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Are Location-Based Pay-Per-Visit Ads Poised To Become Standard For Retail?

'Across the industry, we are seeing growing demand among advertisers for greater transparency and accountability from their media partners,' said Nels Stromborg, EVP of Retale.

With more more budgets shifting to mobile generally — and the use of location-based advertising rising in particular — companies like Retale and xAd are responding to demands for ROI by presenting formats that specifically tie pay for ad performance to store visits.

Retale’s introduction of a “Store Traffic Guarantee” for ad campaigns on its shopping app platform this week follows xAd’s similar Cost-Per-Visit ad formats that was rolled out this month with Applebee’s and The Home Depot.

While the rule is that “three makes a trend,” it’s clear that the two separate performance-guarantees for store visitation by xAd’s and Retale will put pressure on other mobile players to make the same promise.

“Across the industry, we are seeing growing demand among advertisers for greater transparency and accountability from their media partners,” said Nels Stromborg, EVP of Retale.

Retale is owned by location-based shopping analytics provider Bonial. It operates a place-based shopping app that promotes discovery via store discounts and allows users gather those deals on virtual shopping lists. The app reaches 26 million mobile users across 200 countries every month and connects those consumers to more than 5,200 retailers and brands.

Both Retale’s and xAd’s pay-for-performance guarantees will be validated by attribution platform Placed. That company’s Placed Attribution insights are based on a panel model that includes more than 600,000 active opted-in mobile app users — a number that the company has noted represents 1 in 450 adults in the U.S.

“Placed has seen firsthand how important in-store traffic measurement is for retailers and brands when gauging the success of their advertising campaigns,” said Placed CEO David Shim. “To see a company [like Retale] putting its success to the test by making such a bold guarantee is really exciting.”

The Time Is Right

The introduction of these formats reflect the rapid growth of location-based ad dollars and the equally growing demands for attribution showing that such spending is working. As BIA/Kelsey has forecast, local online/interactive/digital marketing dollars will be $71.6 billion, representing 41.6 percent of total local media advertising revenues, up from 28.0 percent in 2015.

In addition, ad measurement overseer the Media Ratings Council, in conjunction with the main online ad industry trade groups, has just issued its “best practices” for location-based advertising to provide a baseline understanding for what marketers should expect from such programs.

In-Store Traffic Is A Top KPI

There are some relevant differences in the approaches xAd and Retale are taking. For one thing, seven-year-old xAd, which has evolved from a hyperlocal mobile ad network into a more broadly focused location marketplace that powers programmatic ad buys across publishers’ apps.

While xAd has key relationships with publishers, four-year-old Retale can be considered a “publisher” in its own right. That means it can offer first-party location data to its brand partners. As first-party data is more clear than third-party sources, its guarantee to retailers comes with a good deal of trust.

Retale’s customer roster includes JC Penney, Target, Rite Aid, Macy’s, Meijer and more – covering more than 1.4 million store locations globally.

As all retailers are increasingly challenged to make the the in-store experience relevant through the use of digital touchpoints — which includes everything from online purchases to in-store pickup — proof that these new technologies actually are driving visits is imperative. As a recent CMO Council survey found, the lack of clarity around ROI for in-store and location-based methods has tended to hold back expanded investment in those areas.

To be sure, pay-for-performance isn’t likely to be a silver bullet for either retailers or the platform companies that serve them. But it’s safe to say that knowing what’s working — and what doesn’t — will be the true test of viable online-to-offline marketing programs while demonstrating which providers of attribution and geo-data have staying power.

Plus, Retale’s role as the first publisher to offer such a specific guarantee could point the way for others on the sell-side who want to ease media buyers’ concerns about viewability (what better proof is there if you can show that someone who saw an ad walked into a store as a result?).

“In-store traffic is one of the top KPIs that retailers and brands look to when measuring the success of a platform and their media choices,” Stromborg said. “We believe that our partners are right to demand media visibility and accountability which drives core business metrics. We are putting our money where our mouth is by guaranteeing that we will deliver the value our customers deserve and expect.”