Ad Costs May Vary for Fast Food and Retailers for xAd's Location Data Model

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Applebee's is a launch advertiser using xAd's cost-per-visit ads.
Applebee's is a launch advertiser using xAd's cost-per-visit ads.

In the past couple years, advertisers have looked to location data firms such as Placed, NinthDecimal and Arrivalist to verify whether people visited their stores, restaurants or auto dealerships. Today, digital ad firm xAd went another step by introducing an ad payment model that charges advertisers only if people showed up in a business location.

Applebee's and The Home Depot are the first to try the new ad model, and several advertisers will launch cost-per-visit campaigns in the coming weeks, according to xAd CEO Dipanshu Sharma.

"I'm excited to see that there's a data point suggesting that marketers are really focused on place visit and focused enough on it to warrant a new cost model," said the founder of a location data firm who asked to remain anonymous.

The xAd payment model itself is unique, but so is the way in which the actual cost for each consumer visit is set. The ad firm is determining ad prices on a case-by-case basis for advertisers. The ad cost for a quick-serve restaurant where customers spend a few bucks for a fast lunch or snack would be less than what the company calculates for a specialty retailer where customers might spend hundreds of dollars in a shopping session, for example. A fast food chain might be charged around $5 per visit when buying cost-per-visit ads while a department store might be charged $10-$15.

The pricing model is not unlike search advertising, suggested Mr. Sharma, noting that search advertisers often factor in the amount of revenue they expect to generate from a search lead into the amount they are willing to bid for keywords.

"We encourage the brands to think of this like they do search," said Mr. Sharma.

The company already uses ComScore data to measure whether ad exposure drove in-store visits, and to measure incremental visits and overall foot traffic. For cost-per-visit ad measurement, xAd named location-based data firm Placed as a preferred third-party service. The company welcomes other third-party validators, said Mr. Sharma.

Some have questioned whether it makes sense for advertisers to pay for visits if a customer would have gone to a business location even if he was not targeted with an ad. "We get that question quite a bit," said Mr. Sharma. He said that the analysis provided by xAd takes into consideration whether mobile devices were spotted during a previous 30-day period compared to after ads ran. He said that advertisers are charged even when someone visited a location during the pre-campaign period, likening the model to search in that someone might have gone to a business location whether or not he clicked on a search ad from that advertiser.

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