Firms Slowly Warm to New Video-Marketing Methods

Well suited to selling niche products, video has not broken into mainstream advertising efforts

WITH the help of video, choosing a house, picking your next cruise vacation, or even "test-driving" a car are possible without leaving home.

The video brochure, the so-called "ad tool of the 1990s," is about to revolutionize how businesses market their products, advocates say, adding a dimension beyond traditional avenues of television, radio, print, and direct sales.

The statistics are seductive. More than 77 percent of American homes have at least one VCR. Companies spend more than $6 billion a year on videos and video production, and the industry grows 20 percent annually, according to the International Television Association.

And, of course, "if you match a video tape with a printed piece - one that moves and lives with one that sits still and does not live - obviously you can see the benefit," says Donald Aaronson, executive vice president of Video Brochures, a New York company that produces customized video materials.

The catch is that despite high expectations, video as a marketing tool has failed to find broad appeal.

Dick Hodgson is not surprised. As president of Sergeant House, a Westtown, Pa., catalog consulting firm, Mr. Hodgson has watched progressive waves of technology and marketing ideas fail to pass muster on the sales floor. Often there is not enough attention to the bottom line and the public mind-set, he says.

Videos are relatively inconvenient to use and expensive to produce. Spiegel, a Chicago-based clothing retailer, flirted with videos for a couple of years, supplementing their "For You from Spiegel" catalog with a 25-minute tape on makeup and dressing tips. Customers who requested the video bought more on average than catalog-only buyers, company research showed. "But the response just wasn't high enough to get the return on the investment that we had hoped to get," says Spiegel's Debbie Koopman.

Video has had a few successes, however. Automakers, travel agents, home builders, and cosmetics manufacturers - who recognize that demonstration is the key to selling their products - are distributing videos with good results.

Carmakers were some of the earliest proponents. "Cadillac is still sending hundreds of thousands of tapes to people who have already bought Cadillacs," says Kelly Thayer of Clear Image, a Utah-based video company. "Go back to the people who have bought and get them to buy again. That's where this tool is most powerful."

Mr. Thayer says the new format can grab attention in ways traditional 30-second television ads and print cannot. Give someone a teaser to get them to pop the video in the VCR, he says, and you've got a captive audience. "They're not going to change channels, they're not going to walk away, they're going to watch it."

Thayer sees videos following the path of computers, where the 1970s were the hardware years and the '80s the software boom. In 1980 only 4 percent of households had a video player, up to 77 percent today. "Now you have market penetration with the hardware, the '90s I see as the decade of the software," he says.

Companies such as Avon and Mary Kay that sell door-to-door are using videos to expand their distributor base. Jafra cosmetics, owned by Gillette, "exploded" this year, Thayer says. His company created a video program for the company to attract sales consultants. The target was 10 to 15 percent growth. By April, Jafra had increased its sales force by 30 percent.

Early video marketing tests failed because they were premature - not enough households had VCRs. It's "much like today with CD-ROM," Thayer says, referring to a new technology struggling to edge its way into the market.

Another new technology may have a large impact on video's prospects. Bell Atlantic Corporation announced last week the development of video-on-demand over the telephone. Primarily an entertainment option, it could also give business another form of access to potential customers.

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