XAd only wants advertisers to get paid if someone actually walks in the door.
On Thursday, the location-based mobile ad network said it would allow brands to transact on a cost-per-visit (CPV) basis. Advertisers will be able to make media buys based on foot traffic-related KPIs and only pay for performance.
It’s an appealing proposition to meet the buy side’s growing “call for greater transparency and greater accountability in their media buying,” said Joshua Lowcock, EVP and chief digital officer at UM Worldwide, which is testing the CPV metric with several auto and CPG clients.
Foot traffic has generally been viewed as a secondary value-add of the media buy. Agencies would place their mobile-based buys using location as a targeting layer, but the KPI was usually click-based. Visitation was gravy, but not a transactional metric.
“Driving foot traffic is all well and good, but if you can’t actually purchase media KPIs against driving foot traffic, it’s hard to value driving foot traffic as a KPI,” Lowcock said.
But an automotive brand, for example, cares about getting someone to come in for a test drive, not generating lead acquisition on its website – unless that web lead turns into a dealership visit. Rather than buying on a CPM basis and hoping for a visit, CPV lets brands buy on visitation and only shell out when the visit takes place.
And that represents “a shift in the way clients think about lead acquisition,” Lowcock said.
“It’s easy to buy impressions, but it’s harder to buy results, and this is something that forces you to think about buying results and outcomes,” he said.
XAd determines CPV through a combination of the opt-in location data it collects from more than 125 million users – roughly 45% of the smartphone-owning population in the US – and its Blueprints technology, which draws real-time geofences around specific locations and matches footfall back to mobile devices.
“That gives us the ability to find a person and understand who they are so we can do precise targeting based on location and audience,” said Shashi Seth, xAd’s chief product officer.
Audience segments are built based on historical location tracking, which bubbles up information on behavior tied to physical activity, like the neighborhood where people live or work, which routes they take to get there, if they play golf on Saturdays and whether they’re a Whole Foods shopper or prefer Trader Joe’s.
XAd uses that data to create segments and run targeted campaigns. It then taps into Blueprints to determine whether a user within the segment visited a location, at what point they visited and whether it was a week or an hour after being exposed to the ad.
Location analytics company Placed provides the third-party verification for xAd’s CPV metric.
Applebee’s and The Home Depot, which are not UM clients, are launch partners for the metric, although xAd has also tested CPV with a growing number of clients since last year. For the moment, CPV is only available in the US, although xAd will open it up to other markets based on demand, Seth said.
CPV pricing will vary by industry and, in some cases, by brand, which makes sense, Seth said.
Paying to send a customer to a fast food restaurant, where the average order size is somewhere around $5, will cost less than getting them to Whole Foods, where they might drop 15 times more.
The same logic would apply if an advertiser was buying inventory on a premium publisher or long-tail site. The premium publisher can charge what it charges because it delivers results.
CPV brings classic online advertising methodology into the real world – direct response for reality.
While that doesn’t dispose of the need for brand-based advertising, Lowcock said, it does bring a level of accountability to the buy. Bots don’t visit stores and foot traffic isn’t caused by accidental clicks, he said.
“It’s always going to be a balancing act between performance and brand advertising,” Lowcock said. “But there are retail channels where foot traffic in the door is what matters, and this is becoming an important way to transact.”