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As seen on TV: selling through infomercials

We've all seen them, if only in passing: lavishly produced video programs extolling the virtues of a revolutionary kitchen device, an amazing breakthrough in golf-club technology or the miraculous home exercise equipment that will turn your pony-keg beer gut into a six-pack of rippling abs.

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They're called infomercials, the 30-minute, long-form version of direct-response television, or DRTV.

Unlike traditional advertising, which seeks to massage us into buying goods or services the next time we're in the store or shopping online, the singular goal of the infomercial is to get us to pick up the phone right now and place our order. No waiting weeks, months or even years for the lofty marketing goals of branding to pay off. Infomercials don't want our loyalty. They want our phone call. Now.

If you've ever found yourself hypnotized by the glistening hard bodies on a Bowflex spot or gotten an itchy dial finger watching the Showtime Rotisserie spin around and wondered whether an infomercial might work for your product, be forewarned.

"It's not brain surgery, but it's harder than it looks," cautions Elissa Myers, president and CEO of the Electronic Retailing Association. "This is a rabidly competitive industry where a guy who is paying his rent with his credit card can, within a few months, be a multi-multi-millionaire. It's not quite like Las Vegas, you have a little more control, but it is a high-stakes game."

Here's what you need to know before betting the ranch on DRTV.

Pocket fishermen premiere
The origin of the infomercial is appropriately shrouded in myth.

The pioneer of the short form was an enterprising son of an inventor named Ron Popeil. Starting in the 1950s, Popeil began using 30-second, 60-second, 90-second and 120-second television spots to sell his inexpensive array of useful products, including the Pocket Fisherman and the Veg-O-Matic food slicer. Long-form DRTV followed in the mid-'70s.

Short-form spots fit in the standard commercial breaks of TV shows. That's basically a run time of less than two minutes, usually around 30-seconds to 60-seconds in today's market. Long-form is anything longer, but the term generally applies to any spot over 20 minutes these days.

One of Myers' favorite stories involves Bud Paxson, now owner and president of PAX TV, who received a shipment of toasters by a strapped appliance store in lieu of payment for radio advertising time. Paxson was so amused that he told the story on air and offered the toasters for $9.95 to listeners who called. The response was tremendous.

Infomercials found an affordable home on the graveyard shift, midnight to 8 a.m., when networks and their affiliates were either running vintage movies or signing off the air entirely. Long-form DRTV exploded when cable TV came along offering bargain-basement prices and more affordable day-parts. Suddenly, info-personalities such as Richard Simmons were household names, and not just to America's insomniacs.

According to Myers, on average, 250,000 infomercials air each month on the eight U.S. broadcast networks, their 1,600 affiliates and 36 national cable channels, dominating the small screen between the hours of 1 a.m to 9 a.m.

Wedged in between the Garden Weasel and the Wonder Mop are some heavy hitters, including Mercedes-Benz, Toyota, Apple computers and Magnavox.

"The U.S. Navy had their highest recruitment response ever per dollar spent on the infomercial they produced last year," says Myers. "They ended up pulling it because they got more response than they could handle."

The high price of persuasion
But to get a response to rival the Navy, you may need a boatload of money, warns Gary Davis, owner of Gary Davis Media in Austin, Texas.

"Probably the cheesiest ones that you ever see are made for $25,000 to $30,000. Those are like talk-show format, bad sets, bad lighting," Davis says. "When you get up to the really well produced infomercials, you're talking $500,000 to $1 million just to produce one."

He points out that long-form infomercials are actually three eight-minute commercials, each followed by a two-minute call to action: "Pick up that phone and order now!" Each segment looks at the product from a different aspect. A Bowflex infomercial, for instance, might focus separately on the machine's body sculpting, conditioning and ease-of-use attributes.

"It's a mini-movie. There are going to be very few people out there that it is going to be appropriate for," Davis says. "If you have an immediate-response product that might benefit from 30 minutes of talking about it, then it might be a way to go."

It don't mean a thing if don't make it ring
Infomercials also differ dramatically from radio and TV advertising in the "air buy," industry lingo for purchasing the broadcast time.

A typical ad agency develops your 30-second television commercial knowing it will recoup its "creative" time on the commission it earns on your advertising schedule, your air buy. Together, you and your agency commit to that schedule and assess the results after the commercial has run its course.

In the world of infomercials, however, a handful of media brokers control most of the available airtime for infomercials. As a result, your 30-minute program must make the phones ring the first time it airs or it will be pulled by your media buyer so that the broker who controls the time slot can then substitute an infomercial that will make the phones ring.

"There's a formula for how much revenue per infomercial you have to sell," says Gary Arlen, president of Arlen Communications, a Bethesda, Md., research company. "Let's say it's $25,000 per show. If you have a $1,000 product, you have to sell 25 of them; if you have a $25 product, you have to sell a thousand of them in that 30-minute block. The rule of thumb is, they know within the first airing if this product is going to sell. If it's not, they'll just put on another Ab Roller or another Tae Bo workout tape. Those sell."

They don't call it direct response television for nothing.

"The nature of direct response television is, if the phones are ringing, you keep airing and airing and airing. If the phones are not ringing, you immediately stop," says Myers. "It isn't that there is this sort of monolithic monopoly in the industry, but the nature of the industry is such that you need to work out of a cooperative. These large media-buying companies are more like a farmer's cooperative."

And in the event those phones do start ringing? You'd best have the manpower to take the calls and ship the orders. That's called fulfillment, and infomercialists tend to need lots of it.

Do you feel lucky?
Given the high stakes and draconian rules by which infomercials operate, is this a wise gamble for a small business entrepreneur?

Absolutely not, says Davis.

"I would say they're beyond the reach of all small businesses. The vast majority don't work; they're run a few times as a test. For every one that you see, there are 20 more that you've never seen because they only ran four or five times in Spokane. Most of the money made in the infomercial business is made by producers of infomercials, not the advertisers themselves."

Arlen agrees.

"It's too late. I don't think there is much opportunity for a small or startup business to sell via infomercials today. I used to be a huge believer that infomercials and direct response was open to almost any kind of product, but it really comes down to a relative handful of products that consistently sell through that category: kitchen products, cleaning products, cosmetics, exercise hardware and videotape workout programs."

Even Myers admits infomercials are a long shot for an entrepreneur. There are vultures out there that can not only steal your idea and manufacture it, but beat you to market with the infomercial, as well. But he remains bullish on the future of DRTV.

"It's an amazing medium because, in 30 minutes, you develop a relationship with the people in the television, people like Ron Popeil. It's a strange emotional phenomenon. It's taking Marshall McLuhan's 'cool' medium and warming it up. It has been hugely overlooked but it is coming of age."

Jay MacDonald is a contributing editor based in Florida.
 
-- Posted: Oct. 9, 2002
   

 

 
 

 

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