Cost-per-visit ad models, offline verification set to shake up online advertising

Retail makes up the largest category of internet ad spending, representing about 21 percent of total revenues, according to the most recent IAB report — or roughly $15 billion annually. That’s why the development of a “cost-per-(store)-visit” ad model (CPV) is potentially so significant.

Some of that retailer ad spending is driven by pure-play e-tailers. However, most is from traditional retailers.

While traditional retailers are suffering, more than 90 percent of consumer retail spending still happens in stores: trillions offline vs. billions online. In addition, though they’re more tech-savvy than millennials, members of so-called “Gen Z” strongly prefer to shop in stores.

Internet ad revenues by industry category

Since the advent of mobile-location analytics and online-to-offline measurement, I’ve been writing about optimizing digital campaigns against offline visits and the possibility of a CPV model.

A few weeks ago, xAd was the first to formally introduce a CPV model. That was followed quickly by similar announcements from Retale and Blis. More are coming.

The firm doing validation and third-party verification of store visits in several of these cases is Placed. According to CEO David Shim, the company now has “250+ publishers, ad networks, and demand side platforms onboard with Placed Attribution.” Shim added that he believes that demand for online-to-offline/store attribution “has hit a tipping point.”

Source: IBM “Uniquely Generation Z” study (2017)

Last last month, the Media Ratings Council issued its Location Based Advertising Measurement Guidelines establishing guidelines and best practices for Location measurement, which support this kind of third-party solution. Placed is one of a number of firms that can provide location analytics and in-store visitation measurement.

Offline merchants, retailers and service businesses have wanted data on whether their digital media are actually driving real-world visits and sales, as opposed to impressions, clicks or “engagement,” for a very long time. Now it’s available — and increasingly reliable (though location accuracy is still a matter of some controversy and debate).

With CPV and similar “guaranteed visits” models (Retale), we’re likely to see a fairly radical shift in the way that major online advertisers buy, optimize and evaluate media. Stay tuned.