Thursday, May 22, 2008

Promises, Promises.

I don't think much of the infomercial industry.

First, there is the form itself. There is nothing wrong with long-form commercials. A commercial that is long enough for the advertiser to present the product's features and benefits in detail would seem to be an improvement over the 30-second spot. In practice, however, most infomercials take the form of a fake talk show. That's the first strike against them. You won't launch a business relationship with me by trying to deceive me, right out of the box.

But the even bigger problem with infomercials is that every single one of them is directed at people with a handicap, people who just aren't skeptical enough. Look at what infomercials sell: beauty, health, wealth, and a better sex life. Even the kitchen gadgets are touted for their health benefits.

And look at how they're sold. The two most critical words in infomercials are "quick" and "easy." Infomercials sell a promise, not a product. You could argue that all advertising does that, sells the sizzle not the steak. The difference is in whether or not the products actually deliver. When people say to me, "good advertising can sell anything," I counter with, "good advertising call sell anything once." Even that is not entirely true. Most people have good detectors for the claim that seems too good to be true. Most, but not the skepticism-impaired. That's who infomercials target, and their mantra is "quick and easy."

Kevin Trudeau got bagged for this with his weight loss book, but only because he was already under court supervision due to a settlement involving previous scamming. The court looked at the weight management program described in Trudeau's book and ruled that whether it worked or not, it could not truthfully be described as either "quick" or "easy."

The skepticism-impaired are a big market. Trudeau alone spends about $20 million a year on infomercial advertising, according to a report by ABC's John Stossel. Even if his advertising budget is 20 percent of his gross revenue, and nobody spends that much, that would mean his gross is $100 million a year. Believe me, I'm not making that selling books about bourbon.

But what really has me thinking about this are the infomercials and regular commercials (generally on AM radio) touting products that promise quick and easy riches through some kind of investing, whether in securities, real estate, options, or something else, or with "an internet-based business." They sell you a computer program, a book, or some other kind of "system" that is, of course, quick and easy.

No matter how long it is, the commercial will spend very little time telling you what the system does or how it works, and a lot of time telling you how great being rich is. Most people, who are gifted with normal skepticism, see through these blandishments immediately, but apparently there are enough of the skepticism-impaired to support many of these get-rich schemes.

It is possible to loss weight, improve your health, improve your appearance, and increase your wealth. The lie is always in the quick and easy part.

Here is is a little bit about the wealth part.

In the past, I have done work for the Chicago Board Options Exchange (CBOE) and the Options Industry Council (OIC). CBOE invented exchange listed options as a type of financial instrument. There are now several different exchanges where options can be traded and the OIC is their educational arm. They are at

One of their educational products is a DVD entitled "It’s Good to Have Options," hosted by Terry Savage. I wrote it. I'm not currently on their payroll nor a regular consultant to them, nor do I make any money if you request the DVD. I simply have a lot of respect for the organization.

The DVD is free. Almost everything on the OIC web site is free. They offer terrific, substantive educational materials written by top experts, all at no charge. The exchanges that fund this make money when you trade options, because they charge a fee for each transaction. The more people trade, the more they make. That's why they're happy to give the stuff away. If you want to draw the analogy to casinos giving away free hotel rooms, I won't argue. Casinos don't care if you win or lose. If you're there and playing, they're making money.

What OIC does not do is promise quick and easy riches. What they promise is that the more you learn the more successful you will be. If you're willing to study and learn, and work at it, you can make money trading options, but it's not quick and it's not easy. It's not dauntingly difficult, but it takes time and work. Just like losing weight and improving your health and appearance takes exercise and diet discipline.

I wish there was a way to help people develop more healthy skepticism about the products they see on infomercials. Maybe there's a pill...

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