Advertising on home-shopping channels or through two-minute infomercials is great if your product has mass appeal, costs $20 to $50, enjoys a four-to-one markup, and is easily explained. If -- and only if. Perhaps those caveats explain the growing interest in half-hour infomercials. It's a format that lets you strut your stuff . . . if you do it right.
No matter how you do it, those 30 minutes don't come cheap. As you might suspect, there's more to making an infomercial than meets the eye. And be forewarned: the industry hit rate is a dismal 10%. We asked Tim Hawthorne, cofounder of the National Infomercial Marketing Association (NIMA) and chairman of Hawthorne Communications, in Fairfield, Iowa, to help us itemize the costs.
Production: $100,000 minimum, $200,000 average. That is what successful infomercial ad agencies charge to write the script, hire talent, and tape your show.
Inbound telemarketing: $2,000 to $5,000. That's how much it costs to retain a telemarketing agency and to prepare its operators to handle your calls. What you're selling had better be worth the $2.50 to $30 you'll pay for each qualified lead or order.
Testing: $10,000 minimum, $25,000 average. You'll need to test lots of time slots and markets to confirm sales projections, the effectiveness of your message, price points, and premiums. Allot two weeks. That will give you enough time to gauge direct sales and gather sales leads.
Media: $50,000/month minimum, $500,000/ month average. If your infomercial tests well, the most profitable times to run it are late nights, mornings, and Saturday and Sunday daytimes.
-- Susan Greco and Robina A. Gangemi
Viewer discretion advised: You can slash up-front costs by hiring an infomercial direct-marketing service. Such services either take a cut of revenues or buy your product wholesale. But you give up control. NIMA (202-962-8342) can refer you to both ad agencies and direct marketers.