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Ah, for the heady days of 1996, when an infomercial producer could throw together a contraption made of metal bars and a padded headrest, give it a name with “Ab” in the front and sell a million or two units at $69.95 a pop.

Those days are over now, with the abdomenal exerciser phenomenon of 1995 and 1996 nothing more than a happy memory for the infomercial industry.

There is widespread agreement that 1997 was kind of a bust year for direct-response television, at least compared with yesteryear.

Statistics haven’t yet been compiled, but Steve Dworman, who publishes a newsletter called Infomercial Marketing Report, estimates that 1997 television sales in the United States will be 20 percent to 25 percent lower than they were in 1996.

Anecdotal evidence from infomercial producers seems to support that estimate. A variety of reasons are cited for the decrease, but most people say it’s just part of the cyclical nature of the business; infomercials, like movies or television, rely on big hits. If there are few break-out products, you get a slow year.

“This is very much an up-and-down industry,” said Laura Fox, vice president of electronic retailing with Culver City-based Kent & Spiegel Direct Inc. “One year you can make millions and millions, and other years you’re struggling because you don’t have the hit shows.”

American consumers also seem to be getting a little more resistant to those relentlessly toothy TV pitch people and their miracle products. The vast majority of consumers trust their neighborhood store more than a TV character in a loud sweater.

“Because products have gone to retail more quickly, I think the consumers are becoming a little more savvy,” said Gerald Bagg, senior management supervisor with Santa Monica-based Williams Worldwide, which buys media time for direct-response TV spots. “They know that a product they see on television today might be on retail shelves in 90 or 120 days, and it might be cheaper.”

But there are other factors that suggest the industry is going through an evolution common to all new industries: from an anything-goes startup phase to a more mature phase of consolidation, public offerings and professional management.

The latter phase is also marked by diversification. Because there are so many competitors, the market becomes saturated, forcing players to branch out into related businesses to survive.

That’s pointed up by a look at National Media Corp., which is more accessible than its competitors because it’s one of the few publicly held direct-response TV companies.

Philadelphia-based National Media is having a terrible year. In fiscal 1997 (ended March 31) it reported a net loss of $45.7 million. Lacking hit products, plagued with lawsuits and management turmoil, the company dropped the axe on its Sherman Oaks-based subsidiary Positive Response Television last summer. About 90 percent of its employees, or 85 workers, were laid off.

For the quarter ended Sept. 30, the company reported a net loss of $14.9 million. Most of the losses were in domestic television sales. For the quarter, domestic TV revenues were 70 percent lower than the like quarter in 1996. International revenues, meanwhile, declined 17 percent from last year, a drop attributed to the economic downturn and increased competition in Asia.

National Media, like all the large players in the business, has discovered that it’s much harder to make a profit by selling merchandise through American television than it used to be. Branching out into other countries is just part of the solution.

Big infomercial companies have set up Internet divisions to go after online commerce. They are creating retail divisions to sell products in stores after the products’ appearance on television. And they are using other forms of marketing like direct mail and telemarketing to go after people on their mailing lists.

“We’re trying to turn this into more of a predictable business, as opposed to a hit-driven business,” said Eytan Urbas, spokesman for Guthy-Renker, which has headquarters in Santa Monica and Palm Desert.

Guthy-Renker has sales programs in place to turn its customers into long-term, steady sources of income. When people order the Victoria Principal line of cosmetics or an acne treatment after seeing an infomercial, they are encouraged to sign up for a program that ships additional orders on a regular basis, just as their prior order runs out. When they order an exercise machine, they go on a mailing list and receive phone or mail solicitations for future exercise products.

Partially because of these sales programs, in addition to the growth of its overseas network, Guthy-Renker has been able to escape the downturn plaguing some of its competitors. Urbas estimates the company will finish the year with about $350 million in revenues, up from $270 million in 1996.

Despite this year’s dropoff in American TV sales, most industry insiders and observers say the U.S. infomercial business is by no means dead. They expect 1998 to be stronger than 1997, mainly because of predicted growth in pharmaceutical sales.

In the past, it was nearly impossible to sell prescription drugs on television because of the reams of disclosure information required by the Food and Drug Administration, according to industry newsletter publisher Dworman. But those rules were recently relaxed, leading to a spate of commercials and direct-response spots pitching pharmaceuticals.

In addition, Bagg of Williams Worldwide says he is seeing a number of new products that are testing extremely well.

“Anybody who’s been in this business long enough knows we’ll see successful fitness products in the future, and houseware products, and skin care products, all of which will provide the next miracle cure for something,” Bagg said.

News Editor Dan Turner writes a weekly marketing column for the Los Angeles Business Journal.

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