The Home Depot, Applebee’s Adopt xAd Cost-Per-Visit Ads

xAd is hoping to stake its claim in the location-based ad attribution wars by offering advertisers a deal: you only have to pay for those ads that drive store visits.

Applebee’s and The Home Depot are the first clients to take location ad marketplace xAd on its new performance-based ad format, dubbed Cost-Per-Visit.

xAd has filed for a patent on the ad format (it’s pending) and is partnering with attribution platform Placed to validate the visits.

For The Home Depot and Applebee’s, like other major retail and restaurant chains, the idea of Cost-Per-Visit fits in with its current plans to deepen their respective omnichannel retail strategy in the face of continuing challenges.

As Craig Menear, The Home Depot’s Chairman, CEO & president, said during the company’s earnings call with analysts at the end of February, “our interconnected business is much more than our online properties, as it seeks to blend the physical and digital world seamlessly to enable customers to shop with us whenever and however they choose.”

A key component of that omnichannel strategy has included greater investment in options like purchasing online and in-store pickup.

“While we are seeing significant growth in our online business, our stores have never been more relevant, as about 45 percent of our online U.S. orders are picked up in our stores, a testament to the power of our interconnected retail strategy,” Menear told analysts, as the company was planning to pilot xAd’s new ad program.

The use of Cost-Per-Visit is a part of how The Home Depot plans to expand what its calls its “interconnected business,” which has included a website redesign and an upgraded mobile app.

The DIY home improvement retailer’s mobile app includes a “dynamic estimated time of arrival feature to provide customers a faster and more accurate delivery date based on location,” Menear noted.

Given the importance The Home Depot is placing on mobile, it makes sense that the ads driving consumers to its digital properties should be complemented by advertising that draws a clear line between its online and offline experiences.

Reversing Foot Traffic Declines

For Applebee’s parent DineEquity, which also operates IHOP restaurants, the challenge of getting customers off the couch and into its outlets, is a top priority.

In its recent earnings call with analysts, DineEquity CEO and Chairman Julia Stewart specifically pointed to online, on-demand channels as taking business away from its franchises.

“Looking at that macroeconomic environment, clearly there’s been a decline in foot traffic at brick-and-mortar retailers during this last holiday season due to more customers shopping online,” Stewart said. “This certainly had a negative impact on traffic to our restaurants and third-party retail sales of our gift cards at the end of 2016.”

Applebee’s will surely be looking to xAd’s Cost-Per-Visit to assist in reversing those poor foot-traffic trends.

A Real-World Cost-Per-Click

The use of the ad format is meant to not only prove that targeted location ads can drive actual business for brick-and-mortar brands, but it also promises to answer general online ad industry concerns marketers harbor about whether consumers are even seeing their placements, as “banner blindness” is an even greater challenge on mobile versus PCs.

In addition to the initial endorsement of Applebee’s and The Home Depot, IPG media shop UM Worldwide is also on board.

“This model creates a complete mindshift for the industry – especially when you equate this to what Cost Per Click did for Search,” says Joshua Lowcock, EVP, Head of Digital, USA (CDO) at UM Worldwide. “The difference is, there are no accidental clicks when it comes to foot traffic. If a brand’s focus is to drive store visits, you should be able to pay for those visits. Now you can align strategy directly to investment, creating an efficient, powerful buying model, one I believe can really cement location as a strategic must for marketers.”

A Competitive Environment

For xAd, the introduction of Cost-Per-Visit is meant to set it apart amid other attribution solutions from the likes of Foursquare, PlaceIQ, NinthDecimal, YP, Verve, and others.

This new product also closes a narrow gap in seven-year-old xAd’s offerings as it has evolved from its origins as a “hyperlocal mobile ad network” as advertisers increasingly demand clearer ROI for spending on location-based ads.

xAd has been preparing for this next phase for the past two years. In addition to working with Placed, last year, xAd struck a partnership with online measurement firm comsScore to boost its attribution capabilities and it has rolled out a self-serve ad product to meet the demands of programmatic marketing.

“Here’s the way we look at ad performance driven from location: If you’re targeting people near a business — which we call the proximity product — that is actually the lowest performing method,”  CEO Dipanshu Sharma told GeoMarketing’s Lauryn Chamberlain at last fall’s Yext Location World conference. “The biggest complaint you get about location is that ‘location’ means no scale; if it’s hyperlocal, how are you going to get scale? I think we’re trying to solve for that, and it’s the first time anybody has done it.”

xAd’s Global Blueprint

To help solve the scale issue, xAd has aggressively been expanding its global presence. The New York company making strategic acquisitions designed to increase its data beyond points on a map.

In November, xAd raised a $42.5 million fifth funding round and acquired meteorological info service Weatherbug to broaden the foundation for those global ad ambitions.

The Cost-Per-Visit builds on two ideas xAd has been exploring for years. The first involves trying to market its geofencing capabilities — something that is easily viewed as commodified and undifferentiated from what any location platform can do — with its “Blueprints”  data visualization tool that debuted in 2015.

Blueprints draws upon the exact physical boundaries of business locations instead of using the typical circular radius positioned in proximity to a street address.

By basing geofences on the actual outline — i.e., “the blueprint” — of a building’s outside structure, xAd attempted to address a widespread problem that held back location-based ad spending by displaying more specific information about a place than can be found in a broad radius.

To be sure, the Cost-Per-Visit follows the clever marketing that xAd has evinced in demonstrating that it wants to provide specific answers to marketers questions about online-to-offline advertising, as opposed to online ad targeting in the aggregate.

Even three years ago, as the online advertising industry has been wringing its hands over the use of clickthrough rates to understand the value of a digital ad campaign.

At the time, Monica Ho, xAd’s CMO, sought to avoid having its ad placements being measured by typical industry metrics like clickthroughs.

Arguing that CTRs are a poor measure of online ad campaign success for brands who want to drive foot traffic, Ho argued for the use of Secondary-Action Rate to measure the percentage of people who “took an action” after clicking an ad.

Another metric preferred xAd has historically favored was Store Visitation Lift (SVL), which essentially measures in-store traffic that directly stems from a geo-targeted mobile ad campaign.

In that sense, Cost-Per-Visit represents the realization of a years-long project to both differentiate its own abilities, while emphasizing that location advertising is actually a distinct discipline.

“We are at a major inflection point in the retail marketing journey where it’s evident that retailers remain heavily vested in growing offline sales – a smart decision when you consider that more than 90 percent of sales are still happening offline,” says Shashi Seth, Chief Product Officer, xAd, about the new format. “Since xAd’s core technology has been built around this predicted behavior, our Cost Per Visit model is the most comprehensive solution for the industry.”