Has the Oprah Effect Diminished?
Join us at Entrepreneur magazine's Growth Conference, Dec. 15 in Long Beach, Calif. for a day of fresh ideas, business mentoring and networking. Register here for exclusive pricing, available only for a limited time.
It's that time of year again: Oprah has rolled out the red carpet for her "Favorite Things" list, featuring everything from a $225 Nest holiday candle to truffle risotto and Himalayan salt shot glasses.
But instead of an audience packed full of teary-eyed, screaming fans, she unveiled the 60-item list in O, The Oprah Magazine.
This is the second year Lady O has chosen to do her big reveal in the magazine format – a move that came after Oprah bowed out of her 25-year-old daytime talk show in 2011.
So instead of seeing her staff dressed in elf costumes, parading down aisles and handing audience members free luxury sweaters, delectable treats, vouchers for vacations, you name it, fans can view Oprah's favorites in a glossy magazine, on a desktop computer or a mobile device and purchase the products.
Obviously, the old format was a goldmine for the audience that got to take home thousands of dollars worth of free swag. But brands also felt the Oprah love, many seeing a huge spike in sales in a phenomenon that became known as the Oprah Effect.
For instance, in 2002 New York City-based Carol's Daughter was featured on the Oprah show. Before the appearance the natural hair care line was generating $2 million in yearly revenue and seeing on average 200 website clicks a day. When Carol's Daughter made its debut on Oprah, the site crashed after having 17,000 visitors in 10 seconds. Fortunately, it recovered and next year's revenue skyrocketed to $20 million. Today, the company is still going strong and is available at Macy's, Sephora and other retailers.
Another business to feel the impact of the Oprah Effect was Fort Lauderdale, Fla-based We Take the Cake. Lori Karmel purchased the mail-order cake business in 2002 and didn’t turn a profit until 2004 -- a $19 profit, mind you. Struggling to survive and on the brink of bankruptcy, the business's bad luck turned around when its key lime bundt cake made the cut for Oprah's Favorite Things list. The company sold 10,000 cakes after the show aired, catapulting it into a million dollar business. Today, We Take the Cake is still thriving and ships across the world.
With her television show off the air and businesses just being showcased in the magazine, are companies going to see the same impact or has Oprah's effect diminished?
"The Oprah Effect isn't what it used it be. What made Oprah was television," says Laura Ries, a marketing strategist. Ries explains Oprah's connection with the audience was what made her such a strong and credible influence over Americans, something a magazine article can't do. "Oprah is still a force in the world, she just can’t create a tsunami effect for a company she 'likes' like she used to."
That lost relationship coupled with the fact there just aren't as many eyeballs viewing her Favorite Things has made the Oprah magic a little less, well, magical.
Single-copy sales of O Magazine have decreased more than 30 percent from December 2010 and December 2012, according to an audited report by Alliance for Audited Media, a nonprofit industry organization. This dip in sales has resulted in ad revenue also shrinking.
Related: 5 Lessons From Oprah's 'Startup'
In the third quarter of 2013, O's ad dollars were $34.1 million, down 22.2 percent from $43.8 million the same time last year, according to The Association of Magazine Media, a non-profit industry association for multi-platform magazine companies. The company also saw fewer ad pages, going from 276.9 in the third quarter of 2012 to 212.9 in the third quarter of 2013.
It isn't all bad for Lady O. Average circulation for a digital monthly subscription was at 99,412 in the first half of 2013, making it the 15th biggest U.S. digital replica circulation.
For businesses making the coveted list, the extra exposure has helped bolster sales. But unlike the extravaganza of Oprah's Favorite List appearing on a national network, a show seen by millions worldwide, the businesses appearing in the publication are finding the experience to be more manageable, but nonetheless exciting.
For New York City-based Brooklyn Piggies, a small business specializing in serving pigs in a blanket, being featured on Oprah's 2012 Favorite Things helped the newly launched company get on the map. Only a month old when they were scouted by Oprah's team, Brooklyn Piggies had to quickly launch an online store -- an infrastructure they weren't planning to integrate until later -- to prepare for the demand.
"The experience led to incredible nationwide exposure and a broader audience. I saw a major spike in sales when the company appeared on the list," says co-founder Missy Koo. "We were excited by the opportunity and adjusted our operating plan to accommodate the 'Oprah Effect.'"
Corkcicle, an Orlando, Fla.-based company that specializes in wine chiller products, was doing well before Oprah took an interest in it for the 2012's Favorite Things list. After being featured, the company saw a marked increase in orders and the coverage provided a boost in growth, helping turn a niche brand into a big business. An extra bonus was the continued exposure, as outlets piggybacked off the list's notoriety.
"Because it is so widely regarded, you get that initial coverage but there are also so many news outlets that want to write about Corkcicle being featured on Oprah's list," says co-founder Stephen Bruner. "Whether it’s a newspaper, a blog or a television station, like Good Morning America, you get that snowball effect."
In 2007, baker Sam Godfrey's cupcakes were featured on Oprah's daytime television show for the Favorite Things episode. His company, Perfect Endings, had enormous success with cupcakes shipping all over the world and elevating the brand to the next level. This time around, Godfrey's $79 Present Cake is being showcased for the 2013 list. While grateful to make the list again, it is too early to gauge how it will affect business.
"It is too soon to tell. Obviously, with a television platform the reaction is so immediate and vast," says Godfrey. "I imagine it won't be the same. Yet, I won't be surprised that it will be very well-received."
But for Godfrey, sales aren't everything.
"The business impact is secondary. I have great love, admiration and respect for Oprah," says Godfrey. "If we get only one order, we would be blessed."