Infomercials: Good, Bad or Ugly?

Let's start with a little quiz to find out how much you know about infomercials:

• Infomercials are a relatively new advertising phenomena.
  
  [ ] Yes [ ] No [ ] Who cares?
• "Infomercial" is a term that relates only to television.
  
  [ ] Yes [ ] No [ ] Who cares?
• Infomercials do not apply to insurance advertising.
  
  [ ] Yes [ ] No [ ] Who cares?
• Infomercials are the advertising method used by hucksters; major corporations would never enter the infomercial arena. [ ] Yes [ ] No [ ] Who cares?
• Infomercials are a very expensive way to advertise.
  
  [ ] Yes [ ] No [ ] Who cares?
• Infomercials are merely a trend that will soon pass away.
  
  [ ] Yes [ ] No [ ] Who cares? 

If you answered "Yes" to any of these questions, you have a lot to learn about infomercials. If you answered "Who cares?", your competitors may be getting ready to reap the benefits. If you answered "No" to all of the questions, congratulations! You're well on your way to attaining "Infomercial Expert" status.

A New Version Of An Old Trick

Many people tend to credit the origin of infomercials to the old, late-night slicer/dicer and Pocket Fisherman commercials. Granted, some tacky infomercials have taken the slicer/dicer format, but the original infomercials began on a higher ground: religion.

Before you haul me off to a padded room, let's define "infomercial."An infomercial is an advertisement for a product or service that has been expanded with information, entertainment, or both to retain the attention of the audience.

In the old days, itinerant preachers would pass the basket after preaching a message that was interspersed with hymn-singing. When radio, and later television, arrived on the scene, preachers began purchasing half-hour or larger blocks of air time to carry their message to a larger audience, replacing the traditional basket with a plea for donations. Profitable? You bet! Many such ministries built huge cathedrals, multi-media production centers, and even their own television stations from the revenues generated by "religious" infomercials. In the meantime, people marketing products and services just rambled along as usual, purchasing 30- and 60-second time slots for their commercials.

For a long time this worked well enough. With only three networks and a limited number of television stations (four networks for radio), only so much advertising time was available. Expensive spot commercials held sway during prime-time hours, and the religious broadcasters helped to fill the late-night and Sunday-morning voids.

Catalysts Of Change: FM & Cable

For decades, these limitations remained unchanged. Cable was a futuristic daydream, and radios capable of receiving FM stations were limited. Then, almost simultaneously, FM became the king of radio, and cable catapulted television into a new age.

The popularization of FM radio more than doubled available commercial broadcast frequencies, and cable brought a 20-fold increase for TV. All this meant a quantum increase in available time for commercials, and broadcast stations scurried to find sources to fill them-sometimes resulting in bargain-basement pricing. Many cable stations charged less for a television spot than the local radio station charged for a radio spot.

In 1984, the final obstacle for infomercials fell when the Federal Trade Commission handed down a decision allowing stations to sell long blocks of advertising time. Existing and budding entrepreneurs were quick to take advantage of the situation by purchasing blocks of time for expanded commercial messages. As this trend began to mature, the content and production values of these commercial messages improved dramatically. Today, it is not unusual for a national infomercial to have a production budget ranging from $500,000 to $2 million. They even have their own awards, equivalent to the Emmy, and commercialspokespersons are assuming "star" status.

From those early get-rich-quick and lose-weight-fast pitches, the infomercial industry has grown to include sponsors ranging from major Fortune 500 corporations to legitimate local businesses to offbeat third-party presidential candidates. More than 90% of television stations now run infomercials-some even running in prime time. It is estimated that more than $1 billion in product sales was generated in 1993 -- triple the 1988 level. The Home Shopping Network (the nation's largest chain owner of television stations) and its competitor QVC are constant grist for the economic mill, as reported by the Wall Street Journal and the business sections of newspapers throughout the world.

What About Insurance?

Don't let the national ballyhoo scare you away from infomercials. They can be a viable way to attract new clients and expand your revenue base.

When you do consider the infomercial form, concentrate on the educational and informational aspects of delivering your message. Don't think like the "Juice Man"; in fact, the old half-hour program of the late Bishop Fulton J. Sheen is a good model for a simple, educational infomercial. Over 30 minutes, Sheen would use a chalkboard, his persuasive voice, and a straightforward manner to bring his message to millions of Americans.

Already some insurance agencies and brokerages are using an infomercial concept, without even being aware of it. Such firms put on topical seminars to solidify their client relationships and attract new clients. They book a conference room and present valuable information to gain more business for their agency. Agency X may sponsor a seminar on retirement planning to attract customers for its financial planning services; Agency Y may conduct a wellness workshop to promote its Health insurance markets. These seminars are nothing more than "live" infomercials with a limited audience. If a camera crew were to videotape the seminar, it could be edited for television viewing. Similarly, an audio technician could adapt the recording for radio.

Other agencies have produced marketing videos or audiotapes to sell their services and expertise to potential clients. Such productions can also be considered infomercials, merely employing a different method of distribution.

Aggressive agents in a number of markets have been airing insurance shows on the radio for years. In some cases, they've purchased the time slot and broadcasted live or pre-recorded shows every week or month. Some talk only about insurance; others accept phone calls from listeners. In some markets, agents don't even buy the time. The stations feel that the topic makes for a viable program and takes on the agent as the on-air broadcaster.

The printed word can also become a venue for infomercials. Newsletters, for example, provide an expanded format for information and selling. Weekly or monthly columns in your local newspapers-even an agency brochure-can all be thought of as printed infomercials.

With all this in mind, let's look at the media you can use for an infomercial to market your agency or brokerage.

Television

This is the first medium that springs to mind, and with it comes visions of significant expense. Luckily, however, that need not be the case.

Newcomers to infomercial advertising on TV should first investigate local cable companies, for two reasons:

• Cable companies are required to provide a local access channel for the community. Time segments are usually available at low cost-sometimes virtually free, if the program is in the public's interest.
• Many local cable companies provide production facilities, personnel, and/or equipment to produce your program. (Some require that you take a training course in the equipment's operation first.)

For these reasons, cable is the perfect start for an agency or brokerage interested in pursuing television infomercials. If it is successful, you can expand your horizons and your budget. If it does not pan out, it will have been a valuable educational experience and a low-cost testing ground.

Although normally a bit more expensive, regular small-market television stations may also be willing to work with you on developing an infomercial- particularly if it can be designed in the public interest, which is easily done for insurance-related topics. For instance, the program can center on providing information on home or workplace safety, health, or financial planning, all the while promoting your agency.

Depending on your resources and the expertise of the station or cable company, the program can be as simple as you (or a spokesperson) talking to the audience. A more elaborate program might include a live audience or several people talking to the camera. Unless you are videotaping a live seminar or presentation, this will take quite a bit more work and a larger budget-but we'll address that later.

Radio

Radio is potentially less expensive and definitely easier. Depending on your local station's preference and your own self-confidence, infomercials can be broadcast live or prerecorded. The advantage of prerecording is that the program can be edited before airing. Its disadvantage is that the recording and editing may cost a bit, but not necessarily an excessive amount.

As with television, your best bet is to work with the local radio station. It often provides a production studio for prerecording, and may make staff available to help edit and add in music.

Note on music: Radio (and most television) stations pay a blanket fee to ASCAP or BMI for the right to broadcast music. They can provide music from their libraries for use in your program-either live or pre-recorded. Rights for use will not extend beyond broadcast; in other words, to distribute tape recordings of the program, you will need to pay a rights fee. If in doubt about music rights, IMMS Silver Members can call me at (800) 451-8273.

Alternative Media

Although not normally thought of as infomercials, audio and/or video programs produced to promote your agency or services come under that rubric. The only difference is the method of distribution and a more limited audience. Your agency or brokerage may have already produced a promotional video or audio to mail to selected prospects or play during sales presentations. You may even make it available to local organizations for use in their meetings. True, the audience is minimal and very targeted, but the product is no different from an infomercial. In fact, some agencies contract to air these programs on local cable or radio.

Most companies don't consider using the product both ways. But in reality, an infomercial can be duplicated and used individually to close the sale and then used for broadcasting, too. It may need minor editing and adaptation, but the costs are minimal compared to full-production services.

Producing An Infomercial

Review the articles on Radio Advertising and Television Advertising on your Silver Membership CD-ROM. Both articles provide an in-depth look at how to produce commercials, and most of that information applies to infomercials.

As mentioned, your cable, television, or radio station is the first source of assistance for a production. If you have an advertising agency, it also can provide some help. Be aware, however, that if the advertising agency produces the infomercial for you, the costs could mount quickly. It might be better if the advertising agency refers you to a production company, while perhaps supplying some help on the script. A number of production companies, particularly in metropolitan areas, are beginning to specialize in television infomercial production, while audio-production companies have been doing infomercial-type productions for corporations and businesses for years.

Dealing directly with a production company or broadcast station will save a lot of money. Hiring an independent producer or ad agency only adds another layer of costs, since it takes a mark-up on what is usually jobbed out to a production company. As you gain expertise in infomercials, you may want to become more elaborate in production. This article sticks to the basics. The prime rule is: Pick a good topic and present the material in an interesting way.

All too often we become myopic when it comes to our business. What's interesting to the owner of an insurance agency will probably hold no interest for the general public, or may be too complicated to understand. It helps to talk with your existing clients about what information they think is valuable. For instance, a program detailing risk management for Commercial Property insurance will probably be less likely to succeed than a commercially oriented program reviewing how to plan finances for retirement, or on health and wellness.

First win over the prospect! Once you've made the initial sale, you can proceed to cross-sell other coverages. The main objective is to get prospects on the books.

Buying The Time

Although you will probably purchase the broadcast time once you have completed the production, some advance planning should be done. Whether you're going to use television or radio, check with local stations early to discuss rate schedules and your budget. Knowing in advance the differences in cost between 15-minute, half-hour, and full-hour programs will help you settle on the format you want for your own production.

Also, check on the station's requirements for a time slot. For instance, a 15-minute time slot may mean 14 minutes and 30 seconds; a one-hour slot might actually be 58 minutes of air time, with a break at 29 minutes 30 seconds for the station to insert station identification. All too often, I've seen someone produce a 60-minute program only to return to the editing room to remove two minutes to meet the station's requirements.

Most stations retain the right to review and approve the production before contracting to air it. Although they can classify it as a commercial, they want assurance that its content meets federal, state, and local regulations, and that its quality would not embarrass the station. All this is another good reason to use the station for production assistance.

If your medium of choice is television, test the program first. Schedule it to run several times on different days and times. When negotiating the price, ask for a longer term-commitment rate, promising to commit to X number of dollars if the response is good. Don't lock yourself into a long-term contract until the program is proven-even if you have to pay a higher time rate the first few times.

If you've chosen radio as your infomercial format, a similar negotiating philosophy applies. You have a little more leeway because it's a lot easier and less expensive to change a program quickly if it isn't getting you the results you want. Therefore, you might be more confident in making a longer-term commitment-particularly if you are planning for the broadcast to be live.

Whether you choose radio or television, remember that every rate card is negotiable. Just because a price is printed doesn't mean that the station management won't settle for less-especially if it is bringing in new revenue for the station.

Insurance And Infomercials: A Perfect Relationship

Aside from pushing products, the broadcast industry has indicated that some of the most promising markets for infomercials are:

• Products or services of a complex nature, such as insurance, financial planning, environmental products, mutual funds, real estate, etc.  These categories are difficult to advertise in 30 or 60 seconds. It simply takes longer to explain all the pertinent details. A half-hour program provides the time to give a full explanation of the need, benefits, and values. Moreover, since the infomercial gives the prospect basic information, in-person sales presentations and closing of the sale generally consume less time. Result? More leads + quicker closes = more sales and greater profits.
• Image enhancement. Let's fact it, every national poll seems to rank insurance agents right down there with car salesmen. The extended time of an infomercial will allow you to tell the story of your agency. Viewers can actually get to know you and your staff. They can learn about the education and experience your producers bring to the table to serve their clients. You can inform viewers about awards and community involvement. Take them behind the scenes to meet the clerical, claims, and service staff. Introduce them to current clients; you benefit from the endorsement, and your client benefits from the free publicity gained from the program.
• Joint-venture packages. This is wide-open territory for exploration. Each agency in every community has the ability to develop mutually beneficial relationships with other businesses that can be expanded to infomercials. For instance, a Personal Lines agency might co-venture with a local auto agency or real estate broker. A Commercial Lines agency might work up a workplace-safety program in conjunction with a supplier of safety items for industry. This concept isn't new, just expanded.
• Co-op advertising.  You've been through the fires of gaining approval for company co-op assistance on advertising. You worry that the company requirements will take away from the time for promoting your agency, and vice versa. Infomercials smooth the way by giving everybody enough time to make their required points. A half-hour show can really sell your agency, the product, and the company behind the product. 

We've been seeing the signs for a long time: The future is communications. Infomercials are an ideal way to communicate your story to prospective clients. Ten years from now, they may be one of the primary methods of generating insurance sales. Do you want to get the jump on the competition? Or do you want to wait until everyone else is doing it? The decision is yours!