Pep Boys' early results suggest there is something to the argument that successful mobile wallets are more about relationship-building and less about payments.
"[Mobile wallet advertising] allows us to close the loop on our campaigns and connect our paid media with real-life purchases in a way that is seamless and trackable," said Rachel Silva, assistant vice president of marketing at Pep Boys.
In about a year, Pep Boys has reached a redemption rate of about 30% by using technology that allows consumers to view mobile advertising to mobile wallets such as Apple Pay and Android Pay.
The technology works differently than an in-ad 'buy button' like those used in social media. Pep Boys' deployment is designed instead to primarily drive in-store engagement off of widely dispersed mobile advertising, and then give the retailer insight into transaction history, geography, and channel preferences for specific consumers. One of the criticisms of social network-driven buy buttons is they make it difficult to match inventory to sales.
"This is unique in comparison to other mobile ad formats because it gives it a [customer relationship management] functionality through the mobile wallet," said Silva, adding Pep Boys can use location-triggered reminders or updates at relevant times through a purchase process, even after an ad campaign has ended.
Pep Boys' ads appear on any mobile ad space, including banner ads and rich media. By tapping the ad, the consumer saves the branded content in the form of a coupon accessible via their mobile wallet. That offer can then be redeemed online or in store as part of a mobile payment.
Pep Boys is building off an existing relationship with Apple—it had earlier made coupons available for Apple Passbook, the predecessor to the Wallet app that manages Apple Pay settings.
Pep Boys' mobile ad strategy relies on Vibes, a mobile marketing company that has partnerships with digital content firms such as Flashtalking, MEC Global, Mobile Fuse and Spark SMG. Pep Boys said its engagement metrics, which measure traffic for ad content, have improved to about twice the industry average for mobile ad content since the companies began working together. Vibes and Pep Boys did not disclose their financial arrangement.
The mobile format provides more flexibility in how ads are deployed. "Saved WalletAds become a living ad unit in the mobile wallet that can be updated over time with new offers, content and reminders," Silva said.
Pep Boys' reported results would give some hope to the idea that special offers can drive consumers to mobile wallets. More recently, Vibes has added clients such as Honda, Adidas and Petco.
Since Apple Pay and its competitors from Samsung and Google have emerged in recent years, there has been lots of buzz about the new technology but less enthusiasm among consumers.
Marketing experts such as Moovweb have suggested loyalty and marketing programs can lure more consumers to mobile payments by deemphasizing the actual payment.
In the case of Vibes, the goal is to move ads and coupons beyond the retailers' native app to other mobile venues, where new consumers are more likely to see the content. Once "hooked," these same consumers can get CRM-driven offers based on their personal preferences.
"The model makes a lot of sense. Consumers have shown an appetite for couponing," said Emmett Higdon, the director of mobile for Javelin Strategy & Research, adding the 'coupon transfer' strategy is similar to banks' efforts to lure people to online banking in the early days of the Internet.
The wallet advertising model still does not address the issue of different enabling technology for wallets made by different tech companies, however, Higdon said.
"Until we see a consolidation of the different technology that's out there in the wallet space it will be tough to crack," Higdon said, adding that would result in advertising that was siloed to specific wallets or different mobile payments technology in many cases.