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Guthy-Renker gives the infomercial street cred

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During a TV interview that usually airs during the wee hours, a smiling Sean "P. Diddy" Combs rhapsodizes about a momentous day in his life.

He's not reminiscing about getting his first platinum album. He's not discussing the Bennifer breakup.

He's talking about discovering acne-fighting Proactiv Solution.

"I couldn't be in the public eye with pimples all over my face," he declares in an "Entertainment Tonight"-style interview with Vanessa Williams that's part of the latest infomercial for Proactiv. He adds later: "I had to make sure that my sexy was all the way right."

Alicia Keys and Jessica Simpson also open up to Ms. Williams about their pore challenges.

With its A-list celebrities and high production values, the Proactiv infomercial is light years from the industry's barking pitchman roots. But it also points toward a new frontier for marketers using infomercials, including Pfizer, Microsoft's MSNTV2 and Voom. In all, $900 million was spent on infomercials last year.

The Proactiv ad suggests how some infomercials are morphing into the latest thing in marketing: branded entertainment. Indeed, industry executives call infomercials "shows." As companies struggle to reach consumers in a fragmented media environment-and as the lines between advertising and entertainment blur-more marketers are expected to create infomercials that consumers might watch rather than TiVo through.

`THE NEXT LEVEL'

Infomercials can "take product placement ... to the next level," said Lynn Fantom, CEO of Interpublic Group of Cos.' ID Media, New York. She "absolutely" expects more marketers to embrace the vehicle-just as they have shorter-form infomercials.

In February 2004, ID Media surveyed its clients, largely Fortune 1000 advertisers such as American Express, HBO, Johnson & Johnson and Verizon to ask them about media trends. It found an increasing interest in infomercials-or "edu-mercials." Fully 78% thought that a longer-form unit that integrates programming and product sell could be an effective response to ad-skipping. (Examples provided in the survey were a mini-program on healthful lifestyles to support promotion of diabetes drug or content about luxury travel to promote a credit card.)

For the growing movement, credit Guthy-Renker, Palm Desert, Calif., which creates the star-packed ads for Proactiv and other products. While there's been a general-though by no mean uniform-improvement in the quality of infomercials over the years, Guthy more than any other firm has shown the creative potential of the form, observers said.

The biggest infomercial company, with more than $1 billion in revenue, about half of that from Proactiv, has distinguished itself with its high production values, smart use of celebrities and meticulous care in making and tweaking ads and offerings.

"They're the Rolls Royce of the industry," said Steve Dworman, author of "$12 Billion of Inside Marketing Secrets."

While the company may be obscure, its infomercials-and the celebrities who appear in them-are widely known. Daisy Fuentes for Winsor Pilates. Cindy Crawford for Meaningful Beauty skin-care system. And, in a reverse movement, Anthony Robbins-who touts the "Get the Edge" self-help CDs-appeared in "Shallow Hal."

Guthy was founded in 1988 by Greg Renker and Bill Guthy, who declined to comment for this story. In the beginning it started shilling get-rich and self help books and tapes, including "Think and Grow Rich." Minnesota Vikings Hall-of-Fame quarterback Fran Tarkenton appeared in those spots. Early on Guthy was involved in the creation of the industry's first trade group, which crafted industry standards. The goal was to fend off regulatory concerns over deceptive practices.

In the mid-1990s the company started to shift to products that would be replenished on a regular basis, a way to ensure ongoing revenue streams as opposed to one-shot offerings, Mr. Dworman said. It built up back-end operations to support that business.

stars get a cut

It also increased its focus on testing to determine what tactics worked best and used increasingly higher caliber celebrities.

Guthy liked celebrities because they caused viewers to stop. Moreover, the celebrities were actually users and champions of the brand. That comes across over the course of the infomercials, lending credibility to the pitch.

Guthy was able to attract stars with remunerative contracts. Generally speaking, major celebrities in infomercials are paid to show up and do the work; they also receive a percentage of sales, some of it guaranteed. The percentage can go as high as 3%, depending on the star. "That's going to be substantial over a period of time," Mr. Dworman said.

As the lines between marketing and entertainment blur, industry executives and observers expect to see more marketers embracing the infomercial.

The rationale is simple: Marketers need to find new ways to reach people as mass media fragment and consumers take more control. With the proliferation of cable networks, infomercials can be an accountable, informative, affordable-and, as Guthy has demonstrated, entertaining-way to reach consumers.

"We have seen in the last year or two much more interest from the Fortune 1000 companies," said Dan Danielson, co-CEO of Mercury Media, Santa Monica, Calif., a direct-response media buying and planning firm. "One reason they're interested is that it's a measurable medium."

And as the success of reality shows like "The Apprentice" demonstrate, consumers are willing to be entertained as they're being pitched to. Lucian James, president of the marketing consultancy Agenda, said people increasingly accept the overlap between marketing and entertainment. He describes it as a continuum. "It's much more of a sliding scale than it used to be," he said, describing an infomercial as being on "slightly on the other side of the scale from `The Apprentice."'

Meanwhile, entertainment increasingly will drive the "shows" at odd hours. Said Mark Blankenship, president of Havas' Euro RSCG 4D, Chicago: Infomercials are "evolving into entertainment. With more and more channels, the more engaging you are ...the more chance you have to get a sale."

Name game

Celebrities used by Guthy include Cindy Crawford, Sean "P. Diddy" Combs and Jessica Simpson. Guthy likes celebrities because they get viewers to stop

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