September 2010 – Channel Crossing: DRTV

Nothing Lasts Forever…Thank Goodness

This has been a challenging year at best. A bullish media market drove up rates, while a lingering economic downturn depressed consumer confidence and as a result, their willingness to respond to DRTV offers. Here’s the good news. The 2011 television Upfront market was extremely strong. That means there will be less pressure from high-rate general advertisers on the Scatter market, where DRTV resides.

Furthermore, DRTV response rates are on the rise. Despite the summer’s news reports of sinking consumer confidence, we’ve seen an across-the-board improvement in DRTV response rates, a pure impulse purchase and one of the truest measures of consumer confidence. Improved consumer response, coupled with a stable media market, has enabled more campaigns to achieve profitable scale.

What Have We Learned?
As 2010 moves into 2011, the DRTV industry will continue to improve. How long it will take consumer willingness to purchase $10, $14.99 and $19.99 items to trickle up to more expensive infomercial offers remains open ended. However, we expect that the improvements in the media market and in consumer confidence that are now boosting short-form DRTV will begin to have a sustained and positive impact on long form later in the fall.

What new insights can we carry forward from the trials of the past year? The first is that neither good nor bad times will last forever. Our industry is affected by powerful and dynamic economic and social trends. To think that we can affect or beat these forces is fool-hearted at best. We need to be nimble enough to take advantage of opportunities when they arise, and intelligent enough to adjust our exposure to constant social and economic change.

We also need to constantly protect and add value to the “As Seen on TV” retail franchise, which has become the dominant revenue channel of our industry. Scott Boilen of Allstar Marketing raised a pressing concern as a panelist during an industry conference in May. Boilen said that the biggest risk we faced was the pretenders that take advantage of the hard-earned As Seen on TV retail space, with products that have never been seen on TV in a meaningful way.

As these DRTV wannabees sit unsold on store shelves, retailers are going to lose confidence in the next wave of deserving products. As an industry, we need to embrace a more reliable method to monitor and report on DRTV campaign activity than we currently settle for.

Don’t be impatient and settle for mediocrity. Over the past year, some of the smartest and most successful DRTV marketers in the world have compromised their standards on campaigns delivering ROIs below historic norms. They justified their decisions based on high media rates and poor consumer response. Some said that DRTV would never again be a profitable stand-alone channel. Over the past year, a media earnings ratio of 1.3 became the new 2.5.

Fortunately, the media market has grown more stable and consumer confidence is on the rise. Scalable, profitable campaigns are starting to take off. Just keep in mind, nothing lasts forever…be patient, nimble and track everything that you do and the DRTV industry will prosper when times allow.

Dick Wechsler is CEO of Irvington, N.Y.-based Lockard & Wechsler Direct, and chairman of Electronic Retailer’s Magazine Advisory Board. Contact Wechsler at rwechsler@lwdirect.com.

September 2010 – Channel Crossing: Social Media

Social Media Marketing: Keeping Your ROI in Check

Is it possible to quantify the true value of social media marketing (SMM)? Advertising and marketing firms across the globe are scrambling to answer this million-dollar question. Yet without knowing the answer to this question, we continue to see companies invest tens of thousands of dollars in social media campaigns, apparently throwing caution to the wind.

Marketing spent on social networking sites in 2009 reached $2.4 billion, according to a report by Mintel. The social media revolution is relentless in its expansion. Most businesses fighting for survival in today’s economy refuse to be left behind–even if they don’t understand how SMM efforts conducted by a hired firm actually affected their return on investment (ROI). Pack mentality is driving the market and may actually be its greatest proponent.

If only radio, television and online marketing firms had it this easy. Wouldn’t they all love it; forget audience analysis…forget cost per lead (CPL)…forget proving to clients that any and all marketing efforts are worth the investment. It’s as if the phenomenon of social media took off too quickly for people to question its validity. Yet, we all know that effective networking–whether through social media or other means–generally leads to business growth. So the value must be there, but how will we ever monetize it? In short, through technology.

Putting the “Buzz” in Social Media Marketing
Most will say revenue growth through SMM is difficult to track; the rest will say it’s impossible. Do not be deceived. Without an industry-accepted formula to calculate social media, here’s what you need to know: Social media firms know the buzzwords. They will “strategize, engage, listen and influence online consumers,” while encouraging others to “connect with, trust and recommend” your brand.

Through them, you will gain “direct contact with consumers,” “real-time customer feedback,” “reach untapped markets,” “gather valuable customer data,” “achieve branding recognition” at its best, and even “gain influence over consumers.” The buzzwords continue. Your chosen firm will report to you on the number of new “backlinks,” “friends,” “followers,” “likes,” “online articles,” “blogs,” “bookmarks,” “newsletter opt-ins,” “comment sentiment,” etc. Yet, they can’t tell you how any of this actually affects bottom-line revenue. Business growth spawns from innovation and it seems the horses (social media firms) left the cart (your business) in the dust before anyone knew the race had started.

So forget all that. What can we really track with even the most basic, often free, technology? How about increased web traffic, number of new leads, leads converted to sales and overall revenue growth achieved through SMM efforts? It seems a simple request. If your social media firm is unable to deliver these fundamental figures and if its business model is obscure like most, then you’ll never truly understand objective ROI when it comes to marketing through social media.

However, there is a solution. Find a firm that grows as you grow: a firm whose interests are your own. I’m, of course, referring to revenue sharing, which is simply a way to grow a business in a manner outside existing portals. Can your firm offer a concrete social media CPL prior to campaign launch? Not likely. They’ll need a new business model for that.

Also, lead generation is imperative. People who “like” your Twitter business page are not leads. Their “like” does not give you their e-mail address or phone number. Social media sites are merely a collection of consumers versus a purchased list of leads falling within your target demographic. The social media leads are useless if not given specific instructions designed to get them to hand over lead information to you and you only. Micro-sites now enter the equation.

Find a firm that’s willing and technically able to set up a top-notch micro-site. As they drive traffic to this site (at no out-of-pocket cost to you), let them climb the social media mountain with you rather than for you. Then just sit back and monitor online traffic, new leads, conversions and revenue growth. This is how results get achieved. This is how technological innovation has finally caught up with the wild brute we call the social media revolution.

Ed Elliott is chief financial officer at Media Worldwide Partners in Long Beach, Calif. Contact Elliott at (562) 439-3900, or via e-mail at eelliott@ mediapartnersworldwide.com.

September 2010 – Channel Crossing: Legal

Do You Need a Legal Physical?

When was the last time you had a physical? What about a legal physical? If you’ve got a product you’re selling on TV, online or at retail, it may be a good idea to get one from a qualified attorney.

The Examination
Not to worry you, but here are just a few of the subject matters to be considered in the course of such an examination:

• Product/Patent rights. If you obtained your product or invention from someone else, do you have a written contract? Does it include all the rights you need to market the product for as long as you will need to market it and in all the channels of distribution you desire? Is there a patent application or patent? Should a patent application be filed, and if so, by whom and at whose expense? What about international IP protection? Can the product be marketed without infringing someone else’s patent, i.e., has a search of other patents been conducted? Are the royalty and other financial obligations clear?
• Name/Trademark rights. If you obtained the name or trademark of your product from someone else, do you have a written contract? Is it a license or assignment? Does it give you the rights you need to use that name or trademark in commerce as and when you desire? In the contract, is it clear who is indemnifying whom and holding them harmless against future third-party claims, alleging trademark infringement if any arising out of the use of the mark? Is the mark even available for commercial use in the United States or does it infringe registered or unregistered “common law” trademark rights of a third party? Is it confusingly similar with a third party’s mark? Has a full search been done on this, i.e., beyond just a Google search and a www.upsto.gov search? If it is available, should a U.S. trademark application be filed, and if so, what kind, by whom and at whose expense? Is the mark too descriptive to be registered with ease or too easy for someone else to come close to with a similar but lawful “knockoff” name? What about international registrations? And, is the name perhaps too good, meaning the FTC might view it as being deceptive if it impliedly conveys to the ordinary consumer that your product has some benefit, if that claim isn’t substantiated?
• Ad Copy/Copyrights. Who owns the spot or infomercial for your product? Who owns the content of the website? Is there a written, signed “work-made-for-hire” agreement or copyright assignment contract with every person who provided any creative input, so the “chain of title” is clear and is in your name for copyright purposes? Has the material been registered with the U.S. Copyright Office? What about registering the material with U.S. Customs? In your contracts, is it clear who is indemnifying whom against third-party claims, alleging copyright infringement arising out of the material?
• Production. Is there a production contract? Is it clear? Does it include the necessary “work-made-for-hire” language? Does anyone (e.g., talent) have a right of script review or approval? Have you consulted with legal counsel about the script and advertising claims? Are there any edits that should be made or supers or disclaimers added for legal reasons? Were the product demonstrations “rigged” in any way? Is there a release form signed by all on-camera talent? Is there a testimonial affidavit signed by all of your testimonialists? How were they recruited? Were any of them paid or given anything and if so how much, when, by whom and for what?

If you have an expert (e.g., a doctor) who is going to endorse your product in your ad, what exactly did he or she do to evaluate the product and to support whatever he or she is saying or implying about it in the ad; and is there a signed expert endorsement affidavit to back it up? Under your contract, is it clear who will indemnify whom for any third-party claim of copyright infringement or false advertising arising from the ad?

• FTC claims review. No advertising should be done without there having been some FTC claims review or consultation ahead of time. What express claims are being made? What would the FTC believe the implied claims are? Liability exists for both express and implied claims. For each, do you have adequate substantiation according to FTC precedent? Given your product and your claims about it, what degree of substantiation would the FTC likely require? Do you need a clinical? Do you need two? Does it need to have a placebo group or other design features? Is there any preexisting substantiation you can borrow from, that may apply to your product and your claims? What edits could be made and what supers or disclaimers added, for a reduced legal risk level? What substantiation could be developed? Does your product or your claim about it fall into a category that the FTC historically has been interested in (e.g., weight loss)? Are you subject to other regulatory bodies such as the FDA? Do you use testimonials? If so, have you ascertained and are you disclosing the results that one can “generally expect” from use of your product in the depicted circumstances? Are you using the word “free” and if so how and why? Are you “guaranteeing” any results? In terms of the online space, is your privacy policy adequate? Are your terms of use adequate? Are you running a sweepstakes or contest? Are you using disclaimers and disclosures properly and in the right locations? Are you using online affiliates or affiliate networks? If so, is their conduct in compliance with the FTC Act and the FTC’s guidelines? The same question goes for any bloggers or other social media participants you pay or to whom you may send free product or gifts. Are they, for example, disclosing the material connection that they have with you (e.g., that you gave them free product)? Finally, in your contracts, who is indemnifying whom for FTC or other third party (e.g., attorneys general) claims of false or deceptive advertising?
• Contracts. Does everyone who has an obligation to you, and does everyone who has a right to be paid by you, have a signed contract? Is anything vague, ambiguous, unclear or otherwise a “loose end,” and if so which party does that favor?

Consult with an Expert
On some of the above matters, it may be reasonable to defer getting legal advice until you’ve tested your campaign and you know it will make money; but on others, it is a major risk to do that. Figuring out which is which is the first step. As they say on TV, “always consult your physician before beginning this or any other exercise program…”

Greg Sater is an attorney with Rutter Hobbs & Davidoff in Los Angeles. Contact Sater at (310) 286-1700 or at gsater@rutterhobbs.com.

September 2010 – Columns: Direct Response Insights

Money Not Well Spent

All online orders are not created equally. Some are ‘free’ while others cost money to obtain. Unfortunately, many electronic retailers don’t even realize they’re incurring additional costs when obtaining orders online and don’t properly manage or factor in these costs.

Let me explain. If you display a web address in the end tag of your spot and someone types that URL into the address bar of his or her browser and places an order, you realize no additional media costs for that order. That person saw the ad, went to your site directly and placed an order. This is good. It is ideally what you want every customer to do; however, it doesn’t end up working that way.

And, if it works any other way, you incur additional costs to realize the order. Whether it’s money spent on search engine optimization (SEO) to obtain high organic listings, media costs of clicks from paid search or affiliate bounties paid, you’re handing out money to someone for each order driven. Once you look at it this way, you’ll realize just how important it is to properly manage the web overall and throughout the entire life of a project or campaign.

Keep It Simple
Believe it or not, web marketing starts in product research. If I were on the product development team, I would open up a browser to Go Daddy and type in domain-name ideas as we developed the product. Don’t go with odd names and misspellings. I can’t stand it when I see things like: www.GardDog.com or www.KarMat.com. Consumers type in the domain name of the item (as they feel it is spelled). Try to come up with a name that is also available as a web address. And please get .com and not .net or .tv. People type in .com just as they dial “800″ instead of “877.” As a side note, be sure to purchase the misspellings of the domain. Case in point, years ago we convinced a client to purchase www.GlassWizzard.com for their Glass Wizard campaign. Nearly 7 percent of the orders came from that domain! It only cost the client $8 for the domain.

Before leaving this point alone, I can’t stress enough how important it is that people find their way to your site directly and with ease. If they go to a search engine, are forced to look for the site or otherwise don’t know where to find you, it will cost you additional money to be found. Some of them will search in a search engine or see a banner ad or e-mail from an affiliate. If the consumer comes to your site through any other door, it will cost you money. You’ll have to pay for the clicks from paid search, or worse yet, pay affiliates large bounties for the orders they drive. Make it clear and easy for people to find your site and you’ll save money–a ton of it.

To that point, please say your domain (website address) out loud in your end tag–and prominently display it. No, web orders don’t take away from the call center. The conversion rate in the call center has no relevance to the conversion rate of your site. If you think that you’re losing orders because the call center is converting at 60 percent while the web is converting at 15 percent, you’re wrong. The more ways you give a consumer to convert, the more conversions you’ll see. I assure you, it is all complimentary.

Consider SEO
Studies have shown that people visit a site three times prior to making a purchase. If that’s the case, that would put the maximum conversion rate on the site at 33 percent. People check out the site prior to ordering, even if they order via phone. Put the domain name in big letters in your end tag, then analyze the numbers and see how your “organic” order volume increases versus “other” orders realized online. Remember, your organic orders cost you nothing.

I would urge today’s DRTV marketers to spend a little time doing some SEO work. There are some basic SEO tasks that can be achieved for very little money. True SEO with generic terms can cost thousands of dollars and take months to kick in. You can do this as well. In other words, set up your meta tags and provide some copy on your site that includes your TM and other key terms.

Now, for one of the most important items. Do your own TM paid search marketing. Pay for the clicks. Don’t ever pay a set bounty for each order driven from TM terms. What I mean by TM terms and paid search is bidding on terms in the search engines that are made up of the trademark name of your item. For instance, you would bid on “widget” if your product was named the Widget. If you don’t have the capacity to manage it all, find an agency that will manage the campaign on a media- buying-agency-fee basis–pay an agency fee on the ad dollars spent on clicks in the search engines. The average cost per order on TM terms in paid search on a given $19.99-$40 item is in the low single digits. So, on average, it would take say $2-$5 in click costs for each order driven. If you’re paying a flat rate–or worse yet–paying affiliates for orders driven from the search engines, you’re paying way too much. Why would you pay $10, $20, $30-plus on an order when it otherwise would cost you $2-$5?

I truly believe this is a macro factor that is negatively affecting many of today’s DRTV ad campaigns. Un­fortunately, most electronic retailers don’t realize this and they continue to bleed money without knowing it.

It is extremely important that you control the listing in the paid search on your TM terms. If you have a trademark, Google and others are quick to help you out and you can push others out of the search results. This all comes back to what an order costs you online. If you drive people to your site, it costs nothing more. If you market to them in paid search under the TM terms, your additional cost is minimal. If you let affiliates and others steal orders from your TM terms, it costs you a mint.

Control your web business. Make it as easy as possible to find your site. Let them know how to get there. Don’t hide it, leave it out or allow others to make money by driving you orders you should have otherwise achieved directly on your own. In a recent study of a campaign, we found that proper management of the domains, TM paid search and the affiliates saved a client over $350,000 in one month alone. Now that’s a big number.

Ken Osborn is president and CEO of Liquid Focus Direct in Bridgeport, Conn. Contact Osborn at (866) 892-0259 or at kosborn@liquidfocus.com.

September 2010 – Columns: Guest Viewpoint

DRTV Categories and Product Promises Withstand Hard Times

Recent economic reports offer a mix of messages that may as well come accompanied with the disclaimer, “Results may vary.” However, as DRTV marketers continue with their own varying outcomes during what has now become known as the Great Recession, there are some encouraging signs. Nielsen reports that primetime viewership is up 3 percent in households that have high-definition television sets and that nearly 52 percent of all U.S. TV households are now watching TV with the more vivid technology.

What’s Considered Recession-Proof?
The phenomenon is no doubt a reflection of the hunker-down mentality that many consumers have adopted–think “staycation”–where folks forego pricey expenditures and, instead, focus on feathering their nests and bringing balance to their lives. Interestingly, the most successful long-form DRTV products of recent note reflect these very same ambitions. An analysis of the IMS Retail Rankings for May 2010 illustrates that there are several categories and types of consumer products that appear to withstand the vagaries of a shaky economy:

Five of the top 25 shows come from the Health and Fitness category, including four of the top 10, reflecting buyers’ desire for a body makeover. While this category seems to consistently be a dominant one in both good times and bad, its current resiliency may in part be attributable to the sort of personal recalibration that occurs in times of economic strife. The New York Times reports that one-third of Americans are obese, suggesting that in addition to waistlines, the category itself will continue to grow. Further, such products are frequently sold as a convenient and wallet-slimming alternative to gym memberships.

Household products comprise the largest category, with nearly a third falling into this broad spectrum. From solutions for the kitchen to the bathroom, to the outdoors, these products all offer ways to make life at home more livable. All of the products that are winning in the current environment reflect cost-savings that eliminate the need for more expensive alternatives. For example, a steamer can be a cheaper solution to maintaining a clean house versus hiring a service to do it for you. Likewise, DRTV-marketed outdoor tools can replace a costly gardener and VoIP telephone service saves money compared to a landline.

Products that are able to withstand an economic cold front often possess another enduring quality: they offer miraculous results or instant gratification. From undergarments that instantly reshape the body to chamois that absorbs both water and consumer skepticism at impressive rates, a broad spate of such products continues to thrive despite recessionary woes.

While it may seem like the current trend will never end, it’s worth remembering that such climates, like the seasons, are cyclical. Neither a blue-sky mentality nor an outright embracing of the blues should color the day. Rather, it’s faith in our ability to embrace the tenets of success that will chart the industry’s future prosperity.

Peter Koeppel is president of Koeppel Direct, a full-service media buying agency based in Dallas. He can be reached at 972-732-6110 or online at pkoeppel@koeppelinc.com or twitter.com/DRTVBUYER.

September 2010 – Columns: Your Association, Your Bottom Line

A Wealth of Leadership

September is a landmark month in the calendar of the direct response marketer. We gather as an industry at the ERA D2C Convention (incidentally, this marks the 20th anniversary of the event) where we forge and renew friendships as well as business relationships, all while educating ourselves and sharing knowledge with the goal of further honing our craft. And we reflect upon the year that was, celebrating some of the industry’s finest and most innovative work at the ERA Moxie Awards Gala.

September marks a milestone for the ERA, too, as we welcome new volunteer leaders to the board of directors and name a new chairman of the board.

In fact, this year we welcome eight new members to the ERA board of directors. These new members will join our incumbent members to create a board that is comprised of gifted and talented leaders, and one which is balanced and nicely reflective of the industry which it represents–it’s perfectly constituted to provide leadership in what’s certain to be a pivotal 2010-2011.

We welcome two more women to the board: Omni Direct’s Denira Borrero and Cecilia Turner of International Commerce Agency. Both bring extensive DR experience–domestic and international–and join existing members Stacy Durand of Revenue Frontier/Media Design Group and Murad’s Carey Grange to give us four female senior executives on the board.

Adding to the group’s international contingent and providing an Asian perspective is Harry Hill of Oak Lawn Marketing Group. (In addition, John Mills–of John Mills Limited–will represent Europe as the new chairman of the board of ERA Europe.)
DRTV marketers are certainly foundational members of our association, and BJ Fazeli of BJ Global Direct and veteran industry and ERA leader Elliott Segal from Guthy-Renker represent this crucial sector of the industry.

HSN’s Greg Henchel will ensure that we continue to have a board presence from the home-shopping space. Dave Wallace of Syndero brings a wealth of experience from the e-commerce world. Matt Fisher is SVP and GM of direct response at LiveOps, a very techno-centric company with leadership that has its roots in e-commerce, as well.

The board’s new chairman will be Jeff Tuller, president of Savvier. Jeff, a true industry leader, has been a valued member of the association for many years, continually taking on positions of increasing responsibility. A member of the Strategic Planning Committee, Jeff is well positioned to lead the association in the first year of the three-year implementation of the strategic plan. As new vice chairman, SF Video’s Steve Feinberg will ascend to leadership for the 2011-2012 term.

I would be remiss if I didn’t acknowledge outgoing chairman Lee Swanson and thank him for his outstanding service throughout the year. Lee has led ERA through a transformative period. He served as vice chair during the re-launch of the ERA D2C Convention and ERA’s mid-winter event, The Great Ideas Summit. As chairman, Lee was an enormously positive influence and helped drive the approval of the strategic planning process and saw it through to its successful conclusion with the ultimate board approval of the strategic plan.

And as we head into the critical first year of the plan’s implementation, I couldn’t be more impressed with the assembled ERA volunteer leadership. I know that as members, you share my enthusiasm and look forward to working with them in the coming year.

September 2010 – Feature: Special Section-An Industry Remembers

Direct response veterans reflect on 25 years of the infomercial and the lessons that they’ve learned along the way.

BY RICHARD SCHEINER

Welcome to the fourth installment of Electronic Retailer’s celebration of the 25th anniversary of the infomercial.

As we all now know, Al Gore did not invent the Internet by himself, and Lebron James can’t win a championship without some help. It takes many individuals to create a success, and the direct response industry is no exception.

As inventors, marketers, producers, media agencies, telemarketers, fulfillment service suppliers, webmasters and product manufacturers–many of us have played our part. Some individuals have endured the test of time, and others have stepped in to bring the genre to the next level.

In preparation for the D2C Convention in Las Vegas in September, the ERA Public Relations Committee and ERA staff have been busy at work, assembling exhibits of some of the industry’s most iconic and memorable infomercial products to be featured at the convention’s 25th Anniversary Pavilion. Included will be product samples, clips of memorable shows, and information on some of the people and companies that have contributed to the growth and success of the infomercial. We urge all attendees of the convention to stop by the pavilion to visit and reminisce.

This month, we hear from Mercury Media’s John Cabrinha and Dan Danielson, Tim Hawthorne of Hawthorne Direct, Jeffrey Knowles of Venable LLP and Richard Stacey of Northern Response (Int’l) Ltd.

Richard Scheiner is chief operating officer at International Commercial Television Inc. in Wayne, Pa.

Dan Danielson
and John Cabrinha
Co-Founders and Co-Chairmen
Mercury Media

Electronic Retailer: How did you both get into the DRTV industry?

Dan Danielson: John Cabrinha got his start in the DRTV business in 1982, answering telephones for one of the first home shopping shows called “Telephone Auction.” He worked his way up from an operator to a media buyer and was actually an “on-screen demonstrator” a couple of times.

John Cabrinha: I met Dan Danielson at a company called SyberVision in 1987. We were two of the first people to ever call a television station and convince them to sell us a half-hour. We developed relationships with cable systems and broadcast stations all over the country. Back then, stations didn’t know what the value of the time period was and neither did we, so we did some calculations on what they should sell it to us for, and we waited for the response to see if we were correct. We quickly developed a database of stations, markets and time periods and what price they worked for and what types of products were successful.

Danielson: This was so early in the history of DRTV that half-hours weren’t even called infomercials back then. There were only a handful of shows on the air during that time, and we were all learning things as we went along.

ER: Is there any one product that you believe changed the face of DRTV for the consumer?

Danielson: If we look back over the past 25 years of infomercials, we could almost create a time line of the business over those years based on the “mega-hits” that were out there–the products that became household names. Some people in the industry are too young to remember some of the older titles that were there at the start of the business.

SyberVision: The Neuropsychology of Weight Loss was one of the first “home look- and-feel shows.” So many shows followed the style that this show set in 1987. Tony Robbins Personal Power was one of the first shows to use true celebrity hosts and to appeal to a mass audience. Ron Popeil’s Food Dehydrator and Pasta Maker were two of the first massive kitchen product hits. There were other kitchen shows that worked, but Ron took it to another level.

Cabrinha: Tae Bo is one that we consider “the” mega hit because it was the first show that hit the airwaves and ran so much media in a relatively short period of time, and people still talk about it to this day. It is a show to compare your success to, and that success was met or exceeded over a long period of time by The Total Gym.

We consider Bare Escentuals to be the quintessential makeup product that created a brand and had a long TV life and shelf life. Magic Bullet would be considered the modern day big hit. It’s had a long TV life, went to retail and continues to be successful in both channels. They set a trend and broke the mold. I’m sure there are so many shows that we are leaving out that were monumental: Proactiv Solution (long life, brand establishment), Power 90 (exercise, weight loss, customer satisfaction, web, etc.), Kevin Trudeau (various shows developing the talk-show format). Also, Time-Life (with the music and video). We could go on and on.

ER: What is your most memorable (insightful, funny or endearing) story of the DRTV industry or a colleague in the industry to date?

Danielson: We have been doing this for such a long time now that we have so many stories and experiences that have been funny, exciting, humorous and sentimental. As the industry is getting older, the individuals in the business are getting older. We have lost some of our fellow industry pioneers in the past few years. We have always loved this industry because of the people. We have worked with so many great people, whether as clients, vendors, consultants or just friends growing up in the business.

There are lots of stories that we can’t publish, and there are many that are way beyond the word limit we have in this article. The one reason we keep going to work every day and attending every industry event is because we love the relationships and the people we have met over the years, and look forward to seeing those relationships continue to blossom, and hopefully continue to develop relationships with new people as they come into this industry.

Timothy Hawthorne
Founder, Chairman and Executive Creative Director
Hawthorne Direct

Electornic Retailer: What were you working on 25 years ago, in relation to DRTV?

Timothy Hawthorne: In November 1984, I sat in the basement of a local electrician’s home (one of the few C-band satellite owners in Fairfield, Iowa), struggling to tune in tiny cable network, Satellite Program Network (SPN), awaiting the telecast of my first infomercial to air in what, unbeknownst to me, was soon to be a new era of DRTV.

Moments after the hour-long infomercial, I anxiously called our small telemarketing partner in Omaha for results. I was disappointed to learn only 100 orders had been posted. One hundred seemed like a fraction of the potential, considering SPN was in 5 million homes. I pulled out some scratch paper and did my first MER calculation: cost of media: $3,000. Sales: $30,000. Ohhh…a 10 to 1. Thus began my transition from DGA director and documentary filmmaker to DRTV advertising. Over the next 18 months, I helped build the Beckley Group, 525 staff strong, with over $100 million in sales–one of the first major long-form direct marketers.

ER: How has the DRTV industry changed over the past 25 years?

Hawthorne: In 1986, I launched Hawthorne Direct, an ad agency dedicated to bringing long-form DRTV to brand advertisers. For 15 years, I had been telling compelling human interest or investigative stories via documentaries; now I was telling product stories. I still considered myself a filmmaker, not an adman–but these “product stories” presented an even greater challenge: results not measured in TV ratings, but sales and immediate feedback on how successful I executed my visual communication skills. It was thrilling and frightening at the same time.

My vision was that all major brands should capitalize on long form’s inherent power: “The more you tell, the more you sell.” It took a while, but over the past 25 years, hundreds of brands have incorporated DRTV into their marketing mix. Along the way, average production budgets tripled, media prices quintupled and hit ratios “inverse septupled” (from 1/3 to 1/20). Simultaneously, our business has gained complexity, credibility and customers, and expanded product categories, professionalism and stability.

ER: What, if any, technologies and trends will influence future growth and help to shape the DRTV industry?

Hawthorne: PVR, VOD, Internet, mobile, interactive TV, gaming, local, TV Everywhere, Digital Out of Home, social, apps, fragmentation, consumer choice: these are the hallmarks of the New Media age–nothing less than a revolution in communication and advertising as significant as moveable type.

The 65-year-old linear TV viewing experience will remain for a few more decades but diminish in use, replaced by viewers interacting with advertising messages on four screens: TV, computer, mobile (hand set or tablet) and out-of-home digital displays. The primary threat to all advertising remains: in a world of infinite choice, how do we engage viewers in our products’ stories? Any ad delivery mechanism that provides consumer control, immediacy and relevancy will win out in the end. But ads incorporating the trademarks of DRTV–great products and motivating offers–should always find success.

Jeffrey Knowles
Partner
Venable LLP

Electronic Retailer: How did you get into the DRTV industry?

Jeffrey Knowles: In the late ’80s, my brother, an entertainment attorney in New York, introduced me to Tom Fenton and Dick Kaylor at Synchronal. I did some legal and FTC-compliance work for the company, which was then the largest infomercial company in the nation.

In 1990, Congressmen Ron Wyden and Norm Sisisky invited members of the infomercial industry to testify at a hearing about the industry’s practices. I was tasked with preparing Greg Renker, co-founder of Guthy-Renker, to testify as the industry’s representative.

During Greg’s testimony, Sisisky asked whether there were industry standards or an industry group representing the interests of companies producing infomercials. When Greg said there were none, a light bulb went off. I decided the industry needed an association, and I set out to organize it.

Over the next few months, I worked with Greg and other industry leaders to form the National Infomercial Marketing Association (NIMA), which eventually became ERA. Twenty-one years later, the rest is history.

ER: What product or products have changed the face of DRTV within the past 25 years?

Knowles: In my opinion, Proactiv Solution is the single most transformative DRTV product over the past 25 years. It has generated more sales than any other DRTV product, and Guthy-Renker’s success integrating A-list celebrities into direct marketing marks a turning point in the industry’s history.

The Thighmaster was another transformative product. As the first wildly successful exercise product marketed through DRTV, it paved the way for other exercise programs such as Tae Bo and P90X that have continued the tradition of reshaping the industry and customers’ lives.

Thighmaster was also one of the first DRTV products to experience widespread counterfeiting and marketing of knockoffs. Many of the legal strategies we employ today to defend clients’ intellectual property were developed while protecting the Thighmaster.

ER: What is your most memorable (insightful, funny or endearing) story of the DRTV industry or a colleague in the industry to date?

Knowles: Greg Renker’s testimony before Congress in 1990, was a turning point for the industry in more ways than one. I will never forget how Greg carried himself during the hearing. At the time, he was only 33 and was president of one of the fastest growing direct marketing companies in the nation. Only a few years earlier, he had been working at the Indian Wells Racquet Club. I had prepared a number of executives to testify before Congress during my career, and it’s safe to say none of them were like Greg.

Watching him in front of the committee and the steady gaze of television cameras from all three major networks, you could tell he was something special. The way he carried himself, the way he responded to questions with the perfect combination of conviction and respect, I could see this was a guy with the intelligence and passion to reshape an industry.

Richard Stacey
President and CEO
Northern Response (Int’l) Ltd.

Electornic Retailer: How did you get your start in the DRTV industry?

Richard Stacey: In 1984, I had a company in Canada selling home-study courses that I wrote on how to get rich in your own business and real estate. They were sold through seminars and mail order. I began seeing infomercials in the United States, selling similar courses by people like Tom Vu, Tony Hoffmann, Hal Morris, Paul Simon and Ed Beckley. I decided to write a script for a 60-minute show called “Blue Print for Success.” That show was a condensed summary of my eight-hour live seminar.

The first time we aired it, the station ran it for free, as they thought it was a public-service educational show. That’s how “early” those days were back then! The phone lines were jammed for over a week from that first single Sunday afternoon airing. From that day forward, I was in the infomercial business.

ER: What product or products have changed the face of the DRTV industry within the past 25 years?

Stacey: In the beginning, the infomercial industry was mostly home study and self-help courses. As the ’80s progressed, companies began experimenting with hard goods like the Hard-Hammered Chinese Cooking Wok or the Annushka Cellulite Reduction Kit. Then the industry literally exploded and everybody got into it. At the same time, the cable industry was expanding so they had plenty of airtime to sell and the industry had plenty of shows to fill it. It was a perfect partnership. We locked up huge blocks of airtime often from midnight to 6 a.m. on most stations. We stopped producing shows and started distributing them. We’ve now distributed over 3,000 shows over the past 25 years. The products have not changed too much–need, greed and vanity still sell. There are certain types of products that fit the DRTV genre in short form and long form. Lately, it’s more about retail and products that can be introduced by DRTV and later sold into Walmart.

There are many memorable and breakthrough products and productions that took the industry to new levels each step of the way. I always thought Media Arts with its Amazing Discoveries series had a big impact in the early days by showing what was possible. Guthy-Renker took it up a notch with its first Personal Power show, which again demonstrated a new standard of quality in DRTV products and production. These types of shows pointed the way.

ER: What is your most memorable (insightful, funny or endearing) story of the DRTV industry to date?

Stacey: What I have always loved about this industry is that there is always something new and exciting going on. Probably the most important insight is that there is no telling what people might buy–it almost always pays to test. Our biggest hits are often ones that you would not have predicted in advance. Sometimes, a show is not so well produced or the product is sort of gimmicky, but that is often what sells.

I remember years ago, a show on how to get better grades in school that reportedly cost a million dollars to produce (a lot of money at that time), that was shot on film and starred many sports stars like Wayne Gretzky. We had to call the station to see if it aired–there wasn’t one call! A few days later, we aired a very simple show called Smart Mop and it took off like a rocket. So you just never know. It also means you have to always keep an open mind because no matter how crazy or off-beat a product is, it might just be the next winner.

September 2010 – Feature: Channeling Radio Response

Generating Greater Response and Media Attribution With Stronger Response Mechanisms

BY ANDREW G. GORDON

This past summer, I spent quite a bit of time driving in my car and I had the opportunity to listen to a lot of radio. What I heard really surprised me. The creative messaging in the direct response radio spots was, for the most part, great, but where many of these commercials fell short was with the response mechanism in the call to action (CTA). Many of the spots weren’t using the response mechanisms effectively, and I’d be shocked if the response rate didn’t suffer.

There are three elements that make an effective response mechanism for a direct response radio or TV spot. It does not matter what kind of response mechanism you are using–whether it is a toll-free number (TFN), URL or SMS Short Code–a strong response mechanism must be unique, memorable and attributable only to the individual media outlet that generated the response. If you have these three elements in your favor, you will increase response volume and optimize your media buy to generate greater ROI. It is that simple.

Toll-Free Number Response
When selecting TFNs for your radio campaign, keep in mind, “an 800 number” is a generic term for all toll-free prefixes, but you can’t use just any toll-free prefix. Consumers are predisposed to dial an 800 number. Use anything but a true 800 number and you will lose calls. Even though they are less expensive, you must avoid the use of 888, 877 and 866 toll-free prefixes, and don’t be tempted to use the new 855 toll-free prefix, which will go into service next month. It’s harder to acquire or lease true 800 numbers, but finding the right vendor, with the depth and type of 800 numbers needed, is your critical first step.

Many marketers are using vanity 800 numbers, such as 800-MATTRESS or 800-LAWYERS. Vanity 800 numbers are memorable and offer instant brand recognition and credibility. The only problem is they are not trackable and do not offer clear media attribution, which is imperative to optimizing your media performance.

A better alternative to a true vanity 800 number would be to use a series of hybrid vanity 800 numbers, such as 1-800-340-HAIR, which is used by a hair restoration doctor; or 1-800-947-AUTO, which is used by Geico. Hybrid vanity 800 numbers are memorable, while also allowing for individual tracking of each media outlet. The only challenge could be acquiring enough of these numbers for your campaign.

When using multiple media outlets, it’s best to use unique, memorable numeric 800 numbers, which allow for individual tracking of each media outlet.

These are the most effective types of 800 numbers for use in direct response broadcast advertising:

Repeaters: 800-236-6868
Thousands: 800-585-5000
Hundreds: 800-585-5500
Ascending: 800-246-2468
Descending: 800-986-4321

URLs/Web Response
The Internet has changed the way people respond to direct-response offers. Some consumers prefer going online to respond because it allows them to research and window shop a product anonymously. Some people like to browse on the web and buy over the phone. Savvy marketers are channeling the consumer urge to search by including URLs in their commercials. Depending on the product or target, you can offer a consumer a TFN and a URL in your commercial and let them choose, or you can exclusively drive them to the web and provide a URL as the sole response mechanism. Opinions vary on how easy it is to remember a URL, as opposed to an 800 number. The longer or more complex the URL, the less likely the consumer will remember it.

There are marketers who are using vanity URLs, such as Priceline.com or eHarmony.com. These vanity URLs are memorable and offer instant brand recognition and credibility, but like the 800 vanity number, these URLs are not trackable and do not provide media attribution.

I’ve also come across marketers who are converting their vanity 800 numbers into URLs, such as 1800Flowers.com and 1800Petmeds.com. This concept drives visitors to the website by capitalizing on the “brand equity” of the vanity number. In the creative, this method saves time by not having to individually voice the 800 number and the URL multiple times in the CTA. This allows you to repeat both your one domain name and the phone number more often, but as great as this sounds, these vanity URLs don’t allow for media attribution either.

Just like a strong TFN, a strong URL must be memorable and unique. I cringe every time a marketer uses a backslash in his or her URL. Studies have shown that consumers drop the prefix or suffix in a URL, go straight to the URL itself and foil any media attribution. For the same reason, stay away from corporate or product brand names in your URL because responders will tend to go straight to the corporate site. The purpose of using a URL as a response mechanism is to channel the listener’s urge to search online, while facilitating tracking and media attribution.

Consider basing your URL on your offer, your product or the benefit your product provides (see chart above for examples).

Along with your URL, I recommend using individual landing pages rather than individual websites. If you are using many URLs in your campaign, it’s more economical to set up a master website with a relational database, which will paginate individual landing pages that correspond with the requested URLs.

SMS Common Short Code/Text Message
According to the CTIA – The Wireless Association, cell phone penetration has surpassed cable TV, web access and home computers. With that in mind, the interactivity of the SMS or text messaging feature of cell phones and smart phones makes for a great response mechanism for direct response advertising.

SMS (Short Message Service) common short codes are phone numbers that are five or six digits long and can only be accessed from a mobile phone. The short code is a number to which a text message can be sent. For example, a short code could be a numeric 54321 or a vanity code such as COKE. Think of the short code as a destination that you dial.

The other component of SMS is the keyword that you text to the destination. The keyword can be as short as two characters, could be numeric or could spell a word. Some examples of keywords are “GO,” “25,” “HAIR” or “WINDOW.”

When using multiple media outlets, it is more efficient to use one common short code and assign individual keywords to each media outlet for tracking and attribution. Both the keyword and the common short code should both be as short and as memorable as possible. The CTA should be worded something like this: “Text insert keyword here to insert common short code here.” When using numeric keywords, in combination with numeric common short codes, try to establish a repeating rhythm between them such as “Text 44 to 44566.”

Look out for the next iteration of SMS that can be used as a response mechanism. This patent-pending technology uses the traditional keyword to short-code concept, but returns a voice call instead of a text message. This type of technology could start to replace cumbersome 10 digit TFNs.

Mobile Star Codes
The next generation of trackable response mechanisms that use a mobile device will be Mobile Star Codes. Soon marketers will be able to leverage the power of these codes on mobile devices. Mobile Star Codes act as intelligent phone numbers, instantly connecting consumers to brands, offers and promotions via their mobile devices. Each code combines the familiarity of a TFN, the power of a URL and the mobile access of a short code into one easy-to-use, easy-to-remember number.

Unlike SMS short codes that only support text responses and TFNs that only support voice dialing, Mobile Star Codes can deliver a wide variety of response types. Now your response mechanism can contain any combination of response type. You can send a consumer a text message and forward them to your call center, send them a web link or even deliver an audio or video file. As the marketer, this allows for better communication and dissemination of information.

A Mobile Star Code is placed by dialing the * button on the handset twice, followed by a unique code, followed by the send button. The unique code may be as short as two digits or as long as is needed to spell a word. You can use memorable number patterns that are easier to remember and that are shorter than a TFN, URL or SMS short code.

Until Mobile Star Codes are in wide use, with consumer acceptance and adoption, we as marketers need to make it easy for consumers to respond to our direct-response offers using the more widely accepted response mechanisms.

We need to accept that consumers are in control. Give them a choice in how they respond to your offer by combining response mechanisms in the call to action. Some powerful response mechanism combinations are the tandem use of a unique TFN and a unique URL, or the tandem use of a unique SMS short code and a unique TFN. Whether you are using a TFN, URL or SMS short code, the response mechanism must be unique, memorable and attributable to the media outlet that generated the response.

Over the years, some clients initially resisted the process to strengthen their response mechanisms, but they quickly saw the value in the process after gaining both a greater response and media attribution.

Andrew G. Gordon is president and founder of Direct Impact Group, a full-service DRTV, DR radio, remnant print and mail marketing firm that specializes in direct response lead generation. Contact Gordon at (781) 453-2200, or via e-mail at andrewg@directimpactgroup.com.

September 2010 – Feature: Engaging the U.S. Hispanic Consumer

The U.S. Hispanic Marketplace Breaks Records in Growth, Buying Power and Success in DRTV.

BY JACQUELINE RENFROW

U.S. Hispanic consumers are rapidly becoming one of the most important segments in direct marketing. In fact, with Hispanics constituting 15.4 percent of the total population in the United States–more than 46 million people–the industry can hardly afford to ignore them. This second largest ethnic group not only continues to grow, but so does its spending power. Despite myths, credit card use in this population is high–90 percent of U.S. Hispanics who purchase through DRTV have access to credit cards, and 46 percent use credit and 26 percent use debit when making a purchase. The collective buying power of the segment is expected to reach $1.2 trillion in 2010, up from $862 million in 2007.

“Our client case studies have shown that we experience an average of three times the call conversions when comparing the Spanish to the English version of a show,” says Eitan Cohen, president of Media Stream Direct, a Sherman Oaks, Calif.-based media buying company with more than a decade of experience in the U.S. Hispanic marketplace.

Beyond growth and spending power, marketers are finding renewed success in categories such as beauty, ingestibles, hardware, financial services and kitchenware thanks to U.S. Hispanics. And with Spanish-language advertisements drawing strength from DRTV, marketers are expanding campaigns across growing channels such as mobile and online social communities.

Growing Market, Growing Power
The most important reasons to be in the U.S. Hispanic market space are twofold: the size and the spending power.

“It is the demographic growth of the market that is driving the growth of DRTV,” says Marcelino Miyares, director of Mercury en Espanol, a division of Mercury Media in Santa Monica, Calif. “In fact, it is the population growth of the Hispanic market that is driving the population growth of much of the country. It is not necessarily that Hispanics are spending more, but rather that more Hispanics are spending.”

Along with population increase, there is a new comfort with using credit cards. In turn, marketers have seen an increase in direct-response sales via long-form television commercials. Not to mention, the demographic is more likely to purchase via direct response. An estimated 11 percent of U.S. consumers will make a purchase through DR, but that number is as high as 15 percent among the Hispanic population.

Purchasing Trends
According to Cohen, products that tend to sell the best in DRTV correlate with the interests of the Hispanic demographic such as beauty, fitness, health and housewares.

“We have been able to take English infomercials in these categories that are either successful or, in some cases, only marginally successful, and create tremendous hits with a Spanish creative,” says Cohen. Media Stream Direct recently brought the Ab Rocket infomercial to the U.S. Hispanic market. Although the product was successful over the past three years in the English version, the introduction of the Spanish version created a resurgence in response.

Miyares agrees that ingestibles, housewares and beauty products are the workhorses of U.S. Hispanic DRTV, along with music and video, diet and exercise, hardware, and financial services. In addition, language learning services and telecommunications continue to be stronger in the U.S. Hispanic marketplace versus the general market.

Miyares also believes that U.S. Hispanic DRTV has followed the general DRTV trend to push to retail. “What makes this convergent with Hispanic marketing is that Hispanic shoppers over-index at these types of retailers–Walmart, Kmart, Bed Bath and Beyond, Anna’s Linens, etc.,” says Miyares.

“I forecast that over the next 18 months, we will see a proliferation of products in the two extremes–$19.95 and $200-$400 range. The lower-priced products have been difficult to make work given the costs of limited media inventory. This problem is solving itself with the addition of more cable channels. And the higher priced products have simply been inaccessible to cash-oriented customers, but credit card penetration has reached a critical mass,” Miyares adds.

Today’s Challenges in a Unique Space

Though very lucrative, experts agree that marketers, media buyers and call centers all need to be aware of the nuances of the U.S. Hispanic market and brace for a learning curve when starting a campaign. One of the biggest challenges when marketing a product to Hispanics in the U.S. is translation into Spanish. The key, says Cohen, is not to translate but to “transcreate.” “When speaking to the Hispanic market, it is essential to understand that there are different expressions and nuances in the phrasing that simple voice dub-over cannot communicate,” says Cohen. “Taking the time to properly re-phrase the intention of each statement into appropriate Spanish dialect immediately ingratiates the viewer to the brand and the show. We’ve had several marketers come to us after working with other agencies, who simply had the show hastily dubbed over and could not explain why the campaign did not work.”

Another challenge to the U.S. Hispanic market is client patience. “The problem is that few clients truly commit,” says Miyares. “While in the general market they may test offers, media mixes and telemarketing scripts until a campaign works, the Hispanic market is more like one or two strikes and you are out.” He advises clients–who can eventually imagine their product on the shelves of a Walmart–to stick with a campaign.

Yet another challenge marketers face is properly budgeting Hispanic campaigns versus general market campaigns. In markets that are predominantly Hispanic, Spanish-language media can substantially lift retail sales and increase overall campaign performance. Interestingly, Denira Borrero, vice president of operations for Omni Direct Inc. in Miami Beach, Fla., says that English-language sales lift when running a Spanish-language campaign simultaneously. This is mostly due to the fact that U.S. Hispanics consume media and use the Internet in both languages. So the message is reinforced in their native language, but in many cases, orders are processed through English-language channels. Omni Direct was established in 1999 as a company focused on the potential of Hispanics as a U.S., not foreign, market.

Kathi Moore, CEO and president of Engagem3nt in Newport Beach, Calif., believes the biggest challenge in this market is breaking down the myths that surround it. One myth is a belief that the demographic doesn’t have credit cards, when 84 percent of Hispanic DR purchases are made via credit. Also, that the market is too small to be worthwhile. And finally, the myth that marketers don’t need to advertise in Spanish because Hispanics will catch the English campaign. However, 30 percent of the market watches only Spanish-language television and even those who watch both respect advertisements in their native language.

Callzilla, a Miami-based call center specializing in the U.S. Hispanic space, deals with the same issues as a call center for the general market–converting calls to sales and now, more than ever, third-party upsells. What’s different about a Hispanic-focused call center is how the sales agents are trained. It’s about “training, educating, retraining and monitoring ">the agents and making sure they adhere to best practices that the industry mandates,” says Neal Topf, president of Callzilla. He says there are three main challenges for call centers. First, reaching the expanding demographic. Second, call centers must be ready for an increase in credit and debit transactions. And finally, the economy has put pressure on marketers to capitalize on a new segment.

Channel Changing
DRTV continues to be the strongest media channel for both general and U.S. Hispanic DR. Cable and satellite televisions have increased in popularity over the past two years, both in channel options and distribution, even though broadcast television has taken a hit. And interactive and digital TV activity among the U.S. Hispanic market will increase over the next 18 to 24 months, according to Miyares.

One of Omni Direct’s recent successes was with the campaign for “Sobre de Oro,” marketed in non-Hispanic markets as “My Gold Envelope,” by Money 4 Gold. The campaign ran on TV, radio, online and print channels and has expanded internationally. Money 4 Gold believed its product was under-tapped in the U.S. Hispanic market and so it worked with Omni Direct to develop creative production and identify Hispanic celebrity endorsements. The campaign built a trusted name through a customized Hispanic message. Even when the category suffered bad press due to other industry players, “Sobre de Oro” withstood the hit because of its brand recognition among Hispanics.

While the buying principles for time in the U.S. Hispanic market are the same as with the general market, the universe is limited. There are far fewer cable networks, particularly in the long-form space, and even fewer in broadcast networks. This creates a high-demand, low-supply situation, according to Miyares. As more marketers begin focusing on the Hispanic market, demand for long-form media time will rise and subsequently, so will rates.

Online is increasing faster than any other channel. Since 2008, the U.S. Hispanic online population has grown faster than the non-Hispanic population in terms of visitors and time spent and pages consumed. Just two years ago, most Hispanic campaigns did not have an e-commerce website. Now, about 25 percent of U.S. Hispanic campaign orders come through the Internet. “Based on our own research and national statistics, we expect Internet usage to continue to grow in this direction,” says Borrero. “Also, because Hispanics are significantly over-indexed when it comes to the use of mobile technology, we expect to see growth in marketing through the mobile channel, even within the very short term.”

Moore says that mobile is definitely a growing segment of the demographic. Everyone is trying to monetize the channel’s value and it’s already an effective means to get outbound messages, special offers, reminders, etc., to customers. And U.S. Hispanics are conducting more business transactions via mobile than the general market.

Moore also says that grassroots event marketing is a strong channel in the U.S. Hispanic demographic. The group tends to have more family oriented outdoor events and attend large festivals in population-dense cities such as New York, Miami, San Diego and Los Angeles. It benefits a marketer to spend money and have a booth at these events.

According to Topf, there is an emerging trend in using online social media in the direct-to-customer acquisition space. Although at the moment it’s not being used much in this way, users of social media and other web applications (either on the computer or by phone) will start to see a correlation between purchases and this channel.

No matter what the channel, more and more marketers are going to arrive in the U.S. Hispanic space in the coming year. The question, according to Topf, is not “Do I have to be there [the U.S. Hispanic market], but how do I get there?”

Jacqueline Renfrow is a freelance writer, who has been writing about the direct marketing industry for the past few years.

September 2010 – Feature: What’s Ailing Long Form?

Are Infomercials An Endangered Species? Just in a Recession-induced Slump? It Depends on Whom You Ask.

BY JACK GORDON

Is the half-hour infomercial headed the way of the dinosaur? Maria Kennedy isn’t saying yes, but she regards the question as a serious one.

Kennedy is vice president of direct response and paid programming for Discovery Communications in New York City–the Discovery Channel. When the U.S. economy tanked in 2008, she says, both general and direct response advertising fell off dramatically. Rates charged by her network and others had to drop. Rates remained low throughout 2009, a grim year for the television industry.

This year, Kennedy says, especially since automakers returned to the air, general advertising has bounced back strongly–and 2011 promises to be even better. The same applies to short-form DR advertising. “Short form is incredibly strong right now,” she says. “It has come back gangbusters.”

But long form? As of mid-summer, the long-form market has picked up so slightly that she might as well call it flat. She estimates that long-form rates are still down 15 to 20 percent from two years ago across most or all networks.

Also troubling to Kennedy is that she is seeing no influx of new advertisers into the long-form space. “In short form, we’re getting tons of new advertisers every quarter,” she says. Not so in long form. The established infomercial marketers are still there–”the Euro-Pros and Product Partners and Guthy-Renkers”–but no new marketers seem to be trying long form. And the “big corporate advertisers” who at least dabbled in long form in the past–she mentions General Motors and Wyeth Pharmaceuticals as examples–are no longer doing so.

“The industry hasn’t seen a big new hit in long form for a couple of years,” Kennedy says. So, she wants to know, is this just a slump of some sort? Or is the half-hour infomercial format no longer working for some reason? “I’m asking,” she says. “I want to know.”

Consumer Confidence?
Among media agencies that buy television time on behalf of DR advertisers, the consensus is that the infomercial format is perfectly viable and healthy. The problem lies in the national economy. Therefore, it’s temporary.

Why would long form be slower than short form to recover from a recession? It’s simple, says Dick Wechsler, president and CEO of Irvington, N.Y., media agency Lockard & Wechsler Direct. Long-form advertising is much more reflective of consumer confidence than short form, Wechsler says, primarily because most long-form products have higher price points. “And consumer confidence is a lagging indicator,” he says. “Coming out of an economic downturn, it’s the last thing to come back.”

In other words, Wechsler says, nervous consumers remain reluctant to make more expensive purchases. He notes that one reason short-form advertising is strong right now is that price points for many successful short-form products have dropped from, say, $19.99 to $9.99, with margins being partially made up in shipping and handling charges.

ss competition for half-hour avails. Hence the fallen prices for those avails, Wechsler says. He predicts that the long-form marketplace will begin to pick up by January 2011, due to increasing consumer confidence. “But I think that the price of half-hours will continue to fall until then.”

So infomercials have no problems that an improved national economy wouldn’t solve? Another media buyer who makes that case is Dan Zifkin, president of Zephyr Media Group of Evanston, Ill. “It’s the economy” that is responsible for the sluggish long-form market, Zifkin says. It’s not the Internet, it’s not the ‘fragmentation’ of viewers brought on by proliferating numbers of cable and satellite TV channels, it’s not shorter audience attention spans. It’s the economy.

It is true, he says, that fewer new players appear to be coming into the infomercial market. But that is due to the same consolidation that produced the kind of strong, established marketers to which Kennedy referred: Guthy-Renker, Product Partners, Euro-Pro, Allstar Marketing, Tristar Products and others. And while there may be no brand new long-form hit at the moment, “that doesn’t mean the process doesn’t work,” Zifkin says. Just look at the continuing success of long-form products like exercise program P90X.

Zifkin doesn’t buy the argument that major brand advertisers of the General Motors ilk have deserted the infomercial format. They were never in it to begin with, he says, at least to any significant degree.

“The big brand guys have never really come into our space,” agrees Rob Medved, CEO of Cannella Response Television, a DR agency based in Burlington, Wis. “The closest we’ve come to bridging that gap is probably with pharmaceuticals on the short-form side. As for long form, the same verticals we had when I started in the business still dominate DR–[business opportunities], beauty, housewares and fitness.”

But does that suggest any reason to think we are witnessing “the beginning of the end of long form,” Medved asks rhetorically? “No. We’re having incredible success in the space. The Guthy-Renkers and Product Partners are as healthy as they’ve ever been.”

“It is way too early to ring the bell on the death of the infomercial,” Zifkin concurs. “I think that long form is still one of the best forms of advertising by far.”

Some executives on the TV-network side of the fence agree that long form’s problems are a temporary, recession-induced condition, brought on by a lack of consumer confidence. And even the perception that no new advertisers are trying infomercials is not shared across the board. “We’re seeing a mixed bag with long form,” says Paul Teja of Chesapeake, Va., vice president of direct market sales for the ABC Family network. “We’re seeing more new infomercials than in the recent past, which is a good indicator of strengthening in the marketplace.”

At the same time, Teja confirms that “current advertisers have cut back on the quantity and pricing of various time periods. I believe this is mostly due to the economy,” he says.

Doubts
But other network executives share Kennedy’s view that something deeper has gone wrong. “I think there are more problems with infomercials than just a bad economy,” says Christine Georgakakis, senior vice president of direct response for the TV Guide Network, located in New York City.

“The 30-minute infomercial is at risk. I think we need to do some things differently with that business,” she says.

Due to digital video recorders (DVRs) and the proliferation of TV channels, not to mention the parallel universe of Internet sites, “paid programming is getting lost in the clutter,” Georgakakis says. She also questions whether viewers still have attention spans long enough to accommodate half-hour infomercials.

Granted that the premise for the infomercial’s existence is that some products cannot be explained and sold effectively in a minute or two, Georgakakis wonders if 30 minutes is too long for today’s audiences. “Maybe we should be looking at alternatives,” she says, such as programming two 15-minute infomercials into a half-hour slot instead of one 30-minute program.

She offers one concrete recommendation: Given the prevalence on on-screen program listings for cable and satellite customers, Georgakakis says that the most important thing infomercial sponsors can do to boost the success of their shows is to list the show’s title in those on-screen guides. That is, if you’re selling real estate secrets or power mops, say so in the program listings; don’t just allow your show to appear as “paid programming.” The fee to list your title is minimal in relation to overall media costs, and it is enormously helpful for attracting viewers who might be interested in your product, she says.

Seconding that advice is DRTV producer Jeff Meltzer, of Meltzer Media Productions in New York City. He agrees with Georgakakis on some other points, as well. Clutter, for instance, is a real problem, he says. Because of what he calls “a saturation of DRTV commercials,” consumers have become more discriminating. To make an infomercial pay today, you have to make a better infomercial, Meltzer says.

He also suspects that attention spans are getting shorter and agrees that 15-minute long-form programs might be worth testing. “We probably need to get to the point quicker,” he says. “I think it’s been proven that people tend to buy in the first pod of an infomercial–the first eight minutes or so–or they don’t buy at all.”

Where’s the Bottom?
To the extent that the “problem with long form” has to do with the fact that half-hour avails are going cheap, that is actually good news for infomercial sponsors. But time buyers, time sellers and producers all know that there is a floor beneath which the price of a half-hour avail will not be allowed to fall. That is the point at which a station or a network can make more money by airing 30 minutes of regular programming, with spot advertisements, than by selling the time as a half-hour slot.

Kennedy, Georgakakis and Teja all say that their networks have not begun to convert any infomercial slots to regular programming. “But we watch [the numbers] all the time,” Kennedy says. “This is a business.”

Medved says that while a few infomercial avails may have vanished on channels here and there, nothing like a mass conversion to regular programming is underway. “It hasn’t happened, and I don’t think it’s going to happen,” he says. Long form may be slower to recover from a recession than short form or general advertising, he says, but those shorter ads are subject to the same basic economic conditions–and audience fragmentation exerts the same downward pressure on advertising rates.

Teja predicts no significant conversion to regular programming by his network or others. The infomercial, he says, “is one of the cheapest, most effective methods for getting across to the consumer the benefits of quality products. I believe that long form is here for the long run.”

Jack Gordon is a freelance writer based in Minnesota. He has been contributing to Electronic Retailer magazine since 2004.