Caliber Data is a Seattle-area startup, run by former Microsoft employees, which has been seeking to bring together a number of interesting elements and capabilities: consumer loyalty cards, online SMB marketing, CPA billing and POS tracking that ties back to online ads. (Disclosure: I’ve done research and market analysis for Caliber.)
The scope of the company’s ambition is large and its founders have been attempting to pull the various “moving parts” together. There have been some challenges in bringing all this together end-to-end. However, a new partnership with a well-established company in the loyalty card space, Nietech, has dramatically accelerated the company’s plan by filling in the missing elements of the infrastructure.
I can’t and won’t go into all elements of that infrastructure; currently the company is working on a market trial in the Seattle area. However, as I currently understand it, the model works like this:
- Online ads/offers/sales information from SMBs are collected (via self service or a sales channel partner) and syndicated to various local search sites and online distribution points (I believe their are nine sites the company is targeting). The company is currently focusing on newspapers as a channel.
- Ads are placed in the system (SMBs can also do this via telephone). They’re only billed when the transaction occurs at the point of sale (POS). It’s a true CPA model.
- Consumers register a credit or debit card (although the system can also reportedly handle cash transactions). This is key: not making someone adopt a new, special card and remember to bring that with them to the store.
- The consumer’s card registration information is tied to online tracking so that when she clicks on a participating SMB ad (at whatever point of entry or distribution) that event is captured and associated with the card registration.
- When the consumer later goes to a local store (service/retail) the consumer receives a discount off her purchase (based on the merchant bid) when the card is swiped through the POS terminal. That swipe is tracked back to the online ad.
- Consumers receive incentives and can even donate money to schools and favored charities through the system
- The beauty of the whole thing, beyond the interesting CPA angle, is its “passive” nature: the card swipe at the point of sale ties the transaction back to the online ad via the Nietech payments infrastructure. The SMB and the consumer never have to say anything or explicitly exchange information to make that attribution.
Certainly there is the standard litany of challenges here, mostly having to do with the familiar issues re acquiring advertisers and building consumer awareness. These challenges are not small. The company believes it has answers for these questions however. It also believes that merchants will be receptive to the program because they’re only charged when a transaction actually happens.
I understand how the system works at a conceptual level — the online ads, credit card registration and POS are all connected — but not technically. AOL is doing something similar for large retailers and CPG makers with the Krogers grocery store chain. More traditional online coupons offer tracking from Web2Store but people forget to bring coupons (though mobile can help somewhat). Hence this statement from some recently published research that I referenced in this post:
58% of consumers responding to the ICOM survey see their coupon use increasing if they could download a coupon from the Internet and have it automatically connected to an electronically swiped frequent shopper card.
One of the fundamental challenges in recognizing the true scale and opportunity of local has been the inability to track online research and activity to offline consumer purchase behavior. Systems like AOL’s Shortcuts and Caliber’s AdFission (not to be confused with AdMission) are really interesting and potentially exciting because they solve that problem.
Thus they hold the promise of bringing much greater transparency to online-offline purchase behavior and “closing the loop” for SMBs and larger merchants alike.
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On the product side, companies like Krillion, NearbyNow, Shopatron, Where2GetIt, Channel Intelligence and a couple others are bringing that “closed loop” transparency to product research and offline buying. Individual retailers are doing so as well with their “pick up in store” capabilities.
April 10, 2008 at 3:20 pm
Caliber’s model recalls a late 90’s, Mountain View, CA-based startup called Prio, with almost exactly the same business model, seeking to tie a registered credit card program with online coupons. Prio was backed by Microsoft and American Express, among others, and was acquired by InfoSpace in late 1999 for $400 mn in InfoSpace stock (back when minimal revenues such as Prio’s could attract such multiples). Word in the credit card industry at the time was that Prio, and then InfoSpace, had trouble getting traction given the very early adoption levels of online coupons, even though Prio was reported to be focused more on national account sales –like the Pizza Huts and Midas Mufflers of the world—than on SMBs (seems like national accounts would still be the low-hanging fruit). After a year or so of InfoSpace ownership (they with their own burgeoning problems at the time), Prio went off the radar screen and was thought to have been quietly shut down. Given current adoption of online coupons, the time might be right at last for this model, though the bidding system might be an unnecessary complication for the early stages, especially if focused on SMBs. Given the Seattle and Microsoft connections to Prio and InfoSpace, can you say, Greg, whether Caliber is a descendant in some way (technology or people) of that earlier effort?
By the way, ValueStar has been using a registered card program to survey Bay Area consumers about their experiences with local service businesses (especially East Bay) for the last two years, and consumer signups for the card program have consistently exceeded expectations—all the more reason to be bullish on the Caliber model.
April 10, 2008 at 3:25 pm
Thanks Lou. Wasn’t aware of the history. Caliber has no relationship with the InfoSpace sub. They don’t see themselves as a “coupon” company but rather as an SMB or local marketing company using a CPA model with a loyalty program for consumers.
The discount or offer isn’t tied to a particular item as I understand it but sales more broadly (e.g., get 20% your entire purchase) but they also may be open to specific item promotions too. Not sure.
May 21, 2008 at 4:03 pm
[...] a very mixed reputation. It’s being revived by sites such as Matchpoint, among others. And Caliber Data is trying to extend this to the point of sale with a loyalty [...]