Q&A: Mitchell Reichgut, founder and CEO, Jun Group

Mitchell Reichgut, founder and CEO of social video company Jun Group, says that incentivized-ad programs such as the one Facebook launched a few weeks ago are turning 60 years of advertising on its head. In addition to discussing the direct marketing capabilities of social video advertising, the former general manager and creative director of Bates Interactive says that he expects the incentivized channel to wend its way into mainstream games such as World of Warcraft.

Direct Marketing News (DMN): Recently Facebook began to reward players of select Facebook games with Facebook Credits for watching an in-game advertising video. Can you talk about the difference that the virtual currency incentive makes in terms of clickthroughs and views?

Mitchell Reichgut (Jun Group): Well, I think virtual currency is an enormous shift, and it’s really an evolution in online advertising. To really understand it you have to consider the 60-some-odd years of advertising that’s come before, where it was all about how frequently can I interrupt someone and in how many different places. What incentivized viewing, or incentivized advertising, does in general is totally flip that on its head, where it says how can I enable someone to have a great experience and absolutely make them happy about seeing this message.

DMN: In terms of the results though, what’s the value-add there?

Reichgut: The results that we see are off the charts. We’ve been in video distribution for six years, and this blows away anything we’ve ever done. We see 90% completion rates on every video that we distribute, and we’re getting about 5% average shares after the video. And that’s the important part because it tells us that people have really enjoyed the experience enough to go and pass it along with a friend or interact with a brand after viewing.

DMN: What kinds of information are advertisers able to collect other than interactions with the videos?

Reichgut: You can collect all kinds of stuff. Of course all of us are very cognizant about privacy issues. Being very careful there, I think that you can use gender and age data in an anonymous way to make sure that the messages are being targeted to the right groups. After the interaction of course, you have the ability then to go much farther and let users opt-in to all kinds of programs where they can click to the website or share a video or anything they want to do.

DMN: How are you able to target according to gender and age? Is that dependent upon a consumer making that information available to everyone in their Facebook privacy settings?

Reichgut: That’s right. And we’re advertising in a lot of the biggest social games, and these games all have registered users. So we’re using the registration data to target who sees the videos that we distribute.

DMN: Obviously the incentives help because it makes consumers more likely to engage an ad, but it seems like there would still be some friction in terms of pulling a consumer out of the game experience. Can you talk about that challenge?

Reichgut: Sure. We don’t really see it as a challenge. In fact, virtual currency is so integral to the game experience that users really seek it out all the time. It enables you to get ahead in the game, and remember, these games are so addicting because there’s a social aspect and a competition aspect. You’re wanting to advance those initiatives all the time, and virtual currency is really what makes that happen. There’s lots of things you can do to earn virtual currency, including paying with your credit card, which is a very popular option.

Video is great because it’s quick and it’s easy and it’s fun and you don’t have to sell anything or participate in anything. That’s why we’ve had such great success with it. To be honest with you, we’ve had so much traffic come from this channel it’s mind-boggling. We have the capacity to drive a million views a day right now and our network is growing every day.

DMN: But the videos that Jun Group displays aren’t pop-ups, correct?

Reichgut: Absolutely not. That kind of thing is antithetical to what we do. For years, even before social games, we were all about opt-in and user-initiated views. The reason we’re so excited about the social game space is people really want to do this and they feel great about it.

DMN: With these videos, is there an ideal video length? I imagine you don’t want to take up too much of the user’s time, but I know some of the videos that are being displayed in the Facebook initiative are averaging about two minutes, which to me seems like an eternity for someone who’s looking to play the game and just watch the video to get the currency.

Reichgut: That’s true. Shorter is always better, but this realm does give you the opportunity to go a little bit longer. We’ve have great success with two minute videos. It does seem like a very long time, but when you consider the other options for earning currency, it’s actually very short and very easy and often quite entertaining. For instance, we have done a bunch of recipe videos for a big CPG brand that are even longer than two minutes, and we’ve had 90% of all people that view them watch all the way to the end and 5% of people downloading a recipe and interacting with a brand afterword. It’s gone as high as 9%.

That sharing aspect after they’re incentivized really tells us they’ve had a great experience. It’s one thing to get people to complete the view to earn the [virtual currency], but when you have that kind of sharing and interaction afterward, there’s just no doubt that people are having a great experience and they’re interacting with a brand because they want to.

DMN: How do you see incentivized-video advertising evolving?

Reichgut: I think you’ll see it as a mainstream online video and online advertising channel. I think it’s going to be widely accepted, widely used. As social gaming becomes more and more ingrained in our culture, this form of advertising, I think the value of it will become evident to everyone. Our clients that have tried it have uniformly come back for more, and I think you’re going to see that across the board, not just in video but in online advertising in general.

DMN: Do you see it extending into non-Facebook games, such as World of Warcraft and others that feature virtual currency?

Reichgut: Absolutely. I just think it’s a win-win for brands and for consumers. The main part looking at it from the brand standpoint is they’re getting to connect with someone in a way that’s enabling them to have a great experience. It’s completely turning the model on its head. Instead of pestering them and having to repeat the message 10 times to get them to remember it, here you’re really working with them in a quid pro quo kind of system.

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