Great Companies Never Try to Be the Best at Everything, by Fred Crawford and Ryan Matthews

All five books are available for purchase through the AMA's website at: www.marketingpower.com/amabookstore and discounts are available for AMA members.

Our congratulations to Will & Vision and to the other runners-up.


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On October 16-19, at The Ritz-Carlton, Laguna Nigel, in Dana Point, California, the Association of National Advertisers (ANA) will hold it's annual conference: the focus this year, "Masters of Marketing." Industry thought leaders and senior executives from an impressive and diverse list of companies including Ernst & Young, General Motors, Pepsi-Cola, Procter & Gamble, Office Depot, and Wachovia will share their insights and strategies for building and maintaining great brands, discovering and implementing marketing innovations, and measuring the effectiveness and ROI of marketing programs. For a full conference agenda, click here.

Chairman and CEO of Copernicus Dr. Kevin Clancy will give a talk on October 18, on "Blending Creativity and Science: Five Things You Can Do Today to Improve Marketing ROI Tomorrow." According to Clancy, to produce the kind of transformational strategies that change brand trajectories, career paths, sometimes entire companies and even industries, requires a new approach to marketing decision making, one that blends creativity and science into blockbuster programs. He'll outline five steps marketers can take and the marketing science tools to use to significantly improve bottom-line performance.

To register for the conference, click here.

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