Early in the industry’s development, one could make millions with a hit product if enough people picked up the phone. Trailblazers built fortunes fast betting on the relatively small-stakes game of infomercials; with television inventory cheap and plentiful, taking the pitch directly to the end user paid off. Based solely on the merits of the item and its creative, people would or wouldn’t buy a product over the phone and have it shipped to their homes.
As the industry matured and earned greater legitimacy in the eyes of consumers, however, DRTV became more like brand advertising—a way to build the buzz surrounding a product and drive sales in other channels. And as much as the Web and mobile have sapped sales from brick-and-mortar retailers, retail is still the easiest place for consumers to pick up a product.
“If the product is selling on TV, the same product should sell at retail. The consumer is the ultimate focus group; if we put something on TV and we don’t get response, we don’t take it to retail at all.”
“Retail is not an option anymore,” says Andy Khubani, CEO of Wayne, N.J.-based IdeaVillage Products Corp., the marketers behind a stable of DR hits such as Stompeez light-up slippers. “We found early on that only 8 percent of viewers would purchase the product on TV, but that the media was creating tremendous consumer awareness. Retail is now the Holy Grail.”
Khubani was an early developer of a drive-to-retail DR strategy. Working with TeleBrands and his brother, A.J. Khubani, in the late 1980s, he got regional retailers such as Caldor and Rose’s to dedicate shelf space to As Seen On TV (ASOTV) products, and then moved on to national retailers such as Target and Walmart. “Over the course of about three or four years, I convinced every major retailer to give it real estate,” he says. “Retail has become very important as it has been harder to sell directly on TV.”
With the potential of an exponential increase in sales, getting a product into retail represents a greater opportunity for reward, but it also carries greater risks for the marketer. “It’s like if you’re sitting at a blackjack table,” says Scott Boilen, CEO of Allstar Products Group, the Hawthorne, N.Y.-based marketer of dozens of popular products including the Snuggie and the Hot Buns hairstyling tool. “If you’re winning, you keep playing.”
Testing the Waters
DRTV, as a result, has increasingly become the ante in that high-stakes game. Marketers will test products on TV for three to six months, but only stage a retail launch for the proven winners. “You just can’t blindly push an item to retail,” Boilen says. “The TV campaign is indicative of consumer demand for the product. We’ll start with straight DR, and it will typically last six months. If the product is selling on TV, the same product should sell at retail. The consumer is the ultimate focus group; if we put something on TV and we don’t get response, we don’t take it to retail at all.”
Predicting what will be a success is not easy. Even big ASOTV companies like Allstar, IdeaVillage, and TeleBrands only take about 10 percent of the products they test on TV to store shelves. Marketers must be ready with large quantities of products and the campaigns to back them up, and every launch is a gamble. “Between inventory, product development, and media support, it’s millions of dollars,” IdeaVillage’s Khubani says. “You have to have the financial wherewithal to support these products, and that was not the case 25 years ago.”
Generally, the fundamentals are the same for a good “traditional” DR product and a drive-to-retail hit: The product must deliver a unique solution to a common problem, and offer great value for the price. Electrical cords that block furniture is a problem that Allstar’s Side Socket solves, for example; the expanding PocketHose is TeleBrands’ economical answer to the common yard work hassle of unspooling and replacing hoses.
There can be subtle differences defined by target market, time of launch, and other factors. “Some products do better in the store than on TV,” says Andy Khubani. “Kids’ items and health and beauty products definitely do better at retail.” Major retailers typically overhaul their offerings twice a year in modules, meaning DR products often launch in January and July. “There’s seasonality for some items,” says A.J. Khubani, CEO of Fairfield, N.J.-based ASOTV originator TeleBrands. “Cookware is better in July; it’s a great springboard to get into the fourth quarter. In January, try something seasonal for summer, like the Pocket Hose.”
But even a great product requires promotion. “While many people feel a spot on the retail shelves is a guarantee of profitability, this is not true,” Boilen says. “The direct response campaign must run significant media and generate response that lets you know the consumer desires the product. Putting a product on the shelves without the proper response or media support will lose money more times that it turns a profit. Retailers have to bring in large quantities of inventory, and the risk is on the marketer.”