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In 1965, Compax Corporation's ad agency hired Jim Henson's company to make three TV ads. Compax sold a line of pre-shrunk cotton fabric called Pak-Nit RX, designed to resist shrinking in clothes dryers and stretching outside of them.
Henson and his partner Jerry Juhl ginned up three ads, including the tale of "Shrinkel and Stretchel" (loosely based on Hansel and Gretel). In the spot, the young duo encounter a witch (Taminella Grinderfall, voiced by Juhl), who puts them in an oven. Due to their aforementioned heat-resistance, they're unscathed. This attempted murder leads to an extended discussion of the positive properties of the brand.
So gather around, kids, and watch the eerie tale of two shrinkage-resistant Muppets!
Read more about this ad from the Jim Henson Company Archivist.
Note: There are unofficial videos online of the other two videos, Shrinkenstein and Rumple Wrinkle Shrinkel Stretchelstiltzkin (featuring Kermit!).