Placed Service Would Prove Mobile Ads Get Customers in the Door

8/14/13Follow @bromano

A mobile advertisement offering 10 percent off of lunch at a fast food restaurant is more likely to drive customers to the store than a banner ad for a burger displayed on the Web.

That’s the promise of mobile advertising—an $8.9 billion global business last year, growing at a rapid clip—and the behavior Seattle startup Placed is trying to capture, and monetize, through a new service for advertisers.

Placed Attribution is meant to tell advertisers whether their mobile advertisements are translating into customers walking through the door.

The company has amassed a panel of 100,000 people who share their anonymized device and location data—100 million longitude and latitude readings a day. Placed customers can determine whether these panelists have seen a mobile ad for a specific brand, and whether they’ve subsequently visited one of the brand’s physical locations.

Placed founder and CEO David Shim says this unlocks a new class of advertising metric: cost per visitor, or essentially how many ad impressions does it take to get someone into a store.

He calls it a mobile-focused improvement on existing metrics of cost per thousand impressions (CPM), cost per click (CPC), and cost per action. (You could argue that a visit to a store is an action, but Placed appears to be one of few companies providing a way to attribute that action in the physical world to the mobile advertisement.)

This is potentially valuable because it helps monetize the characteristics of mobile that make it an inherently different medium from online advertising. It’s not just a smaller version of the Web, of course. It’s a screen that’s with us in real time, and in context of our location.

In the example above, the Web banner ad would presumably require a consumer to get up from the computer and travel to the restaurant. The mobile ad, however, hits a consumer when they’re already out and about—and, with technologies like geo-fencing, potentially even when they’re near a particular restaurant, at lunch time.

“I have a higher likelihood of being able to change your behavior in that moment,” Shim says.

Shim says advertisers today measure the effectiveness of their mobile campaigns through things like click-through rates and app installs. There are also polls that try to determine whether people saw an ad, and if so, whether they visited the store it was advertising in person.

“That’s where it stops, and that’s where mobile is actually missing out on the big opportunity,” Shim says.

Placed is initially partnering with xAd, an ad platform for location-based advertising, on the new service.

Shim believes Placed Attribution reports—which also feature demographic characteristics of store visitors—will encourage advertisers to channel more money into mobile because they will better know what it is they’re buying. “It’s going to be driven by advertisers because they want to be able to justify their ad spend,” Shim says.

He says Placed has thought about looking deeper still to determine whether a mobile ad resulted in a store visit and a purchase transaction, which could effectively move advertising to an even more precise model: cost per dollar of revenue. That is, advertisers could conceivably know how much they’d need to invest in mobile advertising to generate a certain level of sales. He says it’s something the company is keeping an eye on as its panel grows, and as technology allows purchases to be tracked in that way.

But he adds that major advertisers such as restaurant chains and retailers already know what percentage of people who enter their stores will make a purchase, and even what the average size of that purchase will be. By giving them a cost per store visitor, “they can model out that last step,” Shim says, effectively determining a cost per dollar of revenue.

Placed was founded in 2011 and is backed by Madrona Venture Group. It has raised $3.4 million to date, Shim says, and has 15 employees.

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

By posting a comment, you agree to our terms and conditions.