September 27, 2016
Tom founded Third Screen Media, the world’s first mobile advertising network. It was acquired in 2007 by AOL and set the standard for wireless advertising as well as Tom’s ability to deliver a strong return for investors. He previously served as President of Internet portal CollegeLink.com, and as founder and CEO of both 9th Square and Echomedia.
When not sailing the world, Tom is founding and building disruptive media companies. He is a frequent speaker at global industry events and has been quoted or featured in Forbes, The New York Times, The Wall Street Journal, The Boston Globe and CNBC. He currently resides in Rhode Island with his wife and two children, and is a proud Providence College Friar.
Let’s Talk Payments: Could you explain how you see the dynamics of the new cards & payments landscape? How has Linkable Networks been able to successively adapt and grow with it?
Tom Burgess: While the cards and payments landscape has existed for more than 50 years, it has been continuously adapting to meet consumer demand for a more seamless checkout experience by streamlining more efficient technologies and improving security measures. In the background, retailers and banks are fighting a long-standing, industry-wide battle over merchant interchange fees. Looking back at the failures of the Durbin Amendment in 2013 and the MCX coalition in 2014–15, it makes sense that these tensions have escalated (most recently between Walmart and Visa whose conflicts are now impacting consumers at checkout). The industry needs to stop battling over the reduction of interchange fees and start looking for alternative funding sources.
Here at Linkable Networks, we’ve recognized this dynamic and identified a way that AdTech can provide a third-party solution: brand-funded offers that offset these fees and reduce tension in the industry. As brands spend billions on advertising and need attribution data to drive more efficient media spend, we bridge these two to deliver a higher, more measurable return on ad spend. With this efficient use of brands’ advertising media dollars, Linkable Networks passes a portion of the ad spend to the merchant, offsetting retailers’ costs to process the credit card payment and driving incremental sales at retail. This is done without affecting the current interchange fee structure so banks still receive their fees while retailers’ net costs are reduced.
LTP: Where do you see Linkable Networks providing the maximum value? Retailers, to customers, or to digital payment ecosystem?
TB: It’s a close call between retailers and consumers – Linkable Networks delivers value to the consumer in the form of a retailer or brand funded purchase incentive that is simple to redeem using an existing credit or debit card. We deliver value to retailers in two ways: a. Increased consumer visits with increased spend, b. 100% attribution of their media spend via our purchase verification capabilities. It is important to note that we enable the retailer’s brands to fund the consumer incentives that drive sales into their retailer’s stores. The brands are happy to fund these campaigns in exchange for the purchase verification and the resulting attribution for their media spend.
LTP: With the recent news on Visa-Walmart stand-off in Canada, how do you see this affecting the overall industry? Do you think this would be Canada-specific or a global phenomenon?
TB: The Visa-Walmart stand-off in Canada is just one of the latest iterations of the battle over interchange fees, of which retailers pay more than $80 billion in these fees per year. As we saw earlier this year, Visa threatened to raise interchange fees and fine US grocery store chain Kroger because they did not verify purchase via signature-and-PIN. Both these instances indicate the global reach of this dilemma. The industry has very tight margins, and Wall Street values are based on same-store yearly sales, leading retailers to fight for every available basis point so they can meet their growth projections and drive value for investors. Meanwhile, banks are arguing that the fee is fair and they cannot reduce it. This issue is not going away unless the industry looks outside this fee battle for new sources of funding.
LTP: What are the cost economics involved in card-linked offers?
TB: Brands and advertisers are charged when the consumer makes a purchase. This performance-based model guarantees the paying advertiser a direct ROI on each campaign.
LTP: How do you see the adoption of card-linked offers in the market? Given some of the banks have discontinued or have not shown high public interest?
TB: Card linked offers were first promoted on bank websites as a loyalty offer. It was an extension of services for the banks to provide card-linked offers to their card-holding customers. However, consumers weren’t exactly keen on spending additional money after viewing their accounts – can’t blame them!
In 2011, we began building a scalable platform that allowed CPG and specialty retailers to track the effectiveness of their media spend. Linkable provides purchase verification solutions so advertisers can attribute a direct ROI for their advertising campaigns. Leveraging our card-linked offer platform retailers and brands can engage, reward and incent their consumers across any channel – online, mobile and in-store and track the resulting purchases on a one-to-one basis. Linkable currently supports retailers such as Saks Fifth Avenue, Bed Bath & Beyond and Express. Furthermore, non-bank shopper portals such as Ebates launched cash-back offers that are redeemable in-store, and News America Marketing will be adding CLOs to the Sunday morning paper free-standing insert (FSI) later this year.
Card-linked offers are set up for success because they can be saved directly to consumers’ credit or debit card, which is always with them at the point of purchase. This convenience not only makes them easy to use but encourages consumers to try new products or retailers. Data shows that consumers are responding positively to these offers – more than 50% link and redeem within 24 hours, which provides retailers with purchase data that shows the consumer opted for an offer that was then redeemed in-store. With card-linked offers, retailers can convert up to four times as many consumers than through traditional couponing.
LTP: You have started to differentiate with Linkable as a service while starting your project. Recently, you have launched Shopper Attribution Platform, an advanced solution. Can this be seen as an eventual evolution in the card-linked offers market? Do you see other players following the trend?
TB: For background, our Shopper Attribution Platform enables retailers and brands to create and distribute offers at an SKU or whole basket level to drive consumer redemptions at participating retailer locations. Attribution is realized because Linkable is able to verify the consumers’ point-of-sale purchase. With this capability, advertisers can automatically measure one-to-one purchase behavior and attribute this data to any media channel. This provides retailers with insight into who is buying what at which stores, capturing a holistic picture of consumers’ shopping behavior driven by a specific advertising campaign.
Linkable is different, and we feel much more valuable, from other advertising attribution solutions due to our unique ability to verify SKU/item level purchases down to a specific consumer. Other solutions offer panel based results gleaned from a sample set of shopper data. Card linking is a far superior solution and Linkable is enabling new partners, retailers and brands on an increasing basis.