Google To Compete With Jellyfish’s Model

March 24, 2007 · 1 comment

There’s more to than Smack Shopping…not that you’d know it, as much as I chatter about the Smack. But at the heart of Jellyfish is its comparison shopping engine — search for an item and see how cheaply you can buy it, including cashback rebates, at many online stores.
That’s what we see from the consumer side. But how do all those online stores get into Jellyfish’s “database”? Do they include every online store in the universe? Of course not!
The online stores that show up in a product search are Jellyfish’s advertisers. They don’t have to pay to have their store’s items included in the search results, unlike at Google, where those “Sponsored Links” on the right-hand side of the page when you do a Google search are paid ads. The advertiser pays for placement in the results. You may click the advertiser’s ad, go through to his site, and not buy anything. That’s the risk the advertiser takes. They’re paying and not necessarily making a sale, plus they’re opened up to click fraud — an example would be competitors clicking their ads to run up their ad bill or to run out their paid clicks so THEIR ad gets top placement.
I know this can get confusing — please hang with me here.
Unlike Google’s setup, at Jellyfish, the advertiser doesn’t pay for top placement in your product search results. They only pay if the Jellyfish member buys something. So they have an incentive to offer lower prices to Jellyfish members. Instead of paying for every visitor to their store, they can drop the price of a particular item hoping it will generate a sale. They then give Jellyfish a commission for sending them your business. (Jellyfish shares this with their members as cash back, though obviously they don’t have to. The cash back rebates are an incentive to consumers to shop through Jellyfish’s comparison shopping engine, versus say PriceGrabber or MySimon.)
According to InformationWeek, Google announced last week that they are dipping their foot into the Cost Per Action model. In addition to their traditional method of charging advertisers by the click, they’re also trying out the cost per action model that Jellyfish uses.
Can Jellyfish compete with Google?
Google obviously has a lot more eyeballs looking at its website than does Jellyfish, although Jellyfish has had an amazing first 9 or so months of operation. On the other hand, Jellyfish shares the money its advertisers pay them with their loyal members. That’s a great incentive for consumers, but do advertisers care what Jellyfish does with their money once they pay them?
With Google getting into the game, will advertisers have as much of an incentive to deal with Jellyfish at all? Why would an online store bother setting up an account with a smaller website like Jellyfish when they may already have an existing account (for the old-style, pay per click ads) with Google?
On the official Jellyfish blog, the site’s founders posted last September that, “The current pay per click system may hang on as the dominant model for several years, but CPA is inevitable in my opinion.” Perhaps sooner than expected.
More information on how Google’s cost-per-action ads work is located on their AdWords Blog. Info on how Jellyfish envisions their model is located on their founders’ blog and on Jellyfish’s “How We Lower Prices” page.

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{ 1 comment… read it below or add one }

James March 27, 2007 at 12:23 pm

I don’t understand… Jellyfish’s model is not anything new. It’s presented differently to members, but Google getting into CPA doesn’t mean that they are going to offer a cashback site.
It means that they’ll allow advertisers to bid CPA, they’ll tie it into their existing CPC system, which is actually a CPM system (based on how they rank their ads – they don’t give highest rank to the highest bidder… they give it to the highest CPM)
CPA is nothing new for google, it’s just a different way of presenting the same thing. Right now they make you “guess” what CPA is going to be by analyzing conversions. This just means that they’ll do the guesswork for you and display your ads at your price, but they’ll do their own optimization.
I don’t think this means that Google is going to open an affiliate network, and I don’t think that it means that they’re going to compete with Jellyfish. too much speculation.


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