TV Europe: Mixed Signals

AMSTERDAM -- Despite tough government regulations and a small population of cable subscribers, production of home shopping programming in Europe is accelerating this year.<BR><BR>The National Infomercial Marketing Association's second international...

AMSTERDAM — Despite tough government regulations and a small population of cable subscribers, production of home shopping programming in Europe is accelerating this year.

The National Infomercial Marketing Association’s second international conference, held here last week, proved just how determined infomercial and home shopping executives are about building their business in Europe.

Here are some developments that emerged at the conference:

  • PBRK, a French television shopping channel, said it expects to launch a home shopping service this fall.
  • TF1, a subsidiary of Teleshopping, a French network, also plans to launch a television shopping channel.
  • Teleshopping has moved into infomercial production and already has produced three nine-minute infomercials. It continues to produce a television shopping program that is shown on TF1 for half an hour twice a week. Last year, the program sold 710,000 products, and Teleshopping had sales of $60 million.
  • QVC The Shopping Channel, based in the U.K., will be launched on cable systems in the Netherlands, Norway and Denmark, beginning in early July, said Peter Ridsdale, the channel’s chief executive. Ridsdale said he is involved in talks with cable operators in Sweden, and that there is also the potential for a joint venture in Germany.
  • The Shopping Channel is expected to have sales of $62 million this year. Ridsdale predicted it would reach 3.5 million to 4 million households in the U.K. and continental Europe by early fall.
Still, anyone interested in introducing a European shopping channel must overcome such hurdles as language differences, a hostile regulatory environment and the fact that cable penetration is significantly lower than in the U.S.

Home Shopping Network, which talked to British Sky Broadcasting about launching a shopping channel before BSkyB linked up with QVC, continues to eye the European market but has no definite plans, said Michael McMullen, president of HSN’s international division.

But he thinks Europe could be a bigger market than the U.S. because home shopping programs and infomercials in Europe boast significantly lower return rates on orders compared with the U.S.

European industry executives at the conference said their return rates on infomercials average only 1 to 10 percent; U.S. return rates run 20 percent or more. The U.K. QVC Shopping Channel has a return rate of 10 to 12 percent, said Doug Briggs, president of QVC Electronic Retailing. According to a spokeswoman, QVC’s average return rate in the U.S. is 19 percent.

Industry executives said Europeans are more cautious and less impulsive about ordering, which increases the chance that they will keep the product.

A recurring theme at the conference was sensitivity to local cultures.

Jeff Glickman, president of First Class Marketing, suggested using European celebrities for infomercials that are to be shown in Europe.

But while more companies are producing infomercials in Europe, the majority continue to be made in the U.S. and dubbed into the local languages.

Tom Kniesmeijer, a strategy planner for McCann-Erickson, Amsterdam, said he asked several Dutch focus groups what they thought of infomercials. The majority thought they were funny because they were clearly dubbed in very bad Dutch. What was heartening, Kniesmeijer said, was that many of the consumers still bought the products.

A major topic of discussion at the conference — which attracted more than 200 people from 18 countries — was the need for the European Commission to relax its tight limits on air time for infomercials and shopping channels. Under current EC rules, shopping channels can air no more than seven minutes of advertising, infomercials or shopping programming per hour.

Jon Davey, head of cable and satellite television at the U.K. Independent Television Commission, said the EC appears to be moving toward the more relaxed attitude of the U.K., which is Europe’s most open market for infomercials and television shopping.

“I do sense that other countries are coming around to the view that if all that channel capacity [in cable and satellite] is there, why shouldn’t there be home shopping services?” he said.

France, where home shopping is highly regulated, has approved applications from three companies for television shopping channels, said Benoit Danard of the French regulatory agency Conseil Superieur de L’audiovisuel.

“Infomercials in Europe are changing,” said Earl Greenburg, president and chief executive of Transactional Media. “Europe still lags the U.S., but things are definitely picking up here and the gap is closing fast.”