Depending on who you ask, the infomercial industry could be worth anything from $200 billion, to $250 billion, or even $300 billion. Whatever the number, that’s pretty big. And as Jon Nathanson (now Slate columnist) pointed out in his exhaustive breakdown of the economics of infomercials on Priceonomics, in comparison, the U.S. network and cable industry was estimated at just $97 billion in 2013. So why isn’t Thom Jensen, the founder of the Perfect Bacon Bowl (which has shipped 2 million units since late 2013), getting the kind of adulatory coverage bestowed on Instagram, an app that was basically profitless when Facebook purchased it?
It seems obvious—I mean, a bacon bowl? And the industry has long been associated with hucksters like Kevin Trudeau and questionable weight-loss gizmos such as the Neckline Slimmer. But consider the household brands that have emerged from late-night infomercials—Proactiv, OxiClean, and George Foreman Grills—and the fact that big names like Geico and Dove are just as likely to be making infomercials these days as ThighMistress Suzanne Somers. It makes you wonder—is there some kind of innovation snobbery at play?
To start with, infomercial is too limited a term. The industry catchall is “direct response television” or DRTV—the kind of late-night or midday advertising that compels you to purchase a Snuggie from the number on the screen. It includes live TV home shopping (which Timothy Hawthorne, founder of the DRTV agency Hawthorne Direct, estimates to be worth $20 billion to $30 billion); traditional infomercials (which he puts at sales of $20 billion to $25 billion); and a more recent development, brand response DRTV (more of an unknown, according to industry experts I spoke with, but potentially tens of billions). It’s difficult to find firm numbers—many of the estimates are offered by those who have a stake in the industry. But turn on the TV at 1 p.m. or 1 a.m., and you’ll see major brands like Priceline taking over the cheap time slots where Tony Robbins used to tell you how to “Unleash the Power.”
And to think it all started with a blender. It’s generally agreed that William “Papa” Barnard, the founder of Vita-Mix, made the first infomercial in 1949, when he demonstrated his product live on TV. In those days, inventors with limited funds and a revolutionary gadget to fix your gut/back/mold problem could buy cheap airtime in the hours no one else wanted.
But the golden age began in 1984 when President Reagan deregulated the television industry, allowing broadcasters to sell larger chunks of time to advertisers. That year also saw a significant cable television growth spurt, exploding the number of channels needing content. In 1984–1995, marketers rediscovered the “the power of the half-hour,” and fortunes were made.
In those days, according to Hawthorne, “infomercials could be produced for $15,000 to $25,000 per production and generate as much as $50 million in sales, and one out of three could be a hit.”
It was also then that some of the biggest marketers succeeded with a business model that may still hold about an 80 percent share of the DRTV market: Find products created by a would-be Edison somewhere in America, market them on DRTV, give a small royalty cut to the inventor, and share the risk of a capricious DRTV audience across your product portfolio. The most successful of these marketers, Guthy-Renker, was founded in 1988. Bill Guthy and Greg Renker’s Justin Bieber–spruiked pimple cream, Proactiv, is ubiquitous, accounting for about half of their $1.8 billion annual sales. Another is Telebrands, the owner of the surprisingly popular Pocket Hose, which has sold more than 17 million units. DRTV firms have come and go, but Guthy-Renker and Telebrands have dominated the market for close to three decades, along with BeachBody (owners of Paul Ryan–approved workout, P90X), EuroPro, and a few others.