June 2005 - Redesigning the Air Waves

What do you call a hybrid radio program that works like an infomercial but doesn’t act like one? Maybe you call it the next step in direct response marketing.

By Jack Gordon

On Sundays at 5:30 a.m. Pacific time, Ken Michaels hits the airwaves in Los Angeles as the host of a live, radio call-in show, called Mortgage Makeovers. For an hour, he dispenses advice and encouragement to callers with bad credit ratings, assuring them that despite their financial problems, it is quite possible not only to find mortgages and loans, but to get them at decent interest rates. After a 30-minute break, he does a second hour of chat from 7:00 a.m. to 8:00 a.m. One or the other edition of Mortgage Makeovers airs live in 18 radio markets from California to Boston.

Michaels is president of First Nationwide Lending of America Inc. in Valencia, Calif. His company is in the sub-prime lending business, meaning that he arranges loans for people with shaky credit ratings. In other words, one place his listeners can turn for the financing they need is to him. But though a spot advertisement for First Nationwide airs during the show, along with other non-competing spots the participating stations may sell, Michaels deliberately refrains from talking about his company during the program. At the end of the show, listeners who might want to reach him are given a phone number. They’re also directed to the show’s Website, MortgageMakeovers.net, which effectively connects them with First Nationwide. That’s the extent of the classic direct response marketing that occurs.

Michaels insists that his main purpose on Mortgage Makeovers is to function as a bona fide consumer advocate. “I don’t want First Nationwide mentioned,” he says. “It’s not about First Nationwide. It’s about giving information to people who need it…People with bad credit get treated like dirt. I want to step forward and say, ‘Hey, you’re as good as anyone else.’”

Superfriends Marketing’s vice president, Jeffry Martini (left), and president, Steve Pollak (right), pose with Al Franken, radio host, comedian and author.

The media agency behind the program, Superfriends Marketing & Promotions Group Inc., also of Valencia, agrees that Mortgage Makeovers should function like a regular call-in show and not like an infomercial-that Michaels should worry about giving useful advice to listeners and let First Nationwide worry about itself.

But Superfriends’ founder and president, Steve Pollak, also argues that the show is a template for the next big idea in radio marketing-and maybe television marketing as well.

Pollak calls Mortgage Makeovers a hybrid. It doesn’t sound like a sponsored infomercial, and the callers are real people seeking real advice, not shills or plants. Local radio listings in newspapers such as the Los Angeles Times and San Francisco Chronicle include Mortgage Makeovers as a regularly scheduled program.

But radio stations do not pay to air Mortgage Makeovers, as they would pay for regular programming. Instead, Pollak says, Superfriends buys the show’s one-hour time slot from the stations-or barters for the time by allowing stations to keep all of the revenue they get by selling commercial spots within the program to other advertisers, such as Home Depot.

Instead of using the bought time for a hard sell, First Nationwide merely reaps whatever benefits may accrue from Michaels’ growing status as a national authority on sub-prime lending. It turns out that those benefits are considerable.

Pollak says the hybrid format requires a client who can plausibly claim an agenda that goes beyond hawking his own wares. It’s very hard to let your company or your products take a back seat for long if the only goal that interests you is to generate sales or leads. “People are tired of in-your-face stuff,” he says. “They want real expert advice.”

Michaels fits the bill. So taken is he with his role as champion and defender for good people with bad credit that he almost bristles at questions about what First Nationwide gets from the deal.

What goals did he have for sales or lead generation when Mortgage Makeovers launched in June 2004 on a single station, KZLA in Los Angeles? “My goal was to help people out,” Michaels replies. “My [target] audience is so desperate and unknowledgeable that they get suckered into bad deals. Nobody educates them.”

People wind up with bad credit ratings for many innocent reasons, he continues, warming to the subject. They lose their jobs, they suffer an illness, they have an auto accident. “Just because you have bad credit doesn’t make you a loser. These people deserve home loans and refinancing at good rates.” As for First Nationwide, “I don’t want it to be the nation’s largest [lender], I want it to be the best and most caring.”

That said, Michaels acknowledges that Mortgage Makeovers has been a bonanza for First Nationwide. He won’t discuss sales figures, but he says that before the program launched last year, his company was essentially a one-man operation, with Michaels as its only salesman. First Nationwide now employs 12 salespeople and six other staff members. It recently opened a second office in Henderson, Nev. “We’re the fastest-growing sub-prime mortgage company in the nation right now,” he says. “Obviously, the show has something to do with that. It’s like having a tiger by the tail.”

A year ago, Michaels’ only means of finding prospects was to buy e-mail addresses from list vendors. As Pollak points out, those lists are sold to other finance companies as well. “Everybody gets the leads and hands them to their salespeople,” Pollak says. “The sales rep who gets to them first usually gets the business.”

Now the Mortgage Makeovers Website gets approximately 400 hits per week. According to Pollak, about a third of all site visitors fill out an online questionnaire giving information about themselves and sometimes posing questions for Michaels to answer on the air. First Nationwide also maintains a separate Website, but “90 percent of Ken’s business now comes from Mortgagemakeovers.net,” Pollak says.

Superfriends Marketing & Promotions Group, also operating as the Superfriends Radio Network, was founded in 2001. After spending 10 years in the radio business, Pollak started the company partly to pursue an idea he had helped to pioneer while working for CBS/Infinity Broadcasting.

In the late ’90s, he says, CBS/Infinity launched the Expedia Travel Show, a hybrid program sponsored by Microsoft, which owned Expedia at the time, and the Etrade Financial show. Both eventually aired in about 120 U.S. markets.

For Superfriends to package similar programs on its own, Pollak needed the right clients. He found one in Ken Michaels, who wanted to do a radio show for people with low credit scores. Michaels, who had been in the sub-prime lending business for 20 years, was a good talker, “very talented and very well versed in the mortgage and finance industry,” Pollak says.

KZLA in Los Angeles, an FM country-music station, was an unlikely launch vehicle for Mortgage Makeovers, “but it had the right demographics,” Pollak says. The show now airs in 18 markets, including San Francisco, San Diego, Seattle, Denver, Las Vegas and Boston. Michaels says that First Nationwide is licensed to do business in 20 states and plans to add 15 more. The goal is for Mortgage Makeovers to air in all 35 of those states. For now, fans in markets not served can listen to live Sunday morning broadcasts via the Website.

The show’s credibility demands that Michaels refrain from plugging First Nationwide on the air. But nothing prevents the show itself-or Michaels himself-from being aggressively promoted. “We get stations to give us promo spots on other shows as part of the deal,” Pollak says. In addition, Mortgage Makeovers gets a page on the radio station’s Website. Superfriends also buys print and outdoor advertisements for the show.

Michaels’ new standing as an aggressive voice for the credit-disadvantaged, not just another sub-prime lender, opens the door to other promotional opportunities. Some stations that air the show have talk formats, and when their on-air personalities discuss the topic of mortgages, the program directors are likely to call Michaels to be a guest, Pollak says. In April, Michaels was even scheduled to represent KZLA, in lieu of one of its on-air personalities, at the Toyota Long Beach Grand Prix. “Come see me at the KZLA booth!” as Pollak puts it.

Credibility also demands that Michaels play it straight with callers. “People will call in and explain their situation, and I’ll turn them away from me,” he says. “I’ll say, ‘You have a great loan. Don’t refinance, stay with what you’ve got.’”

At the same time, however, the name First Nationwide does not have to be mentioned 50 times for Michaels to demonstrate on the show his own power to solve problems for people in need of financing. Every broadcast features a segment, called the “Mortgage Makeover Miracle” (also highlighted on the Website), in which guests testify to the help they got from Michaels.

One miracle featured a Southern California couple who had been living in a motel for 18 months, with their children, unable to finance a house due to a low credit score. “They called my show and I put them into their own home, without a dollar out of their pocket, in nine days,” Michaels says proudly. Another featured a man in Denver who had been turned down by lenders 17 times in four months. “He contacted me and within three weeks, he had a $36,000 mortgage.” A third miracle involved “a young lady with eight children, bad credit, renting a house, her landlord was going to evict her. They now own a home.”

On Sundays, Ken Michaels goes on-air to host the radio show, Mortgage Makeovers, helping people solve their financial problems one call at a time.

What’s more, these people didn’t have to pay exorbitant interest rates. They got their loans at rates ranging from 5.8 to 6.8 percent. “That’s with bad credit,” Michaels growls, sounding outraged by the thought that a person who had been rejected 17 times would ever have to pay a penny more.

Stories like those are as compelling as any DRTV long-form program on-air today that might feature several real-life success stories or a short-form spot with testimonials. Never mind his company’s name. Who would you call? You’d call Ken Michaels.

Superfriends also has developed a television version of a hybrid program. Sponsored by a Hawaiian car dealer, Ohana Road is a weekly TV “magazine” show for automobile enthusiasts. It has aired for two years in Hawaii. Pollak is currently repackaging Ohana Road for an October debut in Los Angeles. He says the mainland version will be sponsored by California Ford dealers and the American Automobile Association.

The show will still be set in Hawaii, with the same hosts and celebrity guests, but will be re-cut to feature only Ford cars. Just as Mortgage Makeovers offers a drawing for a Caribbean cruise on its Website as a way to increase traffic, California Ford dealerships will offer trips and other promotions linked to Ohana Road.

Pollak says he is developing new TV or radio hybrids for clients, including the Las Vegas Convention and Business Authority and the president of a life-insurance agency.

Michaels, meanwhile, is having the time of his life as the host of Mortgage Makeovers. “I absolutely love it,” he says. “You know what it is? I believe. And I make the listeners believe. If you believe, then you’ll get the loan. It genuinely irritates me when people are mistreated because they have bad credit. ‘Bury your debt before debt buries you’ is the way I end every show.”

Jack Gordon is editor at large for Electronic Retailer magazine. We would appreciate your feedback. To submit comments, please point your browser mortgagejune.marketing-era.com.


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  • By Nolo Contendre, June 30, 2010 @ 6:23 pm

    The only thing wrong with story besides the fact that Michaels later sued Steve Pollak for getting more money than Michaels wanted to pay…..was….that the very person who invented the Sponsored Program concept as presented here….was not Steve Pollak.

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