Empyr Introduces Sales-Based O2O “Cost per Revenue” Model
May 9, 2017 | Contributed by: Greg Sterling
I’ve been arguing that companies selling marketing services to SMBs need to prepare for a time in the relatively near future when they’ll be asked to report on how many people actually came into stores or how many actual (offline) conversions were generated by a campaign.
With the advent of location history and mobile-location tracking, offline attribution was born. It was only a matter of time before ad models changed to reflect these new capabilities. Now a number of companies are starting to charge on a per-visit basis. Separately, Google and Facebook are starting to report on in-store visits.
With few exceptions, it will soon not be good enough to simply report “proxy metrics.” Marketing services providers will need to deliver much more tangible data (i.e., bookings, visits, sales) as proof of value. Those with online booking or some version of CRM will probably be able to do this. Those just selling traffic will have a more difficult time.
Over the past month xAd, Retale and Blis have announced cost-per-visit (CPV) ad models that ask advertisers to only pay for store visits. (Placed is the third party verification for xAd and Retale.) And today, Empyr introduced what it calls a “cost per revenue” model.
Merchants or retailers only pay when an in-store sale actually occurs. The company reaches consumers through a third party publisher network. For example, the Yelp Cash back program is powered by Empyr. It also uses transaction data from Mastercard, Visa and AMEX to verify in-store sales.
This is a card-linked offer model so there must be a consumer credit card on file (e.g., with Yelp) to take advantage of the customer-facing offer and so the card can be matched at the point of sale. That creates a bit of friction but the consumer value proposition (save money, cash back) is very attractive.
On the back end, Empyr gets a negotiated percentage of the revenue generated from sales. It can vary, but 10% would not be abnormal. That is shared with the publisher and in some cases with consumers.
Empyr began as a consumer-facing company in 2011, seeking to build a marketplace. Its initial merchant targets were SMBs. Over time it has shifted away from both, signing up established publishers and apps and moving up market to franchises and national retailers. CEO Jon Carder told me that he’s seeing significant demand from retailers, who are effectively buying new revenue.
Retail is the single largest digital marketing category, according to IAB spending data, with roughly $15 billion in 2016. There are also other billion-dollar advertiser categories (e.g., QSR, entertainment) that will be interested in a “CPR” model. Indeed, this may represent a kind of CPR for the retail industry.
All this is going to trickle down to the SMB level over the next couple of years. Marketing providers need to strategize and make conscious choices now about how to respond. To some degree concrete O2O analytics may insulate against disruption by CPV models. But it’s 100% certain that providers will need to move beyond the current proxy metrics at a minimum.