"Southward Bound... The Time May be Ripe to Explore DRTV in Latin America" reprinted with permission from Priya Ghai

The international direct response industry was borne in the early 90's when there was a significant trend in the US towards expansion globalization. This resulted from a number of key factors, namely the loosening of previously restrictive regulations concerning long form advertising which resulted in the opening up of television air-time for infomercials/TV shopping in most countries with a developed TV industry. As DRTV blossomed in the US it lead to increasing competition for airtime in the U.S. thereby causing advertisers to look for new markets for their shows and products.

As international acceptance for DRTV grew, Latin America was a region that was one of the first to be explored because our neighbors to the South already had a thirst for US goods. It was time to take a drink from the lucrative, yet challenging world of DRTV. Over ten years down the road, Latin America continues to be an irresistible attractive market but it is also a region that probably poses the most obstacles. There are many potholes to overcome and frankly, the knowledge that has been gained has been accomplished through consistent trial and costly, at times almost crippling, errors. Thus, you may ask, why should I bother even entering this market? For those who are not weak at heart and have thus found the successful keys to unleashing the power of DRTV, Latin America represents a huge part of the pie.

This article will outline the how as an American supplier, the options you have open to you to market your product via DRTV to Latin America and the critical potholes to avoid along the way.

Before we begin, there are a couple of critical points that you must employ:

B) Relationship building is the crux
:It's all about relationships, and more so in Latin America. Latinos like to have the personal contact element, in fact you almost have to build a friendship before you will see a business deal develop. The driving force behind any relationship is "confianza" (trust) and unlike in the US, in Latin America "time is not money". An example of this is when contacting a distributor via phone chances are that you will be required to speak with two to four assistants before you get connected to the person you were trying to reach.

C) Choosing the right path:
As an American product supplier there are two paths to consider when launching a DRTV campaign. You could decide to set up local operations, purchase terrestrial media and establish the backend infrastructure required for a DRTV campaign. Alternatively, you could use an established DRTV international company as a one-stop shop that will offer a turnkey operation from inception to completion. Both opportunities do not present themselves without their challenges, but are nonetheless achievable.  

Option One: Establishing local operations:
It is recommended to select a test market in one of the larger markets such as Argentina, Brazil or Mexico. Listed below are key elements that are required to see a profitable return from your market.

1. An understanding of issues typical of marketing of any form, in any country: language, cultural and ethnic diversity, geography, consumer demographics and psychographics. Although the region is gifted with a sense of commonality and identity through language it is important to remember that Spanish spoken in Argentina for instance, will not be the same as Spanish spoken in Mexico. In the infomercial world this is critical, as a show translated in Mexican Spanish will not have the required response in Argentina to determine a success.
2. Training in the media landscape of the countries: key TV stations, cable and satellite opportunities, the role of third party negotiators (i.e. reps), federal regulations concerning advertising and infomercials, audience trends, media penetration, viewing share, etc. Some obstacles you may face are government restrictions that limit the amount of available infomercial airtime. You may need to combat the station sceptics who are concerned of the effect of 30-minute segments of advertising on their audience and content. Often time you may find that better performing local media contracts have been monopolised by existing "local" DRTV players.
3. A trusted and competent firm responsible for the operational infrastructure of telemarketing, fulfilment, payment processing and delivery. As telemarketing and fulfilment centres are often sub-par to their American counterparts, this aspect of the business must be monitored with fervour. Another major difference between the US and International DRTV markets are the variance in credit card penetration. For example, when Williams ran local operations in Mexico, our credit card penetration was ~ 20%. As the majority of our shipments were COD, the business continuously experienced tight cash flow cycles and often time courier services would return damaged goods or good would never reach the end consumer due to theft and more recently, hijackings. For the 20% that used credit cards, a large number of offers required to be on "multi-pay" to convert a potential order into a sale. We often experienced lack of payment on the third payment.
4. Employ a locally based contact, keeping his/her finger on the pulse of the industry and the business.
5. An understanding of what kinds of products has worked well in a particular country.
6. Knowledge of competing companies and their successes or failures.
7. Legal representation with experience in international advertising in each country.
8. The nuances of moving funds in and out of each country.
9. The right product or service. There are many different tariffs based on category of product, origin of manufacture, regulatory issues for topical and ingestible products. When choosing your product mix, do your homework on the costs and time involved in clearing a product in order to be able to import, especially if you have not tested the response rate of the show.

As one of the pioneering international companies, we have seen the industry change and it has been necessary to revise business models to simply survive. The good ole' days of infomercials are gone; nowadays only 1 in 20 in the US makes roll out. Product categories are shifting too, for instance, we are seeing more continuity items as the backend business is proving to be the key to sustainability. Due to these changing times, American DRTV suppliers face many challenges in distributing their products into Latin America, and often spend months or even years trying to get a distributor in each key market. The distributors, deluged with product opportunities and day-to-day economic and operational problems, are cautious about investing in new products. Unless a product is in the top 3 of the current GreenSheets, it is extremely difficult to get them to test.

To the supplier the situation is incredibly frustrating and costly. We know of cases where suppliers spent a lot of money clearing products such as cosmetics, only to find that they don't work once on air. If they had a reliable method to determine the viability of a product before wasting time and money, they would have saved thousands of dollars in hard costs as well as time. In addition, there is the opportunity cost in lost time. Speed to market against competitors is very important.

Despite these problems, once proven profitable, the potential of Latin America is quite large. Even in small markets such as Venezuela, we've been able to move 40K units of an average mid-priced product each quarter, and large markets like Brazil can move multiples of that.

Case Study: WWT's Media UNO Program:
WWT has been all too familiar with the above barriers, as we have specialized in Latin American DRTV marketing for a number of years. We designed our Media Uno program to overcome these market barriers. We created Media UNO because Latin America has traditionally been an extremely hard market to penetrate due to local distributors having an excess of product to choose from and unstable economies. This program creates effective ways of surpassing these challenges and jump-starting product sales. Results on pan regional media strongly determine if a local distributor will invest in terrestrial media.

Media Uno is a "virtual" infomercial network, carried on all of the prominent cable and satellite networks in Latin America, and is tied in to key distributors in each market. WWT owns a substantial amount of media throughout Latin America on the most sought after networks, such as, Discovery, USA, Animal Planet, Telemundo, People and Arts. Rather than losing valuable time with the distributor's decision-making process, this media enables the supplier to test the show in key markets with an A/B split, and thus gain valuable international test data and proven results. It also ensures that you sell your product at the correct price to gain success and you do not have to rely on others to tell you what margin you should make. Before they commit, most distributors want to see international results as well as U.S. results-taking the onus to conduct a test gives them a comfort level, and helps get you results much quicker.

Examples of Williams's successful products in Latin America:

• AB Flex (fitness), one of the industry's most top-performing products of all time. The product generated over $ 10 million of sales in a 9-month period.
• Murad International skin care generated over $7 million dollars in sales during 1999 in Mexico alone; representing the first high end skin care product to be sold successfully in the region and the brand awareness generated as created an extremely successful continuity program and catalogue.
• Nest Entertainment's "Journey Into the New Testament". The Animated Bible video series is an "evergreen" product that has been on the airwaves for the last six years.
• Abslide (our current hit product): International rollout has been underway for the last six months and more than $ 4.5 million in sales has been generated.

DRTV in Latin America is certainly not for the weak hearted, but if you do your homework, develop trustworthy relationships, and have a good product, it's worth the ride. I'm keeping my eye on Latin America, as a region it continues to show potential to be the seductive cultural superpower of the future; we have witnessed Latin mania through the Ricky Martins, JLos, Mark Anthonys, and Salsa has become a consistent, personal weekend pastime. As Internet technology advances and infrastructures improve, if Latin America can be successful in assimilating change, but keeping it's rich cultural heritage, the region will be a force to be reckoned with in this millennium.

- Priya Ghai is Co-President and corporate futurist with Williams Worldwide Television, an international DRTV company specialized in distributing products in infomercial categories to some 75 countries. He can be reached at:priyag@williamsworldwidetv.com

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