From the September 1998 issue of Entrepreneur

Jon Nokes had been demonstrating the SmartMop, a unique Finnish mop with a self-wringing twist action, at state fairs and home shows across the United States for three years. Sales of the product had been fairly brisk: In 1993, his company, Los Angeles-based Smart Inventions Inc., which owns the mop, grossed $1.8 million--not bad considering the company was being run from Nokes' Santa Monica apartment.

But Nokes, 46, wasn't satisfied. Customers raved about SmartMop, and he knew it would sell like hot cakes if only he could reach a larger audience.

Determined to do just that, in 1993, Nokes decided to try direct-response television (DRTV). He contacted Concepts Video Production, a Montville, New Jersey, TV production company, and paid $60,000 for a 28-minute infomercial demonstrating the super-absorbing, back-saving powers of the SmartMop. The response, Nokes says, was remarkable. "We were so naive--we had no idea what this really meant," he says. "We had no idea SmartMop was going to be such a hit. It was like hanging on to a runaway train."

Orders poured in to Smart Inventions each time the infomercial aired--so many orders that Nokes had to invest some of the profits in a larger manufacturing facility to keep up with demand. During a five-month period, Nokes received almost 3 million orders for SmartMops, thanks to that infomercial.

And that was just the beginning. After the initial buying frenzy died down, Nokes asked TeleBrands Corp., a Fairfield, New Jersey, manufacturer and distributor of TV-promoted products, to handle SmartMop's national distribution to retail giants such as Wal-Mart and Kmart. Since the infomercial had brought SmartMop nationwide customer recognition, retail sales quickly surpassed direct TV sales.

By the end of 1994, SmartMop had grossed $44 million for Smart Inventions and had perhaps become the fastest-selling mop in history.

Rising Above the Crowd

With consumers being bombarded by advertising messages every day, DRTV infomercials, short form spots (one minute to two minutes in length) and advertising on home shopping channels are effective ways to grab some attention for your product.

"The aim of an infomercial is to educate the public on what a particular product does," says Nokes. "When you do a TV infomercial, you can sell 10, 20, 30 times the amount of product you could [otherwise]. You can get the word out much quicker."

Infomercials introduce new products, drive retail sales, generate leads and create brand awareness. Most last for 28 minutes, and occasional breaks give viewers the chance to call a toll-free number to order the product or receive additional information. Most infomercials air late at night when the price of air time is lower. They make up for their mainly nocturnal existence through repetition and longevity; many play night after night on the same channel. According to the Electronic Retailing Association (ERA), in 1997, $75 billion worth of products were sold through infomercials and other DRTV mediums.

Short-form direct-response spots generally air after the longer infomercial has reached the end of its run. Much cheaper to produce and air than the long form, the main purpose of the shorter spot is to maintain consumer awareness of the products advertised in a longer infomercial.

Another option for DRTV advertisers is approaching home shopping channels like Home Shopping Network and QVC. These channels use live spokespeople to pitch and demonstrate products to loyal and enthusiastic viewers who are accustomed to buying products seen on TV. According to the ERA, QVC alone sells $4.5 billion worth of merchandise annually.

In reality, only a small minority of consumers actually call the advertised toll-free number to purchase the products; instead, most wait until the product hits the shelves of local retail stores. "Direct-response TV ads only account for 9 percent of all sales of an advertised product," says Anand Khubani, president of wholesale operations for TeleBrands. "While we generate a revenue stream through direct TV, we're actually more interested in building a huge, pent-up demand for the product in the retail marketplace. Since we know that 91 percent of consumers prefer to purchase the products at a retail outlet, we first demonstrate the product on direct TV to create consumer awareness and demand. Then a few months after the ads go off the air, we start shipping to retail stores like Target, Kmart and Wal-Mart."

According to DRTV Expo & Conference, a Fairfield, Connecticut DRTV marketing company,
13 million adults in the United States--nearly 6 percent of the population--bought at least one item from a TV offer in 1996. That's a lot of consumer awareness.

Screen Test

If you have a product you want to sell via DRTV, you must first catch the attention of direct TV marketers. One way to do this is by attending the annual conference put on by DRTV Expo & Conference. The two-day show offers seminars and workshops that educate entrepreneurs on what makes a good DRTV product.

"We wanted to teach inventors what DRTV is and how [DRTV marketing companies] work with products," says Marti Wolf, a marketing consultant for DRTV Expo & Conference. "One of the things that often happens is that an inventor gets an idea and creates [an unsuccessful] product in a vacuum that, with a little guidance, might have become a great consumer product. Inventors really need to know the kind of profit margins needed and what kind of products are appealing so they'll have a better idea how to make a living in this industry."

At the 1998 DRTV Expo in Long Beach, California, in April, the organizers added a new feature to the event: an International Product Search. "To serve exhibitors at the DRTV show, we decided to act as a catalyst for bringing new products to them," says Wolf. "We did this by placing ads in publications like Inventors' Digest, as well as on the Internet."

Inventors' responses to this new expo offering have been very promising, says Wolf. "The inventors we've been able to contact so far are really excited about the potential for DRTV as a way to market products," she says. "Those inventors that came to the show and displayed their products made many great contacts, and several people are now in negotiations to get their products to market." The next DRTV Expo is set for April 20-21, 1999, in Anaheim, California.

Going Live

Home shopping channels like West Chester, Pennsylvania-based QVC are another road to potential DRTV riches. On the air 24 hours per day, seven days per week--and reaching more than 64 million U.S. households--QVC is always looking for new and innovative products to sell on its show "Big Time With Phyllis George." Unlike videotaped infomercials, "Big Time" is always live, and entrepreneurs who demonstrate their products can speak directly to consumers who call in to the show.

Scott Ellis, a buyer for QVC, says only products with "great demonstration quality" work with the QVC format. Some items sell very well on store shelves, says Ellis. But if you have a product that requires a demonstration to be understood or appreciated--especially if it's a new gadget no one has seen before--QVC may be your best bet.

To get your product on QVC, first call its Vendor Relations department. "You need [to provide] a picture of the item and a good description of what it does," says Ellis. "You need to be creative here because the buyer makes the decision based on this [information.] Spell out exactly why your item is different and better than [the competition's,] and highlight all the benefits your product delivers. We also need to know the wholesale and retail costs of the product."

Ellis says that while Vendor Relations reviews about 500 items per week, only 5 percent actually get selected. "The reason that number is so low is because I often find I've done a similar item [in the past] or that the product we receive isn't yet in production. I can't work with prototypes; I need items I can buy."

But the future is bright for DRTV marketing. As the number of homes with cable and satellite TV receivers continues to rise, entrepreneurs who want to hit the DRTV circuit will find more opportunities (and more viewers) than ever before. With a little marketing savvy and a photogenic product, perhaps you, too, can become a TV star.

So You Wanna Be A TV Star?

Like any other form of advertising, direct-response television (DRTV) does have some drawbacks. Not all products can be successfully advertised through this medium. For this reason, DRTV marketers use the following guidelines to select the most marketable products.

The product should:

  • have the "Aha!" factor--something that makes consumers say "Wow, what a great idea!"
  • be unique, innovative and of good quality;
  • demonstrate well;
  • solve a common problem and be easy to use;
  • appeal to a mass audience;
  • not be currently available to the public; and
  • have an average retail markup of five times its cost--enough of a margin to still make a profit after production and media costs.

And keep the following in mind:

  • You should have at least one prototype of the product to show marketers.
  • If the product is already in production, you should have marketing research data to prove consumer demand for the product.
  • Be prepared to deliver the product to retailers in mass quantities.

Next Step

For more information on DRTV, contact:

  • Electronic Retailing Association, Trade Show Information, Amy Ledoux, (202) 682-2830

Contact Source

Smart Inventions Inc., 2932 Wilshire Blvd., #202, Santa Monica, CA 90403, (310) 264-5412.