Cut of Infomercial Action Is Paying Off.

Jim Caldwell first became interested in making infomercials in the late 1980s after seeing a TV sales pitch for motivational tapes.

While buying $350 worth of the tapes, the former host of such short-lived game shows as "Tic Tac Dough" decided to start his own infomercial firm to hawk business opportunities and products.

"I saw them making money and thought 'I can do this, too,'" Caldwell said.

He launched his own company, Sherman Oaks-based Future Thunder Productions Inc., in 1989 and has since produced about 35 infomercials, hosting most of them himself.

The company has seen revenue jump from $400,000 in 1992 to $1.9 million in 1999, in large part because of lucrative deals that Caldwell made over the years for a cut of sales from the products featured in his infomercials. He believes revenue could reach $5 million this year on the strength of those contracts.

Some clients come to Caldwell with products already in production, while others don't even have a patent. If he believes a product is useful and can be easily demonstrated on television, he negotiates for a percentage of sales either on the products sold directly through the infomercial or on overall sales.

Along with producing infomercials, Caldwell has also hired manufacturers, media buyers and anyone else needed to bring early-stage products to market.

"The fact is, if I choose right and I create a home run, I have a royalty stream," Caldwell said.

The use of infomercials has steadily expanded over the past few years as big-name companies like Toyota and Apple start using the format, said Elissa Myers, president and chief executive of the Electronic Retailing Association, an industry trade group.

In April 1998, a total of 250,000 infomercial spots were aired on cable and network TV channels, according to the Infomercial Monitor Service. In the same month last year, 300,000 infomercial spots were aired.

"Business is expanding exponentially," Myers said.

Early flaps

For Caldwell, success came after a few false starts. He started out by traveling to home shows in search of new products for his first infomercials. At a show in Italy, he found the Electro Dynamo, a household product designed to clean, polish and wax floors as well as other household surfaces.

He featured the product in one of his early infomercials but it proved to be cheaply made and unable to do all the things promised. Sales were dismal. "Certainly I learned a lesson about shabby manufacturing," he said.

His second infomercial also flopped. It promoted coupon booklets that people could buy to get hundreds of dollars of groceries for a just few bucks. Caldwell was so confident the product would sell, he financed the infomercial himself.

It bombed. "I guess people didn't want to pay $39 for free coupons," he said.

In 1992, with some costly lessons under his belt, Caldwell hit infomercial gold with the Flying Lure, which promised to glide down through the water at a 45-degree angle as a way to attract fish.

The infomercial generated direct sales of $3 for every $1 in media time purchased, making it a hit in the eyes of the industry. Not only did Caldwell earn a percentage of the sales from the flying Lure, the commercial also generated lots of exposure for his company.

Future Thunder's biggest hit came in 1999 when the company produced a commercial for the Roto Zip Spiral Saw, a woodworking tool sold at Home Depot and Sears. Its direct sales were $14 for every $1 in media time, making it one of the more successful infomercials on television.

It was also named the top infomercial of 1999 by the Electronic Retailing Association.

"A lot of people thought the spot for Tae-bo was a slam dunk, but overall the professionals looked at Caldwell's show and hands down elected it as the best," Myers said. "Jim is one of the masters of writing scripts and delivering them. He is an on-air presenter, and he comes off as warm and genuine on camera and someone the public relates to."

Taking flight

Caldwell employs only one full-time person at his company, preferring to contract production and other help only on an as-needed basis.

Production of the infomercials usually takes between two and four months, with budgets running between $175,000 and $400,000, depending on how much the client is willing to invest.

Future Thunder produces and edits the shows.

Caldwell said he tries to structure his infomercials with testimonials, an interview with the inventor, demonstrations, and if possible, a plug by someone with name recognition.

Later this year, he plans to launch his own product on the Home Shopping Network -- a greeting card with a paper airplane inside. Called SkyWriters, he hopes to market the line through television infomercials, just as he's done for others.

He's also looking at expanding online, and repackaging some of the infomercials as short streaming video clips geared at narrowly defined target audiences.

"People talk about the Internet and e-commerce and all the buzzwords, but the fact is the Internet is direct response," he said. "I think the Internet is changing things. But still, broadcast TV has the largest audience."