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Frank Raines, former CEO and Chairman of Fannie Mae and Pat Higbie, a serial entrepreneur, have invented a new type of mobile ad that's so intuitive, they can't believe it doesn't already exist.
Called XAPP (pronounced "Zap"), Raines and Higbie's product allows listeners to talk back to radio ads when they come up on Pandora, Spotify, NPR, and other mobile apps. It uses an iPhone or Android device's microphone to let users actively participate in the ads, rather than passively listen — or tune them out.
For example: Ourisman Toyota ran a 20% off promotion on NPR for listeners who booked appointments through the radio ad. “Want to learn more?” The voiceover said. “After the beep, just say 'XAPP Me!'" The listener then heard a beep and was given two seconds to repeat the words into their mobile microphones.
"We give the listener a specific word or phrase to say," says Higbie. "That’s the simplicity we believe is necessary. What Siri and other things are doing is impressive, but their results are not reliable enough to get every consumer to use them." Higbie says his team has made the technology so good, it can separate specific responses from background noise.
NPR is XAPP's first publishing partner. Since April, they've run a handful of the voice-enabled ads for local advertisers. NPR is selling the spots for a CPM north of $20.
"We have been demoing this for agencies and brands and the reaction has been roundly positive,” NPR's VP of Digital Strategy, Bryan Moffett, told Advertising Age in March. "When our test group heard [the call to action] ‘say download now’ or ‘say learn more,’ we universally heard them respond with ‘huh,’ sounding pleasantly surprised."
Raines and Higbie raised a $3 million seed round to get their startup launched. XAPP spent 17 months in stealth mode, perfecting its technology, researching the mobile advertising space, and getting feedback from marketers and publishers.
The pair co-invested in a voice assistant company, XTone, which led them to the idea for XAPP. "Frank and I were looking for something that could be really big using the base technology, and we wanted to build an end-to-end service," says Higbie. "We started looking at the media space, specifically in mobile, and the ability to personalize content whether it was music or spoken word. So we thought about how to use voice technology to monetize personalized mobile content."
Neither had ever worked in the radio or advertising industries before, so they met with a lot of agencies to gauge interest. They were surprised to learn that there weren't many known competitors, and that advertisers seemed eager to try a product like XAPP.
"Early on, we'd go in and talk to [advertisers] and we'd always expect to hear, 'Oh, we saw technology like that last month,'" says Higbie. "But every time we'd get a reaction that was more like, 'Wow, this is pretty interesting.'"
XAPP's team says they're building the "voice-click" for mobile ads, like a physical click on a website. While Higbie wouldn't give exact metrics, he says NPR's advertisers are seeing "dramatically higher" response rates when they use XAPP. For the first time, their ads can measure by a user's actions.
Currently, 14 people are working for the DC-based startup. Their team isn't interested in building a mobile advertising agency. Instead, it wants to build standardized, voice-activated units publishers can monetize, advertisers can measure, and consumers have a say in. Literally.
"The best way to think about XAPP is the introduction of the Voice Click to audio advertising," says CMO Bret Kinsella. "In 1994, the first clickable banner ad ran in Hotwired. Now, twenty years later, the first voice click advertisement was served by NPR for Lumber Liquidators through XAPP. It was about conversion then, and it is today for a mobile audio environment."
Here's an example of the first-ever "voice-click" ad XAPP media helped an advertiser run on NPR: