Empyr debuts ultimate performance marketing model: ‘cost per revenue’

In the past several weeks, a number of companies have introduced performance-based mobile ad models that track visitors into stores and charge marketers for those visits: xAd, Retale, Blis and Placed (the verifier in two cases). These are “cost per visit” or “pay per visit” models, and they shift the risk away from the advertiser to the platform or network.

Now Empyr is taking this a step further — to the point of sale. The company is introducing what it calls a “cost per revenue” model that charges marketers or retailers only when an in-store sale actually occurs.

Here’s how it works:

• A consumer encounters an incentive or offer-based marketing message on one of Empyr’s partner sites/apps. For example, the Yelp Cash Back program is powered by Empyr.
• The consumer must have a credit card on file (if s/he does not, that person is invited to register a card to participate).
• When the transaction takes place, the credit card used is matched with the consumer who was exposed to the offer. Transaction data are licensed from Mastercard, Visa and AMEX.
• Reporting to the merchant or retailer happens on an aggregate, not individual, customer level
• The data are analyzed to see how many exposed to the campaign went into the store and transacted. Historical data are used to determine incremental lift.

Empyr gets a percentage of the revenue generated from the sale, which is shared with the publisher. It’s a negotiated rather than a standardized amount, according to Empyr CEO Jon Carder. In Yelp’s case (Cash Back), the consumer gets a piece of the sale as well.

Hypothetically, on sales of $1 million, a retailer might pay a 10 percent commission: $100,000. That would then be shared by the publisher (e.g., Yelp), customers and Empyr.

One could look at this as an “offline affiliate” program, but that’s not a great analogy. Regardless, it’s a way for merchants to acquire customers at no up-front cost and much better margins than during the heyday of Groupon and daily deals.

It’s not without friction; there must be a credit card on file. But it’s a powerful and simple concept that will attract both national retailers and SMBs alike. We will continue to see more of these online-to-offline, pay-per-visit/sale models in the coming months.

RedBeacon and a few others tried a similar approach several years ago, but without the same data capabilities. At the time, they struggled to gain merchant adoption. The timing here is right, and the complexity on the back end has largely been solved. It’s also consistent with a broader mobile-driven trend toward models that offer more concrete outcomes for marketers.

About The Author

Greg Sterling

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.