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DISCOVERING THE ELECTRONIC GOLDMINE

The Electronic Goldmine is a phrase I coined in 1984 when the FCC or the Federal Communication Commission deregulated broadcast television and allowed TV stations to air what was then called Program Length Advertisements, AKA, Infomercials. Prior to this regulatory change, a broadcast station was only allowed to air up to 16 minutes of commercial time per hour. But with the advent of satellite broadcasting (more than 30 cable networks launched between 1976 through 1984), airtime for commercials has undergone dramatic changes. The broadcasters began experiencing fierce competition for advertising dollars from cable networks which were not regulated or limited by the FCC. They cried “unfair competition”, forcing the FCC to create a more even playing field for the broadcasters. Thus, since 1984, there has been a steady growth from local TV broadcasters allowing half-hour “paid advertisements.” Today, over 1000 broadcast TV stations in over 207 markets in the United States, and over 25 national cable TV networks are selling half-hour blocks of airtime for Infomercials. The powerful marketing impact of the Infomercial is being felt not just here in this country; its effect has been global. Thanks to satellite distribution in Europe, products that do even moderately well in the U.S.A. and in Canada have done as well—or better—in Europe. Infomercials are now airing in over 60 countries.

Many media experts at the time described this new form of electronic advertising as a short-lived fad. Few believed that television viewers would tune-in to what essentially was a thirty minute long sales presentation. Only a handful of television outlets were even interested in selling airtime for this form of direct advertising. But as time would prove, we had tapped into a golden vein of marketing opportunities.

Ever since the first Buick rolled across millions of American TV screens in the l950’s, it was unanimously agreed that television was—and of course, still is—the most powerful medium in the world for delivering a persuasive sales message to the largest possible audience. This truism was never more so than right now because today’s sophisticated, global technology has begun to create an industry of mass-marketing that is unparalleled in history. Direct response TV and the emergence of the Infomercial—those ubiquitous half-hour programs that are also program-length commercials—has led the advertising world to discover a whole new way in which to profit in this electronic information age. Through its ability to generate rapid brand-name awareness and measurable direct results, the Infomercial will become, according to many experts, the advertising tool of tomorrow. There are several, very good reasons:

Its longer format enables a more in-depth sales presentation, providing more time to sell the viewer (educate, entertain and motivate) on a product’s benefits, features and selling propositions.
The Infomercial, like its parent, the DRTV spot, is cost efficient, measurable, flexible and produces immediate results.
The Infomercial can be used in non-broadcast situations that can be very effective, such as Direct Video (the video equivalent of a good direct-mail piece).
The Infomercial creates name-brand awareness and product recognition that ultimately drives retail sales.

DRTV or “Electronic Retailing,” has established itself as an easy and convenient way for people to shop, and provides advertisers with the most profitable of marketing venues. This mega-trend is due in part to the fact that most Americans are leading lives that are far more conducive to shopping at home—spending less and less time at the malls and retail stores, finding it cheaper, satisfying, and hassle-free to shop from home. “Cocooning” as Faith Popcorn, author of a best-selling book on consumer and marketing trends, calls it, will not only continue, it will increase as we head toward the next century. According to the DMA (Direct Marketing Association), more than half of all Americans have already purchased products via direct marketing techniques, and this has doubled in the last decade primarily because of Direct Response TV. The numbers speak for themselves and are awesome: Home Shopping Channel and QVC generated combined sales in excess of $4 billion in 2000.

A successful DRTV campaign can often generate between $20 to $100 million in sales revenues from just one Infomercial in only one, two or three years.

VIVA LA DIFFERENCE

What exactly does direct response television marketing do that traditional advertising does not? There is a significant difference between the two. Traditional, or institutional, advertising seeks primarily to create sales of products in the future, after the consumer has received “repetition” or numerous “impressions” from its advertising which, over time, creates specific-brand awareness or product recognition and eventually leads to product sales, usually in a retail setting. It can be very costly, as well as slow and indirect, because the ‘feedback system’, if any, makes it difficult to measure specific results based on sales.

On the other hand, the impact of an Infomercial is immediate. Because of its length and in-depth sales presentation style, the Infomercial breaks through consumer resistance, overcomes objections, powerfully presents all the features and benefits of the product, develops a strong, emotional tie with the viewer/consumer, and produces an immediate and measurable response of sales and/or leads. The dramatically changing face of television advertising is evolving from an “impression-based” advertising vehicle used to create and maintain product brand and corporate image, into a much more proactive medium that generates a measurable response, while at the same time, creating brand-name awareness. This next generation of television advertising is accountable simply because it is measurable. What advertiser wouldn’t be grateful for the opportunity—to know quickly and conclusively the salability of a particular product or service? This does not mean that image, brand awareness or product recognition aren’t important to direct response marketing. Quite the contrary. They are very important and easily achieved each time an Infomercial or spot is aired. These traditional objectives become significant spin-off benefits which automatically occur, at no additional cost, and while—at the same time—the more immediate goal of direct response selling is being accomplished. The financial management task of tracking results in order to react quickly to winners and losers is done instantly while providing brand-name recognition. It’s also cost efficient because “impression based” advertising can be more expensive when it comes to the launching of new products.

Take for example, the Gillette company’s campaign to introduce its razor, the Sensor. Gillette spent a reported $13 million on image advertising for their latest product. Mind you, this is typical of the expense involved in establishing brand name awareness, but DRTV marketing takes a different, more measurable approach to the same challenge. Infomercials are often produced for approximately the same cost of a national image spot. The initial media budget to launch a DRTV campaign can also be significantly less than that of a traditional advertising campaign, often under $500,000. A successful Infomercial is self-funding, creating its own multi-million dollar advertising budget by simultaneously generating direct sales of the product, as well as establishing name recognition.

Once a DRTV campaign has passed the initial test phase (approximately four weeks), the outcome is predictable, with successful campaigns literally creating the cash flow to “self fund” a product’s advertising budget. This means that a successful DRTV campaign which began with a $300,000 to $1,000,000 investment can often generate as much as a 10 to 20 million dollar annual advertising budget. Most major advertising agencies would agree that it can cost between $10 and $20 million in a traditional image advertising campaign just to establish a new product in the marketplace and the company still doesn’t know how successful that campaign is until after it has been aired for several months. With DRTV, a relatively small advertising budget can introduce a new product nationwide, create brand name awareness and become very profitable.

And that is why, from Wall Street to Main Street, and especially on Madison Avenue, the Electronic Goldmine has made such a dramatic impact on the television and advertising industry. DRTV and Infomercials are the unique selling tools which can deliver the most powerful, measurable, results-oriented advertising that has ever been imagined, along with the financial rewards—the returns on the advertising investment—which, too, have been beyond the wildest expectations of advertisers. By learning the art and science of this exciting new marketplace, corporations and organizations, as well as individual entrepreneurs, can profitably mine this “mother lode” of advertising opportunities.