Global Perspective

Canadian DRTV Marketplace: DRTV Sells North of the Border

1 Sep, 2002 By: Bridget McCrea Response

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The Canadian DRTV industry closely resembles that of the United States, even though regulations differ and media is hard to come by.

With the exception of regionally oriented products, such as specialized "Barbie" dolls or a set of commemorative, post-September 11th American flags, DRTV products that make it in the United States typically do well in Canada.

That's because Canadians are much like their neighbors to the south when it comes to buying habits, likes and dislikes.

They also shop the same way, according to Rod Bell, president of Toronto full-service DRTV agency Channel 500 Ltd., which works with clients like Rogers AT&T Wireless, Guthy-Renker and Greenpeace. "What infomercial marketers experience in the United States is usually a good indicator of what will happen in Canada," he says.

That is, as long as the product is relevant, passes the country's sometimes-stringent import rules and regulations, and locates space in the country's media-strapped market.

Key Canadian Statistics

Sometimes, despite the similarities between the two countries, the pieces of the puzzle just don't fit. Take the time four years ago when an American marketer went north to run an adaptation of an infomercial for a "Gone With the Wind" Scarlett O'Hara Barbie doll.

The campaign flopped. "It may have worked great down in the (American) south, but the further north it went, the less it sold," says Bell, whose agency produced the Canadian version of the show. "People just didn't relate to it."

A few misfires aside, American DRTV marketers who do well in their home country tend to do equally as well in Canada, a country with more than 30 million citizens. And unlike most other non-domestic markets, the cultural nuances are subtle. Dubbing shows aimed at the French-speaking Quebec market is one of the few extra steps that American marketers must take.

Market for Direct Response in Canada Still Relatively Untapped

"Other than that," says Ian French, partner with Toronto DRTV production company Monte Brooks-Northern Lights, which recently produced the Comfort Gel Pillow and Abtronic Pro shows, "there really are no big cultural issues."

Adding It Up

Roughly 80 percent of Canada's 31 million population resides within 100 miles of the U.S. border, making TV networks like NBC, ABC, CBS and Fox very popular. Nearly 70 percent of the country's homes have cable access - a phenomenon that has further pushed the evolution of DRTV north of the border.

"Canada is very, very close to the U.S. in many ways," says Rob Woodrooffe, president of Interwood Marketing Ltd., in Toronto. Founded in 1974, the company is one of the oldest in the business, producing shows for Canada including the Power Juicer, Steam Buggy and the Johnny Carson Video Library.

Woodrooffe estimates that in an average week, the Toronto market broadcasts about 1,500 half-hour infomercials, half from Canadian stations and the rest from American stations that can be viewed in Canada. Annual home shopping and infomercial sales in Canada, he adds, are at about $1 billion, while other estimates place the entire direct response market in the nation (including all direct marketed products) closer to $12 billion.

Where's All the Media Time?

So the numbers are there, but breaking in requires more than a simple trip across the border. For starters, there are regulatory hurdles to pass and a definite lack of media avails. Canada's regulations aren't necessarily more stringent than those in the United States, but they are different, particularly when it comes to ingestible and topical products.

Even more challenging, says French, is the fact that the Canadian government keeps tight reigns on TV content (see sidebar at right) and "leaves little room for DRTV." On a positive note, however, French points to the historically low value of the Canadian dollar, or "Loonie," as a sweet spot for American marketers, whose money value almost doubles by simply crossing the border.

"American companies come here and get infomercials produced by Canadian production companies at 30 to 40 percent less than what it costs in the U.S.," says French, adding that most of Canada's major DRTV producers, such as Thane, Northern Response and Interwood Marketing, are all keeping busy these days. Throw in the fact that Toronto is the third-largest television production center in North America - behind only Los Angeles and New York - and the result is a fertile breeding ground for DRTV success.

"DRTV's evolution has progressed much the same as in America, except for the fact that we've always been about five years behind - a delay largely due to the fact that Canadian regulations didn't allow infomercials to air during daytime hours until about eight years after the U.S. market was deregulated," says Patty Booth, vice president and general manager at Thane Direct Canada Inc. in Toronto. "Now, the Canadian market is still regulated to a certain extent, limiting the number of infomercial avails."

Tips for Breaking In

Calling Canada an "open market, similar to the United States," Booth says it's the regulatory hurdles that tend to trip up American marketers.

"Acquiring the clearances can be a time consuming and costly process so it can be easier for companies who know the ropes to use their regulatory channels to get products up on air more quickly," says Booth. "It's also a bonus to have fulfillment and order processing already set up in Canada so that the costs to ship product can be amortized across all of the business channels."

Fertile Ground

Media and regulatory hurdles aside, Richard Stacey, president and CEO at Northern Response International Ltd. in Toronto, estimates that the DRTV industry has grown at about the same pace in Canada as it has in the United States, with best geographic targets including metropolitan areas concentrated near the border, like Toronto, Montreal and Vancouver. The provinces of Ontario, Quebec, Alberta and British Columbia are also good bets.

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