Unveiling Jellyfish.com and VPA Advertising
We just flipped the switch on the Jellyfish.com beta search engine, opening it up to the outside world. It is an amazing feeling and I’m really proud to be working with such a great group of dedicated people. Alright, enough sappy talk, let’s get down to business.
Over the past few months, we have been talking a lot about problems with online advertising, particularly some of the misalignment of incentives and limitations of pay per click advertising. We’ve also talked a fair bit about the coming Attention Economy and how we hope to be a tipping point for consumers to realize how much value their attention has online.
When Brian and I set out to start Jellyfish, we saw a remarkable opportunity to create a powerful new value proposition by evolving the underlying revenue model for search: pay per click advertising. So many start-up companies today create a better mouse trap and then try to figure out how to attach a revenue model to it (typically by slapping up some advertisements on their site). We did the opposite; we developed a revenue model that provided us a compelling value proposition for our end customer. We aren’t aware of many start-ups that are doing this today (we would love to hear of others), which likely means we are either idiots or geniuses (I’m guessing you will tell us pretty quick). I’m not sure which one we are, but at least we are different.
If you’ve followed our thoughts in the Jellyfish blog, you are aware that we think we’ve come up with a new form of consumer-centric search advertising that:
- More efficiently connects buyers and sellers
- Eliminates Click Fraud
- Provides online merchants with a risk-free sales channel
- Makes advertising transparent and unbiased for consumers
- Maximizes the value of a customer’s intention to buy something online
The Pay Per Click Auction
Like many people, Brian and I have been impressed with the efficiency and power of the Pay Per Click advertising auction that takes place every day at Google, Yahoo!, MSN and the other major search engines. As John Battelle so eloquently detailed in The Search, this NASDAQ-like market does an amazing job of setting the maximum value on our intentions through advertising competition, which has allowed search engines to reap huge rewards.
But we saw a limitation in this advertising auction, namely, the fact that it doesn’t directly connect consumers to the monetary value being generated. This isn’t much of a limitation when you use the search engines to find information. In fact, we love using search engines for this purpose and think that they do a great job. But when you want to buy something online—when advertising is the focus of your search—we think this limitation creates a big opportunity. Why? Two reasons:
- Limited Relevancy. The sponsored results are ranked with one primary goal in mind; to maximize the amount of click revenue the search engines make. The results you see are from the companies that write the best ad copy and pay the most to get in front of you. But are these listings showing you the best product choice for you? Is there a less expensive option, a product with better value, or a store that is more trusted? This is a secondary consideration. What matters most is that the search engine derives maximum click revenue. Isn’t this why paid search results have to be labeled as Sponsored?
- Failure to Maximize the Return on Your Intent to Buy. A consumer with a present intent to buy something online is the gold of the Internet. The more search engines can connect your search and the data they collect on you to some buying motivation, the more money they can continue to extract from advertisers. Thus, when a consumer announces their intention to buy something at a search engine, the advertising auction works its magic and the search engine makes increasing sums of money, none of which ends up in the pocket of the end consumer.
Enter Jellyfish.
Introducing Value Per Action (VPA) Search Advertising
At Jellyfish, we want to pioneer a new form of search advertising we call Value Per Action. Instead of charging fees on the click, we charge our advertisers only when people actually buy, and we share at least half of this fee back with those buyers in a cash back account. In other words, we connect people directly to the value of the advertising market. Instead of measuring how much money WE make when you click, we measure how much value the advertiser is willing to pay YOU for your sale. With VPA, the advertising value of your attention becomes transparent (you see it in the form of cash back) and changes from annoying advertising into a new kind of currency (we call it buying currency) that lowers your end price.
And to help you get the maximum amount of savings when you buy, we are launching VPA in the same kind of advertising auction system used by the major search engines. But instead of ranking our results by the amount companies pay us in the form of hidden advertising fees, we rank results by the end price for a product, after our cash back. We think this will create a perfect retail marketplace because retailers will increase their VPA advertising rates (keeping pricing constant on their own sites) to get to the top of our rankings and the value of that advertising competition will flow directly to our users in the form of lower net prices. You can see a simple picture of this system on our site here.
The power of the VPA auction is this: The more stores compete for buying attention, the more end consumers save. In this way, we think we hope to create a system that delivers the maximum return on a consumer’s intention to buy, and they don’t have to do anything more than search they way they would at one of the existing comparison shopping engines.
And what does this do for retailers? It allows them to spend the same $1 of advertising on both search promotion (paying for higher rankings) and price promotion (dropping price to drive conversion) in a risk free channel where click fraud is impossible.
A Big Idea–In Beta
We think this could represent is a major shift in online advertising and help advertising evolve to continue to be relevant in a world where the end consumer has ever increasing choices and control over their attention. You can read our vision of online advertising on the site here. But we also recognize that we are a start-up company with a beta search engine. Like the first PPC auction that started bids a 1 cent/click, we have to start somewhere as well. We could have waited a lot longer to build a perfect site with lots more products, but that doesn’t make sense. We wanted to introduce the VPA concept and start the bidding and the conversation as soon as possible.
Day one on our beta site you will see roughly five million products from approximately 1,000 online retailers. You will be able to search for individual products, narrow searches by store, manufacturer, and price range, shop by store, compare products, and earn cash back on most everything you buy. Things won’t always work perfectly, but we hope you will be able to visualize the power of Jellyfish.com as stores start to compete in a VPA system.
What We Promise During Beta
We recognize that our site will have limitations and bugs like most beta launches. Here are the main things we will be working on tirelessly during our beta period to get ready for our full consumer launch this fall:
- Adding thousands of additonal retailers and millions of additonal products at Jellyfish.com
- Promoting VPA-product level bidding and store competition
- Creating enhanced search functionality
- Expanding the tools to narrow your search results
- Launching better product review, merchant review, relevancy systems that leverage consumer buying data
We recognize that our site is far from perfect and we appreciate your patience while we move through our beta period. We also really look forward to your feedback and comments, both positive and negative, as we bring Jellyfish.com to market.
June 26th, 2006 at 12:36 pm
[…] Jellyfish has just launched, and is here to give a little back to us, the buyers. As Pete Cashmore from Mashable mentions, it is a “Radically Different Shopping Site” that is geared towards giving us money back when we buy something. They have worked out discounts from over 1000 sites such that when you buy products from them you get a few percentage points of money back. The percentage varies from site to site and basically comes from a commission that the stores pay Jellyfish for the sale. Jellyfish shares at least 50% of the commission with the consumer. […]
June 26th, 2006 at 1:36 pm
I like the idea- you are solving a problem for online merchants (alebit one that can be copied by other shopping comparison companies) - I guess the big question is how will you get people to come to the site to do their shopping vs. Amazon, PriceGrabber, Shopzilla, Shopping.com, etc…
June 26th, 2006 at 2:57 pm
How is this different from ebates + web2.0? You are just sharing your cutbacks like ebates does except that you have comparison shopping.
Good UI. Kudos on that.
June 26th, 2006 at 3:39 pm
Thanks for the comments and the positive feedback.
In response to Criticalshopper, I agree that cash back incentives have been around for some time. What makes Jellyfish unique is that we are the first search engine to put this system into a competitive, auction environment that drives maximum savings for end consumers. At Jellyfish, merchants are able to do category level and product level bidding on their commissions, and the more they bid, the higher in our rankings they go. Thus, there is a liquid, efficient marketplace that allows competition to bring the best deals to the top of our rankings for consumers.
I liken it to the advertising auctions that happen everyday at Google/Yahoo/MSN, except our ad auction delivers tangible value to the end consumer in the form of lower prices. These auctions have driven incredible returns for the search intermediaries. We want to turn this value creation (using the VPA auction) towards the consumer.
Another way to look at the difference in our model is from the merchant perspective: for the first time a merchant can use the same $1 of ad spend for both price promotion (driving conversions through pricing) and search promotion (paying to move up the rankings on search terms. I’m not aware of any other model that allows this currently.
June 26th, 2006 at 3:51 pm
justthefacts also raises a great question regarding our competitive differentiation over the other comparision shopping engines. This is certainly a question we have thought about on more than one occastion.
The first answer is that Jellyfish offers what we hope will be significant pricing advantages. Because we have a different ad model that actually provides additional savings back to the end consumer, you should be able to find the same products at Jellyfish.com at a significant discount over the other engines (especially as the competition for sales kicks in on our site). Engines that are on a Price Per Click basis do not have this ability.
Thanks for the question.
June 26th, 2006 at 5:03 pm
Congrats on yer Launch!
I was reading John Palfrey of Harvard Business School’s take on How to Monetize your Blog at BloggerConIV. Interestingly their wasn’t really anything too earth shattering other than the same old BlogAds or Adsense ads or maybe some affliliate stuff & subscribing to Feeds in order to send Traffic to your Blog.
It was generally agreed that unless your a Superstar like Michael Arrington of TechCrunch or maybe that Shoe Money dude
) there is no way the average Joe or Jane Blogger is going to generate any real serious Beer $Money!
My friend Eric Giguere who wrote Make Easy Money with Google & is currently getting ready to publish UnCommon AdSense might disagree. But even looking at his common sense advice you need to really know some programming basics which I don’t think the average consumer wants to delve into.
JellyFish got it right with creating a New Economic Paradigm shifting model. A New $Currency is also a smart idea.
It would be interesting to see some numbers done on what type of Advertising $Dollars can be saved by Companies & actually passed back to the Consumer while still meeting or probably wildly Exceeding Sales Goals by tapping into the Long Tail.
Cheers! Billy
)
June 26th, 2006 at 5:59 pm
This is a great business model alternative - click fraud is the archilles heal of PPC - their apathy opened the door to a more competative model.
Good Luck
digg.com/tech_deals/Finally,_An_Alternative_to_Pay_Per_Clicks_Click_Fraud_-_New_Model_Debuts
June 26th, 2006 at 8:12 pm
So many start-up companies today create a better mouse trap and then try to figure out how to attach a revenue model to it (typically by slapping up some advertisements on their site).
Instead we slapped up a poor reimplementation of existing tools, with the hope that we can pay our users enough to put up with it.
I wish you the best of luck with that. This “bribe engine” concept seems to come up every few years, but every time users choose to use sites that put their money into design, development and (most importantly) QA. I wouldn’t put up with much inconvienence to save $2 on a coffee machine, and unless I’m looking for a specific model it’s easiest to go to a large retailer and look at their loss-leader specials. Companies like Amazon and Walmart will always be able to undercut the competition with explicit price points and carefully designed customer interactions that cleanly differentiate a smaller number of products.
June 27th, 2006 at 1:06 am
[…] Jellyfish launched its new “buying engine” yesterday (see coverage in Mashable, WSJ, and ClickZ), and some of the feedback has inevitably been — “it’s nothing new.” I’ve spend a fair amount of time talking to founders Brian Wiegand and Mark McGuire, and I think what they’ve imagine with Jellyfish IS new, and potentially revolutionary. […]
June 27th, 2006 at 3:20 pm
JellyFish Buying Engine could spell trouble for Google Adwords
JellyFish is a startup that you’ve probably never heard of, but they’ve come up with an innovative service that could make them very popular amongst online shoppers and advertisers alike. Their business model works like this: You search for…
June 27th, 2006 at 7:56 pm
By looking very closely at the way your site works, it doesn’t seem a lot different from other cash back sites like ebates.com, fatwallet.com, doodlebuy.com. I am still doubtful about your claims that merchants bid to come at top of your searches. I think you are just listing the sites at the top that pay max commissions. You cj links look pretty similar to other datafeed affiliate links ( I did a view source to look at your cj links). The link doesn’t have anything to suggest that there is a dynamic bidding process.
June 29th, 2006 at 11:33 am
As one of the rare women who does not love shopping (just the results) who has many women and men friends who do, and as a non-geek I think you’ve hit the bullseye with a premise/promise that is enticing for both groups.
Have read your blog commetns and web site and have signed up… to buy, and to tell others of my experience. Kare, author, SmartPartnering
June 29th, 2006 at 11:35 am
The cashback concept doesn’t always save money for a shopper.
Most of the vendors have a landing page for products that is higher priced than the price on their regular website. The mark up alllows them to give them a commossion to the affiliate. So say you can buy a product for $10 directly from the vendor’s website, you pay $11 when you go thru an affiliates site. Then the vendor gives $1 back to the affiliate site which the affiliate site shares with the buyer. If that sharing is on a 50/50 basis, then the buyer gets back .50 cents. So the final cost to the buyer is $11 - 0.50 = $10.50, which the buyer could have bought at $10.00 directly from the vendor site.
June 29th, 2006 at 3:10 pm
Kare, thanks so much for your comments. I think the key to bringing the Attention Economy to the masses is to develop an application that has mainstream appeal. I’m glad you think we are on the right track! And we have a great Refer-a-friend program that i hope you use when you refer folks.
Easyshopper, the site is in beta and you are correct to point out that we don’t have much active bidding yet, but it is only day 4 after our launch. When Google started offering Adwords, I believe the ppc rates started at .01/click. Just like the ppc world, I think we will see competition rule here, which should save you lots of money when you buy things.
ShopperDude, thanks for comments, but I’m not aware of many stores that have different prices for different landing pages. In fact, the big stores that did try this in the early days of the Internet quickly abandoned the concept. This may work for really small stores that can handle the complexity and risk this creates, but I think this will be the minority. Also, I think the consumer market will rule at Jellyfish. If a merchant is willing to play games and take this kind of risk, all they are doing is dropping their store listing on our site and letting their competitors move up our listings because we sort retailer results by net price (we call it bottomline price) which factors in both the store price and the total cost for the product after our cash back rebate. Thus, the old method of “let’s raise our price and kick out some coupons” won’t increase their rankings in our results. Stores can only get to the top of our rankings by either increasing their commission (giving more cash back) or by dropping their linked store price. Either way, the consumer can always clearly see the total cost they will pay and make an informed decision.
Nate, I’m sorry you had a negative experience with some of our beta features. I hope you check us out again as we continue to add more stores and increased functionality. And WalMart and Amazon also have to buy customers. A percentage of every thing you buy from them is paying for their advertising. Wouldn’t you like a model where you share in some of that?
Stores compete for attention every day with advertising dollars, we think our marketplace will help consumers get direct value from this competition.
July 5th, 2006 at 2:48 am
[…] Here’s Jellyfish and how it works from the Jellyfish blog. […]
July 6th, 2006 at 8:01 pm
[…] Your Search Functionality isn’t Great and You Have Limited Products. As I mentioned in my VPA post announcing Jellyfish, we wanted to be first to market with this concept and we made the decision (like many companies) to launch in beta with limited search functionality and products. I’ll continue to keep you updated on our progress, but we’ve already made substantial changes to our search features and are adding new products on a daily basis. […]
July 16th, 2006 at 6:40 pm
Hey Jellyfish Team,
First, congratulations on your launch! It’s always an amazing experience to get a concept out there and start to see real use.
I like the experiment of the advertiser only paying on actual sales. However I also know that there is a lot of value in the ads whcihdon’t result in a direct purchase online. The vast majority of purchases are researched on the internet, yet still conducted in stores. There are a number of recent studies that highlight this. So, I have to wonder if some value is not being recognized to find company information during the research process.
The other thing I have a question about is latency. The buying cycle within search typically starts with research — I am searching for a “vacuum.” I see brands, gather information and then ponder my decision. I come back a week later and then due to my first research I type “Electrolux.”
The point is that most buying patterns are a series of searches that lead to a transaction. Are the bids variable on the actual keyword or is it a flat fee to advertise. If it is varible, then the cost of the product would vary on the actual keyword I used to find it — vacuum costs $2.00 and Electrolux costs $1.00 (then I would either get $1 off or $0.50 off). If it’s not variable, then its not an auction, so I am curious to know how this plays out.
The last thing you mention on the blog is that this is connected to the Attention Economy. I don’t see the connection. If the users were monetizing the time they spend on the site and they had control over that rate, then maybe. I don’t think splitting the cost of a single ad after researching multiple products is a correct description of most ideas that the AE centers around right now, but I want tohear your perspective.
For disclosure, I am the Founder of Meople.net and we are in the early stages of defining attention economics there. I would be curious to get your thoughts on the AE.
Anyway, best of luck to you guys. Keep up the good work on empowering consumers.
Take care.
– James
July 19th, 2006 at 1:41 pm
[…] There are a lot of job-seekers out there vying for my attention. Why then do they seem to put so little time into the process? We’re a vibrant Internet company caught up in the excitement of executing on some really big ideas. The last thing I want to do is read a bland resume that feels like it’s been sent out to dozens of non-descript companies. If you’re sending me a resume, you’re interrupting me, and I’ve had many years of practice at ignoring disruptive advertising. (Thanks flashblock! Thanks TiVo!) As a job seeker, the last thing you want to do is get dismissed in the first few seconds. […]
July 25th, 2006 at 6:45 pm
[…] Why not the Value Per Action advertising model? Instead of interrupting and annoying me with wasteful movie advertisments, billboards, banners, etc., why don’t the studios bring me directly into the value of their advertising by sharing back a portion of the advertising fee with me each time I book a ticket online. Get rid of the waste and inefficiency of traditional advertising and use your ad dollars to drive demand in a risk free, verifiable fashion. The system could work very similar to the initial Jellyfish.com retail shopping experience. […]
August 30th, 2006 at 9:33 am
[…] So what makes our Value Per Action (VPA) search advertising unique for online retailers? There are several unique elements, but the one element I would like to highlight in this post is the maximum value that retailers obtain from each advertising dollar they spend at Jellyfish. This concept can be boiled down as follows: Jellyfish.com is the only search engine where retailers achieve both search promotion (moving higher up our listings) AND price promotion (driving conversions with price discounts) with every advertising $1 they spend on the site. Let’s look at this concept at work in the following basic example: […]
October 30th, 2006 at 10:23 am
[…] The funding will allow us to move forward aggressively with our vision of online advertising, and the belief that the customer should be a direct participant in the advertising value equation. We may not execute perfectly over the next few years, but you can rest assured that all of us at Jellyfish will be working extremely hard on our campaign to drive great accountability and value from online advertising. […]
February 15th, 2007 at 9:59 am
[…] Since our launch in June of 2006, Jellyfish has been working hard to drive adoption of a new form of online advertising we call Value Per Action that eliminates the waste from traditional advertising and transforms it into added customer savings (you can read about VPA here and our vision of advertising here). […]
March 18th, 2007 at 9:29 am
In order to attract all of these companies to do business with your company you are going to need a real savvy business manager or head sales representative. Since you two are more techies do oyu have a good business rep?
March 26th, 2007 at 1:39 pm
[…] This is why Google’s news ultimately lands with a thud. If we assume Google is wildly successful with their CPA model, it may help elimiate the search engine spam and click optimized sites that frustrate untold online consumers. This is a good thing for consumers but it doesn’t go nearly far enough to deliver consumers the true value of their attention online (see my post on Buying Attention here). At Jellyfish we take Cost Per Action one step further to create Value Per Action, which directly rewards consumers for making purchase decisions on our site. In the Jellyfish VPA model, as advertisers bid higher and higher rates to reach buying consumers, the end consumers share directly in that competition for their attention through greater savings. This won’t happen in Google’s CPA system. As advertisers compete for CPA opportunities and bid up CPA rates, Google and third party publishers will make more money, but the end consumer will still be completely disconnected from this significant value creation. Ultimately, this makes Google’s CPA moves of marginal benefit to online consumers. […]
May 15th, 2007 at 5:25 pm
[…] There’s an argument here that CPA/PPA will only gain momentum; however that’s not necessarily so. Borrell Associates, in its recent report on the Automotive vertical indicated that lead gen programs were losing favor. And Jellyfish triumphantly proclaimed that their model was game-changing and would initiate a “major shift” in online advertising when it launched. It has not. […]
July 14th, 2007 at 5:24 pm
As a self described “white hat SEO professional I have never used PPC programs. It’s kinda like it’s a religion taboo, if you will… However, I think PPA is the wave of the future. I have been waiting for this natural progression to occur.
I have always considered paying for a visitor to be a waste of time. I’ve clicked on lots of sites never intending to buy anything. So paying for visitors made no sense to me. However, paying when someone actually pay is just another cost of doing business and I CAN LIVE WITH THAT.
Since I have never used AdWords I will have a long wait before Google’s PPA becomes available to me… Oh, darn….
Having said all of that I must do some research on Jellyfish… I have never heard of them until today…Hmm
May 15th, 2008 at 7:09 am
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