Sunday, December 05, 1999

Infomercials surf Web terrain

E-commerce begins with TV viewers

The Cincinnati Enquirer

        The increasing cost of television air time has some infomercial companies looking for innovative ways to boost sales of their products.

        And, increasingly, they're turning to the World Wide Web.

        One industry leader, Cincinnati native Kevin Harrington, has found a way to boost sales and combat those rising costs by combining infomercials with e-commerce.

        Mr. Harrington, chief executive officer of Reliant Interactive Media Corp., a company he founded last December in Clearwater, Fla., is at the forefront of a movement among companies that produce infomercials that advertise Web sites.

        The goal is to get people to buy the product on the television screen, then drive them to a Web site, where they can buy a host of other products. The hope is that buyers will return to the Web site time and time again to make more purchases.

        According to Response TV Magazine, the average cost in 1996 for a ne-half hour block of time to air an infomercial was about $790. Now, a one-half hour block of time costs about $890.

Pioneering expansion
        Combining infomercials with Web sites to advertise products is a revolutionary idea, said Andrew Kraft, executive director of the Association of Internet Professionals. “Using television to drive traffic to Web sites is a fairly recent phenomenon, and Kevin (Harrington) is one of the pioneers there. There are very few players using TV to drive customers to the Web for purchasing things through e-commerce,” he said.

        David Nagel, editor-in-chief of Response TV Magazine, said incorporating Web sites into infomercials offers an advantage to consumers.

        “Giving consumers options for purchasing products basically strengthens your ability to reach them and offer them the most comfortable way to shop,” he said.

        In one of his company's most recent ventures, Mr. Harrington formed a partnership with Systemax, a catalog company that sells computers and computer parts and accessories. Systemax will provide all of the inventory and take and ship orders, then provide the technical support to the customer after the sale. Reliant will do all of the marketing of the product, including producing the company's infomercial, which will advertise the company's products and Web site.

        “We're going to be using the infomercial to drive an e-commerce site that sells computers and computer accessories,” Mr. Harrington said. The infomercial will run in 11 countries worldwide.

Sites increase revenue
        What makes Reliant's deal with Systemax so unique is that the Web site is a way to keep customers coming back for upgrades, accessories and other products.

        It's a way to turn a one-time buyer into a lifelong customer, Mr. Harrington said.

        “All of us have come to realize in the last two years that if you put a Web address inside the show, you're going to drive sales,” he said.

        Usually, Mr. Harrington said, the company will take a product, develop an infomercial for it and then “hit it hard for a year or two.”

        “We sell a bunch, make some money and move onto the next one.”

        Mr. Harrington got his start in Cincinnati in 1984, the same year that the Federal Communications Commission deregulated the television industry. Up until that point, a broadcast station could not air more than seven minutes of advertising in a half-hour of programming. He approached a local cable company about buying half-hour slots of air time to advertise and sell products. The cable company would get a cut of the profits from anything Mr. Harrington sold.

        The project was a success, and in 1988, Mr. Harrington formed a company in Philadelphia called Quantum, which specialized in producing infomercials. In 1991, the company merged with National Media Corp., now called E4L Inc., a publicly traded company.

Viewing adds to sales
        Mr. Harrington was the company's president until 1994, when he entered a joint venture with the Home Shop ping Network Direct, the arm of the Home Shopping Network that produced infomercials and marketed products worldwide. Mr. Harrington took the Home Shopping Network's best-selling products, developed infomercials for them and aired them on television stations all day long and in countries all over the globe.

        For example, Tony Little's Ab Isolator, which sold about 20,000 units a month while it was with the Home Shopping Network alone, sold 3.5 million units in two years after Mr. Harrington developed an infomercial for it which was broadcast worldwide.

        Mr. Harrington's contract with the Home Shopping Network Direct expired last December, and that's when Mr. Harrington decided he would begin Reliant Interactive Media Corp. Reliant was a company formed by investors in 1984. It was a shell that remained dormant until last year, when the company acquired Mr. Harrington and the name Reliant Interactive Media Corp.

        Joe Cavaretta, vice president of the Electronic Retailing Association, said that although using infomercials to drive traffic to Internet sites is an idea still in its infancy, companies are already seeing positive results.

        Infomercials can also significantly drive the sales of complicated or complex products at retail stores, Mr. Cavaretta said. For every product sold successfully through an infomercial, an average of four or more will be sold on the retail shelves, he said. People become more familiar with a product on an infomercial, then will more likely buy it when they see it in the store.

        Add a Web site to the infomercial, and companies can experience another 1 percent to 6 percent increase or higher in sales - a large increase for a company selling millions of products.

Internet expands
        And that number should continue to grow. According to Veronis, Suhler & Associates' 1998 Communications Industry Forecast, in 1991, U.S. adults spent an average 1 hour a year on the Internet. In 1998, adults spent an average 35 hours on the Internet, and by 2002, it is estimated that American adults will spend 49 hours a year accessing the Internet — more than triple the time estimated for watching movies in theaters.

        Still, Mr. Harrington doesn't worry that advertising on the Internet will replace infomercials.

        “As long as there's TV channels, there will always be infomercials,” he said. In the future, people might be viewing infomercials on the Internet, he said.

        “As people get more sophisticated, our infomercials will have a second place to run. Infomercials will be incorporated in the Internet,” he said.


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