Tuesday, October 24, 2006

The Oprah Effect


Lisa Price was at a crossroads. By 2002, Carol's Daughter, the bath and beauty products business she had founded in her Brooklyn kitchen, had hit $2 million in sales. "We were trying to decide whether to scale back to keep control of costs or find investors to keep growing," she recalls, Twenty minutes later, the phone rang. It was a producer from The Oprah Winfrey Show asking Price to come on the program.

The effect of Price's appearance was astounding: the Carol's Daughter Web site nearly crashed from the high volume of orders that came in after Oprah raved about the products. "What it did was give us a stamp of approval," Price says. The company easily attracted new investors such as Jada Pinkett Smith, celebrity endorsements from Mary J. Blige and mass market distribution in stores like Sephora.

Such is the power of Oprah. She arguably holds more sway in making--or breaking--an individual (James Frey, anyone?), a business (Carol's Daughter and hundreds more), a book (too many to mention) or an industry (the beef brouhaha in 1998) than anyone, ever, in this country--and maybe even the world. She's our $1.4 billion woman--and that's just with her sprawling media empire. Factor in her ability to subtly endorse products without ever appearing in a commercial or an ad, and her economic impact magnifies. She has made her mark on the retail landscape, seemingly fueled the exponential growth of online shopping, transformed the book industry, made giving to charity a priority for millions, and exposed new audiences to Broadway. Consider this: If every one of her 49 million viewers and 2.4 million magazine readers bought just one Oprah-sanctioned item a month, for say $10, that would equal a whopping $6.168 billion a year pumped into America's economy. That's about how much Starbucks made last year, worldwide.

On a seismic scale of impact, Ms. Winfrey is a 10, with aftershocks felt at both poles. This is how her influence stacks up:

The Oprah Winfrey Show, now 20 years old, has been No. I for 19 seasons. Before Oprah decided to stop submitting the show for Emmy consideration, it won 35 Emmy Awards. It is her most popular showcase, and it's broadcast to 122 countries.

The show (Harpo Productions) is the platform for her business, Harpo, Inc., which has grown and diversified. Harpo, Inc., now includes Harpo Films (Beloved, Tuesdays With Morrie, Their Eyes Were Watching God), Harpo Radio (a $55 million deal with XM satellite radio for the new Oprah & Friends channel) and Harpo Print (O, The Oprah Magazine and O at Home with Hearst), as well as a deal with Oxygen Media and the Oxygen network.

In a 2004 study, Brigham Young University found that Winfrey's book club recommendations had a greater influence on book sales than anything else in the history of modern publishing. Says Sara Nelson, editor-in-chief of Publishers Weekly, "Oprah is getting people who were not particularly reading, to read."

It's her 59-and-counting book club picks that usually get the most press, but Oprah gets thousands of books moving in other ways. From April 2005 to April 2006,162 books got a plug on her show. Kerry McCloskey went on the show in early April 2006 touting her research on sex and passion as the best slim-down plan in her book, The Ultimate Sex Diet (True Courage Press). According to Nielsen Bookscan, the week after her appearance, McCloskey's book sales shot up 1,260 percent. Harville Hendrix, Ph.D., also got a lot of love when he appeared on the show twice in April 2006, pushing sales of his Getting the Love You Want (Owl Books) up 849 percent.

O, The Oprah Magazine was the most successful magazine launch in publishing history: It has a circulation of 2.4 million, it reaches 16.3 million total readers each month, and it's now avail able in a South African edition. Her magazines are also a lush outlet of product love, lining the coffers of thousands of vendors and retailers. Each issue of O features celebrities and experts and books and products that just ache to be purchased. The spring 2006 issue of 0 at Home, for example, showcased 71 products in one story.

She doesn't do traditional endorsements. You'll never see Oprah's name on sneakers or clothes. Instead, her interest is in spreading her passions. Oprah likes to promote what she thinks is important and useful. We follow--and spend in droves. "She influences the purchase of 20 to 25 percent of all goods. I think Oprah is actually underestimated," says Michael Silverstein, coauthor of Treasure Hunt: Inside the Mind of the New Consumer (Portfolio). Oprah's product bacchanal hits its pinnacle with "Oprah's Favorite Things--The Holiday Edition." This list of items has included everything from Burberry coats to computers and chocolate.

For every several thousand of Oprah "blessings," a few turn out not so rosy. Though her 2005 audience giveaway of brand-new Pontiac G6's was trumpeted as the epitome of successful product placement, the automotive press was not all convinced. "It was great for Oprah, but I didn't see much on Pontiac. I didn't hear her say, 'This is a Pontiac kind of day,'" said Lincoln Merrihew, managing director of automotive practice at Compete Inc., in WardsAuto.com.

Still, for most vendors, there is nothing like an Oprah blessing, says Rob Walker, the consumer columnist for The New York Times Magazine. "If you have a product, there's no better environment to be in than on Oprah. You're being treated as almost a religious artifact," he says. Large retailers, such as Sony, see a nice jump in sales, but Oprah also picks small vendors like Pamela Fitzpatrick. Her $39.99 tub of oatmeal raisin cookie dough from Chicago's gourmet grocery fox & Obel was Chosen as a Favorite Thing for holiday 2005. "It was really like winning the Academy Award," Fitzpatrick says, adding that the first 220 sales came 45 minutes into the show. They then sold around 600 tubs in the first two weeks after the show aired, and over the holidays they sold three times that many.

Oprah's desire to help those in need has been a lifeline to many charities and nonprofits. The Reverend Gloria White-Hammond, chairperson of the Million Voices for Darfur campaign, was certainly pleased. "Oprah's impact on the Save Darfur Coalition's effort was nothing short of tremendous," she says. According to the Coalition, donations went up 1,200 percent in the three days after Oprah highlighted their efforts on her show, and 1,600 percent more donors signed up in the same time. Translation: Many lives were saved in Darfur.

What seems to bolster her featured charities and retailers most is the limitless resource that is oprah.com. "When Oprah does something, there is an immediate 'click' impact," says Heather Dougherty, senior analyst at Nielsen//Net Ratings. For example, take the month that the Save the Darfur Coalition was featured on The Oprah Winfrey Show. According to Dougherty, oprah.com had 2.2 million unique visitors. "She has a very deep site. The deeper the site, the better the engagement," Dougherty says. "Other comparable sites are so small [number of visitors], we don't measure them."

Oprah's protégés serve both as brand extensions and as a fire under her seat. Dr. Phil's success has been its own phenomenon--he now has the second-highest-rated talk show and eight best-selling books, is the new spokesperson for Match.com, and has prime-time TV specials and the Dr. Phil Foundation. Others who've benefited include her crowned boy wonder, interior designer Nate Berkus, with his own home line at Linens 'N Things; Bob Greene, Oprah's personal trainer and fitness guru; Suze Orman money diva; Mehmet Oz, M.D., health guru; and her two newest additions, Robin Smith, love and relationship psychologist, and Rachael Ray, the smiley TV chef (whose new show is produced by Harpo Productions) and magazine powerhouse in her own right. And, of course, there's Gayle King--Oprah's BFF and editor-at-large of O, The Oprah Magazine, who, at press time, was still churning in the rumor mill as a possible cohost to join ABC talkfest The View.

What's left? Ah yes, Broadway. Ms. Winfrey's producer credit for Alice Walker's The Color Purple on Broadway surely had something to do with its outrageous opening ticket sales--S16 million in two months--and possibly its 11 Tony nominations. But, more than the bursting moneybags and accolades for the show (this in a business with a 75 percent failure rate), what's significant is, as with her book club, Ms. Winfrey has brought new audiences to Broadway.

With every venture, Oprah somehow finds more to do, more needs to fill, and more ways to make and use her money--and her power. The Live Your Best Life speaking tour and on line multimedia workshop is a standing-room-only event every year. She's released a six-disc DVD set of her Twentieth Anniversary Celebration with all proceeds going to the Angel Network, her charitable foundation that has raised $50 million in five years and $10 million for Hurricane Katrina victims. And in October 2005 she launched a Child Predator Watch List that has captured four sexual predators and has rewarded those who located them with $100,000. It is undeniable. Oprah has the Midas touch.

So what will Her Highness turn into gold next? We're all watching.

*Based on our $6.168 billion estimate.


IF OPRAH WERE… A NATION her 51.4 million weekly viewers and magazine readers would equal more than the population of Canada (33 million), Spain (40.3 million) or Argentina (39.9 million).

IF OPRAH WERE… A PILE OF GOLD she'd be equal to 24,000 14-karat gold bars.

IF OPRAH WERE… BLING she'd be eight times the equivalent of 373 100-karat pear-shaped, flawless diamonds (the most expensive ever sold).

cnnmoney.com reported in January that Oprah ranked second only to Google as the biggest brand newsmaker of 2006. Behind Ms. Winfrey were Amazon, eBay and iPod.

IF OPRAH WERE… A NATIONAL ECONOMY what she'd pump into the U.S. economy would be slightly more than the GDP of the Bahamas.*

By: Ulrich, Carmen Wong, Essence, Oct2006

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