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The infomercial business began in the mid-1980s when the Reagan administration deregulated the amount of advertising time allowed per hour on television. Cable television stations were in their infancy and they were hungry for revenue. A few smart entrepreneurs realized that they could purchase this suddenly abundant cable airtime for literally a few hundred dollars per half hour and run their own programming–selling products, investment courses and business opportunities. In the late 1980s, several companies formed to take advantage of this new marketing medium. Among these were the Synchronal Corporation, Twin Star, Media Arts and Guthy-Renker. American Telecast, a company that already amassed a strong sales record in direct response television, decided to venture into the "infomercial" realm. In 1989, two key infomercials hit the airwaves and they changed the industry forever. American Telecast launched Victoria Jackson Cosmetics featuring a then unknown Victoria Jackson, a Hollywood make-up artist with her own cosmetic line. Her infomercial starred Ali MacGraw and Lisa Hartman, two celebrities the likes of whom had never before been seen in an infomercial. Meanwhile, Guthy-Renker launched their Tony Robbins Personal Power infomercial with Fran Tarkenton as the host and a slew of well know endorsers from the worlds of entertainment, sports and government. Over the years, Tony Robbins’ infomercials have grossed over $300 million. Victoria Jackson’s series of shows have gone on to gross even more.

In August of 1991, I published the first issue of the Infomercial Marketing Report. The industry was hot. Entrepreneurs believed that infomercials were the next gold rush. Huge amounts of money were being made through a combination of a winning product, a winning offer and a winning show. In 1991, one out of seven infomercials were financially successful, meaning that they were turning a profit. Today, only one out of sixty infomercials turns a profit. Why the tremendous difference? There are two primary reasons. First, during the early days, an average consumer had less than nine stations to choose from on their television. Today, with cable and satellite television, they now have several hundred viewing options. So obviously there are far fewer people watching each individual station. This is why the audience for the major networks has shrunk to such a staggering degree. Second, even though the number of eyeballs watching has decreased, the media rates have gone up by as much as 500% over the past 14 years. Still, major corporations like Salton-Maxim are using infomercials to launch new consumer products into major department stores. At a conference I sponsored at the Waldorf Astoria in 1993, Marvin Traub, the former Chairman of Bloomingdale’s, stood up and remarked that he’d never seen anything move product at retail in such tremendous quantities as a successful infomercial.

The Infomercial Marketing Report took off like a rocket from the moment it was launched. Read by thousands of people in 20 countries around the world, this inside report broke many newsworthy stories that were picked up by The Wall Street Journal, The New York Times, The Washington Post and hundreds of other notable media entities. Each month, the entire industry waited for their copy of this vital news source to arrive in the mail. If an issue was even a day late, the phones in our publishing offices would ring off the hook with readers wondering where their issue was. And sometimes people didn’t like what they read. For a period of three months, the heads of three major infomercial companies refused to talk to us because they were unhappy with some of the inside information we printed. Often that included actual copies of lawsuits recently filed that contained hard sales numbers and the ever important deal points for major infomercial campaigns. We certainly stirred the pot a number of times. On the other hand, the newsletter was also responsible for helping many inventors to sell their products. This included one of the top grossing infomercial products of all time, The Total Gym, which showcased Chuck Norris and Christie Brinkley in the show. That product alone has grossed just under one billion dollars.

Companies subscribing to the Infomercial Marketing Report paid a total of $4,740 to receive it over the course of the 12 years of its publication. What you hold in your hands represents a goldmine of information culled from those 12 years of inside information. The exclusive interviews in this book represent some of the most important marketing information ever divulged from the world of direct marketing and television infomercial sales. Since the Infomercial Marketing Report was an "insider" newsletter, no one from outside the industry ever had the opportunity to view this wealth of carefully guarded secrets…until now.

These interviews not only give you insightful, inside marketing data, but they also serve as a history of the industry itself. Since the inception of the direct marketing infomercial industry in 1991, the industry has gone through a rapid maturation process. Only two of the major companies that started the infomercial revolution are still in business today. Those two pioneers/veterans are American Telecast and the Guthy-Renker Corporation.

Why did some companies succeed while the others failed? What secrets did they learn that the others didn’t, or failed to heed? You’ll uncover the answers to these questions within the covers of this book.

Unlike the Internet boom, the infomercial business is based on three major elements: 1) Selling a product or service profitably; 2) Purchasing the media to advertise the product at the most economical price; and 3) When possible, creating an ongoing relationship with a customer and selling them more or additional products.

Every single one of these elements should be incorporated into all businesses. But unlike the infomercial industry, most outside businesses don’t track their results. Advertising agencies can tell you how many people saw your ad, how many may have read your ad, what the demographics are of the people who may have read your ad, but they’ll never tell you how many people picked up the phone or went down to their local retailer and actually purchased your product.

Direct response television companies test price, offer, and product configurations before rolling out. It has surprised many people throughout the years that often a consumer will be more likely to purchase a product at a higher price point than a low price point because the higher price increases the perceived value of the product. The wealth of information gathered over the years from this continuous consumer testing is a treasure chest of data.

A general rule of thumb is that an infomercial will not stay on the air if it isn’t profitable, however, unless you’re privy to what is going on behind the scenes you’ll never really know whether a campaign is profitable or not. For example, one company created a low-priced exercise show selling three exercise videos for only $40.00. They didn’t expect the show to be profitable; instead their intention was to get customers to sign on to a continuity program for vitamins. But when the show was tested it surprised everyone that the video offer worked on its own, was extremely profitable, and the vitamin sales became a highly profitable gravy that will pay a good chunk of their overhead for years to come.

Joe Sugarman, one of the interviewees in this book, made a fortune from his line of BluBlocker Sunglasses. Joe remarked to me once during a private conversation that he attributes his success to the fact that he failed more times than anyone else.

Marketing guru Jay Abraham said to me on several occasions, "I try a lot of stuff Stevie, more than anyone else I know. Some work and some don’t. You don’t know unless you try."

And that’s what I’d like to impart to you. There is such a wealth of information contained within this book–information that is the result of 12 years of constant and continuous research. I urge you to take even the smallest bit of information and test it in your own marketing campaigns. You don’t have to launch an entire direct response television campaign. You can start with a simple letter to your customer base making them an offer similar to the ones talked about in this book. Watch what happens. I think you’ll be very surprised. Many of these techniques also work with print advertising. Maybe you didn’t realize it, but when you run print ads that sell directly, you very often qualify for a substantial discount in the advertising rates. This too is discussed in this book. You can easily make back the cost of this book ten times over with your very first advertisement.

I hope you enjoy the treasure hunt you’re about to begin.

Best of luck to you,

Steven Dworman

 

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