First, Henry C. Yuen did what skeptics said was impossible: He persuaded newspapers to pay for all those tiny numbers they now run in the TV listings, the ones that program VCRs to automatically record shows. Now, he's going after far bigger game by trying to get TV advertisers to do the same.
Yuen is the genius behind VCR Plus, that simple $60 gadget that signals almost any VCR to turn on and record at the right time after the viewer punches in a code number from the TV listings (BW--Jan. 14). The way Yuen figures, advertisers could use the same scheme to deliver information to interested consumers. "We're just extending the choice from what program they want to watch to what commercial they want to watch," says Yuen, CEO of Gemstar Development Corp.
BIG SAVINGS. Right now, the idea is just a concept, but he has set up a sister company, iPlus Inc., and hired ad agency veteran James K. Agnew to run it. Executive Vice-President Agnew most recently headed J. Walter Thompson/West and was president of McCann-Erickson USA. "You already see ads for cars and cruise lines and tourist destinations running 800 numbers so prospects can get a videotape," he says. "In the future, we'd hope that the VCR PlusCode would be listed."
The code would trigger VCRs to tape a 10- to 30-minute commercial aired on a little-used cable channel in the wee hours. Agnew figures that as the number of VCR Plus users grows, the iPlus system will be able to deliver such a "video brochure" to consumers at a cost to advertisers as low as $1 to $2. Companies that now mail out videocassettes spend as much as $10 each, plus production costs. Blank tape, dubbing, and packaging alone cost them around $2.
As with current video brochures, the consumer pays nothing. The cable station, meanwhile, could sell time that would otherwise go unused. And iPlus would collect its cut from the agency that placed the ad that got the consumer taping in the first place.
The prospect of big savings has grabbed the advertising community's attention. "If TV advertising is fragmenting like we think it is, then we have to find new ways to get our message into the home," says Vic Olesen, president of the Los Angeles ad agency that bears his name. Olesen ran a campaign earlier this year for Chevrolet, mailing 200,000 videotapes to Californians to drum up interest in the Caprice sedan. "That was just potluck, but what VCR Plus has is really remarkable," he says. "You would get highly qualified prospects, because they all asked for it."
Adds Richard B. Edler, managing director of Foote, Cone & Belding/Los Angeles: "Because they're already in the home, VCR Plus could become the premier direct marketers in the country."
TEST TARGETS. Agnew plans to start with three categories when testing begins next spring: automobiles, tourism, and movies. The three already use extensive video marketing, he points out, either through direct mail or, in the case of movie studios, by running trailers in theaters and on videos.
Now, all he has to do is to persuade prospects to run them on TV--and rent a PlusCode from iPlus. That will mean still more revenues for VCR Plus, which, counting license fees from newspapers, royalties from VCR makers, and sales of the gadget itself, will do close to $80 million in business this year, its first. "What we've come up with is the poor man's interactive TV," says Yuen, who still holds down a job at TRW Inc.'s Space & Technology Group. But it's a poor man's toy that's making him rich.