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Informercials Hit Prospects With A Little Shamwow

Steve Viuker Freelance Writer, Business Insider Recent Posts

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June 26, 2009

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We’ve all seen Billy Mays and his various pitches. It looks like they work pretty well.

Products such as the Shamwow are thriving, thanks to infomercials, also known as direct-response television, or DRTV. Square One Entertainment has sold 48 million Shamwows since November 2007.

Sam Catanese, president and chief executive of Infomercial Monitoring Service Inc., estimates the number of businesses using infomercials has risen 10% in the past year. “Infomercials are 20- to 30-minutes; though shorter spots are lumped together by the viewing public,” he explained.

A main reason is the cost of television ad time has fallen as much as 50% from years past,” he explained. “More people are watching at prime viewing times.”

It’s easy to track the success of the ads because customers make their purchases either through a Web address or a toll-free phone number.

Infomercials are deemed successful when their sales make a profit of at least one dollar for every dollar spent on advertising. Roger Fredericks, founder of Fredericks Golf, uses 30-minute infomercials to sell a set of three instructional golf DVDs for $89.95. In a six month period, $2,700 is sales was made for every $1,000 spent. The DVDs have grossed more than $7 million since 2005.

The Video Professor saves on costs by having the complete marketing and video production departments along with television studio in-house. That is rare. But Catenese says an entrepreneur can film his or her own spot using technology available for half the cost it took 20 years ago.

The start-up cost of a 20-30 minute campaign can range from $150,000 to $500,000 depending on the production quality, time slots and channel. Shorter DRTV ads start at $50,000. Some small businesses that want to save on their advertising costs buy time through Google Inc., which currently allows advertisers to buy television ads on channels provided by Dish Network, NBC Universal and Bloomberg Television.

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