A Letter From INPEX® Keynote Speaker John Abdo
Selecting An Infomercial Agency
Hello INPEX® Exhibitors:
Experiencing this years' INPEX® event was sensational. The energy, passion and potential I sensed from all of you is beyond explanation. I know it wasn't easy or convenient for many of you to exhibit. I know it required a lot of courage to make that decision and stay committed to it. But these are characteristics of a true champion, and for that I'm proud of you and applaud your dedication.
During my visit, I was asked many questions, some of which pertained to infomercials. I have plenty to say about infomercials. I've appeared in many of them myself both behind-the-scenes and on-camera. I write them, host them, and manage them once they hit the airwaves. And since I've had my own inventions airing on infomercials since the early 1990's, and consulted many others, I'd like to share a little more in this article.
From conception to airdate--planning, producing, airing and managing an infomercial is a long process that demands an enormous amount of creativity, inventory and media planning, logistic and legal counseling, and financial resources. There's plenty to say about infomercials, too much for one article, so please regard the following as a brief overview on this complex topic so you can attempt to launch your invention through a DRTV [direct-response television] or infomercial campaign.
INFOMERCIALS:
Long-Form [30 minute] infomercials can range in price from $50,000-$250,000 on the low-end to $250,000-$1,000,000 on the higher-end. Short-Form spots [typically 2 minutes or less] can range between $15,000 - $80,000 on the low-end and $80,000 - $150,000 on the high-end. The more you pay doesn't always mean the more products you will sell. In fact, many of us in the infomercial business know people who have spent as much as $1 million for their shows and it tanked, an infomercial term for bombing out or failing.
There are plenty of elements that must be integrated into each show. Most infomercials follow a certain template from product demo to user testimonials, to expert or celebrity endorsements, to order information and special deals, and much more-it's very complicated but beautiful to see once it's fully edited with upbeat music, dynamic product demonstrations and special effects.
Many inventors are thrilled to hear producers telling them that they love their product and believe it will sell in large volumes on TV through an infomercial they produce. But unless that producer is partnering with you-either "no pay for production costs with a percentage of the business" or "raw production costs only, with no markup, and a negotiated backend point [or percentage] system", their risk is low [or nonexistent] because they obtain all their production fees upfront. So if the show tanks you sink and they swim. But an arrangement of full pay-up-front doesn't necessarily mean it's a bad deal. In fact, many inventors and marketing companies who truly believe in their product and have the funds and endurance to keep tweaking the infomercial until they "get it right" would rather pay [in full] for the infomercial upfront so they don't have to deal with writing checks later on and reduce accounting responsibilities. This is just one of the decisions you'll [ultimately] have to make but don't let a producers' enthusiasm for your product be the only deciding factor to have them produce your infomercial. [Tip: Make an intellectual decision, not an emotional one].
There is another big word of caution to be aware of; many video production companies represent themselves as full-blown infomercial agencies but, technically, they're not. These companies [only] produce the infomercial, or aspects of it, and do so for [as stated] a production fee while some agencies may negotiate a backend percentage of the revenues you generate from product sales. If the latter is negotiated; i.e., a percentage of backend sales, then you should request they oblige to several show edits [or tweaks] afterward the first version is produced. Basically what this means is when the season changes--and it does--your product "offer", "price-point", "shipping and handling", etc. may also change. So when it's time to adjust your infomercial you will need a budget for studio or location rental, camera crew, new edits [tweaks], tape stock, duplication, shipping to the networks, etc.
An obvious editing update [or tweak] for fitness and nutritional product infomercials--in addition to the above mentioned reasons-is when testimonials in your User Group register better results in weight and inches lost; like 65 pounds as opposed to the first version of the show were they lost only 32 pounds. In situations like this it's definitely time to consider updating your show because better results from your product could yield more phone calls, orders and revenue, so plan your budget to cover these required extra costs.
BREAKDOWN:
Amongst a long laundry list of "to-do" items, producers or production companies get paid for script writing, set design, graphics, location rentals, talent and expert recruiting, user groups, editing, duplication, and more. It's a lot of work hence the high fees. Typically, a production company will require a certain percentage of the budget paid upon contract approval and before the infomercial process commences while the balance is paid before the final-cut of the show is delivered, or the master tapes are handed over to you.
There are plenty of ways agreements can be structured and the more you know or are willing to invest the better you can negotiate a deal that's win-win for both parties, and what's best for your project. Interestingly enough, if you're new to this business, you won't know who's who so it's best to know each person or party's role and the terms they are working under, check their references and demo reels, and ask a lot of questions on why they believe your product will sell on TV and how they will create a stimulating message that gets the viewing audience to "pick up the phone and call now!"
Of course, everything else in business, conduct your due diligence before making any decisions and know the reality of your project before signing any agreement. Concurrent with your due diligence consult your legal advisors in assisting you in making the right decisions.
As always, I Wish you the VERY Best!
John Abdo
JOHNABDO.com
All Rights Reserved©, Abdo, 2007
