Case #17 Analysis

Group #2

Names of group members

Date Submitted

Advanced Marketing Communications 55635-02

Introduction

TurboTax was developed by Chipsoft in the 1980s and acquired by Intuit in 1993. While the
software was initially available only as a download on personal computers, there are now versions that
operate entirely online. Intuit has expanded the TurboTax product lines to include Basic, Deluxe,
Premier, Home & Business, and Business editions. TurboTax offers federal tax preparation software and
individual state tax preparation software that is available for customers to purchase. As of 2008,
TurboTax is America’s number one tax preparation software. The product sold more than 18.7 million
federal tax preparation software units in 2007 which was up from 16 million in 2006 (Kelly, Jones, and
Hagle, 2015).

Overview of case - Historical issues and problems presented

While TurboTax was the number one tax preparation software provider in the United States, it
has reached a point of diminishing returns on its branded advertising. Intuit was looking to boost its
marketing efforts through the use of direct response television (DRTV). DRTV is a short advertisement
that runs on national cable television. Whereas the goal of brand advertising is to generate brand
awareness, the goal of DRTV is to drive purchases. Often times, DRTV advertisements encourage
consumers to either call a toll free phone number or visit a unique URL in response to the product of
service that is being sold. The unique phone number or URL associate with DRTV advertising makes it
easy to track the success of the media. Success is usually determined according to the response rate
which is then translate into an estimated sales impact (Kelly, Jones, and Hagle, 2015).

Direct response television has three unique advantages. First, there are significant cost savings
when using DRTV over traditional advertising. “A 30 second DRTV slot might cost one-half to one-fifth
what a 30 second brand spot would cost” (Kelly, Jones, and Hagle, p. 452, 2015). The main reason for
this is because DRTV slots are often sold last minute to fill unsold airtime. The second advantage of
DRTV is that it allows for the creation of deeper messages. The lower cost makes it feasible for
organizations to purchase longer time slots of 60 seconds or 120 seconds. The longer time slots allow for
deeper, more informational messages. The third advantage of DRTV is that it creates a direct
relationship with the customer. A DRTV advertisement should have a system that collects contact
information of those customers who have responded. A collection of contact information would create a
database of customers that the organization could communicate with in the future (Kelly, Jones, and
Hagle, 2015).

Intuit has used direct response television as an advertising channel for TurboTax in the past.
However, the attempt was unsuccessful for many reasons. First, Intuit only measured the responses that
utilized the unique toll free number and URL address. The company had reason to believe the DRTV
advertising prompted customers to go to other websites or retail locations to purchase TurboTax
software, but it had no way of tracking the sales. Therefore, it was difficult to assess the effectiveness of
the DRTV campaign. Additionally, the DRTV campaign was implemented nationwide with no control

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market. Without a control group, Intuit had no way to gauge the impact of the DRTV marketing. Overall,
the initial use of DRTV for TurboTax was ineffective (Kelly, Jones, and Hagle, 2015).

While Intuit may have failed at using direct response television to market TurboTax in the past,
it was determined to test the method again. The strategy for Intuit was to offer its TurboTax Online Free
Federal Edition through a DRTV platform. In doing so, Intuit hoped to direct traffic to a specific URL and
monetize customers by up-selling to paid editions and cross-selling paid state editions. In order to
achieve this, Intuit ran a nine week DRTV commercial in seven different market segments which
included a control group. DRTV advertisements were ran in 60 second and 120 second time slots (Kelly,
Jones, and Hagle, 2015).

The results of the DRTV test campaign proved to be promising. The results showed that markets
that were exposed to the 60 second and 120 second DRTV advertising saw a significant boost in online
TurboTax sales. Retail sales of TurboTax were not conclusively impacted by the DRTV advertising which
was expected as the advertising promoted an exclusively online edition. An additional late season test
concluded that the deeper messages from the 60 second and 120 second time slots were more effective
than 30 second time slots. However, it should be noted that one test occurred at the beginning of tax
season and the other occurred toward the end of tax season. While this might have impacted the
results, the overall DRTV test run was positive and Intuit is considering launching a second DRTV
campaign (Kelly, Jones, and Hagle, 2015).

Identify what marketing communications issues are at play in the case.

TurboTax had many decisions to make regarding the DRTV program and could possibly run into
some marketing communications issues. The first set of issues that were identified are the
disadvantages of using direct marketing as a marketing communication tactic. Low response rates and
low conversion rates could prove to TurboTax that the DRTV ads are not worth the money spent on the
spots. In order to have a successful DRTV campaign, the advertisements need to be persuasive and
informative so consumers receive some sort of call to action and a tracking method to capture data
related to the responses. No call to action or tracking means the DRTV is now just a generic commercial
and without the added value DRTV offers.

Another marketing communications issue that was identified would be miscommunication

between TurboTax and the consumer. The URL that TurboTax wants to use is
www.getTurboTaxFree.com, which could be misleading (Kelly, Jones, and Hagle, 2015). If a consumer
was to Google the free program, the first URL might not be the one referenced in the commercial.
TurboTax could see customers turned off because of the inconsistency or the data collected from the
call to action in the DRTV campaign could be skewed if a customer, won over by the DRTV spot, does not
use the link provided in the DRTV.

The goal for any DRTV campaign is drive sales (Kelly, Jones, and Hagle, 2015). The case stated
that TurboTax wanted to drive sales while also building brand awareness and perception. Two vastly
different goals could cause a marketing communications issue. Inconsistent messages or a message that
confuses the consumer on what they should do is going to be detrimental to any DRTV campaign.

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TurboTax needs to be very careful when they choose a message so the consumer is not confused by the
two different goals of the DRTV campaign.

The last marketing communications issues identified go along with the difficulties of producing
solid television advertisements. Television used as a marketing communication tactic offers many
advantages, such as reaching a large audience in a short amount of time. One of the disadvantages that
TurboTax will be faced with is that individuals often do not pay attention to these commercials. DRTV
ads are longer and more informative, but that does not mean these ads will be any more effective than
the 30 second soda commercial. Most television commercials are also very broad and only try to raise
brand/product awareness. DRTV ads have much deeper messages which could be ignored or forgotten
once the next advertisement is shown.

The biggest hurdle for TurboTax and a DRTV campaign is the fact that tax season is not all year
round. One of the marketing communications issue at play here is that individuals, which are the targets
of the DRTV advertisements, are not interested in tax preparation year round. TurboTax needs to be
optimize the time it runs a DRTV campaign in order for it to be successful. If TurboTax starts the DRTV
campaign too early or too late, the campaign could be a waste of money. Either way, it will need to
prove to the viewers that TurboTax is a better option than the competition. Timing is critical, which is
why seasonal timing of the DRTV campaign is the most important communications issue presented in
the case.

If the case has a series of questions at the end (not all do), present the questions and answer each
(not all cases have questions at the end).

Do you agree with David Kirven’s assessment of the success of this DRTV test? Why or why not? What
additional information, if any, is needed to assess the “success” of the effort?

Kirven’s assessment of the DRTV test is not as accurate as it could have been. The main reason
this assessment should not be used is the timing of the two different ad campaigns. The first DRTV
campaign was put into action using 60-second and 120-second spots when consumers are looking for
resources to help out with tax issues. The case stated that the second campaign, using 30-second spots,
came late in the season, regardless of when the two campaigns were implemented, the difference in
season renders the two data sets uncomparable (Kelly, Jones, and Hagle, 2015). Timing is everything
when TurboTax is trying to gain customers. Tax season is not all year round and if the two tests were
done at different times, all of the results could be skewed. The additional information needed is to run
the two different campaigns at the same time in two similar markets or to run the campaigns in the
same market, at the same time, but in different years. After that is done, the assessment would be able
to compare the success of the DRTV campaigns.

What should TurboTax do with direct response TV for subsequent tax seasons? Should it rollout
nationally, expand incrementally, continue to test or cancel DRTV? Why?

TurboTax should continue to implement DRTV in subsequent tax seasons because the seven
markets that were tested showed positive results compared to the seven markets that did not see the

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DRTV campaign. (Kelly, Jones, and Hagle, 2015). The DRTV campaigns should be rolled out incrementally
while also being tested in the new markets. It should continue to be tested because until a new, more
accurate assessment is done, TurboTax has no idea how effective the DRTV campaigns really are. Being
able to assess the new markets will let TurboTax know if the DRTV is going to be viable in those markets.
TurboTax needs to test the two different advertisement lengths in similar markets. Rolling out
incrementally will give TurboTax the chance to better understand the different costs and benefits
between the two, making the decision to roll out the DRTV nationally spots more clear with better
supporting data.

Should DRTV be expanded to include additional TurboTax products and, if so, how? What kind of offer
and creative could be utilized? What different approaches for DRTV would be required for TurboTax
products that require payment? After all, a free product is a pretty powerful offer!

Yes, using more products will allow consumers to see products that pertain to them. Many
consumers might not try the free version of the most basic TurboTax software, but would be willing to
hear more information about the other products that they offer. If consumers can see more value, the
more benefit the DRTV campaign will see.

One offer that could be utilized is the state tax software along with the free basic package. The
state tax software would be similar to the free software already offered. Unless it was a very simple tax
situation, the user would be inclined to purchase the full state software package. Another offer that
could be used is promoting one of the more upscale software packages to be free for the first year.
Switching tax software or people is a very complicated and time consuming process. By offering the
more upscale software for free, people would be inclined to leave their current provider and move to
TurboTax.

TurboTax needs to stick to the basics of DRTV in order to be successful. If TurboTax uses DRTV
for the basic products and the premium product, the DRTV’s would be more efficient and effective.
Doing many different offers could be productive and show positive sales results, but could also do a lot
of harm. Making the DRTV too complicated or overloading consumers with every single product will not
be successful. Sticking to the basics and offering consumers products that have a lot of value will make
DRTV campaigns successful.

Add additional findings or suggestions to be made.

Additional suggestions are as follows. First, offer services that help retain customers year after
year (i.e. saving their information and expediting their tax returns the following year). Also, offer
incentives such as free premium software for a year for switching from a competitor. In addition, market
premium/deluxe packages against a traditional tax advisor with price as the main point of
differentiation. Lastly, to sell web advertising spots in order to monetize customers who only use the
free service.

By offering services that help retain customers for multiple years TurboTax can effectively
deepen the relationship with its existing customers. Not only will this deepened relationship help cross-

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sell and up-sell customers, most importantly, it will increase the switching cost thus leading to higher
customer retention rates. This could be called ‘pick up where you left off’ and it would automatically
save customer information, or import from a competitor, in order to expedite next year’s tax filings. The
goal would be to make filing so easy that switching to a competitor would be too much of a hassle, even
if they offered lower costs.

By incentivizing customers to switch to TurboTax with free, upgraded services TurboTax can
minimize the cost (both monetary and non-monetary such as time and hassle) associated with switching
from a competitor. Initially this may result in revenue loses, but converting customers will build upon
the previous suggestion because once new customers are converted they could be more easily retained
and up or cross-sold, generating future revenues and gaining in the tax software market share.

Additionally, by marketing premium, deluxe, or small business packages against a traditional tax
advisor, with price as the key point selling point, TurboTax can differentiate themselves from traditional
tax advisors. Traditional advisors main advantage it an easier and more convenient service, but
TurboTax leverage the fact that it will also cost more. This can be achieved through an in depth side by
side direct comparison of premium TurboTax packages and traditional tax advisors.

Lastly, in order to monetize non-paying customers who are only using the free version of the
software Turbo Tax can sell web-advertising spots. The advertisements could be to upsell to TurboTax’s
other paid products or advertisements from external companies. By doing this, TurboTax will not be
solely reliant on cross and up selling in order to recoup their investment in DRTV. Executive
management may be more accepting of DRTV efforts with advertising revenues as there are hard
numbers associated with the DRTV investment.

Include information regarding the current situation of the company. Be sure to cite the additional
information.

Today, TurboTax remains a leader in tax preparation software, especially in the online market.
DRTV remains a viable marketing tactic and in 2016 marketers spent nearly $6.5 billion on DRTV across
92 cable networks (Direct Response TV, 2017). Customers are flooded with options to file in today’s
online world. Competition is strong from companies like H&R Block, TaxACT and Jackson Hewitt, among
others (Yakal, 2018), showing that it is vital for TurboTax to consistently keep up with trends and
marketing efforts in the market. TurboTax will need to continue to add features and services and
promote them efficiently to customers. DRTV shows great promise to be a tool for this promotion for
TurboTax.

Restate major findings/solutions/Conclusion

Communications issues with a DRTV campaign include; low response rates and low conversion
rates that are difficult to track, seasonal timing of the DRTV campaign, and an inconsistent messages and
product offering. Too many offerings or products could make it difficult for customers to choose and
may be difficult for a customer to digest showing that TurboTax needs to consider what its main goal is
and stick close to it to avoid diluting the brand.

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 Offerings and promotions like a ‘pick up where you left off’ feature, an ‘import and switch now
for a free premium upgrade’ or similar promotions can help TurboTax retain and grow its customer
base. DRTV is an excellent option for TurboTax to promote its free products and its products directed at
individuals, however it is not the ideal solution for its premium and business products as these products
will need a more robust comparison to customers other options. Additional revenue streams from
TurboTax’s free software could come from advertisements within the software and these revenues
could help offset the losses from free users and free-upgraded users.

Additional testing and research should be done incrementally to better understand if it the right
solution for TurboTax’s other product offerings. All-in-all DRTV has great value and shows great promise
to be a tool for TurboTax to promote, especially with its free and individual users.

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 Bibliography

Direct Response TV, Infomercials, and the Shift in Television. (2017, October 18). Retrieved April 03,
2018, from https://cdmginc.com/direct-response-tv-boom-ahead/

Kelly, J. S., Jones, S. K., and Hagle, R. A. (2015). The IMC Handbook: Readings & Cases in Integrated
Marketing Communications. Chicago: Racom Communications.

Yakal, K. (2018, March 29). The Best Tax Software of 2018. Retrieved April 05, 2018, from
https://www.pcmag.com/article2/0,2817,1904319,00.asp