We covered the launch of Happy Pay’s happy Ads network in an edition this week, saying we’d dig deeper on some of the claims. The team has now given us more insights…

The 20x return on ad spend behind Happy Pay's new Happy Ads platform is what a 5% average commission looks like, co-founder and chief executive Wesley Billett has confirmed.

"Average bids are around 5%, which equates to approximately 20x return on ad spend," he told The Open Letter. Happy Ads charges retailers only when a campaign produces a sale, and Billett has painted a much clearer picture: from which merchants took part in the pilot to how the money is split with partners.

The pilot that Happy Pay says produced more than R100 million in sales involved 50 merchants, among them Timberland, Nespresso, Tekkie Town, Standard Beauty and Subwear. Every merchant on Happy Ads must offer Happy Pay at checkout, but Billett says the R100-million counts only sales attributed to Happy Ads campaigns, which is separate from Happy Pay's total payment volume, because shoppers can pay with any method.

Merchants bid the commission they are willing to pay per sale, which is where the 5% average comes from. On whether the ads created extra sales or reached people who would have bought anyway, Billett was candid. "Attribution alone, however, does not establish whether a shopper would have purchased without seeing the ad," he says, adding that merchants report a lift in sales and in Happy Pay volume.

Merchants set their own attribution window as well as their bid. Zapper is the first audience partner behind the 2 million partner customers, and the partner behind the 6 million joining soon has not been announced. Happy Pay shares advertising revenue equally with those partners: on R50 of commission, the partner gets R25 and Happy Pay R25. Advertising already contributes about 15% to 20% of Happy Pay's total revenue.

On privacy, Billett says targeting data is limited to what each integration needs, agreements set out each party's POPIA responsibilities, and where consent is required, it is collected in the partner app.

For big retailers with their own ad networks, he pitches Happy Ads as an extra channel with no upfront cost, at a price that "by design will never surpass their existing channels".

Happy Pay's merchant sign-up page sets out how retailers can join. We first covered the company when it raised funding in March, when it had about 600,000 users, against more than 800,000 registered users now. Zapper's Steve Smith said in the launch announcement that the Happy Ads API powers Zapper Shop and generated revenue for Zapper from day one.

One question that still to be seen is how many of their 800,000 users are active each month. But we reckon that just makes the platform more worth a test.

The model still puts the risk in the right place, because you pay nothing unless a sale is attributed to a campaign, and you choose the bid and the window. So the practical advice for a merchant is to keep the attribution window short, and to test it yourself, for example by comparing sales for products in a campaign against similar products outside it.

The business itself is moving fast. Ads already bring in up to a fifth of Happy Pay's revenue, and the even split with partners is generous enough to attract more banks, telcos and fintechs. Whether this becomes the digital mall we described in the edition depends on the numbers still missing, above all how many of those users actually shop each month.

You might also like our piece on Amazon's early Black Friday sale, Omnisient using grocery data for credit, and Pepkor's R21-billion fintech deal.

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