Field Reports1 Feb, 2004 By: Digby Orsmond Response
Patrolling the European Marketplace
Not so long ago, the majority of international markets had very few rules and regulations governing infomercial product sales, making it very easy to market products globally. However, the international marketplace has changed and as laws become more stringent and the consumer becomes more savvy, European DRTV companies have had to change the way they operate in order to maintain their growing success.
As a result of new European Union (EU) legislation, many product categories have proven virtually impossible to import and sell via DRTV - including many "ingestibles" and "topicals." Other U.S.-proven DRTV product categories can safely be imported into Europe, but many have lacked the necessary substantiation or approval documentation to be allowed on European television.
The United Kingdom was one of the last markets to introduce infomercials as a form of advertising. Today, 37 of the nation's 400 TV channels are dedicated to home shopping or infomercial programming.
Many DRTV practitioners see the enhanced regulatory requirements as a welcome change to the industry, ensuring it retains credibility and is recognized as a viable sales channel for a high caliber of product. One such person is John Bramm, president of Vector Direct. "In the U.K., DRTV remains new, and to ensure a high caliber of media and a repeat consumer, we need to work with good products from suppliers who are able to provide supporting documentation to the claims made in the infomercial," he says. "Many DRTV companies have disappeared during the past few years as they were unable to adhere to legislation. A core group of companies, though, have built a good reputation, enabling us to operate very successfully."
Companies that do not adhere to U.K. legislation can be penalized a number of ways - via the Independent Television Commission (ITC), which licenses and regulates commercial television in Britain, or the Trading Standards (a government-funded consumer protection organization), or by the consumer, who has an ever-increasing choice of shopping alternatives.
One company able to recognize and respond to these increasing changes is Interglobal Intl. Ltd. Kym Bramm, president, comments, "DRTV distributors now require services around the product and don't simply want a tape and price. It is important that all substantiation documentation, approvals and detailed marketing information is provided with the product. The work in gaining this information is lengthy. However, the rewards are high, and suppliers only need to give us this information once, and we will pass it on to each country. Where international sales used only to represent a small portion of some companies business, they now represent up to 50 percent of some U.S. suppliers' revenue."
Across Europe, most popular products fall into the "household" or "fitness" categories, with consumer spending on DR products averaging about $99. The European consumer is more demanding, and when distributors take on a new product, their investment commitment is both time and money - not only are they ensuring that the product adheres to the required approvals, the show also needs to be edited and re-voiced to adhere to local languages, regulations and consumer tastes.
There also must be a considerable investment in time for training local telemarketing centers. European consumers are some of the most discerning, and a lot of work must go into making sure all questions are answered.
The EU opportunity is also now beginning to be recognized by major brands. Some have seen that innovative goods need to go to DRTV first before they go to retail. Products often sell better if their purpose can be fully demonstrated - first using infomercials to create demand and then maximizing retail.
Brands are beginning to appreciate the magic of DRTV, and its myriad of advantages that E-commerce has not been able to deliver (e.g., greater control over the targeted consumer, customer feedback and a medium to demonstrate the product in a creative and often entertaining way).
"As these companies have all the necessary substantiations and approvals already, we have been able to launch products into markets very quickly. With the detailed marketing information shared between distributors and these suppliers, we've seen great success," says Bramm.
The DRTV industry is changing in Europe, and despite a few regulatory hurdles, it's also providing many opportunities to those companies willing to accept the challenge head-on. The key to European DRTV is reaching the right number of target viewers at the lowest cost-per-order during airtime that will enable multilingual response to be captured efficiently.
American marketers should now be looking to Europe for a new mix of sales opportunities. Those first into the market are likely to reap substantial rewards. The foundation for selling a growing mix of DRTV products has already been built by innovative companies, and it's largely through their efforts that the industry will enjoy future increased sales in Europe among a bevy of consumers eager to buy the products they see on their TV screens.
Direct Holdings Worldwide Buys Time-Life DM UnitNEW YORK - The Associated Press (AP) reports that Time Inc. sold its direct marketing unit, Time-Life Inc., to privately held Direct Holdings Worldwide LLC on Jan. 5. The buyer is owned by Ripplewood Holdings LLC and ZelnickMedia Corp., which formed it in July 2003 to buy Lillian Vernon Corp., a specialty catalog retailer.
According to Time Inc., the combined holdings of Direct Holdings will now exceed $500 million in annual revenue. ZelnickMedia will manage the company's day-to-day operations, with Strauss Zelnick assuming the role of chairman and chief executive of Direct Holdings.