Pick up that phone! Infomercials at 20
Like everyone, infomercial customers have needs and desires. Unlike everyone, they act on them.
The infomercial turns 20 this year. Veg-O-Matic daddy Ron Popeil, often thought of as the father of the infomercial, first bought 60-second television commercials in the 1950s. But until 1984, the Federal Communications Commission did not allow more than 16 minutes of advertising per hour, with two-minute spots the maximum length.
In the beginning ...
The restriction was lifted that year, owing to the proliferation of cable stations and industry lobbying, and the 30-minute infomercial was born. Herbalife nutritional-product infomercials appeared on USA Network. Soon after, Bill Guthy, who owned a cassette-tape copying business, and resort scion Greg Renker started an infomercial studio, Guthy-Renker. They signed former NFL quarterback Fran Tarkenton to pitch motivational books.
Their next client was Tony Robbins, whose "Personal Power" motivational books, tapes and seminars became a juggernaut. His infomercials showed him hanging with celebrities and royals, befriending children and piloting his own helicopter.
Today, infomercials are a $256 billion-a-year industry (including its business-to-business component), according to the Electronic Retailing Association, the trade group of companies that sell via radio, television and the Internet.
Modus operandi
The traditional infomercial format remains the same: The commercials frequently feature a full-volume pitchman, (Tae Bo's Billy Blanks, Tony Little with the Gazelle exerciser, Billy Mays for OxiClean), hawking an "amazing product" accompanied by an incredulous interviewer (often a former actress).
Recent entrants are infomercials for male-enhancement pills/supplements/pumps and pulleys/etc. The Extenze pill infomercial features a studio audience and legendary porn star Ron "The Hedgehog" Jeremy.
And boy howdy, do they rake in the dough. The infomercial for the Total Gym, which features Christie Brinkley and Chuck Norris, sold more than $1 billion worth of Total Gyms in a six-year run, the association said. Guthy-Renker grosses more than $1 billion annually, as do Popeil's inventions.
Busy, busy, busy
The infomercial industry is growing 10 percent annually, the association said. Each month, 250,000 infomercials air on cable and broadcast channels in the United States and Canada, said Sam Catanese, who runs Infomercial Monitoring Service, which tracks where and how often infomercials air and sells reports to advertisers.
May 2004 was the busiest month ever for the introduction of new infomercials, he said. Each day in May, three new infomercials hit the air.
The industry says that misconceptions about it abound, that the perception of the average customer as an anti-social, insomniac shut-in with no impulse control is exaggerated and unfair.
"They're you and me," said Barbara Tulipane, president of the Electronic Retailing Association, the trade group of infomercial makers. "Typically, they're multitaskers. They're not just sitting down, glued to the TV. They're probably making dinner; they've got kids in the room studying, reading, talking."
An April study commissioned by Tulipane's association found the typical infomercial shopper is a single mother 18 to 34 years old. The fact that she has less education than her peers who shop online, according to the study, doesn't prevent her from making $50,000 to $99,000 a year.
Generally, an infomercial must hit a 2-to-1 sales-to-cost ratio to survive, said Catanese, who also produces infomercials for advertisers. In other words, if the advertiser spends $1 million a week to air the infomercial, the product had better gross $2 million in weekly sales.
It can cost an advertiser $10,000 to more than $500,000 to produce a 30-minute infomercial, Catanese said. Then comes the continuing expense of buying airtime. In the early days of infomercials, when cable channels were screaming for programming to fill their gaping 24-7 schedules, airtime could be had for next to nothing. At an independently owned television station in a small market in the middle of the night, an advertiser can still get its 30-minute infomercial aired for $50, said Dan Danielson, chief executive of Mercury Media, which bought $152 million worth of airtime for infomercials last year.
"Prime time"
After that, prices go way up. The most-desired infomercial slots — during the day on Saturday and Sunday, especially in the winter, when people are indoors — can run as high as $10,000 to $15,000 for one half-hour slot at a big-city station. Infomercials typically account for 3 to 5 percent of a station's total ad revenue.
But viewers are probably most likely to see infomercials on the scores of cable channels available nowadays. Those in the industry say it's another misconception that infomercials are night-grazing for the stay-awake set, but a look at the Infomercial Monitoring Service grid from midnight to 8 a.m. suggests otherwise.
Almost all CNBC's overnight programming can consist of infomercials, with other big cable channels such as FX, SciFi, Oxygen and Lifetime selling as many as half their overnight slots for infomercials.
In a nifty bit of knowing-your-audience, E! entertainment channel has followed its "Wild On ... " program, which documents young, nearly naked vacationers partying in hot spots around the world, with the infomercial for "Girls Gone Wild!," a videotape oeuvre largely devoted to recording young women pulling their shirts up/bikini tops down.
Cable's moneymakers
Thirty-minute time slots in the weekend daytime hours on a popular cable channel such as Lifetime can cost up to $40,000 a shot because they're reaching millions of viewers, Danielson said. Like broadcast stations, cable networks count on infomercial revenue for about 5 percent of their total ad dollars. Danielson said some stations recently have backed off selling time to infomercials.
"Stations are more wary now because of some of the bad things that have happened," he said. "But it's a cyclical business. There's a backlash, then that'll wear away after a while."
Self-regulation
In the early '90s, when Congress was threatening to crack down on fraudulent infomercials, Renker testified before a congressional subcommittee and established the Electronic Retailing Association, which promised self-policing in exchange for keeping lawmakers at bay.
Earlier this year, the association began another self-regulatory process, working with an ombudsman at the National Advertising Review Council who reviews infomercials and their claims. When the ombudsman targets what he thinks is a specious infomercial, he passes it along to the association, which works with the company to get it to clean up its act. If the company refuses, the association passes the company to the Federal Trade Commission, which may investigate.
"There have been bad marketers on the air that unfortunately give everyone a bad name," Tulipane said. "The goal is to quickly get those people off the air so the good companies can rise to the top."
Maybe it's hard to get people to confess to buying from infomercials.
On www.infomercialscams.com, run by Justin Leonard, a Nevada man with his own fitness business, customers give only their first names.
But anonymity makes it easier to reveal the soul. Ask any priest.
Pauly — who bought the Sharper Image Ionic Breeze air purifier for $350 — plaintively writes: "I purchased this product because ... I saw something shiny on TV and it was late. This happens to me from time to time."
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