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Retailers And Shoppers Are Pushing The Right Buttons On ‘Remote Control’ Commerce

By connecting the places where consumers spend time with the places they spend money, Mike Dudas’ Button aims to expand the value of loyalty as an affiliate sales proposition.

Foursquare has been expanding its offerings beyond serving as a “discovery” tool for locations, and through deals with OpenTable and Uber over the past few months, it has also been working on getting people to the places they’ve been looking for via its apps.

Last week, Foursquare dove still deeper into the on-demand space by partnering with Delivery.com on a Postmates-like in-app courier service.

The one common denominator though all those alliances has been Foursquare’s work with mobile loyalty and payments platform Button, whose social plugins appear on its apps as well as those associated with companies such as Uber, Airbnb, Ticketmaster, Groupon, and others.

As the concept of loyalty moves from punching holes in so-called “fidelity cards,” Button is also looking beyond the traditional model for its own rewards, says, Mike Dudas, the New York company’s co-founder, chief revenue officer, and someone who has seen the evolution of contactless payment systems up close during past posts at Google, where he worked on the debut of Google Wallet, and Venmo.

Delivery tapped the Button Marketplace to help it stay engaged with users across apps like Foursquare last October.

“Button is thrilled to activate Delivery.com’s thousands of merchants on the Foursquare platform,” said Michael Jaconi, Button’s co-Founder and CEO, in a statement touting the deal. “Increasing the utility of mobile experiences through matching offline locations with online mobile actions showcases the true power and size of the mobile opportunity.”

GeoMarketing: What’s Button’s perspective on the blurring of online and offline commerce at the retail level?

Mike Dudas: We are focused on mobile commerce. But what’s really surprising is that mobile commerce is actually happening in store. For example, Walmart saw that something like 10 percent of their mobile transactions are happening in store on device.

People want to walk in to a store and if it doesn’t have the good on the shelf, they say, “Guess what, I’ll buy it from you on my phone.” You’re going to see retailers responding to this. You’re going to be able to buy anything and get it delivered at the biggest, most savvy and sophisticated retailers. There’s going to be a much bigger shift to transactions that occur on what some would call “remote commerce,” but I would call “proximity commerce,” as I tap the phone and pay with a credit card.

Then, there’s this whole class of transactions that occur with services like Uber, and other platforms where you can book anything from food to hospitality to movie tickets.

The on-demand space has been evolving more rapidly in the past two years. How has the work you’ve done in the past positions with Google Wallet and Venmo, as well as serving current Button partnerships with companies like Uber, influenced where do you see things going in the short term?

At Google, years ago, we were saying, “Hey how do we help merchants drive traffic into the store?” Uber knows where you’re going, when you’re in the car. I can imagine and envision a world where they encourage merchants to fund someone coming to their store. It’s logical, I don’t know who their partners will be on that.

The Uber API is one of the most advanced right now and it’s more about people and goods. But they’re improving the product every day.

Button does a lot of work on powering loyalty programs. How do you also advise companies on devising a loyalty strategy?

Loyalty is a component of what we do, but it’s not the core of what we do. Actually, we’re trying to engender loyalty to specific commerce brands, but also to specific publishers by connecting the two. We try to connect the places consumers spend time to the places where consumers spend money.

Historically, if you’re a publisher, you have a few options. But generally it’s advertising or subscription revenue. What we’ve found is that so many publishers have actionable content — and this is what Google found years ago.

On mobile, it has been more challenging. And frankly, the only format that people are pursuing is app installs. So publishers are monetizing in crappy, spam-like ways and companies that are selling things only have a few options over app install.

What we’ve done is created a platform to match those two constituents: the apps where the eyeballs are — what you would call publisher with those commerce companies: the Ubers, Airbnb, Ticketmaster, OpenTable, Groupon, a few retailers that we haven’t named, but who are absolutely massive.

As the underlying commerce platform behind those apps, do you consider Button to be “consumer-facing?”

It is consumer-facing, but what we do is pull the AP out from the APIs — the inventory of commerce. We believe that your mobile device just has inventory of every kind; everything from retail SKUs to what cars are available nearby, what hotel rooms are available, what foods are available, and what tickets.

It’s almost like a commerce API hub. Then, what we do is we get what we call Button placements in publisher apps, in relevant places. In Foursquare it will be on a restaurant menu page and you’ll see OpenTable, Seamless, Uber, all of which gives people options to order food, make a reservation, or to take a car to the place they’re looking at in the app.

What’s Button’s business model?

Button provides a facilitated commerce connector and what’s amazing about it is the model is that it’s pretty straightforward. The commerce company only pays for transactions and for new customers, so they’ll pay an app install fee as well. You’re getting somebody who’s coming in with a certain context, who’s ready to purchase. It’s a very attractive model, much more attractive than a taking a percentage from payments.

It’s essentially affiliate marketing.

We fundamentally believe that all performance advertising ultimately trends towards affiliate in its model. Meaning, if everything can be purchased, if every advertiser’s goods can be purchased on the device, then the only two ways to advertise are going to be: pure brand, and that’s going to be measured on increasing intent to purchase, brand lift, awareness. Then you’re going to have performance, which, I’m over simplifying, but in ten to fifteen years is only going to be measured on “did somebody buy?”

How has the idea of using a loyalty program changed through mobile commerce and the affiliate marketing deals Button supports? And how do you know it works?

You’re starting to see is people become loyal to platforms that provide tremendous value to them. You can’t force loyalty, you can’t rely on the classic punch card model, or “the two cents off deals.” It’s really hard to prove that it drives behavior.

What drives loyalty is creating a great experience. One of our partners, Foursquare, has already seen a lift in terms of the folks who interact with the Buttons we provide. It goes beyond just using Foursquare as a information source, but actually as a tool they can use to purchase something. And that drives actions such as coming back and visiting the site more often.

We would call that a sign of increasing loyalty, increasing usage, and engagement. There are a host of ways where we plan to go further into what has historically or explicitly been defined as loyalty. We have the ability to send create a sense of context when we move somebody from a site or from app A into app B.

Today, we pass a lot of user intent context, we can pass some information about an offer detail. Down the road, these will pass loyalty points and things of that nature. You can envision a world —and we do — where we compete with the American Express’s of the world. But for today, we’re just very focused on providing value to the services where people are spending time, and the services where people are spending money. You can do a lot when you are in the trust of both sides.

You worked on mobile pay early on with Google Wallet in 2011. The cliché on mobile payment adoption by consumers and retailers is that “it’s always a solution in search of a problem.” Is that what you were confronted with Google Wallet five years ago?

Google Wallet, in 2011 was supported with very exciting product vision. You take your phone, walk into a store, tap, and pay with whatever instrument you want: from a credit card, debit card, store value card, to a store branded card. That same tap would also transmit loyalty points and coupons. This product would work across a host of android devices via NFC and they would work at hundreds of large merchants and thousands and tens of thousands smaller merchants starting in a few major cities then nationwide over a few years, and it would work seamlessly.

Unfortunately, almost none of those things came true.

What went wrong?

If you were to look at what’s the right way to build a mobile payment business, it’s actually not to start in the store and lead back onto the device. It’s actually to start on the device and then move out.

From an in-store perspective, we weren’t able to get the app onto devices, because Google didn’t control the entire plan.

The smartphone manufacturers didn’t have an interest in including the software to support Google Wallet.

We couldn’t even get manufacturers to put the technology into the devices on the scale that we’d hoped. We didn’t get the support of the Android team that we expected. The carrier section blocked the product from working on their networks. That meant we were stuck with a scenario where it only worked on Sprint, it didn’t work on T-mobile. It was working on very small set of devices. We had a lot of success selling to merchant division.

You see this with a lot of technology firms. Google approached it with experts from other disciplines. For example, I was somebody who didn’t have any payments industry or any retail industry experts; I was from the advertising division. So I can learn things, but learning while you’re selling to some of the largest organizations in the world from CBS to Walgreens to Subway, is tough.

But that’s what’s interesting. Ultimately, the reason that we wanted to include loyalty, coupons, and offers is that the notion is it would ultimately help close the loop. So, expand Google from those 10 percent of transactions that happened online where Google search was — and still is — pretty dominant and get attribution for that transaction. Some other cases are more complex in attribution, but the notion here is that if you could actually tie it to a transaction in the store, this would open up much more powerful advertising, particular for things like CPG brands, and things that are primarily purchased in the store.

Anyway, it made sense from a strategic perspective.

What’s the your sense of the current state of mobile wallets and how companies like Google, Apple, and others are pursuing it?

Google was right in that you’re going need all three things: You’re going to need payments, a loyalty program that people use and relevant offers, and then a reason to use it.

Now, some of the stuff you’re talking about — beacons and push notifications about offers — those triggers will help, but it’s hard to do that on a platform basis as well.

You got to manage a payments program on a merchant-by-merchant basis. The jury is still out on the notion of wallets, I’m not really a big bull on mobile wallets, I’m much more of a bull on Apple Pay, with Android Pay being the underlining platform to support just the payment and then on top of that you’ll see other services.

Primarily, you’re going to see retailer-specific apps. You’re already seeing this with Starbucks, Dunkin’ Donuts — I’m a big bull on brands that have a very dedicated audience and can create a truly customized experience in store having a lot of success with apps.

How do you see the landscape for mobile pay shifting over the next year?

There’s on thing that may, over the next 12-to-18 months buoy and bolster in-store mobile payment efforts. The fact is, it’s just a disaster trying to use an EMV or chip card at a U.S. retail establishment that supports.

Many don’t support it, but the ones that do have, for the most part, implemented abysmally and not educated their staff. For example, I’ll walk in to a pharmacy trying to pay with Apple Pay and the reader will be broken. Then, I’ll try to use my card, and just forget that I even have a chip card; so I swipe it, and nobody can figure it out. Then, they can’t tell me how to put it into the chip card reader correctly. At that point, I pull it out, because I’m not able use to it.

It’s very poorly implemented, it’s an embarrassment. It’s a shame that the network mandated it with no teeth, right? It’s a “chip and signature,” not a “chip and pin”, so it’s not that much more secure than what we previously advertised. It’s just an easy way for the networks to put together a half-assed technology in the market and push liability to retailers who don’t comply.

There are some really sophisticated merchants, but for the most part, as an industry it hasn’t been pretty. Mobile payments, the reason so we here at Button are very focused on the transactions and the places that the people are actually spending.

What else are you working on further developing?

Attribution and affiliation are two pieces our partners care about. We can attribute where somebody came from, but then a lot of people stop at attribution and don’t go that extra mile towards affiliation, because dealing with money and paying money with custom terms and making a market is really challenging.

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of GeoMarketing.com. A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.