“The Sell Sider” is a column written by and for the sell side of the digital media community.
Today’s column is written by AdExchanger Senior Editor James Hercher.
If you know the brand Ibotta, you’re likely thinking of the popular cash-back app. Users upload receipts of in-store purchases and redeem credit for products listed for promotion in the app.
But while that business still exists – and still represents the majority of Ibotta’s revenue – the company is shifting from DTC app to B2B2C performance marketing network.
One loose analogy is Foursquare. The location check-in app never abandoned its original DTC roots, but the business is now focused on its network data and providing a technology backbone for other companies looking for mapping services or to attribute foot traffic.
Why is Ibotta well-positioned to make this move? Nearly every retailer has its app by now. But none on their own have the scale and incremental gains that CPG brands covet.
“We’re putting together a network of now 120 million and growing customers that you can reach in a single interface,” said Ibotta Founder and CEO Bryan Leach.
AdExchanger spoke with Leach.
AdExchanger: How has the business changed?
BRYAN LEACH: A lot has changed.
A few years ago, we were a mobile app focused on delivering direct consumer cash-back rewards. But over the last three years, we’ve begun building out a platform we call the Ibotta Performance Network, or IPN, where Ibotta’s app is one publisher in a broader network.
We’ve since begun working with the largest retailers in the US to power their next-generation rewards programs. For example, we signed Walmart as our exclusive partner for the next several years, which is a big deal because Walmart never had a digital rewards program. Fifty-nine years as a company – and the largest retailer – but they never had one. That launches in the next quarter.
Walmart has its own discounts, coupons and affiliate partners. Where is the exclusivity?
Walmart did use to have a price-matching program called Savings Catcher, but it was shut down and it wasn’t a loyalty or rewards program, just a guaranteed lowest price.
This is the first time Walmart has a program where people can get rewards for buying specific items. It’s phasing out paper coupons and replacing them with a closed-loop rewards program. Instead of getting a discount, like a paper coupon, you’re getting Walmart cash applied to your Walmart Plus membership.
On your next trip to Walmart or to Walmart.com, you can use it much like a Starbucks reward or airline mileage. That’s not the norm in the industry.
This represents a big change in the way major grocery and pharmacy retailers think about loyalty. It’s more strategic and focused on return trips. It entices you to come back and spend that currency.
When I say exclusive, I mean we’re the only company Walmart is partnering with to source content for that program. Any manufacturer that sells its products at Walmart and wants to be part of the digital rewards program, whether it makes cheese sticks or mountain bikes, works through us to do that.
I see the value for Ibotta, but what’s the benefit for Walmart to have an exclusive vendor rather than work with a number of companies?
You need someone to handle the coordination of offer delivery.
Ibotta is a widely used direct-to-consumer savings tool in the grocery space. If an offer is available at Walmart, there has to be a mechanism for making sure it can’t be stacked with an offer on Ibotta. Otherwise, customers could get double rewarded. Walmart needs a method almost like air traffic control for identifying that a deal has been redeemed on the Walmart app, so take it off the Ibotta app.
Our scale makes us the most logical partner to fulfill that function – but it’s very different than media, where Walmart works with The Trade Desk. You can put impressions wherever you want, but we use a reward value keyed off of a specific purchase.
Is Ibotta fully focused on the performance network now or do you still support the receipt-based cash-back service in the app?
The app accounts for $15 billion in sales per year and is still a major part of our company and financial profile.
But the receipt upload has become less and less prevalent because we now have direct integrations. For example, if you use the Ibotta app at Walmart, all you have to do is link your Walmart account and then you can pay with your credit card. You can still scan the barcode on your Walmart receipt if you want, and we’ll credit you, but we’ve largely transitioned to a seamless non-receipt-based approach.
Why is that better?
There’s less fraud, so it’s more reliable from a consumer standpoint. It also means we can look at your entire basket of purchases and personalize offers more accurately. Before the pandemic, we didn’t support using Ibotta offers for online shopping, like online grocery. Then the pandemic hit, and we were like, “Oh shit.”
So we went into, like, crazy Manhattan Project mode in April 2020 and launched support for cash-back on Walmart, Safeway and others. We already worked with Kroger to do that. Now about 15% of our redemptions are online grocery sales.
Do retailers like that you have your own app or do they view it as a rival shopper traffic channel?
Retailers don’t just want you to power their loyalty program – they want incremental traffic and new sign-ups. And the Ibotta app can help retailers reach people who haven’t downloaded their app yet.
One of the reasons we’ve surpassed competitors like Quotient is that we invest heavily in our B2C business, which helps us make the case to retailers that we can drive traffic and handle shopper coupon abuses and loopholes.
Do you still work directly with large brand marketers or are you doing more with agencies and ad tech?
We work much more closely with the major media agencies.
There is real hunger among media buyers for better targeted shoppable ads. Although almost all of digital advertising is geared toward online sales conversions, 90% or more of purchases still happen in stores. Typical performance marketing misses that path to purchase.
Brands can continue to spend heavily on upper-funnel ads and rely on multi-touch attribution models, but it’s pretty speculative and that methodology is unsatisfying – particularly when conversions occur in the physical world.
What we do is say, “OK, use The Trade Desk or LiveRamp, but also use creative that isn’t just reminding people about a brand. Use creative that says go here and buy Bud Light to redeem this deal.”
It’s actually cheaper and more efficient to share a portion of sales with consumers. Otherwise, you end up with ad blindness and wasted impressions.
This interview has been edited and condensed.
