Will Fraud, Waste & Ad Blocking Drive More Outcomes-Based Ad Models?
The digital ad industry has lately been hit by a kind of triple whammy: bot fraud, viewability issues and ad blocking. Notwithstanding these challenges, money continues to pour into digital from traditional media because it’s where consumers are spending their time. In parallel, mobile devices are making it possible to measure whether an online or […]
The digital ad industry has lately been hit by a kind of triple whammy: bot fraud, viewability issues and ad blocking. Notwithstanding these challenges, money continues to pour into digital from traditional media because it’s where consumers are spending their time.
In parallel, mobile devices are making it possible to measure whether an online or mobile ad exposure has caused someone to visit a physical store. Already a wide range of marketing providers and analytics companies are measuring offline actions or visits: xAd, NinthDecimal, PlaceIQ, Placed, YP, Acxiom, Marchex, SessionM, Belly, Google, Yext, Facebook and others.
I recently had two unrelated conversations that caused me to think about whether display ad fraud, waste and other issues might combine with offline tracking to generate more interest in CPA or “outcome-based” ad models. Those two conversations were with SessionM and Light Reaction.
SessionM is an interesting example of one approach to “closing the loop.” The company describes itself as “the next generation consumer loyalty and engagement platform.”
One thing that SessionM does is power loyalty and engagement programs for partner apps. Users engage with an app and reach selected engagement milestones in exchange for rewards. Another thing the company does is enable receipt capture (also for partner apps), which provides visibility on the impact of ads on actual sales and all kinds of other data about audiences and their purchase behavior.
As with the app-engagement functionality, consumers are similarly given incentives and rewards for photographing and uploading store receipts. Brands offer points for buying specific products, and consumers collect those points upon proving they purchased the products via receipt capture.
This kind of closed-loop tracking enables advertising or other marketing to be bought or sold on a CPA (cost per action) basis. CPA models have been around for a long time, but they’ve rarely extended to online-to-offline/in-store purchases.
The other conversation was with Light Reaction’s Paul Dolan. GroupM’s Xaxis earlier this year launched Light Reaction, “a new mobile-first performance advertising business.” What’s most interesting is that the company bills on an “outcomes-based, pay-for-performance media model” — effectively CPA. While there are several “A’s” (depending on client objective), one of them is offline actions.
Xasis is a programmatic buying platform. Most digital display ad dollars are expected to migrate to programmatic over the next several years. The buying efficiency and reach makes this inevitable. However, problems of fraud, viewability and overall impression quality continue to plague programmatic.
Questions about ad viewability or impression quality and ad blocking could drive greater demand for more outcomes-based ad models over time. Online-to-offline impression tracking simultaneously makes it possible to measure the “real-world” impact of advertising on store visits, and often, purchases. This could also fuel demand for CPA models. Regardless, the demand for the data will grow.
On what I would call a continuum of financial risk, migration to outcomes-based models would shift the risk from advertisers (who bear the most in a CPM model) to publishers and developers (who bear the most in a CPA model).