Billy Mays, Companies’ Lost ‘Key’ to Product Selling

30Jun09

The untimely passing of television pitchman Billy Mays on Sunday at the age of 50 has brought about some interesting moral and business issues. Mays story has been repeated hundreds of times within the last 48 hours, from his appearance on the CNBC “As Seen on TV” to the front page of most major newspapers in the US announcing his passing on Monday morning. He was the old school door- to- door salesman that graduated from the rank and file of conventions and took his products to television. His company, Mays Promotions, Inc. was a one- man show that provided companies a turnkey operation for creating infomercials. Mays would write the scripts and act as pitchman as well as the one who would hire third parties to produce the commercials. Of course, his brilliance and lasting legacy in the business was Mays’ ability to move product.

billy-mays

Mays hit the big time with OxiClean laundry detergent, which was manufactured by a company called Orange Glo International, Inc., a family run business out of Colorado. The principals of Orange Glo were located directly across from a booth that Mays was working at a large convention. The Orange Glo team had problems with the microphone that they had brought to solicit those roaming the floors at the convention and despite being their competition, Mays lent the company one of his extra microphones. Who would have thought that Mays’ helping hand would lead to Mays becoming the face of the product that reportedly does $250 million in revenue a year.

As time passed, Mays became a strong influence on the selling of a company’s brand and was also able to obtain ownership points in the products and companies selling the products. Now that he has passed away, this leaves those companies in a compromising situation.

Now that the companies have lost the face and voice of their products and in many cases, some of these companies have also expended a lot of money producing the infomercials where consumers associate the product with the face Billy Mays. Production shoots of this kind can easily range from between $150,000 to $500,000. If it is determined that the commercials have to be pulled and thus becoming unusable, the company not only will lose out on the Mays endorsement, but also in the cost of the creation of the advertisement itself. To date, Mays is involved with a number of products and most have said they will not run the ads for the time being due out of respect for Mays and his family. However, I did see a commercial last evening for Awesome Auger that featured Mays signature screaming pitch.

While I have heard a lot of commentary about the morality of what companies should do with the Mays platform going forward, little to nothing has been said about what a company should do to protect against this situation. In situations such as this it is critical that the company takes out Key Person Insurance (a.k.a Key Man Insurance). In essence it is a policy that is taken out by a business to compensate that business for financial loss that would arise from the death or extended incapacity of someone who is critical to the business. The policy does not cover losses, but a specific sum as specified in the insurance policy. While this is commonplace in Hollywood with star actors who are participating in blockbuster movies, it is not as common for those who endorse products. The more you think about it, the more it makes sense to cover your losses, and in this case, perhaps your own business partner’s life. It will also be something you will be hearing more about as it relates to the death of Michael Jackson and his 50 concerts that were planned in London. Reports say that Jackson recently received a doctor’s physical in order to obtain an insurance policy written for those underwriting the concert series. In most cases the relatively inexpensive cost of Key Person Insurance should be on the check- list of any company that is doing a multi million- dollar endorsement