A softening in the infomercial business has lowered estimated earnings for at least one cable network.
Paxson Communications, a Florida-based company that owns 65 broadcast stations and the PAX
network, said today that its estimated second-quarter revenues would be lower than anticipated. The company had previously forecast an increase of up to high single digits in its cable operation.
The company pointed to fewer infomercials in the second quarter.
“This segment of our business has been affected by an increase in the number of media outlets competing for infomercial
advertising revenue and also by the Federal Trade Commission’s filing of complaints against the marketers of certain electronic abdominal exercise belts,” said Jeff Sagansky, Paxson’s president and
CEO.
Some abdominal exercisers, among the fastest-growing products in the infomercial business, have been the target of Federal Trade Commission investigations.
Experts in the infomercial
business, however, say that a weak economy and lower CPMs factor into the infomercial dynamics and may lead to a stronger industry. In the world of infomercials and their shorter-duration siblings
that make up direct response TV, placement is ever changing.
Traditional rules don’t apply here. Results aren’t tracked quarterly or semi-annually. Orders are tallied overnight. The ads are
designed to drive the consumer to buy after a 30-minute infomercial. (A one- or two-minute spot tucked in other programming might promote a brochure or free video.) Clients – and media buyers and
planners – judge effectiveness by the orders from the toll-free number and zip codes where products are shipped. It’s this data that tells which infomercial drove the consumer to the phone.
“We
call this accountable advertising,” says Greg Sarnow, CEO of Austin, Texas-based Direct Response Academy. Sarnow has more than a decade of experience in direct-response TV and the academy teaches
executives and media planners how to work in the field.
Frank Cannella, CEO of Cannella Response Television Inc. and a veteran of 20 years in the infomercial business, puts it another way.
“If
callers don’t call and order right now, then we haven’t done our jobs. There is no tomorrow,” he says.
Direct-response television’s results-oriented approach requires buyers to adjust placements
daily. Placements that don’t sell enough are dropped.
And placement doesn’t follow the norm either, Sarnow says. Prime-time spots, vast reach and other common media measures aren’t as important as
solid sales. Sarnow also advises not to put a large percentage of money into one airing. “Create a mosaic of kinds of media airings in depth and breadth,” he says.
Direct-response experts say that
what works in traditional media doesn’t work in their field. It’s a different learning curve, Cannella says. Sarnow says it takes as long as two years for a media planner to reach a comfort level in
direct-response TV.
“Infomercials and direct response TV are as diverse now as any market mix,” Sarnow says.
Paxson’s Sagansky predicted the network’s advertising business would return.
“We
expect our infomercial business to improve as traditional networks and network affiliates revert to normal business patterns and as new products are launched,” he said.