Tongal, a Southern California start-up that has crowd-sourced video ads for big brands such as Pringles and McDonald’s, is expanding into music.
The Santa Monica-based firm has made a name for itself linking writers, directors and actors with brands to create video ads in exchange for cash prizes. The sponsoring brand chooses the best entries from the users’ submissions.
Tongal will now use its platform to field ideas and production for music videos as online streaming becomes a key way that people consume content, the company said Thursday.
James DeJulio, Tongal’s co-founder and chief product officer, argues this will be a big opportunity for the company to meet the increased demand for music on the Web. Plus, it’s easier to get people to watch music videos than commercials.
“You will do everything in your power to avoid an ad unless it’s really compelling, but people actually seek out music,” said DeJulio.
Tongal hired former Capitol Records A&R head Dennis Wolfe to lead the music division. Wolfe will oversee label partnerships and rights management. The new music side of Tongal will work with labels to set up video-making contests. It will also hold scoring competitions.
This will increase opportunities for the company’s community of amateur filmmakers and bring in more creative people who want to get exposure and money for their work, the company said.
Crowd-sourcing music videos could also save money for the labels, and increase the number of videos they can make, Wolfe said. While $250,000 music videos were once the norm, record companies have pulled back.
At the same time, the demand for videos has increased as fans desire more content to watch on the Web through YouTube and Vevo.
“All the recent research clearly shows YouTube as being the No. 1 place where people consume music,” said Wolfe. “Labels used to spend a quarter-million to make a video that would get one spin a day. The way we do it, we make a video for every track on an album.”
Tongal, which competes with Poptent Inc., received $15 million in funding in January.
Tongal’s advertising business allows filmmakers to enter competitions to make a brand’s next ad. Advertisers pay Tongal to manage the creation of the advertisement.
The site offers a prize -- often around $250, paid for by advertisers -- for a winning idea of no longer than 140 words. It then has competitions for fully fleshed pitches and finished video products, with the prizes going as high as $25,000.
The company recently put out a call for videos for an ad campaign by Pringles based on Lucasfilm’s “Star Wars” brand. Users submitted more than a thousand ideas. Eventually seven videos were made.
One of them shows an office worker pretending to do battle with Darth Vader, using a light saber that turns out to be just a Pringles can.
“The reaction we have seen to the seven videos has been overwhelmingly positive and successful,” said Teresa Lindsey-Houston, marketing director for Pringles.
This concept works for advertisers who want to save money and still create ads that go viral online, said Thales Teixeira, a Harvard Business School professor who studies crowd-sourcing.
“It’s too expensive to come up with only one or two ads when one might not work,” he said. “So the alternative is you create a great many ads and you put them on YouTube. You can’t do that with your traditional ad agencies.”
Still, the company’s tactic of crowd-sourcing from talented filmmakers could backfire if normal ad agencies start offering the filmmakers regular, high-paying jobs. Also, the company needs to prove it can consistently churn out winning ads for the brands.
“These companies can’t afford to manage a relationship with a one-off,” Teixeira said. “What Tongal needs to do is provide consistently good content.”