Infomercial Tips 2010-Now is the Time

My how time flies! It seems like it was yesterday that we were just starting out in 2010 with new dreams, plans and projects. At InfoWorx it’s been extremely busy, profitable and exciting. Our clients bring us innovative products that solve problems and make life easier. That brings me to some infomercial money making tips for 2010.

1. If you want to launch your product in 2010 – NOW is the time. Infomercial projects take anywhere from six weeks to six months. You should be ready to test in August to roll out in the last third of the year – when everyone is back in school and at work.

2. Your product should solve a problem. Infomercials work best with visuals that demonstrate the problem and the solution.

3. Not only should your product solve a problem, but it should be new and innovative.

4. Your product should have mass appeal. Kitchen products do well because everyone has a kitchen. Floor care products save time, money or both.

5. Remember, THE OFFER IS KING. You could have great creative and a problem solving product that’s new and innovative…..but unless your offer is packed with value, sounds almost too good to be true, and has upsells or line extensions your infomercial will not have a good chance for success.

Stay tuned. Bookmark or subscribe to this blog and come back here often. There’s still time to maximize the improving economy but now is the time to have a chance at success in 2010.

Make Money With TV Infomercials

For 18 years, I’ve been helping entrepreneurs understand the dynamics of direct response television or DRTV. Nowadays everyone refers to short form direct response commercials and long form infomercials as simply infomercials. But make no mistake they are different infomercial formats, with different ways of targeting customers to make your product an as seen on TV success. Here’s 7 tips for making money with TV infomercials and DRTV spots.

1. If you have a single SKU product, find some other products to work your offer and create an upsell stream of revenue.

2. TV infomercials are much more then TV production and media. Remember that a successful infomercial campaign includes telemarketing to convert leads to orders, payment processing, fulfillment, customer service and e commerce web sites. Look for an experienced infomercial shop with a successful track record.

3. Direct to consumer selling is a science. You must conduct research to understand your most profitable customer. Then, test more then one offer, price point, and upsell strategy. An agency with experience and the ability to move quickly can help get your product out to market faster.

4. Make sure you have adequate funding. Today smart direct response companies can utilize the latest technologies and produce award winning infomercials with limited budgets. But you must have adequate funds to test an offer, tweak the creative and telemarketing scripts and re-test. Be patient.

5. When you hire a good TV infomercial company, listen to their advice. They are on your team and know a lot more about what works and what doesn’t.

6. Beware of infomercial companies offering joint ventures. Usually these deals are simply a hook to sell you a cheap TV production that will never go anywhere. Your direct response agency should have years of experience, a good reputation and offer services for a legitimate fee.

7. Be clear on your goals and objectives. Is your product a direct to consumer product with an ongoing revenue stream and continuity offer? Or is your product better for direct to retail — using retail sell through as the back end profit center? Make sure your TV marketing strategy fits your product line and team strengths.

There is much power in TV infomercial promotions. You can launch a new product on a nationwide stage faster and cheaper then any other marketing method. Media delivery is more efficient and targeted then ever before. Now it’s your turn to introduce your dream product and make money on TV.

The Cost of Long Form Infomercials

Each day the telephone rings in our offices with questions about budget.  This blog exists to answer the most common questions about what I call the wacky, wonderful world of infomercials — my world! So let’s get right to it…..

TV Production:  In order to air a long form infomercial, you must produce a half hour TV show.  Like anything, production budgets vary greatly from low-budget talk shows with the author of a book pitching to the camera to higher budget shows with multiple cameras, varied locations, celebrity talent, etc.  A low-budget talk show style infomercial can cost as little as $20,000.00  and a beautiful high-end show with about a week of shooting and a 12 person cast would cost around $75,000.00.  Remember, the investment you make in production is a one time cost.  You can create short form spots and utilize the video assets on the internet and more – so we always recommend putting a few extra dollars into the TV production. 

Media and Airtime: Ok, so now you have a show.  where do you air it, and how much does it cost?  Again, of course, you get what you pay for.  If you air on a local cable system’s classified or infomercial channel – what are the chances that anyone will see it?  These types of “stations” provide the cheapest airtime and to have any chance of success you must air your show frequently or on a pay for performance basis.  These type of infomercial airings should run under $50 and as low as $10.  Now what if your show airs on a network (think ABC, CBC, NBC) and has a clean lead in?  What is a lead in?  — the previous program — think Jay Leno’s prime time show killing the ratings on the local newscasts.  That’s the importance of the lead in. I know in my house we watch the local news, network news and therefore, the TV is often on the local NBC affiliate when we turn on the TV. So even though the station is a local station, and even if it is a small market, those airings can cost $1000 – $5000.00.  Maybe in your house you watch a lot of CNBC during the week to track your millions. Well there are a lot of infomercials on CNBC during the weekend, and, of course these are “primo” national spots costing well over $10,000.00 per airing.

Well, we could go on and on.  The bottom line:  Your media buyer better be smart and experienced.

Infomercial Media Rates

“How many airings will we get?”  “I think my infomercial media should air on Lifetime.”  “How much does infomercial media cost?” The questions keep coming, and we have the answers here at the DRTV and Infomercial blog. 

Lets start with some basic information.  The largest and best known cable networks now reach about 90 million TV households in the USA.  Broadcast networks have been losing audience to cable for a generation.  So make no mistake, the best known cable networks have plenty of demand for their limited inventory from the largest brand marketers out there.  For example, back in January a :60 second direct response spot on HGTV would clear for about $2500.00 with :120’s costing double. The rates go up each month as we closer to second quarter.  Remember, when it comes to media, it’s all about supply and demand. And even the nest media agencies have to pay the rate that will clear.  Cable networks do not give their inventory away because they like the agency.

When selling a product with a hard offer, it is generally known that a two-minute infomercial will work the best — so as you can see large networks are not efficient methods of testing and may not be the best medium until you have  a large roll out in retail.

We generally recommend media tests in the $10,000 to $20,000 range using the most efficient media available, which is usually lower tiered national cable networks, not local cable.

Using the example above, we ran our client on DIY (which is owned by the same cable family as HGTV) but has a smaller cable footprint and is much more infomercial and direct response friendly.  We were able to clear on DIY at rates from $250 to $700 for two-minute airings.

Another efficient media buying strategy is satellite networks like DirecTV and DISH.  These networks work best for lead generating offers because they do not have 2 minute inventory available.  You can buy 26 HD cable networks on DISH for as low as $50 per :60 second airing.

Infomercial media rates change on a daily basis, and the market is fluid and demand is heavy even in this tepid economy.  You see it pays to advertise and everyone realizes that TV infomercials are effective channels of distribution

Infomercial Cost Per Order

Let’s talk about infomercial metrics. Every day we speak to product developers and innovative direct response marketers. I often ask the question to these would be infomercial start ups – How much can you afford per order or per call? Of course our regular direct response media clients know what their allowable is. Allowable cost per order you say? I say you better crunch the numbers and have a plan to get your product out there. Check out this link for an ROI forecasting tool. Well, let’s define allowable, or cost per order, or CPO.

Ad Allowable: Your ad allowable tells you how much you can afford on a cost per order basis. The ad allowable is the dollar amount determined to be the maximum media expense for each unit sold in order to generate a legitimate profit.

Another infomercial metric that is widely used is the media efficiency ratio. The MER is a universal metric that is discussed among all infomercial professionals. We use this metric to determine how infomercial television media is performing.

Media Efficiency Ratio (MER): The total number that decides an infomercial’s overall success or failure. The ratio is derived by dividing total sales by the media cost. Sales/Media Cost = MER.

To determine MER you must be able to track media efficiency through toll free number tracking and good Internet analytics. Through the use of this analysis, we cancel non performing media buys and renew those that have MER’s that are profitable.

Allowable cost per order is such an important concept in all of direct marketing including mail and internet, that you must learn the concept, crunch the numbers and be scientific in your analysis. This is the concept that will drive your media buys, ROI, and overall success of your project.

Direct Response TV Advertising FTC Update

DRTV Advertising and TV Infomercial Advertising rules changes as of December 1, 2009. The Federal Trade Commission announced the implementation of its new Testimonial and Endorsement Guides.

The new Guides go into effect on December 1, 2009. Here are a few areas of important changes as reported by John Hendricksen of Manhattan Advertising and Media Law:

“The Guides remove the “safe harbor” provision which previously allowed use of a text disclaimer such as “results not typical” or “results may vary” when presenting exemplary testimonials of the product or service. In short, marketers should be prepared to disclose the “typical” results which users can expect to achieve.”

“If bloggers or “word-of mouth” marketers have a “material connection” to the product or service, this fact must be disclosed when writing, posting, or otherwise promoting the product.”

“Celebrities must disclose their relationships with advertisers when making endorsement-like statements on talk shows, interviews, blogs, tweets, or in other social media.”

We always recommend that you have your scripts checked by a good attorney to make sure that you are in compliance. For more information and DRTV and Infomercial resources look here.

Infomercial Advertising On TV

Every day our telephones ring with entrepreneurs and established companies alike asking the same questions about TV advertising cost. In addition, since Billy Mays  tremendous success and tragic death, many advertising and marketing executives are looking to get started with infomercial advertising on TV. This blog is for all of you, and hopefully we will “see” you here often for the current state of  TV advertising rates, infomercial production costs, and media planning services.

In our last blog we talked about short form infomercial inventory being tight and expensive. The cable TV networks have gone “all in” after the upfront quarterly media buys that were mostly reserved for the big four networks (ABC,CBS,NBC and FOX) before the recession. Direct response television advertising depended on unsold preemtible media buying to make their offers payout. Well — our DRTV inventory is being sold to major branding marketers looking for impressions and ratings – not orders! For example, last week a major cable advertising network called after we negotiated TV media rates for our client. They informed us that our rates would not clear and they needed another $100.00 per spot. We cancelled because our clients need cheap TV ads that can bring a profit.

So here’s some food for thought. Long form infomercial television advertising rates are down, not up! Inventory is plentiful and highly negotiable. You rarely get bumped or preempted, and we are buying half hours for our clients as low as $40 in top ten markets like San Fransisco and Boston. When you do long form infomercial production, you have plenty of footage to create short form TV ads, Internet TV ads, and fill your web site with compelling demos and testimonials. The benefits of a traditional half hour infomercial are even more compelling in this “new” economy and Internet video era. The old saying “The more you tell, the more you sell” is more true than ever. We like to say there is much power in the half hour!

Direct Response TV Inventory Tight

A tightening remnant Direct Response TV market is leaving many infomercial marketers desperate for media, as traditional advertisers snap up the preemptible air time that supplies DR. “This is probably the tightest time I can remember in my history with direct response,” said Scott Boilen, to reporters at AdAge. Boilen’s company, All Star Marketing is the company behind the Snuggie. “We were the industry that took what’s left,” he added. “And there’s not a lot left right now.”

The lack of remnant airtime is a result of large corporate marketers adding to their quarterly buys, along with networks having to offer remnant ad space as “make-goods” to make up for ratings shortfalls over the past years.

The networks are not at all displeased to see DRTV advertisers getting knocked out of some of the media they’ve enjoyed during this recession, because they typically pay lower prices than the high flyers. “In the malaise that was out there in the first six months of the year … you saw a lot of direct response popping up in network prime time,” said one media-buying executive. “Well, not right now.”

We have been recommending shorter DRTV commercials and infomercials for months, and apparently that trend is catching on. With fewer avails at two minute commercials, Snuggie, which had launched last year behind mostly 120-second spots, has down-shifted to 10-, 15- and 30-second commercials, Mr. Boilen said, noting that other DRTV advertisers are also moving to shorter forms.

“All the consumer-products companies and other big advertisers have renegotiated their rates, so they’re able to buy more time, and things are back to where they were [before the recession] or even worse for us, because people are advertising more at the lower rates to try to make up for lost sales,” said A.J. Khubani, CEO of TeleBrands, marketer of such products as PedEgg and JupiterJack to AdAge.

TV Media — 21st Century Style

I’ve often said that television is the most powerful communication tool in history. I said it in the 90’s when the Internet began, and I say it again today as the Internet continues it’s incredible evolution. But direct marketers and advertisers need to evolve,too. And the Internet provides opportunities for direct response television(DRTV)and infomercial advertisers like never before.

In the 21st century, you can brand and drive prospects to your web site that converts them to customers. No need anymore for a call center, no need anymore for long form advertising on TV. Try it, you will see. Use 30 second and 60 second short form TV advertising to drive your prospects to your website where they can view a longer demonstration, get a free gift or newsletter for logging in, or convert that skeptical prospect into a profitable customer with outstanding lifetime value.

Today’s consumer wants information, credibility and value. Your TV advertising campaign drives traffic to your web presence, just like brick and mortar uses the short 30 second television format to drive traffic into their stores. More than ever, prospects are bombarded by many messages and much competition in all fields. Therefore, repetition and consistency matter more than ever in your television campaign.You can run 4 thirty second spots for every two minute commercial. That’s four times the gross impressions and very likely — multiple impressions for much of your highly targeted audience.

TV Media Costs Update

We get asked every day about media costs. Has the recession lowered media costs? Where do I find TV and Radio media at the right price? Well, as I always say on this blog — your media buyer better be smart! Please take a look a our last blog for a full report on third quarter media.

The fact is that there is much unsold media, and we have access to TV media on 98 cable networks with national distribution. Not only is this unsold TV remnant media available at low cost, we can target your best customers with research into age, sex, household income and more. In our database, we have five networks with distribution in over 40 million households, and the other 93 cable networks reach up to 15 million households. You only pay for the viewers who watch, that’s how sophisticated the newer systems are!

In radio, our database contains 679 radio stations in virtually every market. Our media buying department can buy remnant TV and Radio direct response and infomercial media for up to 90% off rate card!

The key to lower media costs is uncovering unsold media, understanding the target audience, and buying media at the lowest cost per thousand.