What is value exchange and how is it an answer to ad blocking and fraud?


An Adotas Q&A with Mitchell Reichgut, CEO of Jun Group, explores this way marketers may be able to cope with ad blocking and reduce fraud.

Q: What is value exchange and how is it an answer to ad blocking and fraud?

A: Value exchange advertising puts people in control of their ad experiences. With value exchange, audiences actively engage with advertisers to unlock entertainment, points, WiFi, or other digital content. Also known as “rewarded advertising” or “incentivized advertising,” value exchange has evolved from a niche play to a major force in digital advertising. Value exchange ads now power major apps and entertainment destinations around the Internet. Additionally, value exchange ads are always viewable, resistant to fraud, and immune to ad blocking because people actively choose to open them.

Q: There has been industry resistance to value exchange advertising. Why and how is it changing?

A: The industry has been interrupting people for decades, and the reach-and-frequency mindset will not disappear overnight. We’re simply not use to partnering with our consumers. There was similar resistance to banner ads, pre-roll, rich media and other formats when they were new. Value exchange is an even bigger conceptual shift, and it delivers breakthrough results. Google, for instance, recently reported that over 46 percent of digital video ads go unviewed. eMarketer reports that in 2017 over 86 million Americans will use an ad blocker. Value exchange is the remedy for these challenges.

Q: What are some examples of how value exchange advertising works?

A: Publishers such as The Daily Globe and Los Angeles Times use value exchange to help monetize their content without paywalls. Here, people choose to engage with an ad to access a premium article. Other major publishers such as Rovio (Angry Birds), Kik Messenger, and AT&T utilize value exchange units to reach millions of individuals in brand-safe environments. Advertisers such as Honda, Pizza Hut, Disney, AngelSoft, Dos Equis, and Samsung have all used value exchange to engage with their consumers. Large players like Google, News Corp, and Viacom are now adopting value exchange formats as well. For example, with Google’s consumer survey app, users can take survey questions to earn Google Play credits.

Q: Why do you think advertisers are now just starting to jump on the value exchange bandwagon?

A: The value exchange concept is not new. Television ads, radio ads, and even pre-roll units are all incentivized (we sit through them to get to the content). The only difference with digital value exchange is that people choose when and where to participate. And that’s key. When someone decides on her own to engage with an advertiser it’s a deeper, richer experience that yields better results for all parties involved.

Q: Why is performance so much better with value exchange? And why does it work so well on mobile?

A: Value exchange ads deliver the best results in the industry, especially on mobile. The units outperform other forms of advertising because people actively choose to be there. Add to this first-party targeting that comes from user-declared data and suddenly, you have a brand-new kind of connection. One that delivers relevant, intimate connections on-demand. A recent study showed that users who previously never made an in-app purchase are 4X more likely to make a purchase after engaging in a value exchange video. We see 92 percent completion rates for :30 second videos compared with pre-roll benchmarks of 73 percent. We also see engagement rates that are up to 14X greater than with pre-roll. Value exchange also generates superior awareness. A recent study showed 86 percent greater brand awareness with value exchange, compared with Vizu benchmarks.

Q: What are some of the shortcomings of value exchange?

A: Value exchange is only now starting to be offered programmatically. Jun Group is one of the first companies to make its value exchange inventory available programmatically, including mobile in-app video. Prices for value exchange units are typically higher when compared to pre-roll and some native placements. This format is typically a performance placement and purchased on a CPE (Cost Per Engagement) basis as opposed to a CPM (Cost Per Thousand), which advertisers are more accustom to.

Q: What are the key benefits to value exchange advertising from a consumer, brand, and publisher perspective?

A: As mentioned above, consumers love it. No pop-ups, no interstitials, no mandatory loss of data. Advertisers appreciate it for different reasons: value exchange units are always viewable; they’re resistant to fraud, and they represent an elegant and much-needed solution to ad blocking. Additionally, the units create new inventory. Value exchange ads can be found on major entertainment publishers that are brand safe and family friendly.

Q: Value exchange has its roots in games. What has the rest of the digital ecosystem learned from that success, and what new types of publishers are embracing value exchange placements?

A: Value exchange has its origins in the digital game space, and top games like Kim Kardashian’s Hollywood, Crossy Roads, Madden NFL, and Angry Birds have made value exchange units a key part of their products because they work, and because users prefer them. According to Unity Technologies, 71 percent of users said watching video ads is their preferred way to access in-game content, and 66 percent of respondents want more opportunities to earn rewards through ads. Music apps, such as Spotify and Pandora have had major success with value exchange. Their users may opt into branded experiences to earn ad-free listening time. The same mechanism has also been successful on Hulu and other video properties. Social platforms like Kik are the latest to hop on the bandwagon.

Q: Do you see a point in time where value exchange advertising overtakes other popular types of digital advertising like native, and display?

A: As the word grows ever more mobile, people have greater control over what they see and experience. We believe that value exchange will gain broad industry acceptance in this environment. For the most part, standard digital ads are not great experiences. They’re interruptive; they use precious data, and they are increasingly creepy. Value exchange advertising is what happens when our industry finally learns that providing consumer value is more beneficial to advertisers than incessant interruption.
Mitchell Reichgut, CEO, Jun Group

Prior to founding Jun Group in 2005, Mitchell led Bates Interactive, the online unit of Bates Worldwide Advertising, now owned by WPP. As General Manager/Creative Director, Mitchell helped grow Bates Interactive into a 70-person integrated unit, with clients such as EDS, Moet & Chandon, and Warner-Lambert. Before joining Bates, Mitchell served as Creative Director at Think New Ideas.

Mitchell began his career as an Art Director at Grey Advertising where he created print and television advertisements for clients. Throughout his career, he’s worked with major brands across industries, including Procter & Gamble, Parker Brothers, Budweiser, Rockport, Reebok, and Sony.


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