Shopping Comparison Site Offers New Ad Model

  |  June 26, 2006   |  Comments

Jellyfish ranks retailers according to bid price, and splits that commission with consumers, thus lowering their purchase cost.

The notion that the Web has put consumers in control is something many marketers are grappling with, and now a new comparison shopping engine has based its ad revenue model on the idea.

Jellyfish acts like a reverse auction through which retailers are ranked according to the amount they agree to lower their prices. The more they drop the price, the higher up in the search results advertisers appear. Consumers still pay full price, but they get half of the discount amount returned to them, and Jellyfish takes the other half. The company contends that its "Value Per Action" (VPA) model turns the tables on CPC models because the ad unit price is measured according to the value it creates for the consumer.

"It's not the cost to the retailer; it’s the value to the consumer," stressed Jellyfish President Mark McGuire.

The model is similar to that of Upromise, which contributes a percentage of users' purchases at participating merchants to a college savings account.

Jellyfish currently lists products from just over 1,000 retailers; those Web sellers distribute data feeds to the search engine, which features paid listings only.

By offering VPA ads instead of the CPC ads sold by most search engines, the firm argues that its system will be free of click fraud. McGuire cited Google's recent introduction of CPA advertising, which many believe could help stave off click fraud, commenting that "the experience is the same for consumers" with both CPC and CPA advertising.

Jellyfish CEO Brian Wiegand said that the firm's ad offering is "a more equitable model," adding that with CPC or CPA buys "the intermediary takes all that value."

Even with lower click fraud potential, there is the chance that advertisers will create Jellyfish-specific product landing pages that display higher prices, so as not to lose money on discounts. McGuire doesn't think that will be much of a problem, though he noted, "It's something we're going to have to monitor for."

The consumer's half of the discount is distributed directly to user accounts and can be cashed out in PayPal or check form. Payments are awarded only when users click through to the retailer site from Jellyfish. The company does not add commissions to user accounts until the retailer's return policy period for each product has lapsed, to prevent fraud by shoppers tempted to return purchases after cashing in their rewards.

The firm also aims to curb bogus product reviews by requiring that only consumers who have actually made a purchase through Jellyfish can submit a review of that item. "We feel there's a lack of integrity of product reviews on the Internet," asserted McGuire. Products listed on the site are also ranked according to popularity based on the number of consumers who have purchased them through the site. In addition, if users have complaints about sellers, they can submit merchant reviews; Jellyfish verifies the dispute with the retailer and assists in its resolution.

To attract users to the site, the company has developed a referral system which offers an additional 50 percent of the commission that’s paid to each purchaser to the person who referred that shopper to Jellyfish.

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ABOUT THE AUTHOR

Kate Kaye

Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.

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