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New Client…wants it all
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I know a guy who does that. Seriously. A several-thousand dollar used car purchase on a whim. He thought he might need an extra car for his daughter, so went to the dealer, found one that looked okay, paid, and drove it home that day. And it’s not like he had ridiculous amounts of disposable income, either.
So I guess it’s not implausible, but is that kind of consumer behavior common? Does the ad create a need, or does it play off of ideas already in a buyer’s head? If someone was already thinking they needed to replace their car, does the screaming panic of the ad push the consumer over the threshold to get out and actually buy a new car?
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Hi,
There are 2 types of TV commercials, namely, Spots, and Infomercials. Spots are 2 minutes or less and are a worthless form of advertising. When a Spot comes on TV the viewer goes to the bathroom or refrigerator or TIVO’s it out and there is no way to buy Spots low enough from any agency to turn a profit through an 800-number. If you wanted to run a Spot for a product you would have to cut a deal with a “Time Bank Broker”–this is a company that trades movies for Spot time. The average cost on any TV station for any Spot, any Time of day is 50 cents per Spot and that same Spot might eventually get sold for as high as $1,500. Time Banks are sold in blocks of $5 million per bank–so unless you are a good talker and want to try to talk a Time BAnker into working with you, you will NEVER turn a prodit on Spot advertising. Don’t waste your time with Per Inquiry TV Spots either–a total waste of time.
The time worth buying is half hour infomercial time. A full half hour costs about 1/10 of what a Spot(2 minutes or less) costs.
The problem is that if you buy infomercial time from an agency they will bid HIGH for that times—usually 20 times what you could actually get it at if you bid low. An agency is not motivated to bid low because their 15% would be low! Your best bet is to partner with an ad agency to air a 30-minute infomercial.
Bill SerGio
Bill SerGio
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[Bill SerGio] “Spots are 2 minutes or less and are a worthless form of advertising.”
Well, that’s a pretty broad and, in my opinion, completely innacurate statement.
I don’t get on a soapbox often, but I will now…
I’ve made a pretty darn decent living directing commercial spots, by this point many many thousands of them, over the past decade…. and 99.99999% of them were :30 spots. We manage to keep all our bills paid, my employees very well compensated and happy… and my clients provided with extremely effective advertising that works for them.
It all depends on what you are trying to sell. We’ve done our share of informercials, too, but they are definitely not my favorite kind of advertising. For one, the production values are typically lower. I know price ranges vary wildly, but if we produce a 30 minute infomercial for, say, $30K (an average guess for our shop), versus $10K for a :30 commercial, we are putting a lot more bucks on the screen per minute for the spot… which usually (although not always) translates into higher production values. Our profit margins are also much greater on spots than on infomercials.
Secondly, although I’m sure this is not true in all areas or for all advertisers, the potential clients that come to us wanting infomercial production tend to fall much more in the “slickster” or huckster categories than do those that come to us for :30 spots. The infomercial clients tend to want us to help them sell used cars, exercise videos, bargain hot tubs, or a variety of gadgets and tchotchkes that when you get right down to it most people don’t need. I’m not deriding them as a client… we take their money and it spends just as well as the other clients… it’s just that we tend to gravitate toward and are happier working for the type of higer-end clients that benefit best from :30 spots.
Although we do work for individual clients, the vast majority of our clients are advertising agencies… we work for probably a dozen or so of the bigger ones in our region. And I would say very few of them if any do much if any infomercial work at all… instead, :30 spots are their stock in trade. And I have say most of them seem to be rolling in the dough from those “worthless” spots.
To broadly characterize television spots as “worthless” is incredibly ill-informed.
T2
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Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com
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Hi,
I agree with you Todd… you can make a great living shooting and directing 30-second spots but that is called “Display Advertising” and not “Direct Response” which is what the other post referred to…
Let me define what I mean by “worthless”–they are worthless bedcause if you pay more than a $1 a spot you will never turn a profit over the cost of the media through an 800-number on a 2-minute spot.
All TV stations price their “Direct Response” Spots at 50% of the price of their “Display Spots.” Large companies like Coke or Pepsi buy these worthless display spots to promote their “brand name.”
If you want to air a direct response spot, then you can’t pay more than $1 for a 2-minute spot on any station, on any day, in any tieslot. Run of schedule spots are worthless as a form of direct response. You must a 2 minute direct response spot AT LEAST 200 times on the same station, on the same day and at the same time before it will pull a single order. You can air direct response spots on a P.I. or Per Inquiry basis with stations but the income is very little.
I AGREE with you that producing or directing DISPLAY SPOTS for companies can be lucrative, but if you want to air a direct response spot with an 800-number then you can’t buy the spots from the station–remember you bid on spot time and you don’t “buy it.”
To make any money with a Direct Response Spot you must cut a deal with a timebank broker and then your spots on ANY station and at any time will cost you about 50 cents each.Since half hour TV time costs about 1/10 of what 30 seconds would cost you, why would any businessman buy anything other than a half hour if they have an 800-number and are trying to sell a product.
You are right when you say that clients with infomercials tend to be “entrepreneur types” and clients who want “spots” are larger corporations…
Bill
Bill SerGio
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Hi,
An ad agemcy would not be in business very long if it sold 2-minute “Direct Response Spots” with an 800 number because their clients would realize immediately that they were not making a profit.
Agencies lect to sell Display Advertising because their clients will never know if the advertsing made any money or not. The agency will present the Nielson numbers and that’s all the executive of a publicly traded cares about–doing his due diligence to verify the media buy. If coke or pepsi ever put an 800-number on any of their Display Spots they would realize that they lost money on every buy!Direct response is nothing like Display Advertising and your comment about “production values” being lower on an infomercial is correct but NOT for the reason you think–the lower the production value the higher the Pull Ratio of the infomercial. A set with a black background will pull FOUR TIMES as many orders as a beatifully lit set with a bookcase and flowers because there is no visual objection to distract the viewer from listening to the sales pitch. I have produced over 140 infomercials for my own products and I own several companies that buy and trade in bulk in half hour infomercial time.
Production companies are used to doing high end productions for clients to please their clients but “good-looking” infomercials rarely work. By work I mean that the show will pull over $4 in TV sales for every $1 of TV time on every station PER DAY–less than that is an unsuccessful infomercial…
Bill SerGio
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If there is one thing I will NOT abide, it’s absolutists:-)
I don’t know what to make of this new argument, however, I have seen plenty of “call this 800 number” spots on my local cable, all of the 30-second nature, scattered through all the channels and playing only once or twice in an hour on any one in particular. 30-second spots, with response needed to order. Yes, many of them are cheesy, others have a bit more production value. Same cable co. runs 30-minute informercials on a couple dedicated channels that I NEVER watch, in fact have deleted many of those channels from my remote.
How does this figure into your assertion?
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Hi,
I don’t see your point? There are a lot of 800-direct response on TV for many reasons. They may be placed through a timebamk broker so they only cost 50 cents each and therefore are profitable at THAT COST! When a client calls an ad agency and asks “How much will it cost to test my commercial?”… the agency will ask, “What it is budget?” and by coincidence whatever the client’s budget is what it costs to test a commercial…. the same is true for what some production companies will they a client when the cllient asks “How much to shoot a commercial?” and the production company asks–what is your budget?
And because you see something on Tv doesn’t mean it is making money!
For example, in the case of display spots, the comapny selling a product in retail must show the retail distributors a media schedule that they have spent so many dollars on spot ads in the area the product is to be sold–that money is a total loss to the company in almost every case.
I have literally shot and aired over 600 SPOTS for my own products and in every case I ran my spots through a deal with a timebanker so my cost per spot was always under $1…
Bill
Bill SerGio
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Bill, I truly am not trying to bait you or anything, but after reading your COW bio I am very curious to see what kind of stuff you’re actually selling and how you sell it. It would help me to understand your assertions on this topic a little better. Clearly, you are moving some product in profitable quantity. But how you are computing the costs and values is not clear to me. Can you point to some actual cases or online examples of the stuff you’re doing?
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I certainly understand the infomercial theory as Bill has laid out…
But to contend that clients like Pepsi and Coke are throwing their money away on “display spots” is an asinine assumption.
(By the way… I’m guessing that is a well-known term in the infomercial world, but despite a couple of decades in the business and 11 years as creative director at my own shop I have never heard the term “display spot.” Thinking I must be crazy I called two Creative Director buds — one at a BIG agency — and they had never heard the term either. Display ads in print, sure, but never heard it in TV. But I will use it in this posting for clarity’s sake.)
Simple fact is that those “display spots” do work, and can work very well if effectively created and placed well. Coke, Pepsi, GM, and a thousand other big advertisers would not be spending billions of dollars a year on them if they didn’t.
Before we moved into a bit more high-end stuff, our little company started by doing price/product “display spots” for grocery store chains throughout the southeast. Yes, those gawd awful spots. Yes, I fully realize they are barely one click above infomercials on the advertising food chain and they certainly never “make the reel,” but they enabled us to start our company and get us to where we are. But the surprising thing about those spots is that they work. Advertise frozen pizzas at a “special price” (which might not be all that special) one week and they might sell 150 cases… as opposed to the usual 10 cases that week. I was honestly amazed to hear reports from the clients and their vendors as to how well they worked. I guess I’m a typical man… I never look at a price in the grocery store, I just put stuff in the basket… and I would never dream of driving across town to save a nickle on a jar of pickles, but apparently plenty of people do.
As for infomercials, outside the office I consider myself an “average viewer” and can’t say that I’ve ever really watched more than a few minutes of one other than for the can’t-look-away factor (“Wow, Chuck Norris’ face sure looks tight”), and never considered buying anything from one (although I was intrigued by the Little Giant ladder, until I learned the price).
But I guess infomercials do work, or they wouldn’t still be around in such mindnumbing droves.
T2
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Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com
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Hi,
I got into the mail order business when I was young and teamed up with a man who owned the remnant space in 13,000 newspapers and magazines. He had signed these contracts to buy all of the unsold ad space back in the 1940s when nobody dreamed what the value would become. His cost for a full page in the New York Times was $4 and $6 for a full page in the National Enquirer. If you paid $50,000 for a page from the Enquirer you would NEVER turn a profit–you might gross $16,000, but if you partnered with me and my partner, we would put up the page and take 50% of the gross of the direct response. The bottom line was that if you wanted to make a profit in print direct response, you did business with my partner–or you could NOT make a profit.
That was my start in mail order where I learn that it was what you paid for ad space that determined if you made a profit.
When I started airing infomercials and spots I realized that what stations and agencies sold spots for was marked up so high that you can’t make a profit so I went to the major time bankers. A time bank is a collection of 30 second to 2 minutes spots with a retail value of $5 million–that is the minimum. When you buy a timebank you pay an average of 50 cents per spot on any station in America and at that price you can make a profit with direct response spots–or you can per enquiry a deal with the timebanker–NOT with the station.
With infomercials it is much more interesting. I own a dozen ad agebcies that bid on half hour time in bulk and I apy from $15 to $150 for any half hour on any broadcast station in America or Canada.
Cable is even more interesting but I won’t go into it here publicly.I make my money by buying half hour time and selling it to ad ahencies or buy airing my own infomercials in that or buying syndicating national TV shows using my half hours.
Because a half hour costs so mucjh less than 30 seconds, it is a business with awesome potential.
I wrote a program that repakces media buyers and automatically bids on half hour time to 176,000 sources of half hour time in my database. There are only 1493 high power broadcast stations but the total number of good sources, not including worthless low power sources, is amazing. No human being could call or email or fax 176,000 sources of media and ask for avails–my software determines how much to bid for each half hour using an artificial intelligence module I wrote that assigns probability densities to each avail.
In this way I can get half hours for less than anybody else…
When you buy a half hour from a station or canle network you can air an infomercial, or an entertainment show or ahybrid of an infomercial and entertainment show. A national half hour that airs in all 50 states and reaches 37 million viewers costs me between $1,000 and $8,000 for teh best half hours NATIONALLY. A 30 second spot with that same time slot can be sold, depending upon the time for literally hundreds of thousands of dollars while the half hours costs less than $8,000.
I don’t sell time to “clients”… I buy it for myself or sell it to ad agencies… A typical half hour I buy in bidding for $15 to $150 will be sold by an agency I might sell it to to their client for over $500 to $5,000 depending on the agency….
I don’t have the patience to deal with clients and my agencies only buy and trade in bulk time packages.
For example, if I syndicate a non-informercial TV series I will paint the side of a truck green and shot it going by–a scene that I will repeat over and over. Then after the TV show or movie is finished–not an infomercial–I can sell out product placement where I insert a logo on the green side of the truck. Product placement is very lucrative….
Bill
Bill SerGio
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