With cost per visit, xAd brings search-like performance to mobile advertising

Location-based marketing platform xAd is doing something radical. The company is offering a new “cost per visit” (CPV) mobile ad model backed by third-party validation from Placed.

Mobile marketers will only be asked to pay for visitors to their stores or locations, not impressions or clicks. The CPV approach thus simplifies the buying and planning process for marketers and shifts the risk of campaign performance to xAd.

Chief Product Officer Shashi Seth, a former search executive at Google and Yahoo, said that one of the objectives was to take the guesswork out of targeting for advertisers. “They can now just tell us how many visitors they need in what locations.”

Third-party location analytics firm Placed will provide validation and verification that xAd delivered visitors. Placed CEO David Shim told me in email that “Placed is working closely with xAd to finalize the methodology to deliver an independent validation of visitation for Cost Per Visit. In the same way that viewability is table stakes for digital media, Placed is that for location validation.”

Shashi Seth said that the company started testing its CPV ambitions with some customers in December to determine whether “[w]e could predict with a high level of confidence what a particular brand could get from us,” in the form of offline visits. He added that there’s been a very positive response from customers. Launch partners for the new approach include Home Depot and Applebee’s.

Pricing for each visitor is different by vertical but fixed for now. He believes that over time it will become a bidded marketplace like search. Accordingly, Seth asserts, “Performance driven marketers are going to get attracted to this model.” He points out that the majority of transactions involving major categories — retail, QSR, automotive and CPG, among others — happen offline and that brands and enterprises in these categories will be very attracted to a CPV model.

CPV is made possible by offline store visitation and attribution tracking. It’s a model that was arguably inevitable given the ability to “see” when mobile users visit business locations.

While there have been transaction-based marketing models before (e.g., pay-per-call, booking), xAd’s CPV model for mobile advertising is new. It’s likely to get a big response from brands and marketers — and potentially put pressure on others to do the same.