These 3 Powerful Letters Can Greatly Improve Your Odds of Choosing Hit Products
Plus: Skunks vs dudes and more from the late, great Billy Mays
Did you know there’s a book that 100,000+ entrepreneurs have relied on for “detailed, step-by-step instructions on building successful, scalable, profitable startups”? In fact, it’s said that the National Science Foundation “pays hundreds of startup teams each year to follow the process outlined in the book,” and its tenets are taught at “Stanford, Berkeley, Columbia and more than 100 other leading universities worldwide.”
This is the book:
All of the claims above come from the promotional materials for the book, but I have no reason to doubt they’re true. I know this book is incredibly valuable because I know the power of just three letters that apparently originated from it: T.A.M.
The book’s author, Steve Blank, is a Silicon-Valley guy who introduced the “Lean Start-Up” movement. And TAM is a very Silicon-Valley acronym. Amusingly, it has six possible definitions per its Wikipedia entry (HT: Beta Boom):
“the revenue opportunity available for a product or service”
“how much of the market any company can gain if there were no competitors”
“the market size that could theoretically be served with a specific product or service”
“a global total (even if a particular company could not reach some of it)”
“a market that one specific company could serve (within realistic expansion scenarios)”
“the total market demand for a product or service”
I use TAM in the sense of definition #3. Other people seem to think definition #1 is better. The only real difference between their preference and mine is the unit of measure. I tend to think in terms of people, they think in terms of the money those people could spend. Potato, potahto.
So what does any of this have to do with direct-response advertising? Well, you may recall that I am in the process of breaking down The Divine Seven (D7), my original criteria for selecting TV products. Last time, I elaborated on the first of these criteria (UNIQUE) using Seth Godin’s “Purple Cow” metaphor. Click below if you missed that article and want to catch up.
The second criterion on my D7 checklist is MASS MARKET, and here’s where I think TAM is a very powerful concept. When evaluating any selling opportunity, it’s critically important to ask the question version of Wiki definition #3: What is the size of the market that could theoretically be served with your product or service?
Within the traditional TV/retail model, it’s easy to establish the correct answer to this question. Since you are going to advertise on national networks (e.g. Fox News) and do the majority of your sales at national retailers (e.g. Walmart), it only makes sense to focus on products with a TAM as close to ‘every American man, woman and child’ as possible. Though we DR marketers absolutely love such products (e.g. sunglasses), they’re obviously rare. So we set the bar a little lower and choose products with a potential market size of ‘one per household.’ A vacuum cleaner is a good example.
If you think about it, this ideal is really just about maximizing media efficiency. You wouldn’t use a shotgun to kill a fly, so why use mass media to advertise products or services that many/most people can’t use?
Of course, there are exceptions. Not every house has a cat, but DRTV marketers have done quite well with the occasional product targeting cat owners. I’ve also been surprised by what I thought were niche products (see Skunky below) that ended up having much larger TAMs than I expected. Shotguns are the wrong choice for flies, but sometimes they work fine for larger targets. T.A.M. can be outweighed by other letters, such as R.O.A.S. and L.T.V. More on this in a moment.
That said, experience has taught me that would-be sellers are better off not trying to be exceptions to the rule. That’s why I began the D7 checklist by declaring “the odds of having a hit DRTV campaign are highest” when following these guidelines. It’s all about playing the odds. One of my favorite marketing legends put it best:
“You can always find at least one exception to every rule. You have a choice. You can either live by the rules and accept the possibility that you might miss an opportunity because you didn’t break the rules. Or you can live a life of anarchy.” - Al Ries
OK, so that’s the traditional TV/retail advertising model. Change the media type to digital or social, and the sales channel to Shopify or Amazon, and does the ideal TAM rule change? In my last article, I posed the question this way: What’s the minimum viable market size these days?
Before I try to answer to that question, I must again acknowledge things have changed a lot since I first published the D7 in 2007. The proliferation of media types and channels now allows for targeted marketing strategies that would have been impossible when TV was the main driver of sales. Yet while advertisers can efficiently reach smaller and more specific audiences than ever before, that doesn’t mean old Al’s advice should go out the window. It just means the rules you don’t want to break are a little different. Here, I’ll propose three.
Maximum Appeal. When targeting a narrower-than-mass market, the gap between potential market size and actual market size should shrink proportionately. We’ve all heard the classic rationalization: ‘If we could only get 1% of that market … Well, you do the math!’ That only works (if it ever works) when the potential market is huge. When the market is small, 1% just ain’t gonna cut it. Products or services that cater to specific interests, needs or problems can only achieve success by deeply resonating with the target audience.
Narrow But Deep. As mentioned above, LTV can outweigh TAM limitations. That is, we know that products or services that foster a sense of community or have the potential for strong brand loyalty typically benefit from higher customer lifetime values. Achieving this is absolutely essential to making smaller markets profitable enough to be sustainable. In short: If it’s narrow, make sure it’s gonna be deep.
High Margin: Even with a smaller TAM, products with higher margins, relatively low customer acquisition costs (CAC, CPA/CPO) and/or high repeat purchase rates (LTV again) can be viable. No mystery there. It’s just math.
Interesting! Looking at the above, it seems there are quite a few three-letter combinations that are just as powerful as T.A.M. Mr. Blank might need to revise his book.
Chart Watch👁️
Skunky
Pitch: “Get perfectly clean from head to toe without stepping into a shower”
Offer: $9.99 for 25 wipes
Marketer: BulbHead
Premium subscribers learned about this campaign back in September when I declared it a “fast fail.” The website was already down, and I considered the product a longshot at best. Well, it looks like I was wrong because there it is at #15 on this week’s DRMetrix. It seems this one’s not a fail at all. It’s a winner.
Wait, this campaign? The one that has the slogan: “Smell funky? Grab a Skunky”? That’s correct. Hey, I find it as hard to believe as you do. But I have learned a few things since September that made me realize I was underestimating the TAM for this product.
It starts with information about a different product. Apparently, “With Over $120 Million in Sales, Dude Wipes Is No Joke,” according to Entrepreneur magazine. What’s the connection? That surprisingly strong brand, which started as butt wipes on Shark Tank, has now expanded into Shower Wipes and other personal hygiene products.
I should also mention that the Skunky offer has changed. When I first wrote about the project, it was 12 wipes for $19.99. Now they’re offering twice as many for half the price.
So let’s review: We have an opportunity to ‘draft’ off a successful brand backed by Mark Cuban plus a chance to compete on price. This is totally the BulbHead playbook, and I should have seen it coming.
Recent Tests🧪
I took a short break from my library duties and came back to no less than nine new DRTV tests. Supporters of this newsletter (i.e. paying subscribers) can review all nine of them by logging in to The Library of DRTV. The rest of you will have to settle for a sample, but it’s another good one because it stars …
Mighty Putty (2024)
Pitch: “Fix, fill and seal anything fast and make it last”
Offer: $29.99 for six sticks (triple 2-pack offer)
Starring: The late, great Billy Mays
Marketer: Top Dog
Producer: Hutton Miller
This is one of my favorite DRTV commercials of all time because it’s an absolute clinic in the highly effective tricks of our trade. Indeed, I use it often (along with Billy’s OxiClean commercial) when teaching our techniques.
This test follows the resurrection of Mighty Mendit last month, another Billy Mays classic that is now #10 on the DRMetrix. Old Gold for the win!
By the way, if you didn’t read that first review, and you don’t want to click through on the link, and yet have questions or concerns about Billy Mays being back on the air — this is what appears on the new Mighty websites:
It’s all class, folks, and I love what Top Dog and HM are doing. Like many, I miss Billy and it’s great that his memory lives on outside of memes and South Park episodes. Everyone serious about marketing should be carefully studying his methods.
The Divine Seven
1. UNIQUE
(Article: Build the Marketing Into Your Product to Maximize Sales)
2. MASS MARKET
(Article: These 3 Powerful Letters Can Greatly Improve Your Odds of Choosing Hit Products)
3. PROBLEM SOLVING
(Article: The Problem Scale Can Guide You Toward the ‘Heart Attack’ You Seek)
4. PRICED RIGHT
(Article: What a Huge Walmart Mistake Can Teach Us About Product Pricing)
5. EASILY EXPLAINED
(Article: Never Try to Sell a ‘Swiss Army Knife’)
6. AGE APPROPRIATE
(Article: Why TikTok Advertisers Shouldn’t Sell Canes)
7. CREDIBLE
(Article: Don’t Even Bother With Products That Can’t Live Up to the Hype)