http://www.businessweek.com/stories/1992-05-03/the-infomercial-inches-toward-respectability

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The Infomercial Inches Toward Respectability


Marketing

THE INFOMERCIAL INCHES TOWARD RESPECTABILITY

"Were not going to slicers dicers, or banana splicers," says Robert Kennedy, president of Saatchi & Saatchi Advertising Worldwide. His agency is getting into the business of infomercials. And Kennedy is deflecting suggestions that Saatchi will soon be knocking out 30-minute ads that peddle everything from hand-hammered woks to tooth whiteners. But his remark provokes titters from two other Saatchi execs, who concede they still regard infomercials as an oddball relative: faintly embarrassing and best kept out of sight.

Kennedy, though, is dead serious. Last December, he set up a joint venture with the nation's No. 1 infomercial producer, Regal Group. Through the venture, called Hudson Street Partners, Saatchi has started wooing clients to use program-length ads that mix information and entertainment with sales pitches. Among the products it wants to promote are airlines and cars.

What's a top-ranked agency doing in this business? After all, Saatchi is the shop whose "Labor Isn't Working" slogan is credited with helping to topple the British government in 1978. That's a far cry from a garden-variety infomercial of, say, pro-football retiree Fran Tarkenton selling self-improvement tapes between 2 a.m. and 6 a.m. on a cable channel so high up the dial you get a nosebleed searching for it. Worse, even infomercials aren't immune to the recession: Richard E. Kaylor, chairman of Hudson Street Partners, figures total industry revenue slid from $750 million to $700 million in 1991.

BAGGING THE BIGGIES. Yet Kaylor thinks infomercials are on the rebound. He predicts revenue will reach $750 million again this year and top $1 billion by 1993. What's more, the industry is slowly gaining credibility among mainstream marketers: Volvo, Club Med, and General Motors all have recently promoted products with 30-minute commercials. Revenue-starved TV stations are starting to air them at more desirable times. Even IBM executives are pondering them: "The industry is overcoming its earlier reputation as a fringe marketing option," says James C. Reilly, general manager of U.S. marketing at IBM.

Kennedy and others say infomercials are a good solution to rising concerns about the effectiveness of advertising. Even high-quality infomercials cost roughly the same to produce as a 30-second spot--between $375,000 and $500,000--and most air during off-price hours. More important, infomercials offer marketers two things a regular commercial can't: a way to stand out from the cacophony of short spots, and a way to measure results by the number of viewers who call the 800 number usually featured. Makeup artist Victoria Jackson and self-help guru Tony Robbins have used infomercials to build thriving direct-response businesses. Even Presidential hopeful Jerry Brown has used one to make his 800 number a part of the political lexicon.

Now, mainstream marketers are trying to adapt the formula to sell cars and vacation packages. Volvo used an infomercial to promote its safety record to consumers in Southern California, where Japanese and German luxury carmakers dominate. "The story of auto safety is very difficult to do in 30 seconds," says Bob Austin, a spokesman for Volvo Cars of North America. The infomercial features a thorough discussion of Volvo's safety engineering. Toward the end, viewers are invited to dial an 800 number for a brochure with more information. The infomercial generated 20,000 calls, 10,000 fewer than Volvo hoped. Even so, Austin says the carmaker may air the ad next in San Francisco.

Club Med also values infomercials because the company can promote its full range of vacation packages. In its infomercial, which airs on the Arts & Entertainment cable channel, Club Med presents vignettes of actual vacationers at two of its resorts. The infomercial is designed to catch even channel-hoppers. Michael Kubin, president of Club Med Sales Inc., says the sales pitch and 800 number are repeated frequently, so viewers can get the message before they switch to something else. Club Med has received more than 20,000 calls since the infomercial began airing last August.

CRAZY COUSIN. Kubin and others also appreciate that infomercials are no longer consigned to television oblivion. Club Med's spot for example, airs on WOR, a leading New York independent station. Several stations owned by CBS Inc. and NBC Inc. have dropped longtime bans. Kaylor figures only 20 of the nation's 1,200 broadcast stations still refuse them. They're even starting to air infomercials on weekend mornings.

The infomercial business still faces hurdles in its bid for big marketers. While it has buffed its reputation, there are lingering concerns that infomercials seek to deceive by cloaking ads in the guise of programming. Even some proponents say the infomercial business will always be perceived as the crazy cousin of marketing, despite its efforts to police itself. "Some of us don't want to admit we're selling wrinkle cures," says infomercial producer Greg Renker. If Renker and his colleagues can persuade IBM and others to sign on, the infomercial business may find its own miracle cure.Mark Landler in New York


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