Guthy-Renker

Guthy-Renker (/ˈɡʌθi ˈrɛŋkər/ GUTH-ee RENG-kər) is an El Segundo-based direct-response marketing company that sells products directly to consumers through infomercials, television ads, direct mail, telemarketing, e-mail marketing, and the Internet. As of 2014, it has 8 different product groups, with an emphasis on celebrity-endorsed beauty products.

Guthy-Renker
Private
IndustryDirect marketing
Founded1988 (1988)
HeadquartersEl Segundo, California
Area served
Worldwide
Key people
Bill Guthy and Greg Renker, founding principals and co-chairmen
Revenue$1.8 billion (2012)
Websiteguthy-renker.com

Guthy-Renker was founded in 1988 by Bill Guthy and Greg Renker. In 1995, it began distributing the acne treatment Proactiv, which became 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. In 1996, 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. It formed a joint venture with Nestle Skin Health in 2016 whereby Nestle now manages Proactiv.

History

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 policy makers 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, the firm 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, the firm 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]

In May 1999, Guthy-Renker formed a strategic partnership with search advertising company LookSmart, who acquired some assets of Guthy-Renker's e-commerce division for $3 million.[17][18]

Guthy-Renker grew to $400 million in revenue by 2001[19] and $1.5 billion by 2009.[20] In 2011, Guthy-Renker acquired a portion of Paramount Equity Mortgage, a solar energy, insurance and mortgage loans company.[21] In 2015, the firm moved from its longtime headquarters in Palm Desert to El Segundo, California.[22]

Products

Guthy-Renker's first products were self-help and motivational courses.[23] 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][24] Another early product marketed by Guthy-Renker was Tony Robbins's "Personal Power" series of motivational lectures.[12]

A Proactiv acne treatment package

The company started to sell cosmetics and skin-care products in 1991, starting with the "Principal Secret" cosmetics line endorsed by actress 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".[25] 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.[20][26] In 2010, Guthy-Renker sold 15 different products.[12] Approximately half of Guthy-Renker's revenues in 2005 came from the Proactiv acne treatment,[26] and 30 percent of its revenues were from international sources.[27]

Guthy-Renker also markets the "Meaningful Beauty" anti-aging skin care system endorsed by model/actress Cindy Crawford and developed by French chemist Jean-Louis Sebagh.[28] The "Sheer Cover" brand of mineral makeup is endorsed by tallk show host Leeza Gibbons.[29] The company also manages the "In an Instant" line of skin care products endorsed by model Heidi Klum and the "Malibu Pilates" exercise equipment endorsed by actress Susan Lucci.[12][27] Guthy-Renker’s Proactiv line is endorsed by celebrities, including Jessica Simpson and Kelly Clarkson.[30] The brand reports annual revenue of $1 billion.[31]

In January 2015, it was announced that actress Brooke Shields would be the new celebrity endorser for Wen Hair Care developed by Chaz Dean. She was reportedly a fan of the brand's Cleansing Conditioner.[32]

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References
  1. Leavitt, Neal (August 1997). "Q&A with Guthy-Renker". ResponseTV.
  2. Gladwell, Gina (August 1997). "Guthy-Renker: 10 Years of Trailblazing in Direct Response Marketing". ResponseTV.
  3. 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. Orton, Charles (May 2001). "The Guthy-Renker Story" (PDF). Response Magazine. Archived from the original (PDF) on 2013-10-22. Retrieved 2013-04-08.
  5. Williams, Scott (August 4, 1990). "'Infomercial' Producers Form Trade Group". Associated Press. Retrieved February 15, 2013.
  6. 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. Archived from the original on October 21, 2013. Retrieved October 22, 2013.
  9. 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. Rotenier, N. (1996). Operators are standing by. Forbes, 158(10), 278.
  12. 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. Hamstra, Mark (1999-05-21). "Looksmart, Guthy-Renker Partner". DMNews.com. Retrieved 2019-03-19.
  18. "LOOKSMART LTD - 10-K Annual Report - 12/31/2002". Retrieved 2019-03-19.
  19. Lowry, Brian (January 5, 2001). "Infomercials an easy sell:Celebrities and TV Stations…". The Los Angeles Times.
  20. Remy Stern (6 October 2009). But Wait ... There's More!. HarperCollins. pp. 78–. ISBN 978-0-06-197111-2. Retrieved 23 January 2013.
  21. Finkelstein, Brad (April 18, 2011). "Guthy-Renker Buys Equity in Paramount". National Mortgage News. Retrieved January 23, 2013.
  22. Guthy-Renker Leases New Office Space at PCT in El Segundo, California
  23. Williams, Scott (August 4, 1990). "Infomercials industry forms trade association". Associated Press. Retrieved January 23, 2013.
  24. Mary Lou Roberts; Paul D. Berger (1999). Direct Marketing Management. Prentice Hall. pp. 58–. ISBN 978-0-13-080434-1. Retrieved 23 January 2013.
  25. Fussell, James (February 8, 1999). "As Seen on TV Fitnes Fads Thrive on Variety". The Kansas City Star. pp. D1.
  26. Arndorfer, James (May 2, 2005). "Guthy-Renker gives the infomercial street cred". Advertising Age. Retrieved January 23, 2013.
  27. Brown, Rachel (September 3, 2009). "Van De Bunt Outlines Guthy-Renker Growth Plan". Women's Wear Daily. Retrieved January 23, 2013.
  28. McKay, Hollie. "Ageless Supermodels: Older and Sexier Than Ever. How Do They Do It?". Fox News. Retrieved February 19, 2015. For example, in 2005, Crawford created a line of beauty products with Dr. Jean-Louis Sebagh called Meaningful Beauty for Guthy-Renker
  29. "Sheer Cover". Retrieved January 20, 2015.
  30. "Proactiv's Active Ingredient: Celebrity". Forbes.com. Retrieved January 20, 2015.
  31. "10 Best-Selling Infomercial Products". Mental_Floss. Retrieved January 20, 2015.
  32. "Brooke Shields is the New Face of WEN Hair Care — And There Are 3 Key Reasons She's a Resurgent Beauty Icon". Bustle. Retrieved January 20, 2015.

Further reading

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