Ten Minutes with James DeJulio, President and Co-Founder of Tongal

It's official: Google is evil. As one of the leading dark forces in the current net neutrality debate, Google has partnered with other large media and communications companies to shut the garage door through which it was birthed on the inherently democratic nature of the Internet. What comes out of the net neutrality debate is significant, not least because it may contribute to the silencing of millions of creative voices that the Internet has given output.

But for those who would stem the Internet and its pursuant social media revolution, there are others who are figuring out ways to make it profitable--for brands and creators alike. James DeJulio, a former production veep at Paramount's Robert Evans Company whose credits include How to Lose A Guy in 10 Days and The Kid Stays in the Picture, is getting in to that game as president and co-founder of the startup venture Tongal, which uses crowdsourcing to produce viral video.

Just over a year old, the company has achieved major successes using crowdsourcing to produce viral video with established brands like Nine West, Binaca and the microlender Kiva, and is in competition to be the power behind PepsiCo's social media kingdom. In a net neutrality special of the Ten Minutes series, DeJulio explains that while the ground is shifting, there are plenty of opportunities for profit in the media landscape of the future.

Fabio Periera: What is Tongal and why did you start it?

James DeJulio: The main reason was frustration with the traditional entertainment business where, in Hollywood or on Madison Avenue, there is a short list of people who actually get creative work. There are a billion people on the Internet [and] the tools for creativity have suddenly become so inexpensive. Every kid's got a Mac and FinalCut and a FlipCam is $250 and a camera package that would have cost you $10,000 ten years ago now just costs $250 bucks. There are 20 hours of YouTube video uploaded every minute and there are all these people out there doing this stuff anyway for free.

[But] we also notice that the cost of production in Hollywood and Madison Avenue are spending kept escalating. So, we really just set out to democratize the labor force, [while realizing that] if we put some sort of quality control on it, with prize pools and collaboration, we can really step up the quality of the content.

So, for those who might not know, what is crowdsourcing?

It's a way to leverage intellectual capital and community collaboration and work. The easiest definition that I always tell people is a distributed problem-solving and production model. We're really looking at Tongal as a new production model and right now it's really for brand video and 30-second spots. When we built the application, we really wanted to build something that would be able to take consumers and turn them into creators. In the last six months to a year, [everyone] has [been] scrambling, trying to figure out what social media is, right? Everyone's got their Facebook page [and] at the same time, people at big companies are like, "Well we have to build a Facebook fan page." Regardless of what they do with it, they just feel like they have to build it.

Yeah, but it does seem like they have no idea what they're doing.

Right, they're just like, "Well, we're just going to accumulate people." So, brands have been able to accumulate all these massive followings but now let's give them something to do. A way we were able to do that was to break down the process of creating a 30-second spot into smaller pieces where everyone can get involved and influence what happens.

Ok, I can see how that work for something like a 30-second spot. I wonder though, if applied more broadly to, say, the production of a film whether that would actually work. For instance, with Snakes on a Plane bloggers and people contributed to making that film and it was funny in its own way, but it was also terrible in many respects. Do you think that creating some kind of projects with crowdsourcing works better than others? Where do you think the line should be drawn, Should a line be drawn at all?

I wouldn't draw a line now. When we first started this, we thought we'd be able to crowdsource a screenplay. Just from having worked in that business, it's such a boring thing and a long process that we thought ultimately it wouldn't be satisfying. Now, I don't think of that as a possible--in the future, if you had a huge community of people working together, I think it could work. It wouldn't do this because it's better, faster cheaper; it'd be the kind of thing where a community builds something together. It's totally possible in the future [but] I don't think it's possible now.

But more directly, what I'm curious about is whether you think that certain projects should be specialized?

Absolutely [but] different people want different things out of [social media]. For bigger companies, they want intelligence; they want to be able to influence their marketing.

So, how does Tongal work?

Tongal creates a game-like experience. Usually, we start off with a round of ideation and concepts for a commercial and then the brand gets to pick five concepts. And those concepts become eligible for production. It's not like a traditional competition like Top Chef where people are moving forward, it's the concept that moves forward and it can get influenced [by others]. There are some [project competitions] that are more artistic and some that are more focused where we want people to deliver a brand's messaging--a way for brands to pull their messaging up from people, rather than trying to push it down on them.

Which makes sense because if it feels like it comes from consumers anyway, the likelihood that it will sell more product is that much higher.

That's right. A funny story is, we're working with a record label and they told us how they hired a big ad agency to pitch them ideas for Dean Martin, one of the artists on the label and they put them on a huge retainer and five guys at the ad agency sat in a room and the best idea that these guys ever came up with was that we should sell the records at Buca di Beppo. I was like, first of all, Dean Martin is now rolling over in his grave because no self-respecting Italian would ever eat at Buca di Peppo. (Laughs).

But there are millions of Dean Martin fans across the world. They're the ones who think about this stuff on a daily basis. If you ever gave these people the chance to contribute to this and tapped that creative energy, then that's a huge value to brands. Again, you're pulling up the ad message, rather than pushing it down.

The era of broadcasting is starting to change--that's the whole social media revolution. And brands are eager to be a part of that. That's really the kind of service that we're providing.

Can you give me an example of how this method of producing video can benefit a brand better than a traditional ad campaign?

We've done a couple really neat things. One of the things we're really proud of [is with] Kiva. Kiva's a microlending website but unlike other microfinance institutes, they don't charge interest. So someone got a hold of this [information] last year, and the New York Times wrote this scathing piece on them at the end of last year. They really needed an effective way to activate their enthusiasts. They came to our community and said, "We need videos that explain the process and clarify what we're doing and what our mission is." And we had a huge success with them; we had over 50 really great videos. The one that got the first place in that competition was created by a guy who lives about 20 miles from the Arctic Circle in Sweden who'd never heard of Kiva. That video found its way onto the homepage of YouTube.

How did it get onto the homepage of YouTube?

The community distributes the content. Kiva had this [situation] where they had a real problem; they had to find a way to activate people who cared about this company; they got the results they needed and we incentivize the community to distribute the project [with] a prize pool of a couple thousand dollars. The creators of the videos are incentivized to distribute it through their social networks and through those social networks it found its way to an editor at YouTube where, within a couple hours, it received over one hundred thousand hits.

So, for the people who contribute to Tongal, what is in it for them? I understand they get prize money. Do they also get credit for their work?

Absolutely they do and they also get paid residuals through the site. So, if you come up with a winning concept--let's say we had a virtual competition for Smart Water and you placed one through five in with your concept and I came in at the video round and took your concept and made a video out of it and I won, you get paid back for everyone who takes your concept and makes money off it. If I took your concept and won $5000, you would get a $500 residual check kicked back to you because I took your creative and I made money off of it.

It's also interesting thinking about this because it's a very big threat to the system as it is. It essentially upends the way that advertising is produced, and to some extent, the way that entertainment is produced as well.

Advertising agencies hate us.

I would imagine they do!

They use a lot of lip service [but] what [crowdsourcing] does is it keeps [brands] honest. The analogy I always use is, if you fill out an NCAA bracket for March Madness and you hate Duke, you're still going to put Duke in the Final Four. [It] isn't based on what you like, it's based on ultimately what you think is going to win. The [brand] sponsor picks the creative, but we use the community to predict what the brand is going to think, so it keeps [the brands] honest. You also get analytics out of that where you can tell what people's preferences were and things like that.

Which you don't get from traditional advertising, or certainly not as directly.

You know, a big thing that I see, which I can't believe is that advertisers and agencies and brand managers at big companies [are] hyperaware of data when it comes to Internet advertising. But when it comes to broadcast advertising, it doesn't matter. It's like, "Oh well, we ran these ads and we said this on a media buy," and no one pays attention to whether people are engaging with it or not.

But when [it comes to] people of our generation, I spend about 11 hours a day in front of a computer screen, whether it's my phone or my computer. I mean, maybe I watch an hour of TV.

Yeah... I tend to watch television on the Internet. (Laughs.)

Exactly! And probably fast forward through commercials if you watch it at home. With Tongal, we want to come up with something where it's really fun for people if they actually engage with the brand, think about the brand, and then go out and produce content for the brand.

We've had to do a lot of educating of people and when we explain it they get it. But as I was saying before, advertising agencies hate us and we've heard a lot of lip service: "Oh, it's brilliant." I've had like 10 meetings where, when I walked out the door, the person at the big ad agencies were like, "I can't wait to get something going with this. I have a million clients that would be interested in this," and then there's just crickets." It's a tremendous threat to the way to things are done.