TV inc
Introduction
The following is an extensive report on the various aspects of television direct marketing with an emphasis on Infomercial marketing. Please note that Internet marketing is also infomercial marketing. Almost everything you read here applies to both television infomercials and Internet marketing. Both of these are "Long-Form" advertising mediums. It is a result of over 16 years of research. Our gratitude is extended to those who helped us. To the best of our knowledge, this is the only report of its kind. For many, using TV to sell products and services is the future. The days of television as a strict entertainment medium, is rapidly vanishing. Television as a consumer information based medium, and all that that portends, is the future. The founding president of the industry's original shop-at-home network predicted that by the end of the 20th century, the combined revenues of the television marketing would dwarf the GNP of all the other television revenues, the Internet notwithstanding. It is important to determine how your company will find its niche in this new medium.

In the past, the TV set was a boredom-killing appliance featuring commercials, which were periodically interrupted with "programming". Today the TV is the primary source of almost all information, once again - the Internet taken into consideration. (As we will see, the Internet is another form of television. Tomorrow it will physically interact with its owner's day-to-day environment.

The report you are reading represents a wealth of knowledge compiled from the experiences of many. Let's face it; a few years ago, there was no such thing as an infomercial. Other than a few rare instances, long form commercials were shunned by major advertisers. Today its appeal is broad based. Our industry is comprised of a wide range of service providers: production companies, media buyers, fulfillment houses, telemarketers, celebrity coordinators, writers, consultants, cross-promotion experts, and more.

There are parts of this report, which may be more useful to you than others depending on your experience and needs. Use it as sort of a Chinese menu. Pick from categories that you need to know more about. While this report is far from everything there is to know, it will give you an excellent view of the industry from an insider's vantage point.

Parts of the report you're reading have been quoted by the WSJ, New York Times, and other leading periodicals. I have had the opportunity and good fortune to appear on behalf of the industry on ABC's 20/20, Sally Jesse Raphael, The McLaughlin Report, and hundreds of other television and radio talk shows. Your goal is now focused on the emerging field of television interactive marketing. You will find that this unique perspective on programming style and specialty services offers audiences a new way to buy using an innovative & cost effective marketing tool. You are now able to reach and to sell new customers, keep existing customers aware of your brand name and bring refreshing ideas and desirable products to market via television.

THE LESSONS OF DIRECT RESPONSE
David Ogilvy, from "Ogilvy on Advertising"

"For all their research, most advertisers never know for sure whether specific advertisements sell. Too many other factors cloud the equation. Nevertheless, advertisers, who solicit orders by mail or telephone, know to a dollar how much advertisement sells. So watch the kind of advertising they do. You will notice the important differences between their techniques and the techniques of general advertisers."

"I am convinced that if all advertisers were to follow the example of their direct response brethren, they would get more sales per dollar. Every copywriter should start his career by spending two years in. One glance at any campaign tells me whether its author has ever had that experience."

A REVIEW OF TELEVISION MARKETING-The Infomercial Impact
The infomercial is an idea whose time has come. It's a phenomenon whose potential is no longer a matter of conjecture. It's a vehicle no longer limited to selling gadgets and fads. The sales figures being generated throughout the United States, Canada, Central & South America, Asia and the EU make television interactive marketing a prominent force and an eminent retailing factor for the future. The question to you is, "How are you going to put infomercials to use for in your company?".

In 1985, the home shopping segment of the industry generated revenues of $91,000.000. Sales increased to $3,225,000,000 in 1994. Today television interactive marketing in all its forms generates hundreds of billions of dollars. Against a backdrop of multi trillion dollar U.S.A. GNP, television interactive marketing is important albeit still small. However, all projections, even the most conservative, clearly indicate that infomercial marketing is a growth industry. Its potential dwarfs every other form of merchandising. Television retailing is clearly a powerful marketing tool, which cannot be ignored. The sheer impact of its medium forces it to the forefront. Television retailing is already as much a part of retailing as are shopping centers and mass merchandising and its continued expansion is a certainty.

To enter the arena, you'll need to understand new terms and alter conventional advertising maximums.

Perhaps the most exciting discovery in the infomercial industry is the importance of knowing the psyhography of your customer and its relationship to the format, style and product selection (see "The Psychography" section).

You see, rather than just unearthing a new marketing niche, television interactive marketing has defined and tapped a new consumer with ready cash and an acquisitive personality.

IS TV RIGHT FOR YOUR PRODUCT?
"Bill, how do you know what's going to sell and what's not going to sell on TV?"(Consumer advocates John Stossel interviewing me for an episode of ABC's 20/20.)

"John, if I knew that, I'd be in Monte Carlo and you'd be Robin Leach," was my answer.

Originally, producers of direct response advertising, especially long-form commercials, skewed their product selection toward off brand gadgets, get rich schemes, motivational products and diet programs. Shop-at-home was closeout goods programming. This is changing as highly recognizable manufacturers of better goods are finding their position in the market. Saks Fifth Avenue has jumped in as has Kodak, Volvo, Pontiac, Bently, and soon, IBM.

It was thought that the appearance heavy price discounting was required to sell on TV. Savings of 50% or more off suggested retail was not uncommon. To cover the overhead, mark-ups of 10:1 were sought. Nothing ever below 3:1. This meant that prices and mark-up on products in the retail market place dictated its access to television.

Today television is selling products costing many thousands of dollars. Recently we completed an infomercial for a company selling prefabricated and panelized houses, each costing $50,000 and more.

An infomercial need not make an immediate sale. It can drive a retail market, create new leads, and introduce new ideas. Ross Perot has proved that much. It is suggested that the next President of the United States will be elected using an infomercial. Scary? Well it's here. After his bid for the presidency in 1992, Mr. Perot called me commenting on how much help "Inside Infomercials" had been to him. He garnered nearly 20% of the popular vote spending 1/10th of the projected Madison Avenue budget!

The recent studies on the psychographies of television shoppers combined with the records of accomplishment of other products show clearly that each stands on its own with regard to sales but both enjoy the rewards.

Please understand the definition of an Infomercial. According to the FTC, it is any commercial program that has a running time of 14 minutes and 30 seconds or longer. A commercial program (infomercial) is one in which the producer and the sponsor are one and the same.

Now things get exciting. Regardless of your business, your products or your services, an infomercial will work for you! An infomercial need not be a 30 minute program-length commercial. The History Channel had a one-hour 'program' on the "History of the Jaguar" automobile. Whom do you think underwrote that program? Hmmmm. "Pirates of the Caribbean" with Leonardo DiCaprio was an "Info-tainment" motion picture. Let's see.. There's a 'ride' at Disney called "Pirates of the Caribbean". The movie was underwritten by Buena Vista, a division of Disney. Hmmmm. The entire movie was an infomercial. Many 'Quiz Shows' are infomercials. Bottom line: don't limit your creative senses when you wonder just how you can put the impact of long-form advertising to work for your company. Every business whether it be B2B or B2C, every 'cause-marketing' campaign (not-for-profit organizations), every political agenda can benefit from an infomercial, if you have access to the creativity. (see Global Promise)

Pontiac gave away about 100 of their new cars to everyone in an Oprah Winfrey audience. Hard cost to Pontiac? About $1MM. Now call the syndication company and ask what it would cost to get one-hour of 'Oprah' time. Call your PR firm and ask what it would cost to have a specific model of one of your products featured internationally for a month. I wonder how many Pontiac sales were generated by this brilliant effort.

When DMB&B (the advertising agency in New York City) asked for ideas on how to get their client's Bose Wave Radio off the shelves, I recommended that they take it out of retail and use a direct response program. A $295 clock radio that wouldn't sell at retail now sells like crazy using DR.

Examples:

Abdominizer - was not successful in retail at first. However, after a successful DR TV campaign, those who did not and would not buy from TV bought it in the retail store.

Alpine Supreme Bee Pollen: selling for 10 times the competitors' retail and print DR rates, this company established that sales to TV audiences are clearly as separate as the men's and lady's washrooms. Retail sales of Alpine Supreme and bee pollen products in general grew exponentially.

One "Steam Iron" infomercial featuring the product at $29.95 was run at a loss for months. That's because the producer had it in retail at $9.95. He could care less about TV. He was driving his retail business through the roof! And his advertising cost was underwritten by his infomercial sales. Free Advertising!!!

Others such as Blue Blocker Sun Glasses, Auri Car Wax, Richard Clayterman's Recording (piano soloists of whom no one had ever heard before his infomercial), and the various "juicing" infomercials show that people will buy from TV even though the same or similar product is in the retail market place for less money.

One day it's going to occur to an industry that infomercials are required. The recent infomercials featuring juicing machines have been successful on TV and in the retail marketplace. Juice machines of every brand are selling faster. Moreover, no retail advertising was done. NONE!! A product line went from lack-luster sales to top performers and not one retailer or manufacturer spent a dime. Even those that made the infomercials spent nothing since the advertising was a predicted and quantified expense costing no more or no less that, the tooling costs. All were part of a profit center.

One day it will occur to an industry what has happened. Infomercials sell to a specific audience AND they generate retail sales, ALL WITHOUT INCREASING AN ADVERTISING BUDGET. It's a dream come true.

If a direct sale infomercial is inappropriate, use lead generation or a two-step technique, and high mark-up requirements are overcome. Sales are closed subsequently, but still a direct sale is achieved. Creative marketing has allowed the entrance of highly recognized brand names into millions of television homes.

Will every product work in direct response vehicle? With the right people behind it, yes! Television (and Internet) retailing has the versatility to sell any product.

If a product is best sold when thoroughly demonstrated, infomercials and 'documercials' must be selected. Moreover, these are only two of the five distinctly different merchandising formats from which manufacturers may choose. While each of these formats have the capacity to demonstrate products far more efficiently than is done in conventional retail outlets, each should be studied carefully and their individual advantages weighed.

Before TV retailing, suppliers had to depend on sales clerks to deliver their product's story. Have you visited a discount department store recently or a buying club or warehouse outlet? Go! Try to find someone to help you. If you can, ask the simplest question and watch the blank stare of the salesperson's face. It's neither the retailer's fault nor his employee's. The overhead must be kept low to meet decreasing margins. The salary demanded by quality personnel is not in the cards. The money isn't there to pay them.

Then there's the inventory. In today's fiercely competitive market, suppliers are forced to cut profits to the bone and wait months to be paid. Don't like it? Go elsewhere. What percentage of your inventory is written off to bad debt every year?

Then there's your customer. Where can the shopper turn for accurate information on the product he's buying? Point of purchase video consoles offering a teletext catalog description of the product? Limited at best. The reason is clear. Although shoppers want to learn more about the items of interest to them, they want personal service too. The dilemma has put the retailer between the proverbial rock and a hard place. Personnel costs are too high. Training is too expensive. Mark-ups do not allow for professional sales people. In addition, consumers are distrustful of and put off by clerks and their poor attitudes and lack of product knowledge. Consumers are relegated to point-of-purchase counter cards. Is there another choice for manufacturers who need to tell their product's story more effectively to their customers?

Television's massive audiences, in conjunction with its newly developing retailing ability using trained professionals to explain and sell merchandise, will become the single most effective sales vehicle ever developed.

Because of the newness of the industry, most suppliers are unaware of the assorted entry-level vehicles available to them. Too often this ignorance of television marketing means they are missing a very important new sales tool. Some remain on the sidelines unaware of the creative options available. With others there's a fear that their participation in television commercial programming may be disruptive or perceived as competitive to their existing retailers. It is a false concern. This is not my opinion. The results cited above and the history of the industry proves it to be true. Properly done, television commercial programs enhance retail.

Once again, The Juicing Machines. In the Fall of 1991 through the Spring of 1992, electric juicing machines were popular on television infomercials. They sold hundreds of thousands. Guess what happened at the retail counter? They sold out of the advertised branch. And when stocks ran out, the other brands went. No one ran an ad except the infomercial. Some companies are scratching their heads. Enlightened executives are reexamining their marketing strategies.

Impressed? There's more. The cost to produce and air the infomercial was not an expense! It was a revenue-generating vehicle. For the fist time advertising became a definable profit center.

Times are changing. It is incumbent upon manufacturers to become more aware of the potentional of television retailing. Until then, they are constrained to old-fashioned passive and institutional television advertising techniques. Think of any product or service. Academically, think about how much it will cost to bring it to market. Not the whole USA market, just a small market. You pick the territory. Let's suggest that the product performs well. It's competitively priced, and it has a reasonably wide appeal. What we don't know is how well it will sell.

In the past we would budget enough money to build sufficient product or, in the case of a service oriented product, to support our service staff. After the inventory commitments are made and budgeted, our sales staff meets with our distributors, wholesalers, retailers, or professionals, those who will sell the product to the consumer.

These distributors are easy to please. They want extended terms, free floor planning, cooperative advertising, guaranteed sales, help in moving old inventory, after-market support and service, return guarantees, and lastly, they want you to sell your product to them at pennies over your cost. In return, they will devote time and shelf space at their discretion, use sales people who often know less about the product than the consumer knows, and push their own in-house generic line.

An infomercial can be produced for less than the cost of a one-page ad in a local newspaper. The sales staff featured in the infomercial is the finest one can afford. The media cost is not part of the formula because it is directly attached to the price of each product. Inventory supplies can be minimal because with TV, one can halt the airing of the commercial if supplies run thin or increase it if supplies are sufficient.

Imagine, for the cost of a focus group, one can test your product in the real world using an infomercial. Imagine having at hand and on call one's very best sales person 24/7/365 and paying that person the cost of a single day's work. Imagine having a retail outlet that is open when stocks are available and closed without overhead or layoffs when stocks run short; and all this without a single consumer complaining.

Sounds good to me.

Why isn't everyone doing it? Many, many are. Read on.