Sometimes, the advertising industry can be like a cat, or a toddler: It loves playing with shiny new things. Call up someone at an agency, and all they want to talk about is the hot new app they’ve developed, or a cool Facebook feature they’re about to demo, or a Web game they’re convinced will send their client’s sales through the roof.
All of which means that a lumbering old medium such as television advertising is, of course, dead.
If that’s been conventional wisdom for years now, someone forgot to tell Amir Tukulj.
He’s the chairman and chief executive officer of Thane Direct Inc., the Toronto-area direct marketing company responsible for the sort of consumer products you always seem to stumble upon as you’re trolling for something to watch late at night or on weekend mornings: the FlavorWave Oven (Express and Turbo versions), the Ab Doer Twist exercise machine, and the H2O MOP X5 five-in-one steam cleaning device, which can be yours today for three easy payments of $39.95. All carry that classic boast: “As seen on TV.”
And while the hotshot agencies and most of the major consumer brands may turn up their noses at direct marketing, with its carny come-ons and subprime target market, the segment’s continuing success – and the recent international expansion of companies such as Thane – may hold some lessons for those who would stoop to conquer.
“I haven’t heard any television executives say TV is dead,” shrugged Mr. Tukulj the other day, sitting in his corner office on the top floor of an unremarkable five-storey Mississauga office park building. Noontime traffic on Highway 401 buzzed past his window; just beyond that, planes swept purposefully in and out of Lester B. Pearson airport.
Listen to Mr. Tukulj, and you’d believe we’re in a golden age of television advertising. “There’s more and more television channels available with the digitization of TV. What that means is more fragmentation, but for us it will mean the ability to target consumers in a more accurate manner and lower cost.”
In the past few years, under pressure from tight-fisted clients, the advertising industry has struggled to provide legitimate measures of its performance: Proving sales are a direct result of a particular ad campaign has always been a dark art. Infomercials provide a direct and traceable link between advertising and sales.
“We very, very closely analyze the profitability of each airing,” said Mr. Tukulj, adding that Thane receives an average of between eight and 10 orders for each half-hour spot it airs, in each market on a global basis. “So, if we’re going to have 1,000 buys this week, we’d try to analyze which of those were not profitable, and then we’d either reschedule those or try to cancel those and add to the more profitable [air times]”
The company says it spent about $60-million around the world on media in 2010 – that is, buying TV time. It hopes to hit about $350-million in revenue next year, including $80-million to $90-million in North America. (Reflecting Thane’s Canadian roots, its domestic haul is about one-third of total North American revenue: a far higher percentage than the one-tenth that is typical in some other industries.) In the past five years, Thane has moved into Mexico, Scandinavia, and Australia, expanding a footprint that already stretched across Europe and the Middle East, where it has a joint venture.
This is the part of the business that gets Mr. Tukulj excited; he’s not actually that interested in the on-air sales presentation. In fact, Thane contracts out the production of its infomercials.
Still, he knows what makes consumers pick up the phone, and it’s the same thing that’s always motivated them. “The message has to be clear, concise, it has to solve a real problem which the consumer is experiencing. It has to provide the consumer instant gratification, it has to be a good price point, it has to provide value, it has to be demonstrable.”
Yes, the company has adapted to some new technologies – its videos are on YouTube, and it has a website where customers can order products and download owner’s manuals – but its heart doesn’t seem to be in it.
That may be because, as Mr. Tukulj notes, the Internet is, “a very active medium; you usually go there to look for something. Whereas ours is an impulse buy, and our consumer tends not to be looking for the kinds of products that we offer. When they’re passive, watching TV, that’s when we get their attention, strike a chord, and cause them to purchase. And we feel that’s going to remain the chief driver, at least for our business, for the foreseeable future.”
The changes that have come to Thane and its competitors including Northern Response (also based in the Greater Toronto Area) and the California-based Guthy-Renker, are prompted less by technology and more by economics.
Delinquent accounts among U.S. consumers is a persistent problem – Mr. Tukulj estimates they comprise 10 to 15 per cent of total sales in that market – which helps explain Thane’s continuing push into bricks-and-mortar retailers such as Wal-Mart and Sears. (Here, the roster includes Canadian Tire.) While the margins Thane achieves selling to traditional retailers are slimmer, distribution headaches are also fewer.
In that context, Thane’s ads help raise awareness for the products – that is, they perform the role of traditional advertising – rather than motivating people to pick up the phone and buy something at the moment they’re watching TV.
Still, Mr. Tukulj expects lots of people to be picking up the phone in the next few months. Unlike many other companies, which take a breather after the frenzy of the holiday sprint, Thane is about to gear up for its own busy season, the first quarter of the year.
In part, that’s because the pullback of other companies from TV advertising during the quarter means Thane can buy ad time at lower rates, and place them on more channels. “Also, in the Northern hemisphere obviously we’re in the thick of winter,” he said. “People will tend to stay at home more and therefore more people will be watching television.”
Which means that, even as you pluck another Christmas cookie from that pile of treats in the office kitchen, someone is getting ready to sell you something to help drop the extra pounds.
“People make New Year’s resolutions,” noted Mr. Tukulj wryly, “and one of those is always that they want to lose some weight and get fit.”
The Total Flex fitness system can be on its way to your home for a 30-day trial right now, for a down payment of $14.95. And it’s yours to keep, for only five more easy payments of $49.95 each.