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Alright then...here it is...my $8000 lesson...
This is one of the more painful lessons I've learned in the last few years or so. Originally I decided not to share it but with time the pain has eased and I think there is something to be learned and gained here for everyone, so here we go.
In the summer of 2008 I was contacted by a certain Media Company, I wont name any names because I have already moved on...but you have probably seen many of their commercials yourself on TV. They had a lot of success selling a training DVD on Poker and thought my basic Digital Photography Crash Course DVD could have equal success. They wanted me to invest some money into getting a professional commercial made, which would then be tested to select households to see if a national campaign would be successful.
Initially, I thought it was a scam, so I did some research and discovered that it wasn't in fact a "scam" so to speak, but looking back on the original agreement, it was very risky and I made some very serious mistakes, some of which I will share with you now for your benefit.
The company told me that for every DVD we sold, we would split the profits 50/50 and they would handle all shipping and customer service, returns etc. This would be great, once they had control of the campaign, I wouldn't have to do anything.
I was told by the representative that if I put up the money for the commercial and the test campaign, they would run the test by showing the commercial, get this: 50 times in 10 million homes, and this was just the test. Basic math tells us that 50 x 10 million would be approximately 500 million views in homes, give or take. I was also told that if the test got just 30-50 interested calls, they would go forward with a much more aggressive national campaign. This sounded too good to be true...30-50 calls? That would be nothing compared to 500 million views...right? In the unlikely event the commercial was unsuccessful, the rights to the commercial would be mine after the expiration of our 1 year contract.
I worked the numbers over and felt that if everything I was being told was true, I only had to have an extremely low success rate for this to be worth doing. The Poker video sold over half a million copies, and this encouraged me. The Media company was legit, their representative seemed genuine and sincere and it was looking like it could be a home-run.
A very long story short, I put up the $8000 for the commercial and the test. At that particular time, I was not doing very well for money, I only had 3 DVDs out and had to sell some of my equipment to make this happen. The commercial was produced, which you see here, I have replaced their 800 number with my own, but otherwise its all the same.
The company ran the test, and after a few days, I received a call from their representative who said it was "unsuccessful" and they only got 5-6 calls. He later sent me an email showing me the times the commercials showed and in what location, however, one thing that never seemed to make sense was the market size of those television stations when they were showing. The ad package they ended up purchasing in fact wasnt using controlled stations and markets, it was more of a "filler" ad campaign, meaning the company arranging to show the ad with different TV stations would decide when and what market the ad would be shown, most likely in gaps where they didnt have ads...meaning, the times and slots no one wanted.
My suspicion on this is that it wasn't 50 times in 10 million homes as I was told, which looking back would have been an extremely expensive test, it was more like 30 times in a much smaller market, (like 30-40,000), as in restricted local television stations in small towns. These numbers obviously would deterred me from doing the test.
The biggest mistake I made: Not getting the projected test numbers in writing. This was something that was spoken to me over the phone, but the contract simply said they would "do a test campaign" with no specific numbers or way to verify. Colossal mistake of epic proportions which will haunt me to my dying days.
Essentially, the company felt they had enough statistical data to believe that the product was a flop and not worth pushing on a larger scale.
I've shared this story with a few close friends and a few have suggested that maybe the Media Company did do a legit test...but come on....500 million views generating 5-6 phone calls? Another thing was, I had a lot of people looking for these commercials on the stations they were supposed to be on and NO ONE, saw them....not one of them, which raised my suspicion even more.
I later got an offer from the same Media company to sell the DVDs on consignment through QVC (which essentially means I pay for 30,000 DVDs to be made and they sell them, and whatever they don't sell I get to keep and eat the losses). My take on this was, I wouldn't make anything on this deal either, so I declined the offer.
The representative told me he would be in touch and that was the last I heard of him. To this day they have never contacted me again, nor delivered the commercial, even though our contract has expired.
Was it a "scam"? Probably not. Was it risky and were they asking me to assume all the risk? Yes, they were.
If I was to do it again, I would ask that they cover the cost of the commercial and test, otherwise no deal. My negotiating skills definitely did some maturing a few days after I got the news.
Being in the DVD business is absolutely dang tough and risky, and I am learning as I go. Over the last 2 years, I have sold about 400 of those Digital Photography Crash Course DVDs, which after all my production costs and this commercial thing, I still haven't made any money on it and wont for another year or 2.
Im constantly battling piracy, if my calculations are correct, less than a half percent of you will actually pay for the DVDs, which means, I am barely making enough money to make the next DVD. If it wasnt for the support of the honest people out there, I would have been out of business by now. There is just enough support to keep it going, and as long as its there, I will keep on going. I made much more profit from being a full time wedding photographer, but I have hope that when I have enough DVDs in the store, I will be able to focus on making REAL movies without having to worry too much about how Ill eat. (BTW- if you are a media pirate, I would advise you to immediately stop doing this, I have set up some traps, and will be able to identify you. There absolutely will be consequences to pay when we catch you, and we absolutely will come after you.)
You guys would be amazed at all the scams I get coming at me, I would like to share some of them, but I just cant because it would probably increase their frequency, but I see something just about every day.
I get emails every week from "students" asking for discounts, which I can appreciate, but why would they buy a $1500 camera and then ask me for a $10 discount? Its not like they didn't have enough money to buy the camera, ya know?
So, there you have it...another EXTREMELY personal glimpse of some of the crap I have to go through.
This commercial experience really crushed part of me in a way, because I felt stupid for going for it without being more careful about the terms. I like going for it, taking calculated risks, but it doesn't mean I should throw caution to the wind. If anything, it has taught me to be more careful about investing into marketing and doing more careful research. I think I have recovered, and I think it has helped me to not get too emotional or greedy. Thats probably a good thing....
An interesting note, is that now that I understand more about my ideal customers behavior, a random commercial on television wouldn't be as nearly as successful as the same commercial, on a certain channel, at a certain time of day, I believe this is why the test failed. I am tempted to buy my own ad time just to see what happens out of curiosity, but this time I would select the market, channel and time.
If something sounds too good to be true, it probably is and if its wrapped up in a business investment, make sure you are not the one burdening ALL the risk.
Live and learn.....