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Is ‘Cost per Visit’ the Ultimate Performance Ad Model?

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Once it became possible to determine whether people had visited physical stores it was probably only a matter of time before a “pay per visit” ad model showed up. Last week xAd introduced a new new “cost per visit” (CPV) ad model.

Marketers will only pay for consumers who walk through their doors.

Today Blis did something similar, announcing a new offering called “Blis Futures,” which uses location data and machine learning to enable advertisers to buy customer visits:

Blis Futures uses machine learning and predictive analytics to group like data sets and identify patterns. The solution builds audience segments based on their predicted conversion rates and indicates when and where to target this audience group to achieve the advertisers’ business objectives

Like xAd, Blis is also using a cost per visit or pay per visit billing model. Will it be adopted by marketers? I think so. Certain categories of advertisers who sell things offline (where more than 90% of sales happen) will be drawn to the concrete nature of the PPV concept — paying only for “real customers” or “actual visits.”

Competitors of Blis and xAd will also probably feel compelled to offer a similar performance-based model.  It’s also the case that online ad metrics are under increasing scrutiny because of rampant bot fraud, viewability issues, quality issues (see YouTube) and reporting mistakes (see, e.g., Facebook video).

With a CPV or PPV model there will be inevitable questions around customer intent — did the customer already intend to come to the store? — and whether these services are delivering incremental lift. But those issues can be worked out; it’s analogous to pay per call. Once businesses start paying for calls they don’t want to pay for certain categories of calls: customer service, telemarketers, etc.

CPV or PPV is made possible by offline store visitation and attribution tracking, which has now become quite sophisticated. In xAd’s case there’s third party validation coming from Placed. It’s not clear in the Blis program whether there’s any independent verification. However, that will likely be demanded by marketers as these programs become more mainstream.

There are three questions in my mind:

  • How quickly will advertisers start experimenting with these PPV/CPV programs and how widely? I think it will take off quickly in some verticals: retail, QSR, automotive, etc.
  • How much pressure will CPV put on more “traditional” digital ad models (impressions, clicks, views)?
  • Will CPV “trickle down” to the SMB level? Probably but not immediately

Regardless, this is a watershed moment in digital advertising as the digital and real worlds finally and fully connect.

What are your thoughts regarding my questions and the development of CPV in general?

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