A local video production company that made infomercials featuring dozens of San Diego businesses ceased operations recently without telling many of their clients.
The decision to shut down ShopAround San Diego caught the firm’s client base, comprised primarily of independently owned, small businesses, by surprise.
ShopAround made the decision in late January, said firm president Rob Heller.
“I was surprised,” client Gigi Bjork said when she learned of ShopAround’s demise on Feb. 20 from the San Diego Business Journal.
Heller said the recent economic slowdown created a soft-advertising market that could not support the firm. ShopAround was a little more than six-months old.
The company’s business model consisted of including stores such as Bjork’s Dress to Impress Designer Wear Consignment in Mission Valley, in a 30-minute infomercial with other local shops and restaurants. The program would air 20 times over a pre-determined 30-day period on Cox Communications channels 4 and 14.
ShopAround would produce the infomercial, and the hosts would include Ronnie Loaiza, a former KFMB-TV reporter, and Rick Lawrence, an Airwatch Traffic reporter.
The show was marketed toward San Diego County residents in a feature format that showcased the reporting skills of Loaiza and Lawrence. Each segment was unrehearsed and edited the same way as a television news story.
ShopAround’s operated by selling infomercial time at a low cost to local, independently owned shops and restaurants, Heller said.
The cost to Bjork was $2,100 for a 90-second spot.
– Profits Were Unobtainable
Started in mid-August, Heller believed the production company could be very profitable.
But it never was.
At the end of January the decision was made to cease operations at ShopAround. The firm produced just five programs, Heller said.
Unfortunately, nobody told the clients appearing on the latest tape , which has only aired five times since taping ended in late December.
ShopAround “was expensive (to operate), but I figured it had to start producing sooner or later,” Heller said.
Heller said few businesses were interested in appearing and fewer existing clients agreed to appear a second time.
“We never came close to breaking even,” Heller said. “In fact, the burn rate was rather high.”
Heller was the sole investor, saying he invested $250,000 into the firm.
– Infomercials Cost $4.5K
The original price to appear on a ShopAround infomercial was $4,500 for three minutes, Heller said.
The cost to air a 30-minute time-slot on Cox Communications is between $300 and $900 per show, said Sheryl Charleston, general manager of CableRep Advertising. CableRep is the branch of Cox Communications that sells airtime on the firm’s cable channels.
In December, ShopAround slashed the price and length of airtime in hopes of attracting new businesses, Heller said. Those businesses are featured on the latest program.
Bjork’s business is featured on that program.
“It was an easy decision to make,” she said. “It was an easy way to test advertising dollars.”
Bjork added the expense would pay itself on the first sale made because of the infomercial.
Whether the program is aired again is still undetermined.
Because of the Fair Credit Reporting Trade Act, Charleston could not comment on ShopAround’s account or if the firm was extended a line of credit.
CableRep sales can be made with credit, Charleston said.
– Businesses Would Be Repeat Customers
Bjork and officials from Seaport Village, where eight business owners paid $500 for 30-second spots, and Bahia Don Bravo, a Mexican restaurant with locations throughout San Diego, which paid more than $500, said they would do it again.
“The price was right,” said Jose Bravo, co-owner of Bahia Don Bravo.
Seaport Village and Bahia typically advertise through the print media and direct mail. Seaport Village almost completely markets to the tourism industry, said Kelly Conti, director of marketing for Seaport Village.
“They put thousands of dollars into print , magazines, the (San Diego) Union-Tribune , and we had it down to a science; $4,500 for three minutes,” Heller said. “It was a great concept, a great idea.”
ShopAround had 11 employees.