Tongal case study from the mix


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Tongal case study from the mix

  1. 1. 10/11/2010 Tongal: A 21st century business model… Management Innovation eXchange Stor y Tongal: A 21st centur y business model for finding top talent and putting them to wor k on something they love James DeJulio July 29, 2010 - 8:33pm Innovative: 4.6 | Detail: 4.6 Comments: (7) Title Tongal: A 21st century business model for finding top talent and putting them to work on something they love Summary Tongal circumvents the traditional Madison Avenue system, by using the internet to bring together talent around the world, and the organizations who need them to create winning advertising. Tongal also “practices what it preaches” by using its sophisticated approach to crowd sourcing to build and continuously improve its own business model. Moonshot(s) Amplify imagination Disaggregate the organization Take advantage of diversity Take the work out of work Context I had been in film and TV production for many years, all the while trying to poke holes in it. A big red flag went up when I saw that tools were becoming cheaper and cheaper and the work force larger and larger, yet costs kept climbing; it was unsustainable. I also hated the stranglehold of Hollywood on filmmaking, and Madison Avenue on advertising; literally, 10 people would get the big jobs. Or great material would sit on some agent’s desk, gathering dust. I left my job at Paramount Pictures in 2004, and formed an entrepreneurial partnership to develop, produce and finance content. We would hand pick a book or magazine article, buy it, and co-develop it with writers and other creatives – usually people working on the industry fringe. But we were still reliant on the old system; we had great material and had trouble getting it to market. It was so frustrating. Triggers Late in 2007, Rob Salvatore, Mark Burrell (Tongal co-founders) and I were having a conversation with Jack Hughes, the CEO of TopCoder, a Boston-based software developer with a global community of over 200,000 programmers who compete to develop the best code for client projects. We were shooting the breeze, thinking about ways to apply the TopCoder model to filmed content. It just seemed to make sense. People now have access to smaller and cheaper, yet technologically sophisticated cameras and other equipment that once were the sole province of professionals. Making a movie no longer needs a major studio; people are already making and sharing their home movies on YouTube, for free. I thought it would be best to start off with shorter pieces, beginning with thirty second commercials. As we gained experience, we could move into short films, music videos, instructional videos, and eventually TV and feature length films. We intended to lead by example, and apply the model to every component of Tongal, from our logo to site development to marketing. That would help with the other big challenge: turning a profit. We wouldn’t be staffing up, so it wouldn’t cost much money to build the business. We would make money through platform subscriptions - a monthly fee for business clients. Key Innovations & Timeline Refining the concept By the summer of 2008, we were refining the concept. Like Topcoder, the basic idea is to run collaborative contests where each project is broken down into pieces, and people compete for cash, with a panel of judges picking the winners. For our projects, the phases in the creative process are submitting an idea, making a pitch that expands on the idea, and developing the video itself. We added a few extra twists too. The contest process, and incentive system ended up looking like this: 1. We announce a contest on our site. Deadlines for each phase are posted on a project calendar. 2. A member – they need to register first – submits an idea. The best 5 ideas advance to the next phase, and their authors get a cash prize. They also earn a percentage of the prize money their submission generates in future rounds. 3. Members can submit pitches for any of the ideas. The best 5 get a cash prize and advance, and earn percentages of future awards, as merited. 4. Members submit videos for any of the pitches. 5. Judges review video submissions and select the top five, for cash award. 6. Members also can the view the submissions, and predict winners. The viewer whose top 10 predictions most closely match those of the judges get cash. 7. The most watched video – which can be embedded anywhere but must be seen via the Tongal player and cannot be a YouTube hit – also wins a cash prize. 8. Clients get 5 video products as part of their subscription, but can have additional items at extra cost.…/tongal-… 1/4
  2. 2. 10/11/2010 Tongal: A 21st century business model… By breaking creativity into smaller pieces, we allow people in all walks of life to compete. For example, a mother in Iowa probably isn’t about to move to New York to join an ad agency. And she may not have the skills or time to create a video for a consumer product that she uses every day, but she can, at the very least, throw her idea into the collective hat – she should, she’s the loyal consumer – and allow the brand and her fellow consumers to hear her voice. And she can have s ome fun! She can be part of a community, play in a contest, and get some recognition for her contributions. Even if she can’t come up with an idea, she can be a voice in predicting the results of a contest for her favorite product. What differentiates Tongal from traditional outsourcers is that it’s not an open call for work; it’s a forum where people with different skill sets can collaborate. The predictive element of our contests also sets us apart. We actually have filed a patent on it, as an analytical and decision making tool. Its power is that it takes personal preference out of decision making. It’s like the NCAA Final Four; even if you hate Duke, you’ll vote for them if you think they’ll win. That brings us to a question we often get: “What the heck does TONGAL mean?” It was inspired by a book published in 2004 by James Surowiecki called “The Wisdom of Crowds.” The book begins with an anecdote: In 1906, in Plymouth, England, statistician Sir Francis Galton attended a country fair, intending to prove the “madness of crowds,” or that crowds lacked intelligence and were prone to delusions. To his surprise, he observed that when guessing the weight of an ox, the average of the crowd’s guesses was more accurate than that of any given individual. TONGAL is an anagram for GALTON. Developing the platform and putting it to work We were trying to create a community. The Tongal site only existed to support the community; it was the scaffolding. Through TopCoder competitions, which we began in late 2008, we created the look of the site; built the website pages, voting systems, and the video player, writing the software to manage membership registrations and for members to submit their work; and ran bug races to identify and resolve any problems. We integrated it into Facebook so people don’t even have to navigate to Lots of clients have dedicated a lot of time, money and energy to build a Facebook following; now they can give them something to do, and a way to be productive. We figured we could leverage our personal networks to attract the first members and companies. We were still in beta – open to invitees only - when we ran our first ever contest in May 2009. It was for an original parody or spoof commercial for, with a $2,500 prize. In June, we were startled but thrilled to get reviewed by PCMAG.Com. We ran a few of our own contests, to develop an elevator pitch and “who we are” video for Tongal. Word began to spread. Launch, learning and growth We officially launched summer 2009. Our pitch to clients was that not only could they have access to more talent, we’d be engaging hundreds of consumers in creating ads for their brands. They also could achieve significant cost savings. The cost of creating a 30 second ad is $500,000 or more; we figured we could do it for as little as $5,000. Plus, it costs another $130,000 every time an ad is aired on prime time TV. By making creative development an on-line contest, the ads get permeated throughout the Internet. And clients can still air the ads on TV if they want to, of course. It wasn’t an easy sell. We had to explain the basic crowdsourcing concept; we didn’t have much product to show; and corporate marketers were nervous about straying from their ad agencies. But by the end of 2009, we were running four client programs. We got a special boost early in 2010 with a project for Kiva, a nonprofit organization that fights global poverty by enabling people to make small loans to low-income entrepreneurs who are supported by microfinance institutions around the world. Kiva wanted an inspiring video that would not only explain the loan process but also raise awareness and attract new lenders to The winning video, developed by a Tongal member in Sweden, was featured on YouTube’s homepage and accumulated over 100,000 views in 1 day. By July, we had run 22 contests total, with prize purses as large as $15,000. Newer clients tended to be more sophisticated; we didn’t have to use the crowdsourcing presentation slide as much, and some were interested in using our tools for problem solving or product improvement. Meanwhile, our community has become as diverse as we hoped it would. Our members range from teenagers to 45+. They are 70% male and 30% female. They are US based (87%; all 50 states) and international (13%; 40+ countries). In just one month, we had visits from 125 different countries. This is a huge factor is our ability to offer diversity in our product, and a global market perspective. Challenges & Solutions Challenge: Educating clients away from impressions to engagement Solution: Digital advertising money is still focused on metrics related to audience impressions, like cost per minute of airtime. We argue that focusing on TV doesn’t make sense anymore, when people are much more attached to their computers and telephones, and are just as likely to fast forward through commercials when they do watch it. We try to help them understand that 1,000 people completely engaged in their brand will always be more valuable than 100,000 who aren’t paying attention. Solution: Metrics like cost per minute also happen to be easy to measure…and charge for. Perhaps we need a rating agency to assess the value of crowdsourcing and other social media. Challenge: Keeping the Tongal community vibrant Solution: We have to be able to offer a steady flow of exciting work. In the short term, we’d like to source a lot of advertising production, applied to any kind of output – brands or nonprofit. Longer term, we’d like to reinvent TV programming; we can easily find the talent to write an episode of a sitcom, and film production. Solution: We want to make this more lucrative for creative talent. Right now, a $10,000 prize is a windfall or legitimate second income; you can buy yourself some new equipment or a family vacation. But as our economics improve, and we get more and bigger projects, we should be able to increase people’s earning potential. Solution: We have to keep the site attractive and useful. It’s constantly evolving, in response to community needs. Someone suggested adding a leaderboard, to showcase top contributors, so we did that. Recently, we got feedback that new people feel like they’re walking into a party that’s already started, so we need to make it more welcoming to newcomers. We also have realized that it doesn’t really have much targeted to clients; we need to fix that. Benefits & Metrics For Tongal Accomplishing goal of providing an alternative to “the system” About 5,000 registered members, 25,000-50,000 user visits per month 22 clients/projects since launch (10 currently) Expect to be profitable by the end of the year…/tongal-… 2/4
  3. 3. 10/11/2010 Tongal: A 21st century business model… For Tongal contestants Chance to make some money, “be discovered,” network, and get feedback on their work Some members cited the following as their favorite things about Tongal: - “It’s the only place where I can play at b eing an advertising executive, b e creative, make videos, and stand a chance of winning actual money!” - “That I have the chance to participate at any level. If I don’t have time to make a video, it only takes a few minutes to come up with and sub mit a concept.” - “I like that it’s a community effort and that there is almost always something for someone to win.” -“You truly feel like your work is appreciated.” For Tongal clients Access to large pool of talent; cost effectiveness; quality and quantity of product; engagement with consumers The president of a client company commented: “I was shocked b y the quality and creativity of the work that we were ab le to source using the Tongal platform…not to mention the diversity. This was a great way to produce our new commercial [for Binaca b reath spray] and to quickly populate our site and YouTub e channel with lots of high quality video.” Lessons It’s not as easy as it looks. There’s lots of expertise required in running this kind of business. I can’t tell you how much we have learned the past 18 months. If you take a leap of faith, and are committed, it will work. The more manageable the tasks, the better, so everyone can participate. And – at its core – it has to be fun, as well as properly incentivized. Make no mistake though; this is no fad. Credits James DeJulio, Tongal co-founder With assistance from Shirley Spence Tags Crowdsourcing, advertising, prediction market, talent Helpful Materials Articles “Aching to Produce Your Own Ad? Try Tongal,” PCMAG.COM, June 4, 2009,2817,2348201,00.asp “Impressions vs. Engagement-Is It Time for a New Metric?” James DeJulio, Cahordix, March 29,2010 The ad space race: Tongal takes off. Jonathan Winter, London Business School, Management 2.0 Labnotes, Issue 14, December 2009 Web site Tongal site Documents: No documents at this time Images: No images at this time Videos: Tongal Highlight Reel 2010 from Tongal on Vimeo. Comments…/tongal-… 3/4
  4. 4. 10/11/2010 Tongal: A 21st century business model… James DeJulio September 16, 2010 - 11:51am @Erika Thanks! shoot me an email if you want to learn more: delete edit reply not spam (0) mark as spam Erika Ilves September 14, 2010 - 6:58am James, Read the story, spent some time on the site - it's brilliant. And building in incentives for distribution through social networks is genius. Grand-prize worthy. Your future client delete edit reply not spam (0) mark as spam Kerry Beazley August 1, 2010 - 9:54am I just love this. Being able to select the best at each step of the process ensures that a project is alive with unexpected twists and turns all along the way and stacks of energy right to the end. Well done, that's awesome! delete edit reply not spam (0) mark as spam James DeJulio July 30, 2010 - 3:49am @Ellen - well, a little bit of both. Not necessarily MBAs, but mostly as a way for creatives to get started working without having to work as waiters :) Also as a way for "couch potato creatives" as an outlet to develop skills. delete edit reply not spam (0) mark as spam Robyn McMaster July 30, 2010 - 3:05am James, I am so impressed by the methods you are using to "crowd source" and engage your global audience with competitions. People love an opportunity to win... Just consider "The American Idol." Nicely spelled out and packaged. delete edit reply not spam (0) mark as spam Ellen Weber July 30, 2010 - 3:38am James, you have seen a huge gap in talent recruitment - and designed a solution that rocks! Well stated and a terrific read! It will be fun to watch your design grow. In a bit of a different way, the MITA brain based approach involves "alternatives to the system" also - which drew me to your innovative story. Do you see this model also as a teaching tool for out-dated MBA programs, or as a training tool for sluggish organizations? Good luck with its continued success! delete edit reply not spam (0) mark as spam James DeJulio July 30, 2010 - 3:20am Thanks Robyn. Most importantly, I think we're democratizing and opening up the creative workforce. Most of our participants would have been locked out of this type of work without a site like Tongal. Same as Idol or Top Chef, etc. delete edit reply not spam (0) mark as spam Management Innovation eXchange Improving the technology of human accomplishment This w ork is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.…/tongal-… 4/4