Avoid The 10 Biggest Direct Response TV Mistakes

By Peter Koeppel

If you dream of making millions by marketing your product through infomercials, you’re not alone. Direct response television (DRTV) provides an excellent platform for marketing innovative products directly to consumers, eliciting impulse responses that lead to immediate sales.

According to the Electronic Retailing Association (ERA), 63% of Americans watch some form of DRTV advertising. That’s 136.2 million viewers, nearly 30% of whom have purchased something they saw advertised in an infomercial.

Before you jump into a DRTV campaign to sell your product, however, understand the do’s and don’ts. By avoiding these ten common DRTV marketing mistakes, you have a better chance of making a mint in infomercials without your dream becoming a nightmare.

Common Mistake #1: Not Working With Experienced DRTV Vendors: Only a small percentage of DRTV products are a hit; those that do make it big usually have seasoned experts in all areas of the DRTV marketing process behind them. Make sure your vendors have worked on a wide range of DRTV campaigns, and ask them for case histories so you can evaluate their performance and capabilities. Consider the following:

• Review the TV production company’s commercial reel to assess the quality of their work.

• Experienced DRTV media buyers will know when and where to purchase optimum airtime to reach your target audience. They should have the leverage to access low media rates for the test and rollout of your product/service and software that lets them link up with the telemarketing firms to track and evaluate media performance.

• The best DRTV telemarketing firm can effectively sell, handle large call spikes, provide real-time access to results, and record all calls so you can listen to them and evaluate performance.

• Your fulfillment partner should be able to quickly fulfill orders from the telemarketing firm and through the web, but they should also have a call center to answer customer service calls, provide warehousing, inventory control, tracking, and more.

• Some merchant processors work specifically with the DRTV industry, so find and hire one of these companies to process credit card orders in large numbers. The merchant processor should be connected with your fulfillment house.

Common Mistake #2: Charging Too Little Markup: In order to cover the many costs of a DRTV campaign, such as media, telemarketing, and card processing costs, you need to have a 5:1 or better product-to-cost of goods markup. If you don’t have sufficient markup, your infomercial is less likely to be profitable.

Common Mistake #3: Not Understanding the Breakeven MER and CPO:    If you don’t know the breakeven Media Efficiency Ratio (MER) and Cost Per Order (CPO) for your DRTV program, you will have a difficult time evaluating its success. Prior to launching your media test, you must understand how much return on investment (ROI) you’ll need in order to attain breakeven performance. Your DRTV media buying agency should provide you with worksheets to calculate MER and CPO.

Common Mistake #4: Selling a Product Without Mass Appeal or DRTV Success: The most successful products sold through DRTV have mass appeal. Because TV targets a wide audience, products that appeal to broader demographics do better on DRTV. Also, bear in mind that certain types of goods traditionally work best on DRTV: health and beauty, fitness, household, hardware, lead generation, consumer electronics, and business opportunity materials. If your product doesn’t fit into one of these categories, you have less chance of it becoming a mega-hit through DRTV.

Common Mistake #5: Failing to Utilize Upsells and Continuity Programs: You can generate additional revenue from your DRTV campaign with upsells such as a buy-one-get-one-free deal or by offering customers an additional, related item when they call in to order. With continuity programs, you’ll ship product to the consumer automatically each month, with their permission, so you establish an ongoing revenue stream. If your DRTV program has a continuity component, then your campaign can be less profitable on the front end, since you have ensured an ongoing income stream once the consumer enrolls in the continuity plan. In general, expect 30-40% of consumers to enroll in a continuity program for an average of 3-6 months, depending on the product.

Common Mistake #6: Not Developing Competitive Pricing and a Compelling Offer:            Make sure you price competitively and feature an attention-grabbing offer. If your product costs $29.95 or less, you can generally sell it through a short-form commercial of one to two minutes. Merchandise priced over $29.95 sells most effectively through an infomercial lasting about a half hour. Develop and test several offers to determine which will generate the best results. Giving consumers an incentive to call now, so they can get a discount or a free, related item, will generate more calls and additional revenue.

Common Mistake #7: Not Demonstrating Problem-Solving Products: If you can actually show viewers that your product can solve their problems, DRTV is an excellent marketing format, as you’ll have ample time to demonstrate why it’s worth purchasing. A single ladder that can turn into 25 different ladders right before consumers’ eyes, for example, makes for a perfect infomercial; it’s difficult to resist purchasing products when you can see how they make your life easier, right before your eyes.

Common Mistake #8: Not Understanding a DRTV Media Test: DRTV media tests provide marketers with daily and weekly reports on the viability of successfully selling their product on TV.  The test usually runs over one to two weeks and typically cost $10-$20,000. By analyzing test results, your media company can buy more of what’s working and drop the networks, stations, and time slots that are not working, in order to optimize performance.

Common Mistake #9: Not Utilizing the Internet: The Internet has become a key component of DRTV campaigns with 15-50% of DRTV purchases now occurring online. Fifty percent of people surfing the Internet watch TV at the same time, so it’s easy for them to log onto your website. And approximately 50% of U.S. homes now have a high-speed broadband connection, enabling consumers to easily view videos on the web. Therefore, run your commercial on your professionally-designed website to educate consumers about your product and its benefits and to let them watch it again if they missed part of it on TV.

Common Mistake #10: Failing to Take a DRTV Product to Retail:    Only a small percentage of the DRTV audience will actually purchase your product from the infomercial. Use a DRTV campaign to also drive retail sales and build product awareness. When you have a hit DRTV product, retailers will be anxious to stock it, due to strong consumer demand. Typically, successful DRTV products go to retail 6-12 months after the TV campaign begins or when TV sales begin to drop off. Retail sales can be 5-10 times TV sales, so definitely plan to take the product to mass retail as part of your DRTV campaign. Infomercial sales may begin to drop off once you do, so timing of the transition to retail is critical. Often DRTV marketers take their product to smaller retailers before Wal-Mart, since Wal-Mart will want the lowest price, which will affect profitability.

Operators are standing by to take your order…: Memorable, successful DRTV campaigns require a great deal of research, planning, and hard work. Certainty that your product is right for DRTV and an understanding of all aspects of the process are critical. Hire an experienced team of DRTV professionals, and let them know that you’re as educated about what you don’t want to do as you are about what you do want to do. By avoiding these ten common DRTV marketing mistakes, you exponentially increase your chances of developing the next hit infomercial.

Peter Koeppel is Founder and President of Koeppel Direct, a leader in direct response television media buying, marketing, campaign management and creative strategies. With over 20 years of marketing and advertising experience, Peter has helped Fortune 500 companies, small businesses and entrepreneurs develop marketing campaigns to increase profits.  Peter is a Wharton MBA and improved the media buying strategies and advertising for clients such as The Hair Club for Men, Scholastic, Columbia House, Ben Hogan Golf, H.J. Heinz and DIRECTV.  For more information on his work, visit www.koeppeldirect.com or call 972-732-6110.