Building brands.

TV AD SALES ARE DOWN BUT INTER/MEDIA ADVERTISING IS USING DIRECT-RESPONSE TO KEEP ITS BUSINESS HOPPING

THE economic downturn may have had a negative impact on television advertising in general, but it's boosting business opportunities for direct-response firms like Inter/Media Advertising.

"With deep cuts to advertising budgets, we are finding that large companies are beginning to be more receptive to our type of advertising," said Robert B. Yallen, president and chief operating officer of the Encino-based company. "That increased interest is an opportunity to increase our billings."

Yallen and his father Sydney have turned their boutique firm into an agency with $100 million in gross billings.

"Our goal is to reach $250 million in gross billings by 2005," he said. "To reach our goal, we are going to have to convince mainline advertisers to use a small portion of their media budget for direct response."

A direct-response campaign consists of lower priced 30, 60 and 120-second commercials airing on national cable networks and in broadcast syndication.

The ads are designed to create a retail brand for a particular product. A campaign can be tracked by the use of multiple 800 numbers used in the commercials.

Inter/Media has handled campaigns for BreathAsure breath freshener tablets, Ralston Purina One, Hudson Software Corp., and Ross Perot's United We Stand America Inc.

Sydney Yallen, former station manager at KFWB-AM (980), founded Inter/Media in 1974. It billed $2.5 million in business that first year. During the mid-1980s, Inter/Media was billing about $10 million a year. By the mid-1990s, it billed $40 million annually.

"We have kept growing and the bigger we get, the more attention we can get from mainstream clients," Robert Yallen said. Besides offering direct-response TV media buying services, Inter/Media is also a full-service ad agency with media and market research, film and video production and post-production facilities. "We do some infomercials, but our strength is the short-form commercial," he said.

Inter/Media's BreathAsure mid-1990s campaign led to one of L.A.'s biggest -- though short-lived -- local entrepreneurial success stories. Westlake Village-based BreathAsure Inc. saw its sales shoot from virtually zero in 1992 to $29 million in 1996.

Prior to Inter/Media being hired, BreathAsure had less than $1 million in sales. Robert Yallen said the firm brought in actor George Kennedy as its spokesman and secured more than 6,500 spots on cable TV -- a media value in excess of $10 million.

But December BreathAsure filed for Chapter 11 bankruptcy protection after competitors made legal challenges to the company's claims that the product cured bad breath.

"What we did with BreathAsure is launch a campaign that created a retail brand for the product," said Robert Yallen. "We made sure that through the advertisements the breath tablets became known and were eventually sold in stores due to consumer demand."

Attraction of lower rates

Much of the interest in direct-response commercials can be traced to lower rates, resulting from TV stations' need to sell large amounts of commercial time.

"A station might sell a 60 second spot on Wednesday night at 8 p.m. for $5,000, but our company buying that unsold airtime at the last minute can purchase the spot for a discounted price of $1,000," he said.

The Electronic Retailing Association expects direct response TV spending overall to increase 15 percent to 20 percent this year, three times the 5 percent to 7 percent growth in 2000.

"With all the dot-com advertising that has dried up and mainstream advertisers that have cut back their budgets, we see an enormous opportunity for growth this year," said Elissa Myers, the association's president and chief executive.

Myers said the direct response TV market should surpass $15 billion this year.

Robert Yallen expects Inter/Media's billing to grow 25 percent this year, boosted by new clients like the U.S. Army, which for the first time has allocated money for a sustained direct response TV campaign.

The Army's $5.2 million campaign through Inter/Media exceeded its 21 week goal in 24 days. The campaign, designed to generate 21,000 leads in about five months, brought in 24,000 in the first three weeks.

The campaign titled "212 Ways to Show Your Strength," airs nationally on cable networks and syndicated programming with 30 and 60-second spots.

"By also using one individual nationally branded vanity number (800-560-ARMY) throughout the campaign we can increase response as much as 40 percent," said Sydney Yallen.

While the Army may benefit from using direct response in a soft market when people out of work are looking for other opportunities, the key to the growth of the direct-response advertising niche will be in attracting and keeping major companies.

"The more Fortune 500 companies we can attract, the rest will begin to look at us, say if Apple is doing direct response maybe we should be doing it," said Myers.

Inter/Media Advertising

Year Founded: 1974

Core Business: Direct-response advertising

Revenue in 1999: $5.9 million

Revenue in 2000: $7.7 million

Revenue in 2001: $10.3 million (projected)

Employees in 1995: 25

Employees in 2001: 40

Goal: To reach $250 million in gross billings by 2005. To convince mainline adverters to use a portion of their media budget for direct response.

Driving Force: Continual mainstreaming of direct response as a sales tool.