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8 FREE CHAPTERS

Contents
Foreword
Chapter 1
The Power of the Half Hour™
Chapter 3
Determining Product Viability
Chapter 4
Infomercial Strategies
Chapter 6
Infomercial Creative Components
Chapter 7
Producing an Infomercial
Chapter 8
Infomercial Financial Realities
Chapter 9
Media Planning, Buying and Analysis
Chapter 13
Five Ways to Avoid Committing Infomercial Suicide


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CHAPTER 4

Infomercial Strategies

You’ve decided your product is right for an infomercial. What now? There are so many elements in an infomercial campaign that demand specialized knowledge, contacts, and expertise, it’s probably best to begin by choosing one of the following two options:

1. Strike a deal with an infomercial/DRTV marketer who will either buy your product wholesale or pay you a royalty of 3 percent to 10 percent of sales. Using an infomercial/DRTV marketer is a low-risk, low-return option. These direct marketing firms source their own product, buy their own media, and do their own fulfillment and outbound telemarketing. They have an estimated 80 percent share of the infomercial marketplace, and seven of the top ten shows.

2. Pay an infomercial advertising agency for production and media. This option allows you to keep all the profits. Using an agency is the high-risk, high-return option. Infomercial advertising agencies provide an alternative for product owners who don’t want to share their gross sales, as they would have to do with an infomercial/DRTV marketer. Keep in mind that you’re getting into a business that is much like the movie industry, where only a fraction of the movies makes money on release.

Who Does What?

Newcomers to infomercial marketing are usually in the dark about what goes into a long-form advertising campaign. Once acquainted with all that is required, they are usually more than happy to hand over their projects to one of the two project-management businesses noted above. The table in Exhibit 4.1 shows the intricacies of the infomercial process.


EXHIBIT  4.1  Who Does What?

 

Which Format Is for You?

One of your first decisions will be to select a format for your infomercial. Should it be a talk show? A documentary? Lecture format, storymercial, or demonstration show? The predominant infomercial formats are reality-based. Everything in these infomercials is real: real people demonstrating a real product, real testimonials, real product users, and so on. The hot new format, though, is the storymercial, where the body of the show is fictional. Here’s a complete list of creative formats to choose from.

Talk Show
Al Eicoff’s and Frank Cannella’s 1983 “New Generation” hair restoration infomercial was the first to use a talk-show format. This format remains a tried-and-true concept for low budgets and non-demonstrable products. Inphomation’s successful “Psychic Friends Network” is a sample of how this genre has been refined today. “Judge Wapner’s Family Legal Guide” (see Exhibit 4.2) is another.

“Judge Wapner’s Family Legal Guide”
talk-show format infomercial with host Doug Lewellyn aired in 1992
.

Demo Show
Bob Warden (of Galloping Gourmet fame) brought the demo show back to the future in 1987 with his Vacuum Sealer. A staple of 1950s DRTV sales, this format is used successfully for lower budget, highly demonstrable products. They generally don’t require a celebrity. Success here is driven overwhelmingly by fascination with product demonstration and the presenter’s personality.


Lecture Format
Paul Simon was one of the first to use the lecture format, often called the “evangelist show,” in 1984. Ed Beckley, Gary Cochran, and Susan Powter later took the format to new heights. This tends to be a lowbrow, low-budget approach. Success rests entirely on the evangelistic presenter’s ability to be credible, inspiring, and motivational. A good evangelist can sell anything! Since product quality is stressed less than the presenter’s personality, this format has the least credibility.


Mass Rally
In 1984, Herbalife made millions bringing together thousands of company distributors in a gigantic auditorium with glitz, glamour, and hyperbole. The mass rally format’s “big event” programming creates a commonly shared experience and credibility through mass activity. Historically, this has a lower demographic appeal, but there’s room for improvement. The format would have a different, more acceptable flavor if, for example, Ford Motor Company produced it.


Live Auction
In 1986, one of the first live-auction, multiple-product infomercials aired. A San Jose flea market sold three or four products per half hour by having an actual audience bid up the displayed product’s price, then discounting the price significantly for home TV buyers. This is another low-budget, lowbrow, yet entertaining format. Today, several cable networks appear to be successful in using auctions to sell products.


Multi-product Home Shopping Knock-Off
The multi-product home shopping format has been attempted many times in both QVC style (laid-back, cool) and HSN style (down-home, chatty). It has never worked for a canned, non-live infomercial. It can be produced upscale or downscale. Even though the home shopping format is risky, expect more attempts at making it work.


Game Show
Forget the game show format. Home Shopping Network tried it in 1989. Maybe in a few years—with truly interactive TV—it might work.


Telethon
Infomercials using the telethon format tend to be as fake and deceptive as the early “investigative-reporter” style BluBlocker infomercial in 1987. They use low-budget, low-class productions and are fair game for FTC investigation.


Sitcommercial
Shooting for funny and entertaining, Ralph Ringer and his nutty family attempted to sell Bell Atlantic’s call-waiting service using a “sitcommercial” format similar to a situation comedy. Poorly conceived and implemented as a selling medium, it missed the mark entirely. When done well, this format can be very effective. But be very careful: there is danger everywhere.


Documercial
Infomercials with a 60 Minutes bent are called documercials. This is the most credible format going, although it may be described as the least entertaining. Consumers are hungering for more real product information and more and more Fortune 500 companies are delivering the goods through documercials. This format requires larger budgets and more time to produce, but offers the most upscale positioning of all the formats.


Video Magazine
The PM Magazine version of the documercial is the video magazine. It is more downscale, entertaining, faster paced, and uses moderate budgets. Former PM Host Jim Caldwell of Future Thunder Productions does it as well as anyone.


Storymercial
Tyee started the storymercial trend with Soloflex. In a storymercial, drama heightens emotion and pulls the viewer in. The storymercial in our industry essentially means a fiction-based format. It has definite upscale potential but can be risky if not done exactly right. The storymercial’s softer sell appeals to major brand name advertisers. Generally structured as one to three fictional vignettes in a half hour, their appeal is based on our natural desire to experience the resolution of conflict (see Exhibit 4.3).


Brandmercial
The most exciting wave of the future is the brandmercial! This is a new hybrid infomercial where an authentic brand image is created, right along with the selling mechanics of DRTV. Brandmercials for Apple Computer and Nissan are exemplary uses of this new breed of infomercial, which is designed to generate leads and/or sales by using an arresting high creative level and production imagery that reflects powerful brand positioning (see Chapter 15).

EXHIBIT 4.3

  “The Martinetti's Bring Home a Computer” created for Apple by hawthorne direct and TYEE, combines both storymercial and brandmercial formats very successfully.
 


Featuremercial
Coined by a hawthorne direct Creative Director, Perri Feuer, it uses behind-the-scenes footage of the making of a TV show or feature film to boost box office sales and television ratings.

Undoubtedly, every conceivable long-form format will be attempted in the next few years—especially by those madcap Madison Avenue copywriters. I’m sure we’ll see music videomercials, mysterymercials, continuing dramamercials, soapmercials, suspensemercials, comedymercials, home videomercials, cartoonmercials, and action-heromercials (Schwarzeneggermercials).

The best formats will rise to the top, but only if the makers know your product and target audience well (see Chapter 5). Increasing numbers and types of vertical-market cable channels will help them reach the right demographic for your product.

Classic Offers

One Step
The classic one-step offer infomercial has dominated the industry for 12 years. It’s usually used to sell such products as exercise equipment, kitchen appliances, cosmetics, and diet programs priced between $29.95 and $495. The traditional one-step infomercial sells unique products--not available at retail stores--directly to television viewers. Because of today’s high cost of media airtime, the success rate for one-step offers has fallen from one-out-of-two to one-out-of-ten. These days, infomercials that employ one-step offers are considered high-risk ventures—that is, if the show itself is the only profit-making element.

One-step infomercial marketers have adapted to the increased media costs by attracting customers with the one-step offer and marketing profits on the back end. Back-end programs may include outbound telemarketing, direct mail, continuity programs, home shopping appearances, catalogs, online programs, and more. Obviously, high media costs have not deterred one-step marketers. Eighty-five percent of the infomercials on the air today are one-step offers.


Two Step
Reacting to the squeeze on one-step offers, advertisers have begun turning toward two-step offers (or lead generators). Major financial service companies such as Bank of America are using the two-step approach to successfully generate leads from infomercial viewers. If your product is priced over $300 and your one-step infomercial doesn’t work, consider changing your offer to generate a lead. You can’t get a more qualified lead than someone who has already watched 30 minutes of your sales presentation. Out of more than 175 successful infomercials running now, only 10 to 15 are lead generators. By 2000, I believe 50 percent of all infomercials will be lead generators.


Driving Retail
The retail-driving infomercial is an interesting hybrid of direct response and image awareness marketing. Ninety-nine percent of infomercial viewers will not buy directly in response to television (the average infomercial response rate is between .1 percent and 1 percent). But these millions of non-purchasing infomercial watchers are primed to purchase the product at retail or through catalogs, their preferred buying channels. Corporations such as Braun, Mattel, and Magnavox, which traditionally marketed strictly through retail, are using infomercials to drive their retail sales.

EXHIBIT 4.4

  Magnavox’s storymercial was designed by TYEE to generate leads and drive retail


Infomercial Retail Strategies

Like many other myths related to long-form advertising, conventional advertising “wisdom” has typically viewed infomercials as competition to sales at retail stores. We know now that view is far from the case. Infomercials boost retail sales. Typically, we project average retail sales increasing anywhere from two to five times the sales generated directly over television.

Another reason infomercials don’t compete with retail sales has to do with price. The product on television is typically more expensive. We purposely add premiums to the TV offer so the viewer pays $10 more than if he or she bought it at retail. Of course, there’s $10 more value with the infomercial product, too. Millions of infomercial viewers will see a product on television for $59.95 and won’t buy it. But if they see it at their local Kmart for $49.95, they snap it up.

And that’s why the number of people who buy a product at retail will always be significantly greater than those who buy through an infomercial: there are many more retail outlets than there are television stations or opportunities to watch an infomercial.

Remember “juicer mania” in 1991? Juicers went from a $10 million retail category to $380 million in one year because of infomercials. There were as many as five different juicer infomercials on-air at one point, all of them selling lots of product through direct-over-television sales, as well as driving retail sales dramatically. To this day juicers remain a popular appliance.

Philip's Electronics’ compact disc interactive system is another example. Philip's tried to sell its CD-I for two years, spent $12 million in spot television and print, and could not move the product at retail. After the company conceded the failure of spot commercials for its product, Philip's created a $6 million infomercial campaign that cleared retailers' shelves in just three months.

 

What About My Other Advertising?

Back-end direct marketing works off your infomercial, often resulting in profits that are two to seven times those of up-front sales. Continuity programs, upsells, cross sells, list management, and more build in profits well beyond your initial expectations (see Chapter 12).

CHECKLIST

• For best results, begin by selecting either an infomercial/DRTV marketer (low risk/low return) or an infomercial advertising agency (high risk/high-return) to plan and manage your infomercial campaign.

• If you have a great hard goods product that can be sold in a one-step offer—don’t hesitate to get into this explosive marketing channel—the window of opportunity is still open, but not for long. If you do opt for this traditional one-step infomercial direct-sell offer, plan to offset high media costs by making profits on the back end.

• If your product is priced over $495, chances are the one-step infomercial offer won’t work. In this case, go for the two-step offer designed to generate leads.

• Don’t be afraid to use your infomercials to drive retail sales. More and more Fortune 500 companies are doing just that with great success.

• Carefully consider the right format for your infomercial (talk show, demonstration, storymercial, etc.). Check out results of past shows and trust the experience of your infomercial agency.

• Use infomercials to enhance and supplement your company’s existing advertising media mix.

• If you represent a company that can use 30 minutes to tell your product’s story in a fascinating way to generate leads, promote image, or drive retail sales, look seriously at launching an infomercial—now!