Orange County Companies Keep Busy Tracking the INFOMERCIAL EXPLOSION : Advertising: Publications based in Tustin and Santa Ana are among those that rank the commercials, offer their observations--and make themselves invaluable to those who call the shots.
From his easy chair or the treadmill nearby, John Kogler watches half a dozen televisions at once, all showing infomercials from VCRs in fast-play mode--and can spot changes from previous versions in any of those 30-minute commercials.
He and his wife, Clare, also view new infomercials in so-called real time, the same half hour it takes anyone to watch them, and they put their observations in a weekly report dubbed the Green Sheet, because of the color of its hard-to-photocopy pages.
The Koglers have a library of infomercials dating back to 1984, an invaluable resource that also helps their Tustin-based company, Jordan Whitney Inc., in its consulting business.
They know, for example, what helped Victoria Jackson sell nearly $200 million worth of makeup since 1989. They know why Ron Popeil sells so many food dehydrators and pasta machines. They can surmise why Dolly Parton’s first Revlon makeup infomercial, for which the singer-actress reportedly was paid $2 million, bombed.
“The Dolly Parton infomercial is beautiful looking,” Clare Kogler said. “But this is a sales tool, and that’s what a lot of people don’t understand. This is not general advertising. This is selling. It’s getting people to walk over there and pick up their phone and dial the number. If it doesn’t do that, it doesn’t matter how pretty it is.”
The Koglers are part of a small coterie of publishers who spend their time dissecting infomercials, which are part of the boom in direct response television that also includes home shopping channels.
Industry insiders pay attention to what the Koglers and others, like Steven Dworman of Infomercial Marketing Report in Los Angeles, have to say.
“Each one of these people wields a lot of clout,” said Greg Renker, chairman of Guthy-Renker Corp. His infomercial production company, based in Palm Desert, counts among its infomercial successes Principal Secret skin care with Victoria Principal, Personal Power! with self-improvement guru Anthony Robbins and Perfect Smile tooth whitener with TV celebrity Vanna White.
“What they print is very important,” Renker said, “because they are the disseminators of information in the industry.”
Jordan Whitney’s Green Sheet, Dworman’s newsletter, ResponseTV magazine in Santa Ana and Infomercial Monitoring Service outside Philadelphia have become indispensable reading for a Hollywood-type industry afraid to miss any tidbit of fact or scuttlebutt.
The reason is simple: profits. The industry sold about $900 million in goods and services on television last year and drove six times that amount in store sales. The cost of air time was about $400 million, according to industry estimates.
TV sales are expected to top $1 billion this year and are projected to go to $5 billion in a few years, even though the cost of air time is soaring and cheaper radio time is beckoning advertisers.
Infomercial hits also do well on the shopping channels. Actress Victoria Principal sold $9,375 worth of her skin-care products for every minute of her four hours of appearances on QVC last summer. Ron Popeil sold 31,000 Ronco Food Dehydrators in less than 90 minutes on QVC last fall. The Home Shopping Network and QVC each sold a total of more than $1 billion worth of goods and services last year.
What makes the profits in the infomercial industry even more amazing is that most of the program-length commercials fail miserably. The Koglers estimate that seven out of eight flop; Renker puts it at 10 of 11. The failures are a big reason why the trade publications have become gospel.
“These reports provide me with ammunition. And with production costs averaging about $300,000, I need all the artillery I can get in determining what to produce,” Renker said. “They don’t help me make a good decision, but they help me avoid making bad ones.”
The publications are aimed at those who work or want to work in an industry many still liken to the snake-oil business. Indeed, they have helped to legitimize the industry by spotlighting shady practices and deceptive pitches.
Lousy products, those in the trade say, not only give the industry a bad image but hurt retail sales. And the hottest segment of the infomercial world is the emergence of name brands seeking a new way to sell in stores.
“Retail is such a big component because most people still won’t buy from television, but they’ll buy a product they saw on television from Costco,” John Kogler said.
For every Popeil Pasta Maker sold on television, six are sold in stores. So retail chains are looking for products they can promote with the slogan, “As seen on TV.”
“Major marketers such as Sears, Philips Electronics, Braun, Mattel, Revlon, Bank of America and others are utilizing the infomercial to demonstrate and explain features and benefits,” Jack Schember wrote in his editor’s column in ResponseTV, an easy-reading four-color magazine.
His and the other publications essentially do research for the industry, and the industry pays dearly.
The Green Sheet--its real name is Direct Response Television Monitoring Report--publishes both weekly and monthly and has 200 customers worldwide. The price: $13,000 a year for the weekly, $3,000 a year for the monthly. Overseas subscribers pay more.
The monthly Infomercial Monitoring Service report, which charts infomercials shown only on cable stations and describes new programs with little editorializing, has about 100 customers paying $3,000 a year each.
Dworman’s monthly newsletter, a potpourri of news, rumors and insider moves, goes to about 1,000 readers who pay $395 each annually. ResponseTV, which uses advertising to help cover production costs, is the least expensive at $40 a year and goes to 16,000 subscribers.
Many producers, media buyers and other industry executives subscribe to all four.
“Do I enjoy reading these publications? No. Do I need to read them? Yes,” said Lenny Lieberman, a producer based in San Francisco. “There’s a perception that things are moving so fast that you can’t afford to miss anything that’s written about the industry.”
Whether all the publications can survive is a “hot issue,” said Helene Blake, executive director of the National Infomercial Marketing Assn. in Washington. Her trade group puts out a newsletter that just skirts competing directly with the publications, which are NIMA members. But she sees no waning of reader interest.
“There is such a thirst for knowledge about the industry,” Blake said. “All of these publications are widely read. If you don’t read one, you might miss something.”
All four publications operate on small budgets--the Koglers and Dworman from their homes. Their effort is a testament as much to the modern tools available to small business as to the phenomenal growth of the infomercial industry. The Green Sheet, in fact, is the quintessential modern-day mom-and-pop business.
The Koglers have been watching and taping infomercials ever since the program-length commercials first invaded households 10 years ago with their toll-free phone numbers urging viewers to call and buy kitchen knives, diet aids and assorted other products not sold in stores.
John Kogler was a real estate lawyer with a prominent firm, and Clare Kogler was a speech therapist. When the couple’s twins were born 12 years ago, Clare decided to stay home and start a direct marketing company, placing advertisements in small newspapers across the nation for a line of cosmetics.
The Koglers called the company Jordan Whitney--their middle names. In 1985, a year after federal regulations on TV commercials were eased, John resigned from his law firm and joined Clare in the venture full time. They wrote scripts and produced several infomercials; when larger producers moved in, the Koglers moved on to consulting.
By the end of the decade, they had a large stash of infomercial videotapes, and John was advising a friend in New York about the newest INs, as the Koglers call infomercials. The friend offered to pay for a weekly handwritten report, and John began mailing copies to four customers in December, 1990. Within a year, he was compiling the data by computer.
The Koglers now have a network of aides who record shows nationwide, then ship the tapes to the Koglers’ home for review.
The Green Sheet contains details of INs, the couple’s opinions of them, plus newsy items gleaned from other publications and from conversations with people in the industry. It also ranks infomercials by the number of times they air, and the industry scans those numbers religiously.
Without advertising, the Jordan Whitney report has grown to become perhaps the most respected of the four publications.
“It is really a Bible source for making a green-light decision on producing infomercials,” Renker said.
John Ripper, president of Tyee Productions in Portland, Ore., subscribes to all four publications but said that the Green Sheet is essential because it provides the most complete list of infomercials, evaluations of their strengths and weaknesses, and the rankings.
“I need to be current on the new shows and their success or failure,” Ripper said.
Publisher Dworman doesn’t worry about rankings. He deals instead in the news he can generate from talks with producers, manufacturers, infomercial celebrities and others in the industry.
A UCLA film school graduate, Dworman wrote scripts for some episodes of such TV shows as “Happy Days,” but in the mid-1980s became fascinated with infomercials and direct response TV.
“In 1990, I said there was such a lack of information about the industry that I was going to start a newsletter,” he said.
His Infomercial Marketing Report is chatty and opinionated. “Dworman usually has the inside scoop,” Renker said.
In the January issue, for instance, Dworman pointed out that manufacturers and infomercial producers were making more deals with Home Shopping Network than with QVC because QVC had a backlog of products submitted for airing.
“In many cases, HSN is ordering more product than QVC and giving better guarantees or commitments,” wrote Dworman, who works out of his home on the westside of Los Angeles. “It’s obvious that HSN does not intend to live in QVC’s or anyone else’s shadow.”
In contrast to Jordan Whitney and Dworman, ResponseTV is part of a large publishing company called Advanstar Communications. The Irvine firm prints five dozen trade journals and started ResponseTV, which is based in Santa Ana, in mid-1992.
Schember, the magazine’s editor, has three staff writers and a number of contributors. Jordan Whitney supplies him with monthly rankings of the top 10 infomercials and top 10 spots--short commercials that sell through a toll-free phone number.
The fourth widely circulated publication takes a different approach. Infomercial Monitoring Service avoids evaluations, gossip and other editorializing.
From an office in Broomall, Pa., west of Philadelphia, owner Sam Catanese and seven employees publish the report, which is billed as a scientific summary on infomercials running on cable stations nationwide.
“We do real-time monitoring and taped verification,” Catanese said. “We’re not editorializing, just providing the facts.”
Infomercial Monitoring Service tracks about 1,000 infomercials a week on 20 national cable stations and prints a TV Guide-like grid showing what infomercials aired during which time slots on which channels. It also ranks the infomercials by the frequency of airings on cable channels.
But by concentrating only on cable stations, producers and others say, Catanese is missing most of the shows--about 70% of all infomercials now air on broadcast stations.
Catanese may soon get more exposure for his company. Electronic Retailing, a four-color monthly magazine set to debut in mid-April, is negotiating with him to use Infomercial Monitoring Service rankings, editor Kathy St. Louis said.
Electronic Retailing, based in Van Nuys, expects to cover advertising, marketing and retailing associated with TV programs and the much-ballyhooed information superhighway.
Its publisher and the others recognize that retail shopping is changing dramatically. Interactive television, for instance, could allow customers to order products they see as a camera pans through a shopping mall.
“This whole shopping revolution coincides with some lifestyle and economic changes,” John Kogler said.
“People are working harder, often both adults in a family. They don’t have time to shop. Two, it’s obviously not a pleasant experience anymore--the clerks are less well-trained, the merchandise is not as available in the sizes and quantities. And three, it’s not safe in many places anymore.”
The Infomercial Blitz
Channel surfers find it increasingly hard to avoid exposure to advertising’s popular infomercials. Here are some facts on the infomercial explosion: Broadcast, and They Will Buy Infomercial product sales have nearly tripled since 1988. Gross sales in millions: 1993: 900 (Estimate)
Air Time Is Money Infomercials are a revenue boon to broadcast and cable channels alike. In 1993, the total revenue for both types of channels was $400 million. * Broadcast channels: $240 million
* Cable channels: $160 million
Infomercial Facts * Average length: 30 minutes * Average life span: 6-12 months; lukewarm consumer response merits an immediate pull. * Average production cost: $250,000-$400,000
Trolling the Airwaves Celebrity salespeople are a proven consumer lure. These pitch makers are veterans, having been touting products on the air from six months (Vanna White) to five years (Anthony Robbins). Estimated sales in millions:
Host Product Producer Sales Richard Simmons Weight-loss plan American Telecast $250+ Anthony Robbins Motivational tapes Guthy-Renker Corp. 120 Victoria Jackson Cosmetics American Telecast 175 The Juiceman Juicers Trillium Health Products 150 Victoria Principal Cosmetics Guthy-Renker Corp. 60 Vanna White Tooth whitener Guthy-Renker Corp. 20
Who Watches, Buys
A Hot Commodity Air time is brokered by media-buying agencies. Prices vary widely among markets and time slots. Here is the range of approximate charges for 30 minutes of non-prime time* in the Los Angeles-Orange County market: Local cable access: $200-$1,000 Local broadcast station: $13,000-$20,000 Network-affiliated broadcast station: $25,000 International cable superstation: $40,000 * Prime time is 7-11 p.m.
Viewers Into Buyers A TV Guide survey showed that most respondents had watched at least one infomercial. The results: * Watched an infomercial: 72% * Purchased a product featured in an infomercial: 29% * Purchased by telephone: 73% * Purchased in a retail store: 27% * More likely to watch if ad has celebrity: 34%
The Infomercial Shopper Who are the people who dial the 800 numbers to reach the operators standing by? A demographic breakdown of the average infomercial shopper: Marital status Married: 59% Single: 25% Divorced: 11% Widowed: 5%
Gender Female: 69% Male: 31%
Age 25 and under: 10% 26-35: 28% 36-45: 31% 46-60: 19% Over 60: 10% Did not respond: 2%
Source: National Infomercial Customer Survey; Researched by JANICE L. JONES / Los Angeles Times