Amid Cutbacks, ShamWow Marches On
As Downturn Worsens, DRTV 'Bottom Feeders' Pick Up Slack for Media
BATAVIA, Ohio (AdAge.com) -- The 30-second spot may be an endangered species, even if its wake has proven largely premature and overbooked. And the 30-minute spot also has seen better days. But the 60- and 120-second spots have never been healthier, as direct sellers of everything from gadgets to personal-care products increasingly fill the breach left by an economy in retreat.
Direct response isn't totally recession-proof. Vendors of big-ticket items and continuity plans are taking a hit as consumers clutch their wallets tighter. But suffice it to say Billy Mays and Vince Offer of ShamWow are doing just fine, thank you.
"Over the years, the number of successful infomercial products diminished because the airtime got expensive," said Gerald Bagg, president of Quigley-Simpson, Los Angeles, an independent direct-response shop that ranks as one of the largest, if not the largest, buyers of direct-response media. "Now that airtime is coming down, you're going to see more and more entrepreneurs re-emerging. ... Recession creates inventiveness on the part of most people. ... They've lost jobs, but they now have the opportunity to pursue the dream or the patent they never applied for or the product they thought up but never applied for because they had an adequately paying job."
Not even the credit crunch is likely to crush such dreams. Anthony Sullivan, the DR producer who's helped sell millions of Swivel Sweepers with his British-accented pitches, and who discovered the industry's now-legendary Mr. Mays, said it's possible for an entrepreneur to get a sample run of a product, produce a DRTV ad and buy time in a test market for around $50,000.
Since he -- and Mr. Mays -- work on royalties, the cost can rise substantially if the pitch succeeds. But the numbers put the price of risk and failure well within reach of entrepreneurs relying on personal resources, friends or family rather than banks or venture capital, Mr. Bagg said.
Indeed, DR players can turn up in surprising places, including within the mainstream marketing and media communities. A former package-goods executive who's now a principal in a Web 2.0 start-up is also an investor in a direct-response nutritional supplement. He said the company can make TV ads of decent quality for about $5,000 and air them on late-night cable at $1 per thousand viewers, which makes even those in online display look princely.
Still, not every segment of DRTV is recession-proof just by virtue of a highly accountable business model and the flexibility to make media and copy changes quickly. The recession generally, plus last year's fourth quarter in particular, hit some of the biggest infomercial players -- who sell big-ticket items or continuity plans -- especially hard.
Sales for NutriSystem were down 16.5% to $114.6 million in the fourth quarter. Nautilus' sales of Bowflex products via direct response were down 42% to $36 million -- more even than declines in the company's retail and commercial businesses.
But other mainstays of direct response appear to be holding up well, despite price points that reach well into the three figures, including Video Professor computer-training courses and Rosetta Stone language training, which have seen their web traffic rise 47% and 19%, respectively, the past year, according to Compete.
And some of the classic DRTV purveyors of merchandise at $19.99 and below are doing nicely, or even posting record results. Beyond All-Star Marketing's pop-culture sensation, the Snuggie, which sold 4 million units in the fourth quarter, were some lesser-known yet bigger-selling hits, such as TeleBrands' PedEgg, which sold an astounding 24 million units last year, according to Mr. Sullivan. At $10 a unit and up, it may well have outsold any new personal-care product put out by the package-goods industry last year.
With the possible exception, that is, of the SkinID lineup from Johnson & Johnson's Neutrogena, which isn't commenting on or breaking out sales but is clearly happy with the results. Since the brand's full-scale launch in July, SkinID has logged an average of about 300,000 visitors monthly to its website, skinid.com.
Guthy-Renker's Proactiv, at least at one time a billion-dollar behemoth believed by many in the industry to be the largest DRTV brand, was clearly Neutrogena's target in hard-hitting comparative ads. And those ads hit their mark. Compete data show traffic to proactiv.com down by about the same 300,000 monthly visitors that SkinID gained. Proactiv's overall monthly traffic was down 42%.
That's despite TNS Media Intelligence data showing a $54 million increase in short-form TV advertising to $206.5 million last year for Proactiv, vs. only $22 million spent last year by J&J on Neutrogena in short-form direct-response ads.
Indeed, in a personal-care industry in which sales growth flattened considerably amid price hikes, another of the more surprising successes, albeit on a smaller scale, came from a direct-response player.
Weekly sales of depilatories were up an amazing 91.2% to $13.4 million in the four weeks ended Feb. 22, following a 50.7% increase the previous four weeks, according to Information Resources Inc. data from Deutsche Bank. And the growth has come almost entirely from a new entry by DRTV powerhouse IdeaVillage: Its hand-held exfoliator Smooth Away, which has already logged $10.7 million in sales and become the
No. 4 brand in the category for the entire 52-week period ended Feb. 22. That doesn't count direct sales or sales at Walmart.
Successes aside, not even Mr. Mays is willing to write off the difficulties posed by recession, despite his ebullient on-air personality. He's talking these days about repositioning himself as Billy "Save You Money" Mays, and highlighting the ability of one of his products -- Mighty Putty -- to do that by facilitating do-it-yourself repairs.