BOB GARFIELD: In our ongoing coverage of the transformation of TV advertising, today we bring you the infomercial. You know what they are, but let us remind you, anyway. [COLLAGE OF INFOMERCIAL CLIPS]

MAN: Even you. Yeah, you! So sit, stay, and we'll be right back.

MAN: Seems we're bombarded every day by one dietary claim after another. You need more fiber. It's okay to drink red wine. Are you getting enough vitamin E?

MAN: Are you spending your life wishing for firmer breasts?

MAN: And you do it naturally.

BOB GARFIELD: Infomercials were huge not too long ago, when making a million overnight didn't seem like that big of a deal and everyone, yes, everyone knew the three words "Psychic Friends Network." But that was then. Now, viewers have hundreds of channels to choose from, and of course there's TiVo, enabling viewers to skip the ads all together. So how is the infomercial industry keeping up? When was the last time you saw an ad for the Psychic Friends Network? Steven Dworman's latest book is Twelve Billion Dollars of Inside Marketing Secrets Discovered Through Direct Response Television Sales. He joins me now from NPR studios in Los Angeles. Steve, welcome to On the Media.

STEVE DWORMAN: Thanks so much. Hi, Bob.

BOB GARFIELD: Tell me about how it was when things were great.

STEVE DWORMAN: Well, when things were great, Mike Warren, the founder of Psychic Friends Network, used to legitimately say that he'd wake up in the morning and find himself a million dollars richer from the psychic calls that came in overnight.

BOB GARFIELD: Apart from the Psychic Friends Network, what were the big, big blockbuster programs, as they call them in the industry?

STEVE DWORMAN:One of the big early successes in the late '80s was Blublocker Sunglasses. Blublocker was selling an average of about 50 million dollars worth of sunglasses per year for a period of about three to four years. And then, of course, the industry really kind of took a new turn in 1989 where two breakthrough shows came on the air, one of them for Victoria Jackson Cosmetics that featured Ali McGraw and Lisa Hartmann, and nobody had seen celebrities like this on an infomercial before. Then you also had Tony Robbins with Personal Power, which was a real breakthrough infomercial as far as documentary style with incredible production values.

BOB GARFIELD:In the early days, the infomercials had just a bizarre attraction to them. It was kind of a car wreck experience, where you don't want to look, but you really do.

STEVE DWORMAN: There certainly was an element of that, because, except for these real quality shows that were being produced, I mean people were doing these shows really cheaply. We actually saw an experiment that was done by a guy named Tony Hoffman. He showed a kitchen appliance show that he produced extremely cheaply, and the show just started doing extremely well, and he felt so guilty about how bad the show looked he went back and parlayed some of the profits and re-did the show with the same host, same demonstrator, same product, but upgraded the set, upgraded the graphics, even upgraded how the audience looked, and they tested that, and the entire thing just bombed, and they went back to the terrible version.

BOB GARFIELD:I actually was in Las Vegas for one of the infomercial conventions, and, and it had just the most amazing gold rush feel to it. Everybody had come there to make their fortunes, and I guess a few of them did, but the predictions that the infomercial was going to dominate the universe didn't seem quite to pan out. What's the landscape like nowadays?

STEVE DWORMAN: It's much more difficult to make a profit, primarily for two reasons -- the cost of media has gone up as much as five times in the last five or six years, and there are fewer eyeballs watching each station, because there are quite a few more stations in cable networks. When these early infomercials started running, Bob, people had nine television stations on their dial, and people would hang around the water cooler and talk about did you see Ali Mcgraw on television last night.

BOB GARFIELD: So who is, in this changed environment, out there still succeeding in this genre? There -- somebody's making money.

STEVE DWORMAN:Actually when everything is said and done, the company that ended up at the top of the heap is a very smart company called Guthy Ranker Corporation, and they were one of the pioneers, starting with Tony Robbins and Victoria Principal. And then their big one which is running consistently is for an acne medication called Pro-Active. Pro-Active alone does close to about 600 million dollars a year in sales, and the company overall this year will be doing over a billion dollars in sales. They were very, very smart in really spending a lot of time developing their back end and building up continuity products which are products that -- they're not really making a profit off of their television sale, because the media is so expensive, but the product is so good that people continuously re-order it every month or every two months, and that's where their primary sales come from.

BOB GARFIELD:One of the fundamentals of direct marketing --you don't make money with your first sale, but it's the up-sell later that keeps the cash flowing in, eh?

STEVE DWORMAN: And that's one of the other things, the third thing, probably, that has changed the business, outside of what we've talked about is the fact that, because you don't make a profit on the first sale, where you used to in the late '80s and early '90s, you have to as a company have extremely deep pockets to finance all of that until your campaign becomes profitable.

BOB GARFIELD: Steve, thanks so much.

STEVE DWORMAN: Thanks, Bob.

BOB GARFIELD:Steven Dwarman's book is Twelve Billion Dollars of Inside Marketing Secrets Discovered Through Direct Response Television Sales. You can get more information at www.DRTVSecrets.com.