Infomercials

[Bubzeebub]

Has anyone here ever used them or know anything about them?

[Rugles]

Did you get a phone call from a salesman?

[Bubzeebub]

No but I'm wondering if they might be effective. They seem to be awfully expensive getting into the six figure range.

[Corey Bryant]

One of our clients swears by them but your products needs to be something that people who actually watch those infomercials would purchase. He is a psychic & his business always increases after one.

-Corey

[Bubzeebub]

Do you think you can get a spot for much less than six figures Kobe? How do informercials compare to any of these home shopping channels?

[Corey Bryant]

I am not too certain what he pays. He targets a specific area. That might be something you would want to consider. What part of the country do you want to target? That is probably a lot cheaper than targeting the entire country.

I think informercials are probably a little bit better than the sales channels because you do "spend more time with your consumer" and you are able to answer maybe some specific questions depending on how you set up your show

-Corey

[robertito62]

A few years ago I got interested in this, did some research and ended up contacting Mr. Direct Marketing himself, Joe Sugarman. He briefly said 'you need $100,000 free and clear, you need to have the product and you need to feel passion for it. If any of these is missing, don't even think about it'.

[Bubzeebub]

so are you saying all of these somewhat low budget products are not really that low budget at all? I would assume the conversion is tremendous though don't you think? As far as reach goes do you think infomercials compare to radio ads?

[Phillyrich]

Anybody have a list of Infommerical providers?

[robertito62]

Bubzeebub,
not sure if you were asking me or someone else. Joe Sugarman said a good chunk of the cost of an infomercial would go into production, shooting, writing the script, hiring a studio, flying to location, etc. Many times, according to him, there are delays (actors), problems, etc and before you know it, you exhausted your capital. As far as I can remember, he didn't stress too much the cost of actually running one live. He suggested there were work arounds like airing them after midnight and stuff. He mentioned that tv chanel brokers would always have an inventory of spots that one could find convenient, price wise. Specially in the beginning, for testing markets, audiences or regions.

His first question was: 'Do you own the product or have you developed it yourself'. He suggested the only way to overcome all obstacles and 'making' it would be by having a 'feel' for the product being offered. Most of his advice revolved around the notion that one must have a passion for what was being offered, truly believing in the product. Without that, he said, the chances of succeeding would be very low.

His second question was: 'Would you be willing to work 7x24 for at least a year'?
His last question: 'Do you have $100,000 free and clear, money that you don't depend on for a living'?

He then explained that someone getting into informercials could not realistically achieve any goal if having a full/part time job, sacrificing savings, etc... Although he said starting with a 'marketable' product was important, he stressed that the key issues were not related to it but to ones character. Makes sense to me.

[hannamyluv]

Well, they do move a ton of stuff with them, but the key is that they don't actually make the products until after thay have built up a significant number of orders, hence the 6-8 week delivery time.

[ogletree]

Maybe you ought to just look at doing comercials. You don't need to make a 30 min show. You can get slots late at night on cable for $5 each. Try that first.

[Bubzeebub]

that's it? ...but don't they cost a lot to produce?

[Bubzeebub]

Also, I don't know too many people that would invest in an infomercial if they had $100,000 free and clear.

[Hunter]

Try film school students if you have a low budget. Many film students are looking for ways to build a reel and may not charge for labor if they like the project. You can cut costs dramatically this way but it will require more leg work.

[chicagohh]

I spent a year (IT Director) with a small company that started running infomercials. When I first joined, we were shipping 20 to 50 units per day from national magazine ads, trade shows etc. In a year, I left to do my own thing. By then we were shipping over 5000 units 6 days a week. All this gain was through infomercials.

but the key is that they don't actually make the products until after thay have built up a significant number of orders, hence the 6-8 week delivery time

My understanding is that would be illegal. The FTC has a lot of rules governing airwaves. One of them is you must have product in order to run ads.

The first shoot cost over $100,000. The second version cost over $250,000. The owner was a madman and would cause all kinds of problems during the shoot.

As was pointed out in an above post - you can purchase after hours spots, small market spots or niche channel spots at a discount.

Something that can be done for those on a budget -
Many media outlets will let your run your spots on net 15 or 30. You run the spot, generate sales, grab the money and then pay off the media with the money from the sales.

The ROI is NOT the same as what SEM pros expect. In the infomercial world, if you are getting a 3 to 1 return your beating the odds (spend $1 to make $3). On the positive side:

Scalability

When things were running smooth, we would run $1 million in TV spots during a week and receive $3 million in sales. It was like clockwork. After all the expenses the owner was making $500,000 each week.

I still see their infomercials on from time to time.

[raywood]

I looked into a shopping channel deal once. It was very inexpensive, as in free. The offer from the channel was they liked the product and thought they could sell it. It fit well with their format and customer base. They would actually buy the product from me, warehouse it, and sell it. They would feature it on their shows without any cost to me. I thought I was on the way to a fortune.

But I could not do the deal, because there was no way I could produce the product volume they wanted. So if you have a product that interests them, and you have the production capacity, it seems like a great way to market.

[DRTVmarketer]

Good job guys, your posts on this subject have been pretty accurate for the most part. I've been in the DRTV/infomercial business for the past 17+ years. I started out working for, what use to be the largest infomercial company (Liquid Lustre wax - car hood on fire / Stainarator etc.), before me and a partner started our own company about 6 years ago. Although we mainly focus on international, taking the products/commercials to 45+ markets overseas, we also deal with catalogs / Home Shopping Channels and retail both domestically and internationally. Although the posts have been pretty accurate, there is allot more to it. One of the listings mentioned a 3to1 margin which actually is inncorrect. Any company who you may find to invest in you and your product would require a 4to1 margin at the "very least" but most would rather see a 5to1. In other words if you had a product which was going to sell for $50 the product could not cost more that $10. As for the commercial itself; an infomercial (28:30 length) is normally produced for products that require more explanation than what can be described in a short form (1:00, 2:00, 5:00 & even the rare 10:00 spots) commercial as well as for products that have a higher price tag (i.e. exercise, kitchen gadgets, etc.). The production costs for a Long Form commercial range from the low end of $114K to a high end of $625K for an elaborate production. This cost is just for the production (aprox. 17% crew/equip, 12% location, 12% editing, 7% director, 25-35% markup etc.) of the commercial and does NOT include the costs to perform a proper test. Unfortunately allot of people think that media costs can be purchased cheaply. Yes, you can get guarantee buys on small stations for a small investment (in fact some you can pay a set amount too and the station will air the show at whatever times they need fill-in programing until you receive that amount in sales) but after going through the effort and costs of the producing a commercial you owe it to yourself/investors & mostly to your product to run a proper media test. Its pretty dumb to simply begin your campaign with that mindset. What you must do is to hire a reputable media buyer and plan on at least a $10-20K budget so you can do a proper test and really guage if your product/commercial has legs to stand on. The small buys are for a show that is nearing its end but its being kept out there to help drive the product into retail, which is your Ultimate Goal. Something to keep in mind is that "usually" a 28:30 show is produced to help educate the customer on the products uses and selling points. In many cases, you hope to just break even with your commercial keeping in mind that you can reap your greatest benefits when a customer sees it on the retail shelf and recognizes it from TV. Also, depending what your product is and its retail price, it may only warrent the production of a short form spot....this comes with similar obstacles such as the increasingly high costs of media over the past couple years (time for a short form can almost cost as much as a long form). Now DON'T let the costs of production, purchasing media time, hiring a call center, etc. discourage you from considering Direct Response TV. If your product is original, serves multiple purposes, includes other items for backend sales and meets the price point then there are allot of different manners in which to overcome the costs. There are a few trustworthy companies and/or investors who like me are hungry for the products which meet most of the criteria mentioned. There are various avenues to use which allows you to sell product while obtaining capital for the production.
Lastly, be careful of some of these companies (couple in Florida & California come to mind) who claim they'll produce a DRTV commercial for you and also purchase $10K in media time on various stations for some low-ball amount....its probably a scam. You get a very generic commercial (all thier productions look alike) without any appeal and the stations they put you on are the smallest stations with worst customer demographics. We are contacted at least once a month by someone they have cheated. Oh yeah, as for having stock prior to running commercial, its not a law requiring it, but there are ones in effect that you have to notify the customer in a certain time frame if it cannot be shipped and numerous others. However, to avoid headaches and giving your company/product bad name, you should be in production at least prior to running. As for the claims made in the commercial, make sure EVERYTHING can be backed up with testing, documentation and whatever other support you can as, even with the fortune 500 companies getting into the business, the FTC is policing the DRTV industry heavily (which is a great thing for DRTV's future) and are coming down hard on those who make outrageous claims that cannot be proven. GOOD LUCK in your venture and don't hesitate to contact me if you have any questions or would like some free advice.