Industry News
What Marketers Should Know About Ibotta, the Digital Promotions Company That Just Went Public
The newly public company Ibotta reached a multibillion-dollar market capitalization by giving shoppers cash back on products they buy, sharing the purchase information with brands and collecting a fee for any sales generated. Now its sights are set on using AI to help brands decide which discounts to offer which consumers.
Ibotta, a Denver-based digital promotions company, introduced its namesake app in 2012 as a replacement of sorts for paper coupons. It subsequently expanded into running promotions for companies such as Walmart on their own platforms as well as serving deal offers on other sites and apps. It now employs more than 800 people. When it went public last week, it priced its shares at $88 apiece, four dollars above the top of its targeted range.
Here’s what else marketers need to know about Ibotta and what’s next for the company.
Where did Ibotta come from?
National Basketball Association fans may know Ibotta’s name from the jersey patches it sponsors on the uniforms of the Denver Nuggets, but many people don’t know the brand or the full extent of its business.
Ibotta’s founder and chief executive, former lawyer Bryan Leach, has said he was inspired to start the company when he saw a woman photographing receipts for an expense report after a conference. That got him thinking about the information found in receipts—price, quantities, date and time, store locations and more—and how it could help companies tailor their promotions and advertisements to consumers.
Consumers now encounter Ibotta’s primarily cash-back promotions both on its app and on sites from Walmart, the Kroger grocery chain and oil-and-gas major Shell, where the deals are embedded without an Ibotta label. Walmart owns more than 5% of the company and is a strategic partner.
How does Ibotta make money?
Brands pay Ibotta only when its promotions result in a sale for them, and not if a consumer merely sees or clicks on a promotion.
“You can get 10 billion impressions with Ibotta to drive one sale and we charge you 80 cents for that entire campaign,” Leach said. “On the other end, get 10 impressions and drive 10 sales, we’ll charge you $8 for that.”
Last year Ibotta posted a net profit of roughly $38 million, up from a net loss of about $55 million the year prior.
More than 2,400 consumer packaged-goods brands were using Ibotta as of late December, according to its prospectus. The company said most of its offers pertain to products in nondiscretionary categories such as groceries, but said its partnerships with companies selling toys, clothing, pet care and other categories are growing.
Who uses Ibotta?
Ibotta says it has 50 million registered users of its app, where consumers who set up accounts can peruse its cash-back deals at various retailers. Users collect the rebates by buying online or uploading receipts from brick-and-mortar stores.
Ibotta also operates a web browser tool that allows shoppers to receive cash back on purchases.
Companies such as RetailMeNot, PayPal Honey and Rakuten offer similar products for consumers looking for deals or cash back on the things they buy.
“This space specifically helps consumers who are value-focused surface the best promotions and discounts, often in the forms of cash back, in a very easy to participate way,” said Kassi Socha, a director analyst for Gartner, a research firm.
https://www.wsj.com/articles/what-marketers-should-know-about-ibotta-the-digital-promotions-company-that-just-went-public-260503de