Why incentives are a necessary marketing evil

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When it comes to advertising’s traditional cat-and-mouse approach to reaching consumers, it’s time Madison Avenue came to grips with the fact that times have changed. Between DVRs, skippable ads, and so-called “ad fatigue,” consumers have more tools and inclination than ever before to tune marketers out. The mice, in essence, have outsmarted the cats.

With new technology that enables consumers to ignore or override ads notwithstanding, the flaws of this model have long been evident. Interrupting someone is a clumsy and heavy-handed way to get them to purchase a product (or take some other similar action), and to most of us, it seems counterintuitive. However, the incredibly invasive nature of advertising has never been more evident than it is online where the sheer variety of pop-ups, pop-unders, and auto-starts is truly dizzying. In many ways, this rapid growth has blown up in the industry’s face. According to comScore, one out of three ad impressions is never even seen by a human. Even those that actually reach eyeballs are largely tuned out, as evidenced by recent data from WordStream showing that just 0.4 percent of users click on Google’s display ads, which are widely thought to be some of the industry’s highest-performing. And, according to video ad platform YuMe, nearly half of consumers don’t even make it through a 30-second video ad.

Why incentives are a necessary marketing evil

The bottom line is that the old, interruption-based reach and frequency model is broken and has been for some time. So if you can’t interrupt them, how do you reach them? There’s an alternative, and it’s fairly simple. Rather than foisting unwanted ads on consumers, allow them to opt in and receive an incentive for spending their valuable time with a relevant ad. On the surface, this is a seemingly radical idea, and yet it’s really just a more respectful and consumer-friendly variation of the ad-supported editorial model.  

So what do these incentives look like? The pioneers were social games like “FarmVille” or “Angry Birds,” where players received virtual currency or virtual goods in return for watching an ad. Now the model is expanding to streaming music sites, dating sites, and more. As mobile app usage continues to grow exponentially and publishers look for new ways to monetize, we’ll start to see an even wider variety of customized options that offer consumers the same kind of tiered access to advanced features and functionality that they’ve become accustomed to under the freemium model. 

Of course, incentivized advertising isn’t a new concept, as marketers have tried it in the past with varying degrees of success. I would argue, however, that a number of factors have aligned to make the timing right for this approach. First, if the statistics I shared above are any indication, current methods of online advertising simply aren’t producing the results that advertisers need. Second, the internet has spawned a number of wildly popular apps, games, and other entertainment-based experiences that provide advertisers with the perfect milieu to offer consumers something in exchange for watching an ad. And lastly, our advertising technology has advanced to a place where these kinds of incentive-based interactions are possible.

To be fair, there are those in the industry who regard incentivized ads as something of a dirty trick akin to bribery. In reality, it’s a far more respectful approach that acknowledges that the balance of power has shifted in favor of consumers. And if we use video completion and engagement rates as a proxy for measuring consumers’ reaction to this approach, there is ample evidence to show that it works. On average, 95 percent of consumers watch an opt-in 30-second video through to completion and 5 to 10 percent take an additional action like downloading a coupon or visiting a brand’s Facebook page at the end. They’re also 42 percent more likely to purchase the product advertised and 38 percent more likely to report a positive sentiment toward the brand.

Traditional methods of advertising are firmly entrenched in our culture, and they won’t change overnight. Online media, however, is not standing still. The more advertisers are exposed to the results of incentivized campaigns, the quicker they become believers. Look for this momentum to continue and for incentivized advertising to become mainstream in the near future.

Mitchell Reichgut is founder and CEO of Jun Group

On Twitter? Follow Mitchell at @jungroup. Follow iMedia Connection at @iMediaTweet.

Dog begging” image via Shutterstock.

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November 1st 2012 Uncategorized

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