June 2010 – Special Selection: Honoring 25 Years of The Infomercial
Meet the pioneers and thought leaders who have helped the direct marketing industry grow and thrive for the past 25 years.
By GINA MULLINS-COHEN and TOM DELLNER
Welcome to Electronic Retailer’s celebration of the 25th anniversary of the infomercial. Although many point to Ronald Reagan’s signing of The Cable Communications Act on June 28, 1984 (lifting Federal Communications Commission regulations on advertising time) as the genesis of the format, it wasn’t until 1985 that the infomercial truly began to take shape.
Timed serendipitously with the proliferation of cable channels, the infomercial and long-form DRTV exploded onto the television-advertising world, leveraging celebrities such as Jane Fonda, Dionne Warwick and George Forman, and creating new cultural icons such as Tony Robbins, Ron Popeil and Billy Mays. Housewares, health and beauty, fitness, sporting goods, pharmaceuticals, business opportunities, books, self-improvement, technology, music–it’s difficult to come up with a product category that hasn’t been “seen on TV.”
Along the way, brands like Apple, Microsoft and Kodak would use the medium, and related industries such as homeshopping would emerge. But perhaps the greatest affirmation of the industry would occur when then-Senator Barack Obama aired an infomercial to help spur his 2008 presidential campaign. (Although many would argue that an industry that generates $100 billion in revenue needs no affirmation.)
As part of our celebration, throughout the remainder of the year we will publish interviews with some of the industry veterans responsible for the growth of the infomercial. We’ll ask them to reflect upon the earliest days of the format, recall some infomercial highlights and lowlights, outline some of the important lessons learned over the past 25 years and project what the future holds for the industry.
In our first installment, Electronic Retailer sat down with Hal Altman of Motivational Fulfillment and Logistics Services and Meltzer Media Production’s Jeff Meltzer.
Hal Altman
Co-Founder & President
Motivational Fulfillment & Logistics Services (MFLS)
Electronic Retailer: What were you working on 25 years ago, in relation to DRTV?
Hal Altman: Twenty five years ago, DR was an infant, and direct mail, print and statement stuffers were the means to sell merchandise. MFLS fulfilled the first jewelry “continuity” programs for Sears, Montgomery Ward’s and JCPenney. Oil company travel clubs were in full swing and we ran the Arco, Chevron and JCPenney travel clubs.
We set up and administered the first worldwide fund raising concert called “Live Aid,” and became a participant in the production and administration of the first 18 years of “Comic Relief” on HBO. We were the first company to offer multiple items on the same invoice for department stores and book clubs. We ran The Los Angeles Times Book Club and introduced time installment payments for book clubs.
We were doing the fulfillment and customer service for a division of Walt Disney Music Company that lasted 16 years, and were involved in the creation of both the Disney Magazine and Disney Channel. It was an exciting time because we were “ground breakers” in the sense that these were all new ideas and programs and it was our challenge to be able to support these new and inventive marketing ideas.
ER: How has the DRTV industry changed over the last 25 years?
Altman: Age has caught up with many of the original DR giants we fulfilled for like Mike Levy. We still do Ronco, but now it has different ownership. The industry is made up of smaller companies and traditional television is now augmented by the web, radio and other electronic media that were never dreamed of 25 years ago. Social networks would have been considered a transmitted disease instead of the electronic phenomena of today.
We, as a fulfillment company, have also had to become a technology and information company. And in the past two years, we have invested heavily both in dollars and man-hours to stay ahead of both our competition and anticipate the new scope of information we receive, process and report.
Banking laws have changed recently and have put a greater responsibility on fulfillment companies to comply and be PCI compliant.
With new live reporting systems, merchandisers can decide faster–and with more accurate reporting–if their efforts will pay out or shut it down. With multiple methods of shipping product to the consumer, and the vast array of transportation prices, it is more important than ever for a fulfillment company to find the least expensive and yet the best method to reach the consumer.
ER: What, if any, technologies will influence the future growth of the DRTV industry?
Altman: Every day, we sit and ask: “What’s coming next?” and/or “What should we prepared for?” As an example, a few years ago, who would have imagined your cell phone would now become a personal shopping and advertising tool?
With the changing economic times, merchandisers are looking for newer ways to reach potential customers and technology will certainly be the driving force.
Now I can take my electronic book and, while reading my favorite novel, order a lawn mower or shoes. What will they think of next? If we knew the future for the next two years, we could get a head start instead of playing catch up when a new medium is developed.
I would also be buying stock in that company.
EDI has opened up retail distribution to over 400 different retail chains so merchandise can be ordered and shipped effectively.
Retail sales with certain DR items is still the key for merchandisers to become profitable and will need the support of electronic reporting and information transfer to be successful. This area will continue to develop. Retailers want to cut receiving and distribution costs, thus making the distribution centers map electronically to their specific warehouses and distribution centers.
Jeff Meltzer
President
Meltzer Media Productions
Electronic Retailer: What were you working on 25 years ago, in relation to DRTV?
Jeff Meltzer: I was privileged to be asked to join the infomercial world by Tom Fenton; one of ERA’s (then NIMA) founding fathers. We both transitioned from mainstream advertising to the direct response world. He shot, what I believe, was the first weight-loss infomercial, titled “You Can Be Thinner,” which starred Dr. Bruce Hensel (KNBC) and Dr. Judy Kuriansky (clinical psychologist). That was an immediate hit, so we proceeded to produce the first skincare infomercial called “Love Your Skin” with Linda Chae. That also became the first Spanish skincare infomercial, I believe.
ER: How has the DRTV industry changed over the last 25 years?
Meltzer: I think the main change is the way infomercial products are now sold. Back then, you could only sell on TV. There were no websites, no home shopping and retailers thought we were their enemy. Negative-option campaigns were legal then. Plus, the buying audience was fresh. No one had ever seen an infomercial so seeing a show and being able to buy something directly from TV was a new experience. Now, with the massive domestic and international growth of DRTV–in addition to distribution on the web, home shopping, radio, print, insert mail and retail outlets–there’s much more opportunity for mass success. On the other hand, cutting through infomercial TV clutter is more difficult than ever. The product, the problem it solves and the offer have to be better than ever.
ER: What trends influencing today’s market will shape the future of DRTV?
Meltzer: Truthfully, no matter how long infomercials are in existence, five categories will always sell: Diet, Exercise, Beauty, Get Rich Quick and Instant Miracles. If you look at what the bestselling products are today, they fit into these categories. Now there are higher-priced untraditional products and services being sold that expand this list, but for the most part, the more the market changes the more it stays the same. I think that the economic condition of the country is what will determine the selling trends for the future. Lastly, the reality TV format for infomercials seems to be catching on because it shows real people getting real results. This format is taking testimonials to a new level.
ShopNBC, owned and operated by 
Enter vertical ad networks, which run advertising on sites catering to specific verticals–such as the Travel Ad Network and the fashion-focused Glam Media. An 
Behavioral Networks – Contextual advertising helps advertisers find targeted consumers in non-targeted publications. But it doesn’t let advertisers find targeted consumers on non-targeted sections of those publications.
Unfortunately, some of these errors are the result of simple dishonesty. Often–and more benignly–they’re the unfortunate by-product of a poorly managed network. Either way, you’ll want to stay vigilant to be sure that you’re getting your money’s worth. Before you get involved with an ad network, make sure you’ve done your homework on which networks are reliable and which aren’t as good to deal with.
Wind gusts up to 205 mph wreaked havoc on Kiowa City Memorial Hospital in Greensburg, causing one of the wings to collapse while 30 people remained trapped inside. Emergency crews were able to free the people and treat their minor injuries. The local high school, city hall and the central business district were completely decimated. 
Homeowners have also been bitten by the green bug. Many are installing energy-efficient windows, skylights and even solar panels on their rooftops. They are also selecting native plants in their landscaping that require little or no water. According to O’Neill, Greensburg GreenTown is a nonprofit organization that has been a valuable resource, “giving local residents information about choices that they can make as they design and build their own homes.”
Of all the places to be in June, the millionaires’ playground of Monte Carlo, nestled on the Mediterranean coast, is one of the more attractive options. Aside from the sun, sea and fun, there is another very good reason to be there this summer: the ERA European Conference takes place on June 22-24.
The multichannel retailer faces continuing challenges, with the industry in constant flux. The media landscape and consumer spending habits continue to shift. At Electronic Retailer, we know that it is our job to make you think, ponder and learn about these changes and what you can do to make sure your company stays at the top of its game.
Only by integrating popular and familiar payment methods from the various European countries into one account-based payment system is it possible to overcome this patchwork of European payment preferences. In an account-based e-mail transaction, consumer and retailer choice and preference, both domestic and cross-border, are respected, while at the same time consumer security concerns are addressed since personal and financial information are not shared. Besides security and convenience, the popular two-click payment process of an account-based system also drives higher incremental sales for merchants by reducing the hassle for consumers and speeding them through the purchase. Account-based payments are the only way that a UK website can efficiently and instantly receive a German-initiated bank transfer or a payment from a French debit card holder. It is also the only way for that German or French consumer to buy from that UK website, using their preferred local payment method. 
IAG Research has come up with a ranking for the top 12 programs by engagement. This ranking reveals some surprising findings. The CW series, “One Tree Hill,” is ranked 184th among primetime network series among adults 18-49, based on ratings; however, it is tied for sixth place in the IAG engagement rankings. More familiar shows comprise most of the other slots in the top rankings, such as “Heroes” (ranking #1), “Lost,” “Prison Break” and “30 Rock.” “Heroes” had an engagement index of 121, which means that viewers of this series are 21 percent more attentive than viewers of the average primetime series, according to B&C. It’s interesting that “Prison Break” has more than twice the audience of “One Tree Hill,” but they are tied in terms of audience engagement.
He bought HowStuffWorks in 2003 for a few million dollars. When he sold it to Discovery last December, the price was a reported $250 million. He retained not only the CEO job, but rights to expand the site to China, Brazil, India and Russia. The Brazilian site is already up and running. The Chinese site launched in June.
Arnold: Discovery wanted to own curiosity across all formats, and they saw HowStuffWorks as already owning it online. We had the potential to be the cornerstone of Discovery’s digital media strategy. As for us, we realized that to take it to the next level, we needed video. We wanted to add Discovery’s great nonfiction video to our site. What we perfected after we bought HowStuffWorks, before the acquisition by Discovery, was the art of doing content so well that search engines put us on the front page of results for a multitude of search terms. We’re one of the rare companies aside from Wikipedia that ranks very high on all kinds of topics. So we could approach a manufacturer or dealer of hybrid cars and say, “You should advertise on our site because we draw a wonderful target audience.” When you add all of those great Discovery Channel videos to that, the quality becomes even higher. Any news item can also drive interest to us. Somebody recently was attacked by a shark in San Diego. A lot of people Googled “shark attack.” If you do that, you’ll find us listed very high. And along with our articles, we have at least six Discovery videos on shark attacks. The same thing happens with product-related stuff. You hear that Apple wants to power iPhones with solar cells. So you Google “solar cells” and find us, with clearly written content and Discovery videos.
Arnold: Our whole business is based on search demand. Our site is broken into 15 vertical categories: science, history, autos, food and computers, for example. Well, to be authoritative, what do we need to explain under “science”? What do we have to cover under “autos”? We create massive taxonomies. But then we prioritize topics within those taxonomies. We study search behavior and prioritize based on search demand. But advertising demand also helps determine what we write about within a taxonomy. If an auto advertiser says, “I’m interested in people who want to know about safety and trucks,” that might become a priority. We maintain a clear delineation between editorial and advertising, but we develop content to attract a target audience. Once we determine the content, the trick is to make the factual fun. Our editors are the key.
