xAd Introduces Pay-for-Performance Model, Guaranteeing Offline Store Visits

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Location intelligence company xAd is launching a new media buying model today called “Cost Per Visit,” which will directly tie mobile ad pricing to offline store visits — and potentially ensure a better return on investment for brands.

The new model, something that xAd calls an industry first, is supposed to reduce the guesswork and risk from traditional media buying. Marketers who use “Cost Per Visit” only pay for ads when targeted customers make in-store visits. This is aimed at increasing transparency and accountability, while cut down the angst associated with ad spending. Location measurement firm Placed verifies, via the consumers’ mobile phone, that a visit has taken place.

Shashi Seth, xAd’s chief product officer, says his company is trying to bridge the gap between online and offline sales by driving foot traffic into stores: “We are very confident in our ability to deliver new customers to these brands,” he says. “You only pay us when an action happens, which is a customer showing up at your doorstep.”

The model sounds like a bit of a gamble that relies on consumers responding to ads in order for xAd to see any cash. However, Seth says the transparency and verification of ROI is attractive to performance marketers. For now, xAd is focused on tying the model to visits to stores but Seth says this could be taken to transaction-level verification in the future. “We definitely have intentions to go all the way to purchases,” he says. “This is our first step in that direction.”

With the introduction of the “Cost Per Visit” model, xAd is borrowing a page from performance-based marketing. Those campaigns usually see brands pitch products and services through broadcast media, such as television or radio, or print with a phone number listed for consumers to call to place an order. Whenever someone dials in, each call gives marketers a real way to see results of their campaigns. Online and mobile marketing, by contrast, has often relied on clicks or impressions to measure the reach and performance of a campaign. This changes up that dynamic by tying targeted ads to real world outcomes.

The new model also brings a new twist on location for xAd and its clients alike. Traditionally, Seth says, a brand would tell his company what type of audience targeting methodologies they want used. That can include proximity targeting, precise geotargeting, or conquesting — the positioning of ads to get the attention of nearby competitors’ customers.

xAd’s Chief Product Officer Shashi Seth

Seth says xAd also offers location-based targeting of audiences who exhibit particular behavior, such as brand loyalists or folks who live in a certain area and have a high propensity to patronize a brand. What xAd is aiming for with the new model is a simplification of such campaigns for the clientele. “We will do all the magic in the back-end,” Seth says. “You just tell us how many customers you want and at which locations.”

The “Cost Per Visit” model, he says, has been tested with a handful of clients and xAd believes it will attract other marketers and brands who want to see more tangible results. “Lots of folks like Procter & Gamble have talked about the difficulty the online advertising world is facing in fraud issues, accountability issues, and transparency issues,” Seth says.

The new model is initially only available in the United States, he says, though he suspects that clients from other countries may soon request it as well.

Joao-Pierre Ruth is a Street Fight contributor.