Joseph interviews the principals of Ultramercial about this company’s new approach and business model that he thinks might prove a shot in the arm for the industry.

For this Juice, Jaffe talked with Dana Jones, founder and president, and Peter Lloyd, COO, of Ultramercial, the company behind the Mercedes-Benz commercial break-style ad on Salon.com that provides a gateway to Salon’s premium content, as wrote about in iMedia Connection on November 21. In a unique approach to the traditional interview, however, Jaffe blends one part thought leadership with two parts interview to serve up an enticing Jaffe Juice cocktail.

Let me tell you a little story about a man with an idea; an idea he thought would revolutionize the Internet industry as we know it – and specifically the scourge of e-mail overload. He put together a business plan and took it on the road to a variety of qualified angel investors. Unfortunately for him, that time was the Fall of 2000, aptly titled as it was not only leaves that were falling to the ground, but failed dot coms, together with a myriad of business plans to boot. That man was me (I gave you an easy one to make up for Gosford Park).

The business plan for Optinal (opt-in-all, geddit?) occupies a special place in both my heart and under my bed, and from time to time, I dust it off to reconsider what might have been. The interesting part is that I firmly believe there is more need now than ever before for my idea, but more specifically, it’s the various forms of new advertising models I toyed with then that draw my attention these days.

One concept I wax about I call Advertising on Demand (AOD). AOD is the future of advertising. It’s the ability for consumers to pull advertising based on their specific needs, user state or mindset. If I’m looking to buy a car, I’m pretty interested in most auto advertising. However, the moment I purchase that car, the same advertising that was so valuable, becomes instantly irrelevant. In fact, the utility associated with it potentially drops beyond zero to represent an even negative value…often in the form of cognitive dissonance.

Optinal used several derivations of this advertising concept. One of which I called, Incentive or Endorsement and it went something like this: The service was subscription based and the dollar value of this subscription represented the fair market value. Consumers had the choice of paying for this service with their hard-earned dollars, or with their time (in the form of a sponsor endorsement).

They say that for every unique or original idea being developed at any given time, there are another three people working on the same thing. The difference between the winner and the losers is often speed to market, intertwined with a bit of healthy luck and/or chutzpah.

About a year passed from the time I benched my mark, exchanging my entrepreneurial hat for an agency one, and then one day I wrote an article about it …

Jaffe: You contacted me about a year ago, based on an article I’d written talking about the endorsement/incentive model. I thought you were definitely onto something then and I told you that until you brought in your first client, your model wouldn’t be validated. Well you’ve done both now in terms of validating the model and signing up your first client. Perhaps take a couple of minutes to share your beliefs about this approach.

Ultamercial: Media has always been paid for or supported by advertising. In print, the subscription fee doesn’t even pay the postage; it’s the advertising that pays for everything. Our feeling is that it ought to be that way with the Internet as well. And the way to do that is to make the relationship between the advertising and the viewer explicit – it’s always been implicit until now. And in an odd way, it’s almost as if the advertising community hasn’t been getting its money’s worth. You run your commercial on TV in a pod of six commercials, running the risk of getting lost in the clutter; and with TiVo it may never be seen at all.

With Ultramerical, the viewer elects to watch the ad because there’s a value proposition, which is in there with TV or print in that “I want the content, and in exchange I’m willing to see some ads.” We make that relationship explicit.

Jaffe: Walk me through how the Ultramercial product and process works.

Ultamercial: Ultramercial is a full-screen multi-page online commercial, with a lot of the benefits of television. Its big hook is that it’s placed between the viewer/reader and premium content that the viewer would otherwise have had to pay for. So by watching an Ultramercial, they buy or pay their way into premium content. The commercial is interactive – you must click to get your way through. You can’t let it run, go and get a cup of coffee and come back. It won’t get to the end if the viewer doesn’t participate. Because of this architecture, you can build in functionality, research or e-mail capture. So if you’re an auto manufacturer, you can let people choose their favorite colors or select a desired price point for example.

Jaffe: And so once they click through the various multiple steps or stages, they would then gain access to this premium content?

Ultamercial: That’s right.

Jaffe: These are tough times, no doubt. I would imagine it was pretty challenging to get this business model and new vision out the door in terms of signing up strategic partners and clients. Talk about this process in terms of how you were able to convince partners to come aboard.

Ultamercial: We had a wonderful opportunity when we found Salon, in that not only did they have a need for this kind of product, but they really spent the time to get to understand this, and developed a tremendous enthusiasm around it.

Jaffe: Did Salon come aboard pretty early in the process?

Ultamercial: We had been in discussions with another automotive manufacturer about a potential media buy with Salon…

Jaffe: …so they were pretty much recommended through the advertiser…

Ultamercial: …correct. And any time an advertiser is willing to spend money with an online publisher, because times are – as you said, so tough -- they are more likely to listen very carefully to the value proposition proposed to them.

Jaffe: Kudos to Salon. Obviously this underscores a very important belief that consumers will pay with either their time or money for value.

Ultamercial: It’s a win-win situation for them. If someone watches the Ultramerical, they’re compensated. And if someone chooses to sign up for the paid version of Salon premium, they win again. So in both cases, they’re compensated. This is a great model for publishers because they can mine the demand curve that’s out there at all price points.

I believe Salon has around 4mm uniques a month, and a little more than 1% are paid subscribers. So close to 99% of its user base are potential customers.

Jaffe: At this early stage, can you share any preliminary results in terms of performance?

Ultamercial: I think we can fairly say we’re absolutely delighted with early returns. When we compare it to published figures from other media, we’re quite certain we’re going to get the attention of other advertisers.

Jaffe: When the campaign concludes, it would be great if you could share some of the initial results, and reactions from the advertiser, agency and publisher.

Ultamercial: Sure.

Jaffe: How have you gone about measuring success? I assume you’re not going to talk to me about clickthrough. Or maybe it is clickthrough, albeit a different kind – click-right-through!

Ultamercial: That’s very interesting. In the banner world, you have three to eight clicks per thousand that come to your site, and yet the vast majority of people that arrive at the landing page hit the back button and go back to where they were. Only a small percent start drilling down into your site. We’re essentially bringing four pages of a client’s Website to a captive audience of engaged consumers.

Jaffe: So I guess competed views would be one measure of success?

Ultamercial: We would call it a beneficial completed view.

Jaffe: Others would be typical brand metrics, research, information and e-mails captured?

Ultamercial: That’s right.

Jaffe: Let’s chat about consumer acceptance and reaction to this intrusive process.

Ultamercial: It all comes back to the value proposition. For something that takes four pages to go through, which might be 30 seconds of time, consumers are getting something back of enormous value: a day pass to all of Salon’s premium content, including its archives.

Jaffe: Try telling that to the empowered online consumer. I would imagine you’ve received your fair share of complaints, right?

Ultamercial: Not one negative comment. As a matter of fact, the only “negative” letters we received were from those who couldn’t get through the process due to technical reasons, such as browser problems. So we essentially help force them in. Not one person has complained about the experience.

Jaffe: Another benefit is that you’re not selling impressions; you’re selling sessions or experiences -- you would buy x number of Ultramercials from the publisher?

Ultamercial: That’s true. We don’t fit well with a lot of the metrics out there, but we’re delivering that solid thing that everyone’s been looking for.

Jaffe: It’s obviously frequency capped as well.

Ultamercial: Right.

Jaffe: What were some of the primary drivers that helped you navigate or determine the optimal number of steps or sequences in the process? Any lessons learned you could share?

Ultamercial: We had a couple of benchmarks. The Superstitial unit is 100 or 300K, so those were benchmarks. In terms of number of screens, we started with eight to 10 and right away got feedback that this was too long. A lot of this was just common sense.

Each screen has a maximum of 75K. We work with a company that uses a proprietary way of using a progressive load for Flash. We can’t have anyone waiting around looking at a loader screen.

Jaffe: Final question: If Jaffe Juice were a drink, what would its ingredients be?

Ultamercial: It would be the Ultra-tini – Absolut Vodka, in honor of your former client, served third-party with a twist.

Jaffe: I’ll endorse that!