Jun Group's guaranteed engagement video ads actually work

By Michael Carney , written on February 7, 2013

From The News Desk

One of the biggest challenges with advertising is measuring impact. As John Wanamaker famously said, "Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” The holy grail then for ad purchase models is cost per engagement (CPE), meaning the advertiser doesn’t pay unless the consumer completes a predetermined action such as purchase, enrollment, or other interaction.

Jun Group, one of the loudest proponents of opt-in video advertising, has applied this model to its platform by introducing a new guaranteed engagement product which it calls “PostView” in December.

There’s a lot to unpack there, so let’s go step by step. Opt-in video advertising means that rather than interrupting viewers with pre-roll or interstitial ads as they watch other online video content, Jun Group invites viewers to volunteer to watch video ads in exchange for rewards or compensation. In most cases this takes the form of free music downloads, free Wi-Fi, or free in-game virtual goods.

PostView advertisements mean that brands are not charged for video views. Rather, they are only charged for user-initiated actions, such as downloading a coupon, Tweeting, or visiting the brand’s website after a video ends. The only risk the brands assume is a potential loss of prestige for resorting to incentivized advertisements, but this is becoming less of an issue in the minds of many in the industry, according to Jun.

The company reaches 101 million Web users each month and an additional 50 million mobile users on YouTube, music and entertainment sites, and within social and mobile games. It aims to demographically and psychographically target each advertisement within this broad audience.

In a study of 100,000 consumers, the company found that incentivized video ads drove three times more clicks than those without rewards. But does this simply amount to a bribe or is the engagement authentic, and thus valuable to the brands paying for it? Jun reports that after earning their reward, consumers were 41 percent more likely to interact with the brand's site again in the future. Also, activity on secondary pages, or those beyond the initial brand landing page, were 17 percent higher among rewarded users.

So maybe there’s something legit to the model.

“On the surface, it’s easy to say that our users are just in it for the rewards,” Jun Group CEO Mitchell Reichgut says. “But opt-in users deliver better results because they are willing to spend more time with brands, and they feel more positively towards them. Additionally, when users opt in to a rewarded program they’re pre-qualified and targeted to a degree that’s not otherwise possible. This dramatically increases the odds of conversion.”

The company serves videos of up to three minutes, but tends to show shorter length content. The company found that its users watch 30 second videos to completion more than 95 percent of the time, blasting the low single digit engagement figures for pre-roll and interstitial video advertising.

Brands often turn to Jun Group when they wish to drive engagement in a promotion or contest, rather than simply build awareness. The company has worked with Nike, ESPN, Wal-Mart, Gillette, Axe, Mercedes Benz, Nokia, Intel, CBS, and HBO among many other premium brands.

Despite the impressive results, brands pay less for rewarded video views and post-view actions than they do for those gained organically. Call it a stigma. The going CPE rate for a Facebook "Like" generated organically is $0.70, but Jun group gets less than this amount – the company declined to specify its exact rates. Nonetheless, with its high conversion rates, Jun is able to serve these ads profitably.

The New York-based advertising company was founded in 2005 and has been bootstrapped since inception.

Jun is just getting started with its PostView product, but its CEO predicts that the model will soon represent one third of its entire business. At the end of the day advertisers simply want to know that they’re getting value for their investment. CPE-based advertising is the purest form of this possible.

As we were wrapping up our meeting, I asked Reichgut what Jun means. “It’s Chinese for truth,” he says.