Mike Safley

The alpaca market in the United States has been a long-running success. Beginning in 1980, when alpacas were re-introduced into the U.S. from England the market has grown year in and year out and the population of registered alpacas between 1989 and 2004 has grown at an annual compound rate of 32%. One of the most important factors in the success of the American marketplace was the magic marriage between alpacas and television that began in 1993. In 2004, the market has never been stronger; the history of this success is a textbook case of guerilla marketing practiced by a committed band of breeders who used the concept of marketing co-ops to leverage their advertising dollars.

In 1996, I read an article about an advertising co-op that promoted pork. Co-op members contributed one cent per pound from every hog that they slaughtered and the proceeds funded their marketing efforts. The ad campaign was simple. They promoted pork as the “other” white meat and encouraged people to eat more chops, ribs, sausage and bacon. The article said that the co-op was enjoying great success, pork futures were up.

I began thinking about how alpaca breeders might get together in a marketing co-op. The ARI was just beginning to issue matching fund grants for regional marketing efforts. An article in the USA Today newspaper that proclaimed that, “alpacas were the investment animal of the 1990’s,” had generated a lot of interest from airline pilots and many of the people who had read the paper picked it up in the airport. The idea came to me in the shower – Inflight magazines.

I dried off and called Greg Mecklem who lived up the road from me, he liked the idea, I checked with Mario Pedroza, another alpaca breeding neighbour, and with Gordon Anderson who was president of Alpaca Fest International at the time, they liked the idea. We decided to create an alpaca-advertising co-op. This excerpt from an article about the co-op describes our effort.

“Together, we christened the first co-op advertising effort: Western Alpaca Associates. The co-op placed ads that invited prospects to call a toll free number (1-888-8ALPACA). People responding to the ads were greeted with a voice mail invitation to leave their name and address in order to receive a state-by-state breeder’s directory and AOBA’s alpaca investment brochure.”

“Seventy-nine breeders advertised in the breeder’s directory, representing nine states and sixty-seven cities. The sale of ads generated $34,422 in revenue. The balance of the programme was funded with matching funds through an ARI regional grant.”

“Ads placed in Alaska Airlines’ Inflight Magazine reached 850,000 people flying Alaska, each month. Sunset Magazine was also chosen for another ad campaign because of its Western readership, which totaled 1,425,000 per month. The publications were selected for: 1) their regional audience, 2) the high income, highly educated readership, and 3) the high proportion of families and women who subscribe to or read each magazine. Over 700 directories were mailed during the first three weeks of the programme. This campaign found an enthusiastic audience of people who, having never laid eyes on an alpaca, found their photographic images irresistible.”

The Western Alpaca Associates directory eventually became the model for AOBA’s Farm and Ranch Guide. Here is what AOBA President Rick Evans had to say about the program in the July 1997, issue of the Hummer.

“Though there are several dimensions to our emerging national marketing program; the cornerstone of the effort will be the revised breeder’s guide in which we are going to sell ads to AOBA farm members to generate funds to purchase alpaca advertising in select national publications.”

“We feel that, with good participation from AOBA farm members, we will be able to triple or quadruple the number of annual alpaca inquires to AOBA, based on the costs and results of the recent ads we placed in Martha Stewart Living Magazine. Advertisers who obtain all the leads generated by the programme will be getting those leads for approximately 12 – 25 cents each, an amount that is well below the $3 - $6 lead cost that many of you are experiencing in your alpaca business. In addition, AOBA will be mailing the directory, with your farm ad included, to every one of the 15,000 to 20,000 people who are expected to respond to our national ads in the upcoming year.”

ALPACAS AND TELEVISION

Next, the ad co-op concept was applied to television. I had developed the first alpaca infomercial in 1993; an article from Alpacas Magazine article described the process.

“Alpaca Infomercials

The same concept of an ad co-op that funded the print media campaign was applied to television. Anyone who has ever had his or her farm featured on TV will attest to the power of television. AOBA learned this when Tilson Associates landed airtime for alpacas on Good Morning America and the Today Show.

This success gave me the idea to develop an alpaca “infomercial.” I had seen this new age form of advertising selling everything from Bow Flex to those slice and dice machines. The programs often featured self-help concepts sold by the likes of Tony Robbins or diet programs sold by Dr. Atkins.

All infomercials are twenty-eight and one-half minutes long. Most have distinct segments containing interesting information, which last about five minutes. Each of the “info” segments is followed by an offer to sell the featured product. I produced an infomercial that told the alpaca story beginning in South America and continuing on to farms and ranches in the United States. The content focused on lifestyle and investment opportunities.”

The infomercial was a tremendous success and when Jerry Forstner was elected President of AOBA in 1995, he decided to produce an infomercial that would be available to members. The tape he created had the added advantage of failing to feature my smiling face. The AOBA infomercial worked well but the real benefit of the tape was that it stimulated Jerry’s imagination and he conceived of using television to market alpacas in a new and revolutionary way. Jerry simplified the infomercial process and began running one-minute AOBA commercials on TV. The commercials were placed on the satellite dish networks that included a high number of rural subscribers. The response was instantaneous. The ads displayed an 800 number and invited people to call AOBA; and they did.

WWW.I LOVE ALPACAS.COM
Jerry Forstner is responsible for a number of remarkable successes in the alpaca business. He created the AOBA auction, pioneered the use of the 60-second commercial by AOBA and his Breeder’s Choice Alpaca Auction, held at Magical Farms each year, is the premier farm event of the year. He also brought Jerry Miller, of Brown and Miller advertising into head AOBA’s media campaign. But, ILoveAlpacas.com has to be Jerry’s most spectacular idea.

Jerry’s big idea came close to crashing before it soared into cyberspace. Rick Evans, the newly appointed president of AOBA, asked Jerry to serve as chair of AOBA’s marketing committee. Rick wanted to increase AOBA’s television budget from $400,000 to $1,000,000: No small task.

Jerry’s committee went to work analysing the revenues and looking for ways to add marketing income. After carefully considering all the alternatives, they proposed that AOBA raise the cost of advertising in the Farm and Ranch Guide from $650 to $1150. (The current price of advertising in the Farm and Ranch Guide, $650, has to be one of the best marketing values on the planet.) This would have doubled the revenue available for TV and accomplished the major part of the committee’s goal. Rick Evans vetoed the committee’s initiative. Here is Jerry’s reaction to the arbitrary veto.

“Rick vetoed the idea. I was upset, in that it did not make sense to have a committee of experts and do a lot of work and then have one person veto all of the work. I felt it was a waste of my time, so I resigned from the committee. After resigning, I was still fretting about the fact that we needed more money spent on television work.”

After “fretting” for a while, Jerry decided to organize an initiative that would create the cash to promote alpacas on television. In one stroke of creative genius, he came up with the, ILoveAlpacas.com, name for the new co-op. Jerry could not believe his good fortune when he found that the website address was available. Here is Jerry’s account of how the co-op came together:

“I just felt if I could not do it through AOBA, I would do it myself. I thought that I could come up with 100 breeders that would put in $5,000.00 and devised the formula to give them very exclusive coverage in their state. The first year we signed up 94. Not quite my one hundred, but I was pleased. I did not know for sure that it would work for them and neither did they. They trusted me and that felt real good.”

“The rest is history. Each year I have around 96, to 99 members. I have never hit the 100 mark; however, I don’t doubt that should I do some advertising, I would be able to reach it without trouble. The members have had spectacular success. The industry as a whole has benefited as so many more people have heard of alpacas. I get several e-mails a year that say I don’t even belong to I love alpacas and I have sold animals because of it.”

ILoveAlpacas.com has added one significant refinement to the ad co-op concept that began with Western Alpaca Associates - it is all electronic. The co-op does not spend any money on fulfillment, which involves mailing a print piece such as the Farm and Ranch Guide to people who inquire by phone or email and are very expensive, about $12.50 a copy, and the fulfillment budget bleeds money from the media budget.

The I Love Alpacas TV campaign is managed by Jerry Miller and he only buys spots when the price is right: At the last minute. The secret or “guerilla” element of this marketing effort is to buy the TV time at deeply discounted prices, which usually means the commercials are run at odd hours or when the networks have unsold space.

ALPACAS AND THE INTERNET

Prior to 1996, all alpaca marketing was done in print or on television. The internet has changed the way we sell our alpacas. In 1997, 58.63 per cent of American alpaca breeders used the internet, in 2000, 92.69% used it. In 2000, only 12.06% of all alpaca breeders had a website. Today 39% have a website.

An AOBA marketing survey determined that that 32% of all U.S. buyers have purchased alpacas, sight unseen, over the internet. The following data is from the 2000, AOBA Marketing Committee report and should be considered by everyone when they develop their marketing plans.

1. The major decision maker for alpaca purchases is female. 42.58% of purchase decisions are made solely by women, another 40.98% are made jointly by both husband and wife (which is to say the woman makes the decision), and finally 12.32% are made by men.

2. The average age of the decision maker is 31-40 (22.94%), 41-50 (32.62%), and 51-60 (30.11%). The average age of an alpaca owner is 46.2 years…”

Internet purchases for all categories of goods are primarily made by women. The single most important fact about the internet and alpacas: 95% of new buyers do their alpaca research on the internet. Today, the bottom line of alpaca marketing is: No Internet, No Sales. (It is also interesting to note that the average income of alpaca buyers in the United States is $65,000.00. This runs contrary to many people’s perception that the U.S. alpaca market is made up of wealthy people.)

These statistics explain the genius of Jerry Forstner’s innovation, I Love Alpacas.com. He married the power of alpacas on television to the technology of the internet. This strategy has become the backbone of AOBA’s marketing program.

WHAT’S GOING ON HERE?
Ray Paulek, Editor of Blood-Horse Magazine, asked, “What’s Going on Here?” He was analysing the success of AOBA’s marketing program. Here is part of what he had to say in his 2002, article:

“You can’t race or bet on an alpaca. But you can breed, raise, and own them, an as the Alpaca Owners and Breeders Association (AOBA) has proven, you can market them. More specifically, you can promote the idea of breeding, raising, and owning these fleece-producing creatures.

AOBA has grown to 1,000 members, and there were 8,000 alpacas on file with the breed’s official registry. Since 1996, the growth of the industry has accelerated. Currently, AOBA has more than 2,500 members [2,889 members in 2002] and the alpaca population totals 33,000. The herd is increasing by 22% annually.

People in the thoroughbred industry who insist anything less than $50 million for national marketing is merely a drop in the bucket will scoff at the suggestion that AOBA can have any impact on a small annual budget.

Well, guess what? For about $800,000 a year, the alpaca industry has a daily presence on cable television – yes, daily – and is regularly promoted in magazines like Martha Stewart Living and Country Living.

Using a tight-fisted media buyer that Hobert said “never buys retail,” the alpaca industry is promoted on several cable packages. All are purchased through DirectTV or the Dish Network. The ads promote alpaca breeding as a fun family activity, but also as a serious investment.

The first media package shows AOBA or I Love Alpaca ads on CNN, CNBC, and MSNBC. I’ve seen the ads numerous times during the “Imus in the Morning” show on MSNBC or “The News with Brian Williams” during evening prime time. A second targets women on the Oxygen and Lifestyle channels, and a third showcases alpacas on Animal Planet, Discovery, and The Learning Channel.

The National Thoroughbred Racing Association and Thoroughbred Owners and Breeders Association are looking for ways to promote thoroughbred ownership. Perhaps they can learn from the modest, but fast-growing alpaca industry.”

AOBA MARKETING 2004

AOBA spends more than $1 million per year on alpaca marketing. I Love Alpacas adds another $500,000. Alpacas are seen on television, in magazines, and over the internet. No promotional stone goes unturned. Today (2004) AOBA raises and spends more than $3,500,000 million dollars a year to operate the breed association and support the alpaca community: The 1986 AOBA budget: $3,179.00. The association’s membership has grown at an annual compound rate of 30% beginning in 1986, when there were 38 members, until today when AOBA membership totals 4,188. The good ship, USS Alpacas, is sailing in smooth water, under blue skies.