Guthy-Renker

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Guthy-Renker
Type Private
Industry Direct Marketing
Founded 1988
Headquarters Santa Monica, California
Area served Worldwide
Key people Bill Guthy and Greg Renker, founding principals and co-chairmen
Revenue $1.8 billion (2012)
Website www.guthy-renker.com

Guthy-Renker is a Santa Monica, California based direct-response marketing company that sells products directly to consumers through infomercials, television ads, direct mail, telemarketing and the internet. As of 2014, it has 8 different product groups, with an emphasis on celebrity-endorsed beauty and wellness products.

Guthy-Renker was founded in 1988 by namesakes Bill Guthy and Greg Renker. It began distributing the acne treatment Proactiv in 1995, which would become responsible for more than half its revenues by 2005. The company also created seven subsidiaries in the late 1990s for different products and advertising channels. It founded an infomercial channel, GRTV, which was sold to TVN Entertainment Corporation in 1999. Guthy-Renker's revenues grew from $400 million in 2001 to $1.5 billion by 2009.

History[edit]

Guthy-Renker was founded in November 1988 by Bill Guthy and Greg Renker, who met at the Indian Wells Racquet Club and Resort in Indian Wells, California.[1][2][3] They considered starting an infomercial company after an order was placed at Guthy's cassette duplication company, Cassette Productions Unlimited, for 50,000 copies of a real estate lecture to be sold through infomercials.[1][2][4]

At the time many infomercials mimicked talk shows and investigative news specials, raising concerns among consumers and policymakers that the programs were misleading.[5] To avoid the controversial practice, Guthy-Renker disclosed that their infomercials were paid advertisements at the beginning of each program. It made professional-quality productions.[6] Renker was invited to testify to a Congressional subcommittee in 1990 regarding ethics in advertising, which led Guthy-Renker and others to form the National Infomercial Marketing Association to create industry standards.[2][6][7]

The following year, Guthy-Renker had to cut back operations, because news coverage of the Persian Gulf War drew viewers away from infomercials.[6][8] Ron Perelman of Forbes Holdings Inc. bought a 37.5 percent share of Guthy-Renker in 1993 in exchange for $25 million and priority access to air-time on Perelman's television stations.[9][10] At the time, Guthy-Renker had grown to $60 million in revenue.[11] In 1996,[11] Perelman's stake in the company was resold to News Corp and Guthy-Renker bought it back. Two years later, Goldman Sachs bought a stake in the company that valued Guthy-Renker at $3 billion,[12] and a Japanese trading company, Nissho Iwai Group, bought a 17 percent portion of Guthy-Renker's Asia subsidiary for $9 million.[13] Guthy-Renker created a television station for infomercials called GRTV in 1996, which was sold to TVN Entertainment Corporation in 1999.[6]

From 1995-1997, Guthy-Renker created seven new subsidiaries.[2] These included Guthy-Renker Radio, Internet, Select Network, International and Fitness,[2] as well as subsidiaries like an online dating service and a psychic business that did not perform well.[4] Guthy-Renker partnered with National Media Corp. to help market some of its fitness products, which led to a legal dispute that was settled with undisclosed terms in 1997. Guthy-Renker claimed National Media Corp. excessively aired infomercials for an exercise machine, the Fitness Flyer, and started selling an unauthorized imitation of the original. National claimed Guthy-Renker had not provided enough Fitness Flyers to meet demand.[14][15][16]

Guthy-Renker grew to $400 million in revenue by 2001[17] and $1.5 billion by 2009.[18] In 2011, Guthy-Renker acquired a portion of Paramount Equity Mortgage, a solar energy, insurance and mortgage loans company.[19]

Products[edit]

Guthy-Renker's first products were self-help and motivational courses.[20] The founders bought the rights to a self-help book they were both fans of, "Think and Grow Rich", for $100,000 and aired their first infomercial selling the book in 1988. The infomercials were hosted by former football quarterback Fran Tarkenton and grossed $10 million in sales.[9][21] Another early product marketed by Guthy-Renker was the "Personal Power" series of motivational lectures.[12]

Approximately one half of Guthy-Renker's revenues in 2005 came from sales of Proactiv, an acne treatment.

The company started to sell cosmetics and skin-care products in 1991, starting with the "Principal Secret" cosmetics line endorsed by Victoria Principal, after market research showed that 70 percent of Guthy-Renker's audience were women.[2][3] In the 1990s, the company started marketing housewares, the "Perfect Smile" teeth whitening product and fitness products like the "Fitness Flyer", "Perfect Abs" and "Perfect Buns and Thighs".[22] By 1996, 40 percent of the company's revenues were from fitness products.[6]

Guthy-Renker uses infomercials, television ads, direct mail, telemarketing and the internet to sell products directly to the consumer.[3] The firm's infomercials have production costs exceeding $1 million and usually feature celebrity endorsers.[18][23] As of 2010, Guthy-Renker sold 15 different products.[12] Approximately one half of Guthy-Renker's revenues as of 2005 came from the Proactiv acne treatment,[23] and 30 percent of its revenues were from international sources.[24]

Guthy-Renker also markets the "Meaningful Beauty" cosmetics line endorsed by Cindy Crawford and the "Sheer Cover" brand of mineral makeup endorsed by Leeza Gibbons. It manages the "In an Instant" line of skin care products endorsed by Heidi Klum and the "Malibu Pilates" exercise equipment endorsed by Susan Lucci.[12][24]

References[edit]

  1. ^ a b Leavitt, Neal (August 1997). "Q&A with Guthy-Renker". ResponseTV. 
  2. ^ a b c d e f Gladwell, Gina (August 1997). "Guthy-Renker: 10 Years of Trailblazing in Direct Response Marketing". ResponseTV. 
  3. ^ a b c Pamela Danziger (1 January 2005). Let Them Eat Cake: Marketing Luxury to the Masses - As well as the Classes. Kaplan Publishing. pp. 126–. ISBN 978-0-7931-9307-3. Retrieved 23 January 2013. 
  4. ^ a b Orton, Charles (May 2001). "The Guthy-Renker Story". Response Magazine. 
  5. ^ Williams, Scott (August 4, 1990). "'Infomercial' Producers Form Trade Group". Associated Press. Retrieved February 15, 2013. 
  6. ^ a b c d e Pederson, Jay (2000). International Directory of Company Histories 32. St. James Press. ISBN 1558623914. 
  7. ^ Vazzano, Sherri (November 23, 1990). "TV Ads Policing Own Act". Chicago Tribune. Retrieved February 15, 2013. 
  8. ^ Weiner, Steward (April 2002). "Excellent ad Venture". Palm Springs Life. p. 66. Retrieved October 22, 2013. 
  9. ^ a b Richman, Louis (October 31, 1994). "Pioneers of a new way to sell". Fortune. pp. Volume 130, Issue 9. Retrieved January 23, 2013. 
  10. ^ Bird, L. (1993, Nov 15). Perelman buys stake in maker of infomercials. Wall Street Journal. Retrieved January 23, 2013.
  11. ^ a b Rotenier, N. (1996). Operators are standing by. Forbes, 158(10), 278.
  12. ^ a b c d Rose, Lacey (November 3, 2010). "Shill Shocked". Forbes. Retrieved January 24, 2013. 
  13. ^ Brennan, Judith (May 19, 1998). "Japanese Firm Buying Stake in Guthy-Renker". Los Angeles Times. Retrieved January 23, 2013. 
  14. ^ Cleland, K. (1997). Fitness Flyer. Advertising Age, 68(26), s30. Retrieved January 23, 2013.
  15. ^ "Business News in Brief". Philadelphia Inquirer. April 1, 1997. pp. D03. 
  16. ^ "Flyer/Strider suits settled with Guthy-Renker Corp.". The Wall Street Journal. April 1, 1997. pp. B, 11:4. 
  17. ^ Lowry, Brian (January 5, 2001). "Infomercials an easy sell:Celebrities and TV Stations…". The Los Angeles Times. 
  18. ^ a b Remy Stern (6 October 2009). But Wait ... There's More!. HarperCollins. pp. 78–. ISBN 978-0-06-197111-2. Retrieved 23 January 2013. 
  19. ^ Finkelstein, Brad (April 18, 2011). Mortgage News "Guthy-Renker Buys Equity in Paramount". Retrieved January 23, 2013. 
  20. ^ Williams, Scott (August 4, 1990). "Infomercials industry forms trade association". Associated Press. Retrieved January 23, 2013. 
  21. ^ Mary Lou Roberts; Paul D. Berger (1999). Direct Marketing Management. Prentice Hall. pp. 58–. ISBN 978-0-13-080434-1. Retrieved 23 January 2013. 
  22. ^ Fussell, James (February 8, 1999). "As Seen on TV Fitnes Fads Thrive on Variety". The Kansas City Star. pp. D1. 
  23. ^ a b Arndorfer, James (May 2, 2005). "Guthy-Renker gives the infomercial street cred". Advertising Age. Retrieved January 23, 2013. 
  24. ^ a b Brown, Rachel (September 3, 2009). "Van De Bunt Outlines Guthy-Renker Growth Plan". Women's Wear Daily. Retrieved January 23, 2013. 

Further reading[edit]

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