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187Chapter 12: Broadcasting Ads on Radio and TV

Products featured in infomercials must have markups high enough to absorb
the cost of creating and airing the infomercial. Most infomercial products are
priced so that when you divide the retail price by your cost of goods, your
result is no less than $3 and usually closer to $5. In other words, a product
that retails for $19.95 should cost the manufacturer somewhere between $4
and $6.

Infomercials are high risk. There is no other way to put it. Experts in the field
warn that the infomercial success rate is as low as one out of four.

The topic of infomercials comes up among small business advertisers in part
because they generate direct and measurable results and in part because the
ads look fairly straightforward and easy to produce. Looks can deceive,
though. As with all other broadcast ads, viewers have been trained to expect
a certain caliber of production value.

The average national infomercial production budget is more than $150,000,
though you can find video production houses that will create your infomer-
cial for a tenth of that amount or less and you can air the program for dollars
per showing on local-market cable channels. Be aware, though, that as you
limit your costs, you also limit your reach and frequency, resulting in fewer
contacts, fewer sales, and probably a proportionately lower return on invest-
ment than the big-budget infomercial advertiser gets.

Big budget or small budget, all infomercials have the following traits in
common:

ߜ They promote products not available through retail channels.
ߜ They present products that are of interest and use to most viewers.
ߜ They feature strong testimonials.
ߜ They show easy-to-demonstrate solutions.
ߜ They offer prices that most viewers feel that they can opt for without

great deliberation.

In creating infomercials, follow these ten rules:

1. Feature the product as king.

2. Solve a viewer problem.

3. Focus on selling, not on entertaining.

4. Use short sentences, short words, and short segments, broken at least
three times during the program by your call to action.

5. Don’t try to be funny.