Since our launch in June, we’ve had remarkable interest from new merchants that want to get their products incorporated into Jellyfish.com.  Almost without fail, these new Jellyfish merchants express how great it is that Jellyfish aligns its incentives on the end sale, providing them with a risk free channel.  Most of these merchants highlight their concerns over the growing threat of click fraud, and the problems they have managing their Return On Ad Spend at the Pay Per Click engines. 

I don’t want to minimize this feedback, because it does represent a major shift towards more accountable search advertising (In fact, I kind of like the sound of this headline: “Jellyfish.com Eliminates Click Fraud & Makes Online Advertising 100% Accountable“).  However, traditional Cost Per Action (CPA) forms of online advertising have been around for some time (e.g., Affiliate Marketing) and at least one other search engine (Snap.com) is trying to move to a Cost Per Action search advertising model.  

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:

I own an online store called Mark’s Camera Shop and I have $100 (easy math) to spend this month on my online search advertising.  

Pay Per Click: I can spend this $100 on links at pay per click search engines like Shopping.com, Pricegrabber, Google, etc.  And what does my $100 spend get me?  I get search promotion, which moves my product link up the search rankings and in front of more eyeballs.  But I have no guarantee that my $100 spend will earn me ANY sales.  Because of this, I might spend some of that $100 on improving my chances of converting those clicks to sales.  I decide to offer a pricing discount on my products that I project will cost me $25 of that $100 budget, leaving me only $75 for search promotion.

Pay Per Click Results:

• $100 total spend
• $25 used for price promotion (assuming my projected closure rate is accurate)
• $75 left over for search promotion

Jellyfish VPA: In contrast to the Pay Per Click engines, the Jellyfish VPA advertising gives me significant additional value for my $100.  In fact, I can spend my entire $100 on search promotion at Jellyfish AND I will automatically obtain an additional $50 of price promotion with the same $100 spend because Jellyfish shares back at least half of every dollar I spend with the end consumer.  What’s more, I obtain this additional power from my ad spend in a risk free channel where I no longer have to guess at conversion rates and hope I earn a positive return.  

Jellyfish VPA Results:  

• $100 total spend
• $100 search promotion 
• $50 price promotion

I may be biased, but I know where Mark’s Camera Shop is going to spend its limited ad dollars.  Is anyone aware of another search engine or online channel where my advertising dollar creates this much value?  If so, I would love to hear about it.     

I’m sure you’re familar with the Gross National Product, that all important measure of the value of goods and services produced in an economy.  But how important is the GNP in today’s online economy?  I’d argue that the Internet is running a bit fast and loose, somewhat unconnected from the realities of the GNP and its focus on the actual sale of goods and services. 

So you may be asking, if web sites aren’t measuring the sale of goods and services online, just what are they measuring?  The focus today, thanks to the remarkable success of Google and the Pay Per Click ad model, is on the click.       

Selling clicks is big business online.  A USAToday article titled “Google Search Ads find momentum” provides a great snapshot of this click selling bonanza and how Google Adsense has allowed millions of sites across the Internet to get into business of producing and selling clicks.  Citing figures showing the click market growing to over $20 billion, the article states pointedly, ”No wonder people are celebrating.” 

But how long will the party last?  The Pay Per Click model certainly advanced advertising by aligning it to a measurable action (the click), but how long will people be able to get by selling clicks without worrying much about whether the clicks they produce are actually converting to the sale of real products or services?  In otherwords, can the Gross National Click exist outside of the Gross National Product?  Will economics textbooks in the future replace their “Widget factory” hypo’s with ”Click factories”?  I don’t think so.          

At Jellyfish, we believe that the Internet is rapidly moving from a click-based economy to a conversion-based economy.  Five years from now, we will look back at this time as the zenith of the Gross National Click (GNC) economy online.  Google moved advertising from impressions to clicks, but at the end of the day it is the sale of goods and services that makes the world go around.  And the Internet makes it possible to create a new, more accountable kind of advertising that is directly tied to the GNP, and not just the click.  

Let’s look at some of the cracks in the wall that will ultimately bring down the Gross National Click (GNC) economy.  

Click Fraud.  Click fraud is quickly coming to the forefront as THE major threat to the GNC economy.  Lawsuits and studies estimating the size of the problem have the search engines on the offensive, but I’ve yet to hear anyway to effectively solve the problem in the Pay Per Click system.  The engines may play a cat and mouse game with the fraudsters, but the problem won’t disappear.  A recent article in Business Week sums this up nicely. 

Syndicating Clicks.  The syndication of click selling through programs like Google Adsense provide major fuel to the click fraud problem, unleashing armies of website owners with a financial incentive to join in click fraud.  But just as importantly, the sydication of the Pay Per Click system has also created a kind of black hole of sites that may not engage in fraud, but still have no direct incentive to drive sales for advertisers and are not held accountable if their sites don’t drive sales.  The Made For Adsense sites that do the minimum amount to create a click-selling site are the obvious example:

Adsense has created a financial model for these sites to work and remain almost completely unaccountable to advertisers.  And the more this occurs, the more of a threat we see for the Gross National Click economy.