The time may be ripe to explore DRTV in Latin America (1,243 Wo
By Priya Ghan
As international acceptance for direct response television (DRTV) has grown, Latin America has become one of the first regions outside of the United States to be explored. Indeed, the region has a thirst for U.S. goods.
Looking ahead, Latin America will continue to be an irresistible market, but it's also a region that poses some of the greatest business challenges, some of which are discussed below. But, for the strong-hearted marketers who've found the successful keys to unleashing the power of DRTV, Latin America represents a tremendous opportunity for growth.
This article will outline the options you have as an American supplier marketing your product via DRTV to Latin America. It also will alert you to some of the major obstacles you may encounter along the way and offer tips for success.
• Get to know the business culture. Avoid the notion: "Because it works this way in the United States, it will work in Latin America." A rigid, elitist American attitude won't lead to a relationship of trust with your Latin American colleagues.
• Building relationships is the heart of the matter, especially so in Latin America. Latinos like personal contact; in fact, you almost have to build a friendship before you'll see a business deal develop. The driving force behind any relationship is confianza (trust). And unlike in the United States, in Latin America time is not money. An example of this is when phoning a distributor; chances are you'll speak with two to four assistants before you're connected to the person you were calling.
As an American marketer, you have two paths to consider when launching a DRTV campaign:
• Set up local operations yourself, buy terrestrial media and establish the back-end infrastructure required for a DRTV campaign.
• Or, you could use an established DRTV international company that offers a turn-key operation from inception to completion.
Both opportunities come with challenges, but nonetheless can get you to your business goal.
Select a test market in one of the more populated countries such as Argentina, Brazil or Mexico. Listed below are key elements needed to achieve a profitable return.
• Understand issues typical of marketing in any method, in any country and in any language; cultural and ethnic diversity; geography; and consumer demographics and psychographics. Although the region is gifted with a sense of commonality and identity through language, remember that Spanish spoken in Argentina, for instance, is not the same as that spoken in Mexico. (This is similar to the differences between American English and British English.) In the infomercial world this is a critical point, as a show in Mexican Spanish won't have the required response in Argentina to be successful.
• You'll need training in the media landscape of the countries, such as key TV stations, cable and satellite opportunities; the role of third-party negotiators (e.g., reps); federal regulations concerning advertising and infomercials; audience trends; media penetration; viewing share; and much more. Some obstacles are government restrictions that limit the amount of available infomercial airtime. Or you may find yourself combating station skeptics concerned about the effect of 30-minute segments of advertising on their audiences and content. Often, you'll find that better-performing local media contracts have been monopolized by existing local DRTV players.
• Partner with a trusted and competent firm responsible for the operational infrastructure of telemarketing, fulfillment, payment processing and delivery. As telemarketing and fulfillment centers often are sub-par to their American counterparts, this aspect of your business must be monitored with care.
Another major difference between the U.S. and international DRTV markets is the variance in credit card penetration. For example, when Williams Worldwide Television ran local operations in Mexico, our credit card penetration was just 20 percent. As most of our shipments were COD, the business continuously experienced tight cash flow cycles. In addition, sometimes courier services returned damaged goods, or goods didn't reach the end consumer due to theft, and more recently, hijackings.
And for the 20 percent of consumers who use credit cards, a large number of offers must be on "multi-pay" to convert potential orders to sales. We often experienced lack of payment on the third payment.
• Employ a locally based contact who can keep keep track of the industry and business.
• You'll need the following: an understanding of what kinds of products have sold well in a particular country; knowledge of competing companies and their successes or failures; legal representation with experience in international advertising in each country; and an understanding of the nuances of moving funds in and out of each country.
• And of course, you'll need the right product or service. There are many tariffs based on category of product, origin of manufacture, and regulatory issues for topical and ingestible products. When choosing your product mix, examine the costs and time involved in clearing a product in order to be able to import, especially if you haven't tested the response rate of the television show.
Use a local partner
Your second option is to use an established DRTV company to distribute your products. This can be as straightforward as a distribution deal where your product is bought from you and resold for a mark-up. Or suppliers can assist in your overall marketing strategy.
It's important to note that the good ol' days of infomercials are gone; nowadays only one in 20 infomercials produced in the United States makes a roll-out.
Product categories also are shifting. For instance, as the back-end business is proving to be the key to sustainability, more continuity items are being seen. 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. Distributors, deluged with product opportunities and day-to-day economic and operational problems, often are cautious about investing in new products.
To the supplier, this situation may be frustrating and costly. There are cases in which suppliers spent money clearing products such as cosmetics, only to find they don't sell well once on the air. If those marketers had a reliable method to determine the viability of a product, they would've saved precious resources.
However, once proven profitable, the potential of Latin America is quite large. Even in small markets such as Venezuela, companies have successfully moved 40,000 units of an average mid-priced product each quarter. And large markets such as Brazil can move multiples of that.
Following are some examples of successful marketing campaigns in Latin America:
• AB Flex, one of the fitness industry's top-performing products, generated more than $10 million of sales in a nine-month period.
• Murad International skin care generated more than $7 million in sales during 1999 in Mexico alone. This represented the first high-end skin care product to be sold successfully in the region, and the brand awareness generated created an extremely successful continuity program and catalog.
• Abslide's 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.
Priya Ghai is a co-president and corporate futurist with Williams Worldwide Television, an international DRTV company specializing in distributing products in infomercial categories to some 75 countries. For more information, e-mail: email@example.com, or call (310) 449-4506, ext. 23.