Dympol Uses Targeted Advertising to Cut Online Music Costs

5/6/10Follow @xconomy

Consumer brands have long employed celebrities to build their brands, but this may not be the most effective way of targeting consumers, says Jay Ziskrout, founder and CEO of Dympol, a Vermont and Cambridge, MA-based startup.

“Is just being co-located with the entertainment enough for the magic to rub off on the brand?” asks Ziskrout, whose Web-based service allows advertisers to sponsor discounts on music purchases. Ideally, the transactions through Dympol (pronounced dimple) push artists to sell more and enable advertising brands to more directly reach their desired customers—who ultimately pay less for online music downloads as a result of the partnerships.

“The goal is aligning interests,” says Ziskrout, who’s held positions in the marketing and performing sides of the music industry, (including the role of founding drummer of the ’80s punk rock band Bad Religion). “The consumer wins, retailers win, artists win.”

Dympol (which stands for Discounts Your Music Purchases On-Line) started in 2008 and has conducted its transactions directly through its own website for about a year. (It also offers a toolbar plug-in through Firefox). At the Dympol website, users can select songs to purchase. The songs (provided by Amazon.com) have brand-sponsored rebates attached to them, which consumers can cash in through PayPal accounts. This allows a consumer to buy a song for, say, 68 cents or 88 cents online through Dympol instead of its original price of around 99 cents and up. In exchange, the advertiser gets to align its brand with the latest hot band, and make consumers feel good by offering up the discounts. “We’re letting advertisers target the kind of people they want to reach,” Ziskrout says.

But this isn’t the main avenue the company sees itself operating through, Ziskrout says. Dympol is developing an application programming interface (API) designed to plug in with parties that sell music content through their own websites, including individual artists and bands, music marketers (like Framingham, MA’s Nimbit), big-box retailers, and independent music stores.

JayZiskrout“We came to the conclusion that our short and medium-term best prospects for success and delivery were to focus on being a business-to-business provider with the API, instead of spending the resources required to become a successful destination,” he says.

Dympol’s application programming interface, which operates its service through the back end of other consumer websites, will vary depending on the music retailer it works with. For sites that don’t store user account information, consumers will receive the discount immediately on their song purchases. When consumers use Dympol on sites that create user accounts, the discount comes in the form of a credit that customers can redeem on that particular retailer’s site. It’s essentially like creating a customer loyalty program. The advertising sponsors’ content will be seen throughout both of these types transactions. The sponsors get exposure for their brands through banner ads, and more interactive advertising such as coupon offers and prize drawings entries. “We wrap each step of the checkout process with the brand,” says Ziskrout.

Participating advertisers with Dympol can determine the ideal consumers and transactions for them to target, either based on demographics, or even a specific set of songs. The company is currently supporting about eight advertiser campaigns on its site, and is selling more than 100,000 songs, a number that fluctuates based on the advertisers’ goals and other factors, Ziskrout says. Dympol uses a “price optimization technology” that determines what rebate amount can generate the greatest purchasing activity without costing too much. Advertisers set a cost per transaction that they pay to Dympol. The company’s profits come from those fees, minus the cost of the rebate that consumers get, and a slice that is occasionally given to retailer or musician partners.

The version of the service that plugs in with external music retailer websites will soon enter a private testing phase, and will most likely be up and running sometime this summer. Recently, Topspin Media, a company that powers e-commerce through artist websites, signed a letter indicating its intent to use Dympol’s plug-in interface service, Ziskrout says.

Dympol has 14 people working for it, spread across the country. Locally, it operates out of space at Cambridge’s Viximo, a virtual goods provider and a type of retail target Dympol aims to expand to, Ziskrout says. In the future, Ziskrout sees the Dympol service working with a slew of entertainment forms that consumers purchase online: e-books, apps, audio books, movies, games, and virtual goods. By that time, the M in Dympol would stand for media, a much broader market than just music.

“That’s our real inevitable domain,” he says.

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