When Jon Carder talks about online consumer trends, he speaks with some experience.
Beginning with eHeaven, an e-commerce website that he founded in 2000 as a student at San Diego’s Point Loma Nazarene University, Carder has ridden a series of enormous waves as consumers moved online to shop, search for home loans, and find businesses in their neighborhoods.
When he started selling baby products in 2000 through his college startup eHeaven, Carder recalls, he began well after the e-commerce trend had started. Carder’s home loan website ClientShop followed LendingTree, but he said, “this time we were much closer to the beginning of the wave.” With his startup MojoPages, Carder says, Yelp emerged first with its online listings of neighborhood businesses.
But this time is different, Carder says.
In a recent interview, Carder said he thinks he’s ahead of the curve in bridging a gap in online digital marketing with a new twist in the business model at Mogl, an online customer loyalty program for restaurants that he founded in 2011. Carder has combined Mogl’s Web-based rewards program with technology that can closely track how well online advertising results in offline, in-store sales. Marketers no longer have to wonder which of their digital ads are driving offline sales, Carder says.
The business, now known as Empyr, has integrated its online consumer rewards platform with the three biggest credit cards—Visa, MasterCard, and American Express. As a result, Carder says, Empyr can determine whether an online ad or promotional offer directly results in an offline purchase by one of its loyalty program subscribers.
When asked if the innovation represents a pivot away from Mogl’s previous business model, Carder says, “It not like a full pivot to a new business model. It’s more like an evolution of the model, where we scale much faster by partnering with people who bring in the consumer or the advertiser.”
Instead of laboring to sign up merchants and online publishers to adopt its loyalty program, Carder says Empyr has opened its API (application program interface) to them under a revenue-sharing model. A publisher like Yelp can set up a loyalty rewards program, “powered by Empyr,” which also provides analytics to help marketers and merchants gauge the effectiveness of their online ads.
Empyr says in-store purchases by loyalty program subscribers who have registered their credit or debit cards are automatically attributed to online offers or advertisements that those users have opened or clicked on. Empyr’s system then sends an instant reward notification (such as points or a cash back award) to consumers after the purchase is completed.
Carder says the effort that went into acquiring new partners and scaling the business under Mogl’s old business model was too expensive. He told me in 2013 that Mogl had 70 employees; last week, the company moved into a new San Diego office with about 45 employees. (The company has raised a total of $43 million from Jackson Square Ventures, Sysco Food Ventures, Avalon Ventures, Correlation Ventures, and numerous angel investors.)
In an e-mail to Xconomy yesterday, Empyr said, “The evolutionary threat is to get and stay ahead of technology trends to capture the market. With Empyr, instead of catching up, we are ahead of the curve.”
There are limitations to the company’s insights into online ad engagement, though. Obviously, Empyr’s technology can’t track the offline purchase of consumers who haven’t signed up for its loyalty programs—and the company declined to disclose just how many subscribers have signed up.
But Carder says Empyr’s technology does provide marketers with a better understanding of their digital advertising return-on-investment, and at what he says is a reasonable cost.
Usually, consumer brands that operate brick-and-mortar stores pay for digital advertising on a cost-per-click or cost-per-impression basis—but there has been no way of knowing whether an ad led a consumer to make an offline purchase. Now, Empyr says its CPR approach enables brands to pay only for the digital advertising that directly results in offline sales.
Under Empyr’s revenue-sharing model, digital ad payments are based instead on each completed offline sales transaction linked to a subscriber’s credit or debit card. He calls this a CPR (cost-per-revenue) model. Consumers get a small cut for allowing Empyr to track their shopping habits. (Empyr says it currently doesn’t sell the consumer data it collects to third parties.)
“Consumers opt-in to share the data in exchange for rewards, and we make money from the Empyr business model,” he said. Empyr’s model typically splits 10 percent of an in-store transaction among the customer (who gets 50 percent), the online publisher hosting the ad (30 percent) and Empyr (20 percent).
The company says that digital marketing “influenced” more than half of all U.S. retail sales in 2016, citing data from Deloitte Consulting that estimates such expenditures amounted to $2.1 trillion last year.
Empyr provides the service to subscribers through its own Mogl rewards program, and through partners like Yelp, LivingSocial, and Coupons.com. The company says it can reach over 100 million consumers through its revenue-sharing arrangements with 1,500 participating websites and apps.
