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Media Zone: Sharper Image Bankruptcy Is a Warning Call to DRTV: Build Brands Now

1 Aug, 2008 By: Doug Garnett Response

Even If It Means Giving Up Some Short-Term Sales


I was saddened to read about The Sharper Image's bankruptcy and that they have been forced to seek suitors to purchase their assets. Sadness aside, those of us in the DRTV business must take notice of this failure. In its heyday, The Sharper Image had one of three campaigns that the traditional DRTV business considers mega-hits, but poor brand execution ultimately led to business failure.

Doug Garnett
Doug Garnett

 

Salton and the George Foreman Grill

 

After hundreds of millions of dollars in Foreman Grill sales, Salton was combined with Applica in a 2007 merger/sale. Salton's company stock, which had soared to more than $60 per share during the Foreman heyday, ended up priced under $2.

It is over-simplifying to ignore other business realities that may have contributed to this failure. But, while the company's DRTV spending was an amazing strategic advantage, the Foreman infomercial delivered little long-term value.

Salton invested nearly $100 million in media during the Foreman infomercial's run. In return, Salton, the company, received no brand awareness and no long-term value. The primary beneficiary was George Foreman.

 

Sharper Image and the Ionic Breeze

 

Starting in 1998, The Sharper Image created multi-product half-hour shows that sold products from their catalog. The Ionic Breeze air purifier was introduced in a three-product infomercial. This show worked well and built brand value for The Sharper Image catalog while selling great products.

Then, DRTV industry experts advised the company to shift to a single-product format featuring the Ionic Breeze. Why? To get the highest short-term sales — the only thing of value to many old-schoolers in the traditional DRTV industry.

So, The Sharper Image invested massive media budgets selling Ionic Breeze. Much like Salton, that left the company without a needed increase in brand value to support sales. Compounding this error, messaging for the Ionic Breeze didn't support The Sharper Image's core brand values.

Again, other business realities certainly made The Sharper Image's life difficult. At the same time, its massive media spending produced little long-term value. If The Sharper Image had embraced its position as a catalog brand, its shows could have built brand value by returning to their original plan.

 

RotoZip Tools

 

This story starts like the first two. A classic "yell-and-sell" infomercial drove exceptional short-term sales leading to excellent retail distribution. But RotoZip was unable to leverage this into long-term success. A few years ago, it was quietly sold to Bosch.

What should the RotoZip team have done? There were three key choices the company should have made:

  • 1. Execute advertising to create a RotoZip "brand," not just sell RotoZips
  • 2. Reduce media spending to extend the life of the product line
  • 3. Create a second product line that would be easier to sell because it benefited from the established brand

 

 

Lessons

 

The sad truth is that these companies made a smart choice in selecting DRTV. One can only imagine what long-term brand power $100 million in media should have brought these businesses. If you're approaching DRTV for the first time, here are two recommendations:
› Insist on a campaign that builds brand while selling product. You can do both — and you should. To maintain high long-term media budgets, you need sales from TV to underwrite media spending. And, you must have the discipline to make difficult choices to build long-term brand value.
› Be careful choosing vendors. There are a wide variety of "agencies" in DRTV with long lists of brand clients. Unfortunately, most are production companies or media buyers who take on the trappings of an agency. Clients need agencies that build brand value.

Doug Garnett is founder and president of Atomic Direct, an advertising agency specializing in brands, consumer strategy, infomercials and driving sales with television. He is a member of the Response Editorial Advisory Board. For more information, visit www.atomicdirect.com.


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