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People: As seen on TV

As seen on TV Inter/Media’s direct response advertising strategy makes enough sense to clients in a slow economy that billings have jumped 50 percent By CARLOS MARTINEZ Staff Reporter Even after he earned his law degree in 1985, Robert B. Yallen couldn’t resist the lure of the family business: his father Sydney’s advertising agency in Encino. It was where he grew up, first sweeping the floors and later making sales calls. As entrenched in the business as he was, when Yallen was named president of Inter/Media Advertising three years ago, he was ready to take the small boutique agency to another level. By focusing on so-called direct response advertising, the company doubled its sales between 1998 and 2002. Unlike traditional advertising where consumers are made aware of products they can purchase elsewhere, direct response makes use primarily of television to sell directly to the public via toll-free phone numbers or Web sites. By buying up large blocks of time that television stations typically have trouble selling, usually late at night or early in the morning, and using it for direct response clients, Inter/Media has been able to increase its billings from $70 million in 1999 to $105 million last year. In the same period, Inter/Media’s revenues have increased from $5.9 million to $10.3 million. Inter/Media’s clients include some well-known direct response clients like NordicTrack, Breath Asure, Ditech.com and Tae Bo. Their success has begun to attract mainstream clients and products like Clorox, Discover Card and Ralston Purina to direct response advertising. Thanks largely to an economy that has forced advertisers to look for less expensive ways to reach customers, Inter/Media has grabbed up more clients who are seeing the benefits of direct response. With its own production company, post-production studio and creative team to develop television commercials for its clients, all located at its Encino headquarters, the company keeps costs low and much of its billings in-house. Yallen took time to speak to Business Journal reporter Carlos Martinez. Question: Why is a bad economy so good for your company? Answer: Because these clients that have come to us now see the benefits of direct response, like its cost-effectiveness. They wouldn’t have come to us if the economy was good. People look to us because direct response is cheaper and more effective than other forms of advertising. Q: What is direct response and how is it different from traditional advertising? A: There are very few industries (like television) that have inventories that evaporate on a daily basis, so what they’re not able to sell today, goes away. The direct response industry was developed to maximize a station’s airtime inventory. We buy the last-minute inventory, so you’re a direct response advertiser and you don’t compete with your general advertiser. You have to have an 800 number or some sort of direct mechanism for direct response from customers. Q: It wasn’t until you took over the company three years ago that Inter/Media began to shift away from general advertising into direct response. Why did you change focus? A: We were one of many companies in (general advertising) and it was very difficult to grow. Direct response was starting to grow, so we took a chance and we took advantage of it. It was great because advertisers could see the results of direct response by looking at those calls to 800 numbers. People were amazed and it started building, with Breath Asure and then Diet Systems and lots of others. Q: What is the advantage to direct response? A: You can know how it’s working for you right away. We have the 800 number that keeps track and you don’t need to know how the Nielsen ratings were. Q: No matter what, advertising is highly competitive and business is slow at every agency. How have you been able to increase revenue and attract more clients in this environment? A: Our company is fully integrated and that keeps our costs low. We do everything from the creation of the ad to the execution and post-production. We created our own post-production company two years ago and we’ve had a production company for the past 15 years. So, we’re a one-stop shop that’s very cost-effective. Q: How much of your business now is direct response? A: About 75 percent and growing. Now we can send out coupons so that people can get them and pay less for a general brand. That’s one way to get them in direct response. The majority of our work is television, but we do all media: print, radio, outdoor and television. We have a bias toward television because it’s the most credible and the most efficient. Q: What was your first major challenge in running the company yourself? A: We launched Breath Asure and we used direct response advertising to fuel their growth. We needed a big launch or we would fall flat. The big challenge we had there was how do we get a lot of media to run without the client having to invest a lot in it. So we went to the Turner Networks and we created a strategic relationship with them. We gave them a piece of the direct response income and a piece of the retail sales, so we got millions and millions of dollars of commercial time and we paid one fifth of the value of what that media was. Q: What was the toughest time the company faced since you’ve been around? A: In the early ’90s we had two or three companies go into bankruptcy and that left us about $2 million in debt. An agency is oftentimes responsible for a company’s debt (to media companies) and so we were responsible for those debts. We also lost a $20 million-a-year account due to consolidation. But I restructured the company without going through bankruptcy. We negotiated a lot of payment plans with stations, cut half our staff, cut costs and looked for a lot of business. Q: What do you think of Internet advertising? A: It’s really one of the poorest forms of advertising. Banner ads are really overrated; it’s not the best use of advertising dollars. For us, it’s an adjunct form of advertising, not a primary form. Q: What are your future plans? A: We see us opening a New York office, maybe next year, but we really see us continuing to grow our creative services. Snapshot: Robert Yallen Title: President, Inter/Media Advertising Age: 37 Education: Bachelor’s degree in business, Cal State Northridge; law degree, Southwestern University School of Law Career-turning Point: Joining Inter/Media Advertising Most Admired Person: Lee Iacocca, former chairman and CEO of Chrysler Corp. Personal: Married, with two children

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