Direct Response TV (DRTV) and Infomercial Marketing

 

Frequently Asked Questions on Infomercial Production

Q.  How long can I expect my show to run successfully?

A.  If a show is successful, the average life span of
an infomercial in its original form is about nine to 18 months.
This can be somewhat longer depending on how strong the show is
and how wide its exposure. A heavy broadcast schedule with a
great deal of exposure could shorten the life of a show.

Q.  What happens when my infomercial starts to fade out?

A.  After about one year of broadcast exposure, the
original show could be re-edited with enough differences to give
it a fresh appearance and feel, but with the same creative
platform to assure continued success. Or, a new show with a new
creative could be considered.

Q.  Do I need a celebrity for my DRTV commercial? If so, how do
you choose one?

A.  Celebrity talent is not needed for every show.
There are many successful infomercials that use non-celebrity
presenters. The advantages of using a celebrity are that a
celebrity can lend credibility to the show and help capture the
“channel surfer.” In addition, the right celebrity brings an
instant connection between the show and the viewer. Therefore,
each program is carefully tailored for the best match-up between
the celebrity, the product and the show format. Of course,
budget has a great deal to do with the celebrities that we will
consider for the show. Whenever choosing a celebrity, be sure to
select a celebrity that is well known, respected, admired and,
if possible, even loved by the target audience.

Q.  Does my infomercial need to include closed captioning?

A.  A recent mandate by the federal government,
included in the Telecommunications Act of 1996, legally required
that all infomercials longer than 10 minutes be closed-captioned
in the first quarter of 2000. Those cables requiring closed
captioning for 1st quarter (starting in January 2000) include
Lifetime, Comedy Central and the Product Information Network.
However, by 2002 ALL cables will actually be compliant due to
FCC closed captioned programming.

Q.  How quickly can I get my show on the air?

A.  Often this is the first question heard about
media. After all the work that goes into a production, it is
understandable that everyone is anxious to get to the next step.

Media plays a critical role in the success of your
infomercial and should never be an afterthought. Although there
is no hard and fast rule, it is recommended that clients begin
working with their media account manager at least a month prior
to the first scheduled air date.

Once the creative is completed and the master is done, you
need to allow a minimum of two weeks for stations to review and
approve the demo tapes, media buys to be finalized, 800#’s to be
assigned and tapes to be created, checked and shipped to each
station. Some stations have a 7-14 day approval process and lead
time to receive the broadcast tape.

Q.  What is the purpose of a media test?

A.  The use of real world testing is one primary thing
that sets direct response television apart from many other kinds
of marketing. Media testing in DRTV serves two purposes. It
confirms or refutes the creative decisions made by testing the
viability of the infomercial, and helps to establish the
benchmarks by which future media buying decisions will be made.

In most cases, an infomercial media test is conducted on a
small scale in markets or venues selected either because they
reliably reflect national buying patterns for many DRTV
products, or because they've been good predictors for a specific
category of product in the past.

By testing in various geographic regions in the US and also
incorporating Cable if the budget allows, you can identify
strengths and weaknesses of the creative and/or offer before you
invest a lot of media dollars. Factors such as price point,
structure of the offer, premiums and the product configuration
can affect response and testing helps identify and make changes.
Very few campaigns go directly from testing to roll-out without
making some, if not many, creative changes and testing new
versions.

Q.  How much do you recommend I spend on a media test? What
venues should I test on?

A.  This is determined on a per client basis, based on
the individual objectives of campaign. Most clients budget
anywhere from $20,000 – $30,000 per price point. This generally
buys anywhere from 8-15 telecasts. Media strategists can work
with you to determine the exact demographic/target audience you
are looking to reach. From there you should refer to an internal
media database which contains media history for virtually every
product category, the Lifestyle SRDS profile, industry reports
and many other resources to determine the best markets, regions
and venues to test your show.

Infomercial media is selected from any of the following
venues:

  • U.S. Broadcast: U.S. Broadcast markets
    are any Nielsen market that doesn’t have signal and viewership spill
    over into Canada. This venue allows you to isolate and test every
    region and different demographics throughout the United States, as
    well as specific markets, cost-effectively.
  • Border: Border markets are markets in
    which broadcast TV stations’ signals and viewership spill over into
    Canada. These are markets such as Seattle, Fargo, Detroit, Buffalo,
    Burlington, VT., etc. Border can be a good venue due to its broad
    reach provided that you are able to accept calls from and fulfill
    orders to Canada.
  • National Cable: Cable networks are those
    that broadcast signals via satellite to numerous local cable
    systems. There are over 100 national cable networks, but only a few
    actually reach 25 million or more TV households. Not all national
    cable stations accept paid half-hour programming. National cable is
    a good venue for testing as it is all-pervasive and provides an
    overview of performance nationwide.
  • Local Cable: There are approximately
    11,000 local cable systems operating in the U.S. Most often owned by
    large MSO’s (multiple system operators), but because they are often
    locally operated, it is possible to buy infomercial media time on a
    local, community-by-community basis. This media is generally
    relatively inexpensive and these stations are more likely to offer
    low-risk or guaranteed payout deals. Local cable is not usually
    recommended for testing because of its narrow reach.
  • Regional Sports: Regional Sports networks
    also receive broadcast signals via satellite but much of their
    programming content is targeted to specific sports events and home
    team sports that are of interest to a regional audience. This venue
    is good for testing golf, fitness or sports-related products and
    allows you to target specific regions.

A variety of dayparts and stations will be tested within each
venue, although much long-form programming skews weekends, early
morning, afternoon or late night.

Q.  How are results measured in infomercials?

A.  One of the greatest benefits of an infomercial is how
accountable it is. With the right systems, you are able to determine
within a matter of hours how many people responded to a specific
telecast and how much profit you generated.

  • Ad Allowable (AA): A dollar
    amount determined to be the maximum media expense per unit
    sold in order to make a maximum profit - approximately the
    gross profit per unit, less all direct selling costs, except
    media time.

Ad allowable calculation:

REVENUES
Retail Price $100.00
Shipping and Handling $10.00
Total Revenues $110.00
EXPENSES
Cost of Goods $20.00
Bad Debt $10.00
Merchant Account Fee $2.50
Order Processing $7.00
Dubs $0.50
Telemarketing $2.50
Total Expenses $42.50
AD ALLOWABLE
Revenues $110.00
Expenses $42.50
Ad Allowable/Gross Margins $67.50

*These are estimated costs only and will
vary with each campaign

  • Cost Per Order (CPO): The
    average cost of television media to generate one product
    order. The figure is determined by taking the cost of a
    specific infomercial telecast and dividing it by the
    number of orders received. A $1,000 time period that
    generates 100 product orders would have a CPO of $10.
Media Time Slot $1,000.00
Number of Orders $100
Cost per Order $10.00

*These are estimated costs only and will vary
with each campaign

  • Media Efficiency Ratio (MER): The
    number that provides a snapshot of the success level of a
    media buy. The ratio is derived by dividing total sales
    (resulting from a particular telecast) by the media cost.
    For example, if you buy a half-hour for $1,000 and generate
    $3,000 in sales, the MER is 3.0. Sales/Media cost = MER.
Sales Generated $3,000.00
Cost of Telecast $1,000.00
MER 3.0

*These are estimated costs only and will vary
with each campaign

Q.  What happens after the media test?

A.  If the media test meets or exceeds the goals you
have set for your campaign, a gradual roll-out of your
commercial will begin.

Should a test prove to be marginally successful, the offer
may be restructured to reflect a lower price or different
payment plan. Lowering (or sometimes raising) the price point by
a small amount may prove to deliver stronger results. In many
cases, two price points are testing simultaneously in different
markets to determine quickly what makes the phone ring.
Modifications can be made to the most successful offer as
roll-out begins.

Q.  I know a lot of infomercials are on at odd hours, such as
2:00 or 3:00 AM. Are people really watching then? When is the best
time to test?

A.  Lesson #1 in direct response television media –
forget about the viewing habits of yourself or your family.
Also, remember that effective media buying is largely a function
of rate. When planning your media test strategy, a good media
manager will look for weekdays and times that have been
effective time and again for a product in your same category
and/or price point, targeting the same demographics. And late
night or early morning spots can typically be purchased at a
fraction of the cost and are more available than weekend
daytime.

Q.  If my program airs on a national cable station, it will air
everywhere, right?

A.  While most local cable systems carry all programs
and commercials of the national cable stations, individual local
cable operators (MSO’s) can be allocated a percentage of time to
air local programs and spots, depending on the content of their
contract with each station. It is possible that a small
percentage of operators may opt to air a local program instead,
or insert a local spot somewhere in the middle of an
infomercial. However, this occurs only in a very small
percentage of markets and should not affect your overall
response.

Q.  My schedule said my commercial would be on the air at 1 AM.
But when I tuned to that channel it wasn’t on. What happened?

A.  Although it is logical to think you should be able
to “tune in” to a given station at the exact time your schedule
shows and view your commercial and this is usually the case, on
some occasions you may be disappointed. There are a number of
reasons why your commercial may not be playing and there are
some terms you should be familiar with before entering the
infomercial media world.

  • DNR – Did Not Run: After a
    weekend of airing media, you will receive a broadcast
    history which reports how many orders you received from
    each telecast. There will also be a section labeled
    “Potential DNR’s." These are telecasts that were
    scheduled to air but received no orders. The media buyer
    works with the station over the next few days to
    determine whether the infomercial aired as scheduled or
    did not air as a result of a pre-emption, programming
    change, technical problem or other factors which are
    common. If it did not air, the station will generally
    offer an alternative time period or a refund. Once it
    has been resolved the telecast will be removed from your
    media schedule and it will appear as a credit on your
    adjustment invoice.
  • Pre-Emption: Removal at a TV
    station’s discretion, of a scheduled infomercial to be
    replaced by another infomercial or regular program or
    news report.
  • Affidavit: This is the
    document provided by TV stations confirming their
    allotted commercial run times and specific prices paid.
  • Station Time, Broadcast Time and
    Calendar Time Differences
    : See below.

Q.  Why do some telephone operators sound so knowledgeable,
while others seem like they have difficulty reading the script? What
can I do to make sure my calls are handled professionally?

A.  It’s important to understand that major call
centers have as many as 300 “seats” or operators on staff,
taking calls 24 hours for thousands of different products. As
with any industry, you have varying levels of skill and
experience in the mix.

For even the most experienced operators, one of the most
critical factors in how your call is handled lies in the script
and the tools the operator is provided with and how well they
are able to differentiate your product from the others.

In a “shared” environment, different advertisers are using or
“sharing” the same 800 numbers. So the operator may handle a
call for a golf product one minute, and a kitchen gadget the
next, unless you are willing to pay extra for exclusive numbers.
In a shared environment, the operator depends upon the caller to
“prompt” them as to which product they are calling about. The
operator then refers to a “menu” on their computer screen to
find your product and begin reading the script. Therefore, it is
important to make sure the information in the script is accurate
and easy to read, and flows easily when read aloud.

Q.  How are operators trained on my specific product? Who is
responsible for training? Who is responsible for the cost?

A.  The goal of every TV campaign is to have each
customer greeted by a polite, professional, friendly operator
who understands and is able to answer questions about your
product intelligently. Invariably, even at the best call centers
you will find operators who stumble through the script,
mispronounce the product name or worse, are not able to identify
the product.

For TV offers that are relatively straightforward, the call
centers have internal training programs to ensure that the
operators are reasonably well educated about the product and can
answer basic questions. You will need to provide them with a
copy of your infomercial, product samples and a good description
of the product, including features and benefits, pricing, etc.
You can make test calls once the script is “live” to see how the
operators are handling your calls. It is always good to write
down the operator name and TSR #, and any problems or concerns
you have should be reported to your account manager so
additional training can be conducted if needed.

If you have a complex product or offer, or wish to be
involved in the training process, most call centers are very
open to have clients and/or agency representatives involved in
the training process. While it is nearly impossible to reach
every operator due to scheduling, you will be able to work with
individual focus groups in half-hour increments to view part of
the commercial, provide a demonstration, and answer specific
questions they may have about the product. This is billed on an
hourly basis.

Q.  What is an average call-to-order conversion?

A.  If consumers are responding favorably to the
infomercial and telemarketing scripts are clear and concise, you
should expect the majority of calls (65% – 75%) to be actual
“orders” for your product. It is normal for the remaining calls
to be customer service questions or inquiry (complete) calls. If
you are receiving a high percentage of customer service
calls/questions, it could be a sign that consumers do not
clearly understand the offer.

Q.  What is a reasonable amount of time for customers to expect
to receive their product?

A.  To take the safe route, many infomercials advise
customers to allow from two to four or four to six weeks for
delivery. Most products are actually received much sooner than
that. The rule of thumb is – the sooner the better. Most
infomercial sales are impulse purchases so the less time the
consumer has to wait for your product, the less likely they’ll
be to change their mind.

Q.  What type of fulfillment reporting packages are available?

A.  Most fulfillment companies have standard packages
that are presented at the time of the request for proposal.
Standard reports are general order summary reports, shipment
reports and inventory reports. If they are handling your
merchant accounts, you will receive deposit and refund reports.
Specialized reporting can be created upon request at additional
cost.