Kedma Ough shares insights on licensing products in the As Seen on TV industry.
Most of us have heard of the ThighMaster, the Snuggie or the Ginsu Steak Knives as overnight success products that have amassed millions of dollars selling directly to consumers through Direct Response Television (DRTV) commercials.
Warren Tuttle, president of the United Inventors Association of America, has been working within the DRTV industry for decades. He was the person behind the television direct response mega-hit Smart Spin that generated nearly ten million units through a series of successful infomercials. I sat down with Warren to get his top four tips to getting your product to launch through DRTV and be the next mega wonder.
- Rapidly create national brand recognition
The biggest advantage of DRTV is the ability to create, very rapidly, brand recognition through significant exposure on today’s most dynamic advertising medium. Consumers are more likely to shop for a product they have seen six to eight times, through repeated TV ad exposure. Successful DRTV programs can drive significant sales volume and eventually provide retailers with very high sales, rapid stock turn, strong gross margins and increased bottom line profits.
- DRTV companies focus on different niches
DRTV companies are no different then other industries when focusing on specific niches or areas of differentiation. Some are house and home oriented, while others focus on exercise or personal care. Even the length of commercials are different, as some companies are excellent in developing two-minute short forms, while others better at the 30-minute long format.
Keep in mind, though, that not all products are well suited for DRTV success. It is a rapid roll out process, where a product generally moves through a short selling life cycle at a highly accelerated pace. Some products require a slower burn to get to market and succeed, while other products are more platform oriented with a line up of SKUs that need to be appropriately showcased. Products need to be highly demonstrable. Not all successful products are, so it may be better to introduce some types of products to market through a traditional retail roll out and avoid the DRTV model altogether.
- Do your homework interviewing DRTV companies
Each DRTV company needs to be researched and vetted. Inventors need to do their homework and find out what success stories each DRTV company has been responsible for, in what industry they specialize and how they have treated the individuals who have brought them products in the past. Inventors need to fully vet each company’s history and reputation, since there are companies that have scammed inventors in the past.
Make a point to attend one of the industry trade shows such as The Response Expo or the Electronic Retailing Association Tradeshows as these shows can provide a great opportunity to find resources and build connections for your product launch.
- Avoid upfront costs launching your DRTV product
Many successful DRTV companies will provide the necessary capital, along with creative production and manufacturing resources to test products and roll out successes and simply pay the inventor an ongoing royalty. Patents are generally helpful and typically command a higher royalty but are not always necessary. It depends upon the product and the DRTV company, so it is critical to align correctly. Working prototypes that prove function are also of value and can also be used to film an audition video.
The other items that are important is the creation of a professional pitch and a descriptive sell sheet. Royalties typically run from 2 percent to 6 percent of wholesale. A successful TV roll out will generally last about 18 months.
In an ever increasing competitive environment where capital is often a deal breaker to launching a product, DRTV can be the perfect solution.
Kedma Ough is a proven champion for small businesses. She is an inventor, author, speaker and a fifth-generation entrepreneur. Ough provides honest, straightforward education to innovators on feasibility, funding and free resources.
See this article on Entrepreneur.com: http://www.entrepreneur.com/article/240328
Copyright © 2014 Entrepreneur.com. All rights reserved. Reprinted with permission from Kedma Ough.