New York-based Jun Group has been in the opt-in, incentivized video advertising market since 2005. For the last three years the company has released a “State of Opt-In Video and Consumer Engagement” report to challenge industry conventional wisdom and establish best practices.

Incentivized video advertising is a rarity in an industry where 90 percent of ads served represent an interruption of the content and experience that the consumer is wishing to have. Quite the contrary, Jun Group’s audience elects to watch its advertising in exchange for rewards, which most typically take the form virtual currency on social gaming sites or ad-free music on streaming music sites.

The latest report, which is based on nearly eight million user-initiated video ad views of Fortune 500 brand ads between May and August 2012, sheds light on some commonly held video advertising misconceptions.

Compared to traditional pre-roll video ad-placement, the same 30-second opt in video ad sees a 53 percent increase in completion rate, from 64 percent to 98 percent. The impact on engage is even greater at 192 percent lift, from 1.2 percent to 3.5 percent.

Beyond comparing the advertising models, the first broadly-held belief to be unwoven is that shorter ads are more well received by viewers. 70 percent of the ads in the study were over one minute long and videos of over two minutes (usually capped at four minutes) were completed over 87 percent of the time, versus the 98 percent for 30-second ads. Despite the small drop, engagement for the longer videos increased by 33 percent. The optimal length video was found to be 30 to 60 seconds.

“The internet gives the opportunity to get away from interrupting people,” says Jun Group CEO Mitchell Reichgut. “When you’re not interrupting people, you can tell a longer story.”

Interestingly, the study found no difference in engagement rates between “made for Web” ad content and repurposed TV advertisements, somewhat negating the need for big investments in original, web-based videos

Rather, the study found that targeting is essential such that identifying the proper audience is the biggest predictor of engagement. By using a pre-screening question to identify an individual’s interests or affinities, the company was able to increase post-view brand engagement, such as visiting a brand’s website, by 13 percent.

In the example of a pasta commercial, the company asked, “Are you responsible for cooking for your family?” Of those answering yes, 10 percent downloaded a recipe after viewing the video, an increase from less than nine percent for those answering no.

“The problem for brands isn’t knowing their user, t’s finding them online, or in media in general,” says Reighgut.

According to the company, brands are less interested than ever before in vague metrics like “viral pass-along,” preferring instead to drive more explicit results like website visits. And while visiting a brand’s Facebook page is still the most popular post-view activity, it has declined 9 percent over the past year.

Speaking of engagement, the study found, not surprisingly, that the 18-34 year old Gen Y audience is the least likely to engage by taking an action after viewing, at 2.87 percent. At the other end of the spectrum, the 55 plus crowd 4.35 percent of the time. The difference among gender is less significant, with females only slightly more likely to engage than males.

“Opt-in video has long been associated with viral campaigns and flashy content, but this year’s data speaks to the fact that with the right approach, it can be used to drive real, tangible results,” explainsJun Group CEO, Mitchell Reichgut.

The conclusions drawn from this study are that opt-in video is a viable tool for identifying the right audience and generating significant engagement and earned-media actions. Although self-serving, the company’s findings are applicable across the video advertising industry and offer a viable alternative to the traditional interruption-based model.

Online advertising is evolving and video based ads are no exception. Brands and their agencies are becoming increasingly more demanding that dollars spent translate into measurable return. By adopting the learnings in the report, the industry can dramatically increase ad relevancy and impact.

To download the full report, go here.

[Image source, Will Hart, Flickr]