Former Turn head Bill Demas took the reins of Shopkick in June to “blitz scale” the company’s growth.
More than 20 million consumers have downloaded the 7-year-old app, which rewards them for walking into stores, scanning items and buying products. Marketers use Shopkick to incentivize store visits and purchases.
“In the commerce world, we were ‘Pokémon Go’ before ‘Pokémon Go’ existed,” said Demas.
He exited his CEO role at Turn in April 2015 after six years at the helm. But this time around he won’t have to worry about fighting for an exit in a softening market. Korean company SK Telecom Inc. paid $200 million for Shopkick in 2014; Kleiner Perkins and Greylock previously invested $20 million in the app.
Demas’ goal is to accelerate Shopkick’s growth as its parent company continues to invest in it. While the role builds on his digital marketing experience, the types of advertising found on the app are native offers rather than your typical banners and boxes.
Demas talked to AdExchanger about why he joined Shopkick, his rear-view perspective of the demand-side platform (DSP) and ad tech market and how he plans to move his new company forward.
How does your skill set running Turn apply to what Shopkick is doing?
What was appealing at first was that I scaled companies before. I scaled Turn’s net revenue 60 times from year four to year 10, getting to $100 million in net revenue. At Overture, I scaled it from $200 million in gross revenue to over $1 billion in gross revenue by the time Yahoo acquired us. We grew that to $2 billion during the three years I was a Yahoo. So I have pretty good experience in scaling organizations in the digital marketing space.
What are your thoughts on the DSP space now that you have some outside perspective?
Turn was and is in no trouble. The problem is that the game has changed. When we invented the DSP and DMP (data management platform) business, we were growing hundreds of percent a year and the market was super, super hot. Now, the valuations of these companies are half, if not less. Instead of the five times to six times multiples of revenue, they are two times, one time or even less in some cases, clearly highlighted by Rocket Fuel. As that company went out, it was leading a market perception. Late-stage tech companies – like AppNexus, Turn, Media Math and DataXu – they are all thinking about how ultimately they are going to create liquidity. But my guess is that they are performing better than they ever have.
Do you still have equity in Turn?
That’s a question I am not comfortable answering. I will say that I have every incentive to root for that company’s success.
Is Shopkick valued or perceived differently than ad tech players?
The challenge for us with Turn is that we were doing something novel and pioneering when we helped invent the DSP and DMP markets, when ad servers and ad networks were their own business. Then there were dozens of companies that were DSPs or claiming to be DSPs. With Shopkick, we are the only company doing what we are doing.
Why else were you interested in Shopkick?
It’s a digital, interactive layer to the physical world. It makes shopping more fun and is a nice extension to what the world of advertising is doing. Conversions are easily measured. In digital advertising, conversion rates are .3% or less; here our conversion rates are 20%. Attribution is easy because you know what drives the user to the brand. Viewability is clear. They watch the entire [incentivized] video 94% of the time versus the IAB average completion rate of 68% of the time.
If I’m a retailer, how am I paying to insert myself into Shopkick?
We offer everything from awareness all the way to sale of the product. A brand that wants to encourage sales of the product in store can run a campaign where we create incentives to scan the product or show that they bought the product. The beauty of this model is that the conversion is obvious, the attribution and viewability are obvious. We can show a very clear ROI story to brands and advertisers. It’s a PPA [pay-per-action] and PPC [pay-per-click] model.
Shopkick solves a marketer problem by giving them closed-loop attribution, but does the app solve a consumer problem?
I think we are helping and adding a lot of value. Ultimately, we are rewarding them for shopping. We are saving them money.
The app needs location data. Does Apple’s privacy focus make it tough for you to get the data you need to run the app?
Android is obviously easier. With Android, if you pass the beacon, they open the app for you. You don’t have to have it open.
What’s first on your list to “blitz scale” Shopkick?
One, we are rapidly building out sales and support teams. Second, I will be on the road shortly visiting our largest prospects and customers, to understand their digital marketing and offline marketing and how Shopkick could play best in those environments. For the value and ROI we create, we need to be better known in the community. Three, we are working on ways to make the app more simple and engaging. We have a new product line that is several months away that will make the app more compelling and useful.
How many people will you hire?
We are about 130 today and we will be growing to 160 by the end of the year. In general I would like 40% of the headcount in tech and product development, 40% in our sales, support and marketing and the rest in finance, HR and legal.
There is a push toward native and content solutions and away from banners and boxes. Is Shopkick’s marketer offering part of that – an anti-banner?
We are not anti-anything. This space was built on display advertising and that is flat, which creates some level of pressure. We are in the camp where context matters, content matters and location matters. Shopkick’s ads are showing products and deals. They are all native to the consumer, and in the environment the consumer would expect.
“Pokémon Go” could be a competitor to Shopkick.
It’s validation for what Shopkick pioneered seven years ago, and makes us optimistic for how people are going to interact with physical spaces. I was given a demo a couple weeks ago about a future way we would extend our product, which is analogous to what Pokémon is doing. The concept of augmented reality, the ability to see changes on your screen as you are walking – these are concepts that have been explored before the release of the product but they merit further exploration.
This interview has been condensed and edited.
