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Marketing 17.1

Infomercials, compelling sales pitches that are thinly disguised as TV programs, can be seen across the world. Although the industry is only about 20 years old, it is well established in the United States; however, countries such as Britain have been comparatively slow to adopt what is also called the "long form."

Commercial television in Britain can have a three-hour teleshopping period per day during which infomercials can feature a product or service and sell directly off the screen (or online). There are around 458 TV stations in Britain, and 115 of them broadcast these shopping windows. In other words, this is some 345 hours every day or 125,925 hours per year. The TV stations are not minor interest or fringe stations as they include ITV2, ITV3, Film Four, and Five US, all available to viewers via digital broadcast. Until recently, the bulk of infomercials appeared on cable and satellite television, but now they are a feature of mainstream TV channels.

No part of the world seems immune from the steady advance of the infomercial. In July 2008, a media company based in

Dubai Media City launched the Middle East's first ever infomercial television service. The service, called X Vision, is primarily designed for local rather than international businesses.

Kumar Chandra, the chief executive officer of X Vision said of the new service, "We are introducing a concept called Direct Response Marketing and Advertising strategies, also called Infomercials, which have the ability to reach and affect the audience like no other form of advertisement.

They're engaging, informative, and persuasive. X Vision seeks to help businesses take advantage of these benefits."

Rajan P. Thodiyoor, the executive director of the new service, explained, "Direct response marketing and advertising is one of the most effective ways of bringing your products and services to the end consumer— and X Vision is committed to do it. And because we have a TV channel exclusively for 'Infomercial,' your products are ensured of reaching a greater number of the audience fined up to $11,000 per violation. As a result, reports an FTC spokesperson, the program "has been exceptionally successful."15

Do-not-call types of legislation have hurt the telemarketing industry, but not all that much. Two major forms of telemarketing—inbound consumer telemarketing and outbound business-to-business telemarketing—remain strong and growing. Telemarketing also remains a major fund-raising tool for nonprofit groups. However, many telemarketers are shifting to alternative methods for capturing new customers and sales, from direct mail, direct-response TV, and live-chat Web technology to sweepstakes that prompt customers to call in.

For example, ServiceMaster's TruGreen lawn-care service used to generate about 90 percent of its sales through telemarketing. It now uses more direct mail, as well as having employees go door-to-door in neighborhoods where it already has customers. The new approach appears to be working even better than the old cold-calling one. The company's sales have grown under the new methods, and less than 50 percent of sales come from telemarketing. "We were nervous, but were thrilled with what we've accomplished," says ServiceMaster's chief executive.16

In fact, do-not-call appears to be helping most direct marketers more than it's hurting them. Many of these marketers are shifting their call-center activity from making cold calls on often resentful customers to managing existing customer relationships. They are developing or households. This is more than a channel; this is an exclusive concept to promote business. A concept that we are developing that it wants to extend to its whole range: 360° vision. The 'X' in X-Vision represents the four directions in which our cameras can focus. Let us see the business world surrounding you and me, and explore it."

The business backing X Vision is Brand Works FZ LLC. This is the media arm of Four Ways Group, which is involved in retailing, duty free goods, tourism, travel, brand development, and advertising.

Market research seems to indicate that a TV infomerciai viewer can be converted at a rate three times greater than a short form (standard advertisement) viewer. In other words, it takes an average of 2.5 views of an infomerciai compared to 7.5 views of a normal TV advertisement for a viewer to become a buyer.

Asia is home to three-fifths of the world's population; in under a decade, more than four billion people (or two-thirds of the world's population) will be living in Asia. Therefore, major changes are afoot in DRTV in Asia, particularly in the larger markets of Japan, China, Korea, and Taiwan. The home shopping channels are receiving massive investment and strengthening and there is a decreasing reliance on U.S. direct-response products.

More and more of the home shopping channels are owned by larger corporations with considerable financial support. These corporations are responding to the fact that Asian customers seem to be more content and willing to buy if the products are well known brand names. Increasingly, fulfillment is being secured via local businesses; this makes it possible to keep down the prices and to control the stock levels that need to be held by the shopping channels. In the past, most of the more successful infomercials in Asia came from the United States. This was still the case in the late 1990s. Now, however, the bulk of the infomercials are homemade and feature local products; in fact, the figure may be as high as 80 percent. The businesses providing the products and the infomercials tend to rely on low costs; this spreads the risk for each new product and each of the new infomerciai campaigns.

This has all meant that it is hard for Western direct-response companies to compete in the Asian market. They need to have a patent-protected product (to ensure that it is not copied), they need to cut their costs, and they need to make sure that they flood the market with products before the imitations can arrive on the scene.

India has a population of 1.1 billion; however, around 30 percent of that population live on or below the poverty line. China, with a population of some 1.3 billion, has only one-sixth of its population at or below the poverty line. In India, there are currently 15 DRTV companies. Some are regional, but others use satellite to cover the whole of India as well as Sri Lanka, Pakistan, and parts of the Middle East. At present, there are no shopping channels in India, but it is expected that some may soon be launched. There are a few overseas DRTV companies in India, but they tend to show their infomercials through international syndicators or operate with local DRTV companies.

Back in Britain, it is estimated that infomercials are worth some $1 billion in product sales. Retail sales driven by infomercials are capable of increasing sales by between 2 and 15 times. As a result, more and more brand names are integrating infomercials into their marketing mix; this is often at the expense of conventional advertising. Infomercials seem to be able to generate more qualified sales leads, consumer demand, and actual immediate sales for a fraction of the cost of a major marketing and advertising campaign.

Even a relatively modest infomerciai campaign has been seen to be able to generate product sales in excess of $90 million, which is up to five times the sales value that would have been achieved had the brand concentrated on advertising and the use of its sales force as a joint push-and-pull effort.

Sources: Quotes and other Information from Brand Works (www.brandworks.ae); AME Info (www.amelnfo. com); ¡Media Connection (www.imediaconnection.com); ABQ Zawya (www.zawya.com); and X Vision TV (www.xvisiontv.com).

"opt-in" calling systems, in which they provide useful information and offers to customers who have invited the company to contact them by phone or e-mail. These "sales tactics have [produced] results as good—or even better—than telemarketing," declares one analyst. "The opt-in model is proving [more] valuable for marketers [than] the old invasive one."17

Direct-response television marketing

Direct marketing via television, including direct-response television advertising (or infomercials) and home shopping channels.

Advertising With Circulars

Advertising With Circulars

Co-op Mailing means that two or more businesses share in the cost and distribution of a direct mail campaign. It's kind of like having you and another non-competing business split the cost of printing, assembling and mailing an advertising flyer to a shared same market base.

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