Well…you maybe not be able to have those icons of late night TV, (God Bless Billy) but serial entrepreneur Ron Perkins has an idea for you. He and his company, Newport Media, are licensing world-class infomercials to local businesses that are customized for use in their local markets.
Given Ron’s success, as an entrepreneur this is certainly a business model and concept to watch. Ron help create the Franchise Yearbook sold to Entrepreneur, Experts on Video sold to the Video Learning Library, Digital Media Services sold to CNET and most recently Continuing Fitness sold to VQ Action Care. It’s hard to go an hour without seeing the resistance chair he helped popularize on cable TV.
I recently asked Ron to share a little about the infomercial industry, television and his new concept.
Is TV still a powerful medium for selling products?
The viewership is a lot more scattered now because there are so many channels available and the younger audience spends more time on the Internet. However, we've found that TV is still viable, especially for products and services aimed at the over-40 age group because it gives you a great way to tell your story and show your product in action.
Is there a difference on the local level?
The half-hour infomercial format can really set your business apart from competitors and give your company prestige and brand awareness for a low cost on the local level. If you look at most major markets in the U.S., you’ll see businesses that have become the “800 pound gorilla” in their local market because of aggressive television advertising, whether you’re talking about a plumber, a real estate broker, or an attorney.
How does one know they have a product with potential?
When you promote a new product through direct marketing, the good thing about testing on TV is that you'll know pretty quickly whether or not you have a winner. It's a short time cycle between running the ad and gauging the response, so you can go back very quickly and change the show as needed based upon your testing. If you try this with print advertising or direct mail, the testing cycle can be a lot longer. The testing involves playing with a lot of variables, such as the creative of your ad, the station, and time of day that you run the ad and so on.
What does it roughly cost to try an infomercial idea on TV?
If you talk to most production companies, they'll typically quote you an off-the-cuff price per minute to produce a half-hour show, such as "$3,000 per minute", or "$5,000 per minute". That's too simplistic and doesn't account for the wide variation in costs based on the specific script format. A simple product demonstration show, shot in a single location, could be done very economically. In fact, some of the most effective infomercials were done on very modest budgets. But, for the average business person who hires out the writing, production and editing services, the low side of the range still will be a minimum of $30,000 to $40,000 for a decent quality half-hour show. In addition to this production cost, I would budget about $15,000 to $20,000 for media costs to do a test run of a few airings on national network cable.
Once again, is there a difference on the local level?
If you’re considering testing a show within your local market, the media cost will be much less. In fact, most businesspeople are surprised to learn that local infomercial time, even on network affiliate stations, can be purchased for as little as $80 to $300 per half hour for non-prime-time in many local markets. The big obstacle for most small business owners is that they don’t have their own half-hour show produced and ready to run, so they can’t take advantage of the low air-time costs. That’s why I started Newport Media, so we could divide the production cost among a number of business owners, and they just pay a low license fee to the show in their local market.
Should one try an Internet strategy as well?
Definitely. At the very least you should have a basic "selling" site that provides in-depth information about the product or service, a wealth of testimonials, and makes it easy for customers to purchase online, or to contact you for more information. Some TV viewers would rather go to your web site and spend some time studying the offer rather than just calling in when they see the commercial. And I recommend that you always put your phone number on the web site. I'm amazed when I see web sites with only an email contact. Many potential customers simply will not order anything unless there's a phone number and they feel confident that they can call and speak to a real person, and not just an automated voice answering system.
Tell us more about your new business?
Newport Media produces half-hour informational shows that we customize for local businesses, so a business owner can license the exclusive right to run the show within his or her market territory. In this way, they can have their own half-hour infomercial for about 10% of the cost that they would incur if they tried to produce it on their own. And once they have this show, they can use it to take advantage of the low cost of local half-hour media time in their market area. Because we licensees the exclusive use of the show in their market, they have something with very high perceived value, a TV show, that really sets them apart from their competition.
What are the benefits your customers gain from this?
I like to compare it to “fractional” ownership of a private jet, where you only purchase a portion of the plane, since you only need to use it for a few weeks out of the year. With our system, you only need to run the show within your specific broadcast market area, so it’s a way for you to split the production costs of the show with business people in other market areas, who are not your competitors.
Leasing seems to make great sense. What categories are you pursuing?
We focus on shows for businesses with higher-priced services that require in-depth explanation. This includes half-hour shows for real estate agents, cosmetic surgeons, laser eye surgery, reverse mortgage brokers, and other "high-ticket" services. The longer format program allows us to really provide a lot of information and testimonials. With these types of businesses, potential customers usually require a lot of education before they commit to a purchase. So, in essence, the half-hour program enables you to take the 15-minute to 30-minute spiel that you would give on a one-on-one basis when someone walks in you office, and broadcast it to thousands of potential customers.
What advice would you give to someone who wanted to explore this business?
If a business owner wants to license one of our shows to run in his or her market area, I first recommend that they get a good idea of the potential media costs for half-hour air time in their market. They can do this on their own by calling the ad sales departments of local cable television and broadcast stations. Or, more often, we will work with our media buyers to provide this information as a first step.
The key that I stress with potential licensees of our shows is that they need to look at it as part of a larger strategy. For example, if you already advertise with print ads, you can set up your television show to run at the same time each week on a specific local cable channel. You can then promote the TV show in your print ads and on your web site. Another great advantage of having your own half-hour show is that some of the larger cable television companies now offer video on demand, where you pay a flat monthly fee to have the cable company host your show on their server, and their cable subscribers can call up the show from a menu and watch it at any time. For a small business, you can get a lot of mileage out of this because it really establishes your business as a leader in your local market.
What’s the best business move you’ve made?
Probably the best move I’ve made with Newport Media is that I spent a good deal of time with an attorney to set up the license agreement format that I use with clients. This might sound mundane, but because we put a lot of thought into this agreement, it helps make for a smooth relationship with people who license our shows. Our licensees get the exclusive right to run their show within their market for one to three years, so in some respects we’re like their partners and really want to see them succeed with their show.
What’s the worst business move?
In regard to the infomercial licensing business, probably the hardest lesson to learn was that it’s really crucial to have a good media buying company on your side. There is a lot of knowledge and work involved with lining up the local half-hour air time, and so you need to find a media buyer who will respond to your needs quickly. When I started out I didn’t pay much attention to the media buying side because I knew that the air time was out there at a good price, but I ended up using media buyers who took too long to get pricing and availability for media time. So, by the time the client was ready to commit to buying time for their infomercial, much of the time had already been purchased. This made for some angry clients and so now I’m much more “hands on” with managing the media buyer.
The immediate plan focuses on expanding our library of infomercial titles and finding new ways that our licensees can multiply the impact of their show. For example, we're starting to offer video-on-demand strategies for infomercial clients. On many cable networks, we can run 30-second TV commercials with embedded tags so viewers can instantly link to the infomercial for more detailed information. We're also experimenting with new ways customize the shows to include more personalized video messages from the business owner within the program. Our long-term goal is to make our infomercial programming as valuable as possible to our licensees...something they can leverage off of their entire marketing effort, including their print ads, Internet, and direct mail.
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This post was originally published on Smartplanet.com