It Was 30 Years Ago Today…1 Sep, 2013 By: Thomas Haire Response
Perhaps AJ Khubani didn’t “teach the band to play,” as the Beatles’ “Sgt. Pepper” did, but under his leadership, TELEBrands has led the As Seen On TV revolution at retail.
When AJ Khubani founded TELEBrands in 1983, there was almost no way he could have predicted how his company — and the direct response industry as a whole — would expand during the next 30 years.
“Today, it’s surprising to me how much business we’re doing. I never imagined in my wildest dreams that we’d be approaching $1 billion in annual revenue,” says Khubani, dressed impeccably on a summer morning during a breakfast interview in New York. “And the way the retailers have embraced the As Seen On TV category — something that was so difficult to get them to understand initially is now a key part of their business.”
Fairfield, N.J.-based TELEBrands has been a leader in that charge, ever since Khubani first placed AmberVision sunglasses in a regional sporting goods store in 1987. Much of the company’s expansion can be attributed to its visionary leadership in breaking into the retail space, and bringing the entire category along with it via the now ubiquitous As Seen On TV logo that is part of the packaging for leading marketers across the business.
But the TELEBrands story — and Khubani’s, as well — is not just one of strokes of genius followed by lavish success — no matter how many times you see Khubani being called the “King of Infomercials” these days on national TV shows like “The View,” “Today,” “Good Morning America” and others. No, like any product marketer that grew up in the direct response space, TELEBrands has seen its share of ups and downs during the past three decades. But one reason the company’s success in recent years has become a bellwether for marketers everywhere is the hard work of Khubani and his team. That hard work has its roots in Khubani’s youth.
“From a very young age, I was a hard worker,” he recalls. “That’s really important because nothing comes easy. I always worked, from a paper route at age 11 to cutting lawns and shoveling snow out of driveways. As soon as I was old enough to get a real job, I became a bus boy at the age of 16. I thought a really cool job at age 17 was to deliver pizza — because I loved to drive. I did that for a year and then got promoted to making pizza. Later, I thought bartending would be a cool job, so I read a book on how to mix drinks and applied for a job. I always worked. I paid my own tuition through college and never took any money from my parents.”
Unsurprisingly, such a powerful work ethic now pervades the atmosphere at TELEBrands.
An Amber Beginning
A year after graduating from Montclair State University in New Jersey, while working for his father’s import business in New York, Khubani tried out advertising for the first time, taking print ads to sell some of the products coming into his father’s shop. His first ad, in the National Enquirer, promoted an AM-FM radio. While it only broke even, Khubani recalls it fondly.
“The first day that I received a check for a purchase in the mail was the most memorable moment of my career,” he says. “I wrote my first print ad for the National Enquirer. It ran, and shortly after, the first check came in for $12.95. I looked at it and I said, ‘Should I keep this check or should I cash it?’ I said to myself, ‘Eh, I need the money!’ I cashed it.”
It wasn’t long before Khubani and his new venture, TELEBrands, moved into television. While the modern infomercial was just being born, Khubani saw the format as a promising channel for his consumer products.
It wouldn’t be until 1987, though, that Khubani would finally find the product that would change everything. He produced three DR short-form spots that year: one for an ultrasonic flea collar; one for a product called the Easy Cycle; and one for AmberVision sunglasses. It was AmberVision that became a game changer.
After early TV success, Khubani believed that AmberVision would sell well at retail. While many DR marketers ignored additional sales channels in those early days, Khubani believed that its marketing success on TV had created a brand that would work on retail shelves. But, first, he had to convince the retailers themselves.
“Opening up the As Seen On TV category with all the retailers was a real challenge in the early days,” he says. “The retailers were opposed to As Seen On TV, and they had all kinds of arguments: you’re competitors; you sell directly to consumers; you’re a one-item vendor.”
Khubani continues, “AmberVision was the first thing we tried to get through. We’d go see the sunglass buyer and he’d say, ‘Well, I already have a rack full of sunglasses. I buy everything from Foster Grant. Where am I going to put this one pair of glasses?’ It was a real challenge. Every retailer just said, ‘No, no, no, no.’ Until the buyer’s boss at Herman’s Sporting Goods, Ray Mooney, happened to walk buy during my pitch at Herman’s. He’s the one who said, ‘Give this guy a shot.’ He gave me the break. He’s still in the industry.”
Khubani’s order from Herman’s: a miniscule 200 pieces. The result? “Just days later, they came back with a reorder of 20,000 pieces,” Khubani says with a chuckle. “Once we had that story to tell, I met with the merchandise manager at Jamesway, Angelo Bianco, who’s still my vice president of sales today. He put in AmberVision and other TELEBrands products. He couldn’t believe the sales. Shortly after that, we asked him to join the company. He joined us in 1991.”
The final totals on AmberVision are powerful, even today: more than 15 million pairs sold over a five-year run on TV and at retail. The first As Seen On TV product opened the doors to retail for DR marketers for the first time.
“Angelo became very instrumental in going out and opening up retail accounts when we brought him in,” Khubani says. “Of course, my brother Andy (who now runs Ideavillage Products, another top DR marketer) was very aggressive. He was on the road all the time, visiting Walmart and other retailers.”
Even still, with the success story of AmberVision, it took time to get more retailers involved. “It took us three years to get complete retail distribution on AmberVision,” Khubani says. “That’s a long time by today’s standards.”
Making the Retail Climb
Not only was distribution slower to unfold in the early days, but a bevy of marketers who didn’t understand how DR and retail should work together also muddied the waters. Much of this is thanks to the creation of the As Seen On TV logo by the TELEBrands team. While today that logo is a big boost to retail presence — the initial goal of allowing the logo to remain in the public domain rather than trying to trademark it — it was taken advantage of often in the late 1980s and much of the 1990s.
“Retail hasn’t been a steady climb up,” Khubani says. “The retailers had to learn that the As Seen On TV logo was in public domain. Once we taught them this, they got excited and assigned buyers to the As Seen On TV category, but often those buyers felt that anything with that logo was golden. People took advantage, and the buyers didn’t know any better. Some marketers said, ‘If I put the As Seen On TV logo on my product, shoot a commercial and run a little media on TV, the buyers will put it in. At least I’ll get in the door and it’ll probably sell.’ But not everything sells at retail.”
This created a lot of tension between retailers and marketers throughout the 1990s and early into the past decade. “A lot of people thought putting that logo on the product would create the success,” Khubani says. “Obviously that’s not true. It’s like saying that if you drive a Rolls Royce, you’ll become successful. It doesn’t work that way.”
Eventually, though, through trial and error and by understanding who the leading marketers in the direct response space looking to get into retail really are, retailers and DR marketers have come together to form a powerful combination during the past decade.
“Companies like Walmart have this huge 18-foot As Seen On TV section at the front of the store, with major promotions every single month in the store. It’s incredible to see it become that big,” Khubani says. “You walk into CVS and see a sign on the aisle indicator: As Seen On TV. I never imagined that would happen. It’s become so prolific. Thirty years ago, no one even thought about this stuff.”
And with the boom in As Seen On TV at retail, product lifecycles have shrunk down to more natural retail levels. “Today, the lifecycle of a TELEBrands product is about a year. Sometimes it’s a little shorter,” Khubani says. “Today, we have full retail distribution within four weeks of launching a product on TV. We launch two times a year: in the first quarter, January; and in the third quarter, July. Within four weeks of a launch — if we launch July 1, by the first week of August — we’ve got a half-million pieces on store shelves across the country.”
But As Seen On TV products are not alone, Khubani contends. “Product lifecycles have become shorter across the board, not only in our industry,” he says. “Sunbeam recently said that the lifecycle of a new toaster is now nine months. The product lifecycle of a new iPhone is nine months. Technology has made product development so fast that we’ve increased the consumer’s appetite for new stuff all the time.”
And, now, more As Seen On TV hits are making it into in-line shelving at retail: sitting with other products in their categories, rather than just tied to the As Seen On TV space.
“Initially, it’s always better to be in the As Seen On TV area. It’s usually a more high-traffic area,” Khubani says. “The transition into in-line is a good next step. Then you get a chance there to add line extensions, because the As Seen On TV section is very limited on space. Even good products — products with a good amount of lifecycle left — are being pushed out just because there are so many new products coming in. We’re transitioning as many as we can from As Seen On TV into in-line.”
About Those Products
How many can TELEBrands transition? Sometimes, it seems like all of their products hit the mark with consumers. But Khubani is clear when discussing one of his most recent massive hits: even he’s sometimes wrong.
“The biggest surprise product we’ve had is the PedEgg,” Khubani says, decisively. “I never expected that that would catch on the way it did.”
The idea for the product came from reading online that people were using microplane cheese graters to file their feet, because there was no other good solution. “So we came up with the prototype and sent the concept to a factory in China,” Khubani says. “They decided to make it look like a computer mouse, which I thought was ridiculous. This is a personal care item. So we pushed them to come up with some other prototypes, and each one was worse than the next.”
The “mouse” prototype sat on Khubani’s desk for a year before a chance meeting. “This producer came into my office who I hadn’t done business with for 15 years,” he says. “He’d gotten out of the DR industry but wanted back in. He said, ‘AJ, just give me a shot. Give me something.’ I said, ‘Okay, what the heck, take this thing and shoot the commercial.’”
At the same time, the brainstorming meetings for the product’s name were going just as poorly. “We sat around brainstorming what to call it. There was Foot Magic — and all the other typical types of names came out,” Khubani recalls. “Finally, I said, ‘You know, they designed it to look like a computer mouse, but maybe we could call it an egg.’ I’d read a case study on L’Eggs pantyhose and how the egg shape was appealing. So, we threw Ped in front of it. That was it. We shot the commercial.”
But even then, Khubani was unconvinced, especially when he first saw the ad. “It came in and the first thing I said was, ‘You know, this is one of the schlockiest DR commercials I’ve ever seen.’ It was almost a caricature of a DR spot. A woman screams at her feet in the beginning, for goodness sake!” Khubani says.
But then came the media test. “We got a $6 CPO out of the box,” Khubani says. “That was a surprise. But then we ended up selling 45 million of these things — and still selling.”
The lesson? “You never know how these things are going to work out,” he adds. “I could have given it to another producer, and the creative would be different. I thought this creative was terrible. I didn’t even want to test it, but the creative worked. You never know why something works. You just have to keep on testing.”
This constant effort at seeking out new product and putting it to the test has resulted in a span of hits during recent years that most product marketers would be thrilled to have: beyond PedEgg, there’s GoDuster, HeelTastic, Jupiter Jack, PediPaws and Shoes Under. That’s not to mention the more recent hits: Pocket Hose, the Olde Brooklyn Lantern, Rabbit TV, Callous Clear and OrGreenic pans — among many others.
And with the company’s extension to the in-line spaces of retailers, that means more of its products are becoming parts of full product lines.
“With PedEgg, we added on Callous Clear and HeelTastic as additional foot care items,” Khubani contends. “It’s what is emerging at TELEBrands — products growing into businesses. With OrGreenic, we keep adding to the cookware line and get it into in-line business. OrGreenic, by the way, is the top-selling ceramic cookware in the country, ahead of the Green Pan and Cuisinart.”
He adds that Pocket Hose — the company’s top-seller in 2013 — is headed down the same path. “The Pocket Hose has been huge,” Khubani says. “It’s the No. 1 garden hose in the country. One week in early summer, we sold 200,000 in Walmart — that’s $4 million. The entire rest of the hose department combined sold $6 million. So, for next year, every retailer is putting in a line of hoses. We have a new line of Pocket Hoses coming, adding different lengths and different colors. That’s become a business.”
Another 30 Years
When asked where he’d like to see TELEBrands in 2043, Khubani is quick to answer. “I’ll be 83 years old, and I’ll still be running the company as long as there’s a company to run. I have no other plans.”
He sees the future for TELEBrands and the As Seen On TV space as a whole as bright — but warns against a few possible issues.
“Right now, all the retailers are really on board with the category,” Khubani says. “They went through some troubles because they got inundated with a lot of poor products — As Seen On TV stuff that’s not really on TV. They fell out of love, but then back in love again.”
But what will happen to brick-and-mortar retailers with the continued expansion of online marketing and shopping? After all, Khubani contends that 90 percent of TELEBrands sales come via brick-and-mortar stores.
“Is brick-and-mortar going to continue to decline as the Internet gets bigger and bigger? I don’t think so. People still like the experience of going out and shopping,” Khubani says. “There’s no limit to retail expansion. We’re in places like Best Buy and Macy’s. There are still more retailers we can open up, but we’re in most of them. It’s a matter of pushing hard enough to get more shelf space.”
He sees the bigger issue as what’s happening to TV viewership as video content delivery systems become more and more diverse. “TV viewership continues to decline every year, as people unplug from cable, go to the Internet for content and begin to feel they don’t need traditional TV anymore,” Khubani says. “Reaching the people we’ve been reaching is going to change. We don’t know how that’s going to change or how we’re going to reach them.”
However, Khubani adds, “We know that there will always be a demand for gadgets. People love gadgets and innovative products. It’s a matter of getting the message to the people in a cost-effective manner. TV has worked out so far. You can certainly reach people with video online. We just haven’t figured out — yet — how to do it cost effectively.”
Khubani believes the key is in the hands of TV networks and other content producers. He says, “People that produce content have to figure out a way to make money on it, we hope. And people that distribute the programming have to figure out how to make money. That’s through the advertisers. Hopefully, they’re going to figure out how the mix of TV and online works best and bring that solution to us — and try to sell it to us.” ■