Following are three main entry paths to DRTV, according to how the profits of a marketing campaign are distributed:
- The first is the Turnkey Royalty avenue, where a direct response marketing company will attain the license for your project and take over the campaign from A to Z. In this scenario, you will end up with a royalty;
- The second path to getting started is the Joint Venture way, where you share 50/50 with a partner;
- The third option is the DRTV Marketer path, where you manage the project yourself in-house, take all the risks and get all of the profit.
THE TURNKEY ROYALTY AVENUE
If you have a great product but don’t want to raise capital or invest your time in marketing, the best thing you can do is find a reputable “turnkey” marketing company that specializes in building brands through DRTV.
- Experienced marketers have better success rates;
- Experienced marketers have expertise in a complete marketing strategy from concept to household name;
- Direct response marketers know how to leverage a successful DRTV campaign into a worldwide product launch;
- They have the capital to make it happen;
- They have the infrastructure, capital and human resources to keep trying until it works.
- It is difficult to get the interest of turnkey marketing companies;
- After expressing initial interest, it is often hard to read the intention of the marketing partner;
- It’s often slow to make a deal, jeopardizing the entire product because of similar products coming to market;
- Royalty deals typically are not as lucrative as the inventor or entrepreneur had hoped.
THE JOINT VENTURE WAY
The second way to get into the DRTV industry is a joint venture. If a project is beyond its initial stages, but still needs further funding or a partner with DRTV experience, a joint venture may be the best alternative. Unless there is a disproportionate equity position between partners, joint venture deals are often a 50/50 split. If neither partner is an experienced DRTV marketer, however, it may be very risky going into DRTV under this arrangement. Additionally, very good legal advice is needed for joint ventures, and total agreement is necessary for a strategy to be implemented.
- Most 50/50 deals come from investors outside the DRTV industry that don’t have expertise in marketing but do have cash looking for investment vehicles;
- Considerable development beyond “concept” makes a joint venture a more attractive deal for both parties;
- Other gaps in knowledge can be bridged by experienced DRTV educational organizations (like Direct Response Academy), which don’t have a hidden agenda.
- Lack of DRTV marketing experience;
- Partners don’t usually add core talent needed for implementation;
- Often, final decisions can be based upon shareholders’ equity, not sound marketing judgment;
- Additional funds for legal advice can be considerable.
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