The DRTV is significant to the 20,000 store rollout, the national account, Lancaster accounts, etc... The company needs marketing to support these deals and DRTV is the cheapest way to do it on TV cause the ads can pay for themselves.
Excerpt from the article below...
Retail sales can skyrocket by inspiring consumers who may be reluctant to purchase products directly from television. Retail sales driven by an infomercial can be anywhere from two to 15 times infomercial sales.
The retailers know this... A small amount of success with DRTV could be enough to get a few of these mass chains to come on board...
Target Marketing: February 1998 Timothy R. Hawthorne
When And Why To Consider Infomercials
45 Points to Ponder on Whether This Medium is Right for Your Product
This year an estimated $1.5 billion dollars in product sales will be generated by infomercials. Research has shown that retail sales driven by infomercials all range from two to 15 times the infomercial sales.
More and more major brands are integrating infomercials into their marketing mix, and advertising executives are being asked to measure the results of their advertising expenditures.
Surprised by these statistics? Maybe it's time you took a fresh look at infomercial marketing.
Infomercials are unparalleled in their ability to generate consumer demand, qualified leads and immediate sales - all for a fraction of the budget needed to create an advertising campaign around a 30-second commercial spot. Today's infomercials can generate product sales up to $120 million in just one year and two to five times that if the product is available at retail.
Over the years, infomercials have shown they have the power to:
Reach millions of new customers and present a complete product story for an average of 30 cents per viewing household.
Enhance, support, and fill in where other advertising avenues, particularly spot television, leaves off
Generate qualified leads for as little as $5 per lead.
Produce annual revenues of more than $25 million for many companies.
Reduce advertising costs per order and avoid print and mailing costs.
Rapidly and cost-effectively introduce a new product or revive an under-marketed but potentially profitable product.
Driving Retail Sales
It is not widely known that one of the most lucrative channels of distribution available to an infomercial marketer is retail. Only one out of every 100 consumers watching an infomercial actively calls an 800 number and purchases the product immediately. Therefore, the retail channel provides a means for the other 99 individuals - who may have been primed by the infomercial - to buy the product.
Many Fortune 500 marketers are averse to the typical hard-sell techniques formerly associated with infomercials. But if you want to make money with a soft-sell infomercial advertising campaign, incorporating retail strategies is essential. Corporations such as Braun, Mattel and Magnavox are now using infomercials to drive their retail sales.
Retail sales can skyrocket by inspiring consumers who may be reluctant to purchase products directly from television. Retail sales driven by an infomercial can be anywhere from two to 15 times infomercial sales.
One-step infomercials can be utilized for products previously unable to get retail shelf space to attain retail distribution. Infomercial marketers can tell a retailer that more than a million consumers ordered their product directly from television and thousands of others called for more information.
These kinds of figures grab the attention of a good many retailers, who then purchase and showcase infomercial products realizing that "as seen on TV" are big sellers at retail.
The More Your Tell, The More You Sell
Studies confirm that consumers want more information about the products and services they buy: more details than are available in 30-second spots, more demonstration than can be contained in print ads. Infomercials provide product information in an entertaining and interesting form that sells - which is not meant to suggest that the infomercial should replace spot commercials or print ads.
Infomercials share the product story and benefits with millions of additional prospects at a cost per lead or cost per order that usually matches or beats other direct marketing channels such as direct mail or print ads.
Juicier mania of 1991 is an excellent illustration. Juicers went from $10 million in the retail category to $380 million in 12 months due to infomercials. Five companies were running juicer infomercials at one point, successfully prompting direct sales of each product while dramatically driving retail sales.
Historically, certain product categories have sold well via infomercials. They are:
Automotive: Automobile polishes, waxes, safety and security devices, car-washing tools, etc. Companies such as Nissan, Toyota, Lexus and Turtle Wax.
Beauty and personal care: Skin care products, wrinkle treatments, cosmetics, hair care, teeth whiteners, hair replacement systems, etc. Companies such as Murad and Principal Secret have done well in this category.
Business opportunities: Investment programs, real estate, retirement planning, network marketing, party planning, franchises, etc. Examples include Money Making Secrets and Carleton Sheets.
Diet, health and fitness: Weight-loss products/programs, fitness equipment, stop-smoking programs, vitamins, hearing aids, etc. Products such as Healthrider, Gravity Edge and ABFlex generated millions in this category.
Fund raising and non-profit: Organizations such as Christian Children's Fund, World Vision and Saint Jude's Hospital have used infomercials to solicit donations.
Kitchen and electronics Bread makers, food dehydrators, pasta machines, knife sets, slicer-dicers, home computers, etc. Successful companies include Phillips, Braun, Apple Computer and Amway.
Home and garden: Build-it-your-self kits, exotic plants, ladders, pet care, rug cleaners, water purifiers, mattresses, painting systems, etc. Products like Smart Mop, Power Foam and Kal Kan Pedigree Puppy Food.
Self-improvement: Teaching aids, parenting helpers, crystals, piano courses, memory improvers, etc. and products like "Hooked on Phonics."
Services Brokerage firms, pro-paid legal services, funeral insurance, IRAs, life insurance, etc. Companies such as Bank of America, Fidelity and Blue-Cross Blue Shield. 900 services: Pay-per call services like the Psychic Friends Network.
Media Buying Differences
Infomercial media buying is highly specialized and miles apart from image spot buying - or even short-form DRTV spot buying. Image spot campaigns usually have established media budgets unlike infomercial campaigns (other than the initial $30,000 to $50,000 media test). As long as the media buys create profits, infomercial buyers will spend as much as they can.
Image spot campaigns buy media to obtain a pre-set amount of gross rating points (total viewer impressions). Infomercial buyers care very little about how many viewers watch. They concentrate on how many consumers pick up the phone and order: Image spot buyers buy six-, eight- or 12-week campaign flights while infomercial campaigns may run continuously for 52 weeks a year for five years or more.
Image spot campaigns largely have limited accountability measurements for success. Infomercials can tell success or failure within 24 hours of the media run.
Whereas image spot campaigns have no need for a historical database, infomercial media buyers rely on databases of thousands of previous telecasts and their revenue results to determine future strategy.
Measuring Response
The issue of media buying always prompts the all-important question of response. How many orders can you expect per thousand dollars spent on media? Assuming you have an "A" product and an "A" program, your response will be:
from 0.2 percent to 1.5 percent of total viewers for one-shot/one-step offers or from 1 percent to 4 percent of total viewers for lead generators.
But how response is measured in the infomercial industry is as a ratio - a sales-generated to media-spent ratio: (2-to-1 is good; 3-to-1 is excellent; anything above that is a home run). This means that with a 3-to-1 response ratio, for every $l00 spent in media, $300 in sales are generated.
In 1984, sales-to-media ratios of up to 10-to-i on cable networks were not unusual. With increasing media costs, many product ratios are averaging 2-to-1 or 1.5-to-1. That means to survive in infomercials today you need a high-margin product because you may be spending from up to 75 percent of your gross revenues on media.
Infomercial Vs. Short Form or Home Shopping
Infomercial success is fundamentally product driven. Not all products are appropriate for a half-hour infomercial but may perform well in short form DRTV (60, 90 or 120 seconds) or live home shopping. Jewelry, for example, comprises as much as 40 percent of Home Shopping Network's annual revenues. But jewelry doesn't sell in short form or in infomercials. Consequently, it is vital to begin by evaluating a product based on the criteria provided (see Top 10 list). If the product meets all or most of the criteria, contact a reputable infomercial agency or marketer for a preliminary opinion on DRTV feasibility.
Infomercial products are usually above $30 and require more time to fully explain the products features and benefits. Infomercials considerations include:
price point above $30.
need time to understand the product story: features, benefits, uses.
need to create an emotional bond.
need to establish consumer recognition in marketplace.
want to drive retail, direct mail, international or other after-marketing.
failed in short form and home shopping.
Short-form DRTV commercials are ideal for products under $30 that are easily and quickly understood. Short form considerations are:
price point below $30.
product's purpose easily understood in one minute or less. one camera shot sells it all (Ginsu cuts a beer can in half). product appropriate for a very hard sell.
music, videos and continuities.
limited budget of $100,000 or less.
Home shopping caters to products which ca be showcased in five to 15 minutes. Home shopping considerations are:
average to low gloss profit margin.
jewelry, electronics or fashion.
closeout suck deeply discounted from retail.
limited product in inventory.
proven winner in short form and infomercials.
a celebrity spokesperson to go live.
Getting Started
There is no question that the infomercial can be an extremely powerful marketing weapon. Typical successes gross between 5.5 million and $50 million per year: On the other hand, only one in every 10 succeeds because of intense competition, unsuitable products or poorly produced programs.
A reputable infomercial agency will not take on products unless they have an excellent chance of success. So consider the infomercial agency's rationale, learn about successful products and campaigns and either correct the problem with your product and create an infomercial or simply decide to market the product differently.
The CEO has stated that he's going to start promoting the stock - which he hasn't really before. This in itself should be enough to make the PPS move north.
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