Ibotta, a twist on a mobile couponing app, is driving traffic to merchants by making consumers perform tasks to earn cash-back offers.
"The current system for couponing is not working; couponing is creating a transactional relationship, focused on the payment and discounts more than anything else," says Rich Donahue, chief marketing officer at Ibotta. "Instead we're driving consumer interaction and engagement and loyalty tying advertising spend to items sold on the shelf."
The iOS and Android app, which is free to consumers, lets users search through different categories of offers.
Both merchants and product makers partner with Ibotta to offer coupons. At a particular retailer, there's about $75 to $150 in savings, says Donahue. Some of the coupons are national, encompassing all of a chain's stores, while others are local, trying to drive foot traffic to a certain location, he says.
When consumers tap on a coupon they'd like to redeem, they must first interact with the brand. Consumers may be asked to watch a short commercial, answer a poll question or read facts or recipes. There are 15 different ways to engage.
Consumers then go to a store and purchase the featured item for full price. Ibotta gives a cash-back rebate for the offer amount into their digital Ibotta account.
"Consumers want more opportunity to earn cash back when they shop," says Donahue. Ibotta's platform has about three million consumer users and more than 100,000 merchants and brands.
Ibotta has two ways to verify that a consumer purchased the product. Either it partners with the retailer to get information from its loyalty program or it asks the consumer to take a picture of the receipt through the Ibotta app.
There is a $5 minimum to cash out the rebates a consumer has earned. Consumers can use Venmo or PayPal to receive funds.
Venmo and PayPal "were a very turnkey way to do the cash out; it's a very seamless flow to request through our app," Donahue says. "Some competitors send a paper check to consumers or force you to sign up for a debit card to cash out," but that's a hassle, he says.
Cash rebates can also be put on an eGift card from retailers such as iTunes, Regal Cinemas, Whole Foods and Starbucks. Ibotta is working on adding more eGift options, Donahue says.
Ibotta has also created a gamification feature called Bonuses, which is similar to Foursquare in that it allows consumers to earn badges and rewards for completing certain objectives. For example, Dial could offer a larger discount for purchasing both Dial soap and body wash in one shopping trip, Donahue says.
"This is great for a brand because they're trying to drive a new product into the hands of a consumer with an old product," Donahue says.
Bonuses can also be denominated in alternative currencies, such as reward points instead of U.S. dollars.
Brands pay Ibotta only when they can attribute a sale to an offer in the app. Merchants can also pay Ibotta to administer an offer program and drive customers into the store.
Currently the app has over 200 offers from over 100 brands. It has worked with brands such as Kleenex, Huggies, Best Buy and Burger King, Donahue says.
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Corrected June 27, 2014 at 11:17AM: An earlier version of this article misspelled Ibotta's name, due to incorrect information provided by the company's PR agency.