The Pinterest executive-backed platform lets developers add rewards programs to mobile applications to engage and retain target audiences. The concept suggests that in-app advertising that delivers real rewards is more effective in driving engagement than banner ads, which are coming under increasing criticism for lacking excitement and creativity.

“We’ve worked really hard over the past few years to establish Sol Republic as a music lifestyle brand,” said Mark Reynolds, the four-year-old company’s global digital director. “Lootsie understands that there’s more to creating authentic brand advocates than simply throwing ads at them and seeing what sticks.”

Loyalty programs
Lootsie said its model is loyalty programs that airlines, credit cards and hotels offer, but is built to plug into any mobile app.

Consumers earn points for hitting achievements within their apps and then can redeem those points for real-world rewards from any of Lootsie’s brand partners.

Users download game app to earn redeemable points.

In an example of how Lootsie works, the user downloads a mobile game application from an app store. Points are earned by reaching targets in the games. When the player is ready to redeem points, pressing a Lootsie rewards button takes him or her to a marketplace of brands that includes Sol Republic as well as Gaiam, lyft, Barkbox, 1800Flowers and Aldo. The player can use the points to buy anything he or she desires in the marketplace.

As a way to monetize brand marketing on a mobile app, the Lootsie approach is superior to banner ads, according to Marc Mitchell, Lootsie’s co-founder and CEO.

For one thing, it is built on a community that includes the app developer, the brand and the player. It is undergirded by the financial transaction between the brand and the developer and the social transaction between the brand and the consumer.

Statistics suggest that advertising that delivers real rewards is more effective in driving engagement than banner ads, which are coming under increasing criticism.

Sixty seven percent of users visit the Web site of an advertiser after engaging in a positive ad, according to Lootsie’s Web site. Forty-four percent of mobile users say they would rather use an app with rewards in it.

Lootsie, which recently received $3.5 million in seed funding, is supported by an investor group that includes Tim Kendall, head of product management at Pinterest and former director of monetization for Facebook.

As audiences spend more time on apps, brands aim to connect with audiences in meaningful and authentic ways.

In November, a Sizmek report revealed that average click-through rates for standard banner ads in the United States fell from 0.1 percent to 0.08 percent, while flash rich media click-through rates rose from 0.14 to 0.25 percent.

Embedding creative media rather than stagnant display ads in a mobile site is much more likely to yield higher user retention rates, as the consumer can touch, tap and swipe through the interactive advertisement.

Training music
Coinciding with Lootsie’s seed funding announcement, Sol Republic reached an endorsement deal with Tiger Woods last week ahead of the golfer’s first start of the year at the Waste Management Phoenix Open.

Mobile, and smartphones and music players in particular, are important to athletes because of their ability to provide inspirational training music.

Tiger Woods’ Sol Republic testimonial on Facebook.

Mr. Woods, who reigned for years as the world’s top-ranked golfer, handed Sol Republic portable speakers and headphones to fans on the 16th hole during the Phoenix Open in Scottsdale, AZ.

Two years ago, Sol Republic’s audio gear received the blessing of Michael Phelps, the most decorated Olympian swimmer ever.

“We are psyched to be working with a team that understands how to create next-level experiences that speak to our mobile-savvy fans,” Mr. Reynolds said of Lootsie.

Final Take
Michael Barris is staff reporter on Mobile Marketer, New York