Barack Obama's strategists were applauded for innovative marketing during his presidential run, but it was one quaint relic of pre-internet times — the infomercial — that became a turning point for communicating Mr. Obama's message in the final lead-up to U. S. election day.
Infomercials still generate big business in Canada: Canadians spend some $14-billion annually in the segment despite the advent of Web-surfing and digitally zapping TV ads. The business in this country owes a lot to Ed Crain, chief executive of Kingstar Direct Inc. and Kingstar Media, an infomercial production and media buying agency. The pioneer of so-called direct response TV in Canada, he has made more than 100 infomercials since entering the field 15 years ago for products that include the Jack LaLanne Power Juicer, Tony Little's Gazelle and ShamWow. While the number of infomercials on air has quadrupled in the past six years after a relaxation in Canadian Radio-television and Telecommunications Commission rules about what times the messages could be broadcast on major networks, they remain predominantly a fixture of late-night television. Mr. Crain recently spoke with reporter Hollie Shaw about the industry.
What does it take to make a great infomercial?
Infomercials are selling products, but the successful ones are really selling a healthy lifestyle. They are [also often] related to a life change– you are going to be thinner, look better, feel better, have more energy — they are built around the big promise.
Are some products better suited to infomercials than others?
There are a lot of products out there where nobody would understand what they do [without] the longer explanation that an infomercial provides. The product has to solve a problem, be unique, demonstratable and mass marketable. If a product like (food-sealing system) Vacu-Seal is sitting at a Canadian Tire without demonstration, people aren't going to know what it is. You need the story. [Similarly] the juicer is a process; you have to know how to juice. Infomercials are about 50% fitness systems and products, 30% housewares and the remaining 20% includes music and financial-health products.
How has the business changed over the past 15 years?
When I started Kingstar, there had been a checkered past in the industry. A lot of [broadcasters] had been burned by direct response advertisers who would [run ads and then] not pay [for] them. So we went into a cash up-front mode with them and the infomercial business started from there. In those days, the media costs were so low that [companies who made them] were printing money. But since then and every year, there are more competitors. I do a lot of fitness infomercials and I really believe that over the years the products have improved. There was a period of time where people ran infomercials and took the money and ran–but federal Authorities in the United States and Canada are cracking down. Today it is a much more serious and numbers-driven business. It is more legitimate.
Do infomercials bump up sales in other channels?
Probably as recently as two years ago you could trace 10% of sales on the Internet to infomercials, and our Web hits would go up during infomercials, and we thought that was great –incremental sales that would help justify. The product has to solve a problem, be unique our media costs. But during the run of Leg Magic last year, sales from the Internet were going up 60% during the actual broadcast. The cost of broadcast media has gone up in the past two years and [Internet] sales help.
How much does it cost to make an infomercial?
It is a pretty big investment these days. On the low side it can cost $150,000 to $200,000, but it is more often closer to $400,000 to produce a well-crafted infomercial and you need another $100,000 to test it though a media firm. A test with a brand new infomercial might consist of 10 or 12 broadcast airings and seven or eight national cable airings.
Some people think infomercials are hucksterism. Why should brands try it out?
You will create retail awareness and you will sell four to five times what you spend on media. A $1-million media spend in Canada results in $4-million to $5-million in sales. Jack LaLanne Power Juicer has been on the air for about five years in 40 to 50 countries, and worldwide sales are in excess of $500-million.
How much time in Canada is devoted to airing infomercials on broadcast networks and cable?
Programming people generally don't want to see infomercials on their stations. A TV station would rather be [running] a program and selling general advertising into that slot, but when an infomercial can come in and pay more, they will take the opportunity.
Source: Financial Post Fri Nov 14 2008 Page: FP20 Section: FP Marketing Column: Questions & Answer