Jellyfish is pleased to announce a partnership with Channel Intelligence today that will help accelerate our efforts to add new retailer partners to the Jellyfish.com shopping search engine.  Full Release here.    

This news is an opportune time for me to talk briefly about the Jellyfish advertising model.  There has been a flood of new shopping search engines over the past several months, but to my knowledge, Jellyfish is the only shopping search provider that is doing the hard work of building its own Cost Per Action advertising platform.  (Please correct me if there are others).  Granted, there are a handful of shopping engines that utilize affiliate providers such as Linkshare to integrate CPA advertising into their mix, but these big affiliate providers have illiquid commission structures (typically a standard store-wide commission rate for any sale).  

Why are we building our own CPA ad platform?  It’s a key part of our long range vision for a more consumer friendly version of CPA advertising that we call Value Per Action, or VPA.  Retailers in the Jellyfish system can adjust their advertising rates on a global store level, product category level or at the individual SKU-level for each product.  This makes perfect sense, as retailers may be willing to pay more or less in CPA ad fees for a sale depending upon the product being sold.  

Probably the best way to consider the advantages of this platform is to compare the Jellyfish model to Google’s remarkably successful Cost Per Click keyword ad platform.  Through competition, Google has created a liquid marketplace of Cost Per Click ad rates on millions of keywords.  Every day, online retailers compete with each other to achieve higher rankings on keyword searches by agreeing to pay Google more for each click, creating higher and higher advertising fees for Google.  Over the past several years, the true market rate for a click on keywords such as ”nikon digital camera,” ”mp3 player” and millions more have been set by this efficient system.   

With the Jellyfish CPA ad platform, online retailers bid not on keywords, but on the actual products they sell that match up in our shopping search engine.  The more stores are willing to pay for a successful sale, the higher they go on our rankings.  But here is where our unique model creates a more consumer friendly version of CPA:  In our VPA model, we always share back at least half of those advertising fees with the end consumer.  Thus, as retailers compete for search ranking by increasing their CPA commissions, BOTH Jellyfish and the end consumer benefit directly from that competition.  It’s a liquid CPA marketplace that creates lower prices for end consumers.  (you can read a full description of VPA here)  

For Jellyfish to see this vision through, we need two things: 1) lots of people buying products through our site; and 2) lots of quality retailers taking advantage of our risk-free CPA model to compete for those sales.  Channel Intelligence is a tremendous partner to help us achieve goal number 2.  CI customers include nearly 200 of the world’s best known retail brands, all of which now have direct access to the Jellyfish platform.  We look forward to helping CI and its clients take full advantage of the accountability and precision of Jellyfish shopping engine.                      

Joe Marchese had a great post yesterday regarding the “build it and they will come” ad revenue strategy of most Web 2.0 start ups (e.g., build traffic and the advertisers will come).  I totally agree with Joe that if advertising is going to be your primary revenue stream, it should not be an afterthought; it should be a central part of your strategy.  

We’ve taken this lesson to heart at Jellyfish.  Our Smack Shopping Show was created to make advertising an integrated part of the show content rather than an interruption.  In fact, Smack Shopping is one big advertisment, but end users view it as entertainment.   I attended the recent OMMA show Joe mentions in his post and much of the discussion was centered on this theme.  We think this kind of engaging advertising will be a big part of the future of advertising on the web. 

The challenge for companies like ours is scale.  It is the classic chicken and egg challenge that many Web 2.0 start ups face in trying to convince major advertisers that experimenting with new advertising formats and smaller, more engaged audiences is the future.  It hasn’t been easy, but Jellyfish is finding initial success with several advertisers.  We’ll be working hard in the upcoming months to show that starting with a sound advertising revenue model is a great recipe for success.   

Starting today, Fox network will start running short animated clips about a taxi driver named Oleg during its commercial breaks.  (Wall Street Journal article here).  Will Oleg be entertaining enough to get folks to ease off that DVR button?  I doubt it, but I love seeing traditional media starting to work to catch up with the enhanced power that consumers have to tune out advertising. 

As we’ve been saying at Jellyfish for some time, you need to give consumers a reason to engage with your advertising, not just figure out new ways to interrupt them.  We’ve tried to stand behind that belief with both Smack Shopping (advertising transformed into entertainment) and our main Jellyfish.com search (advertising transformed into cash back savings). 

As the WSJ article indicates, this isn’t the first or the last effort by the major networks to get viewers to pay more attention to their advertisements.  I think the future success of these efforts will depend on whether the initiative is just a slick way to trick viewers into figuring out what the new content is (unsustainable) versus whether it is content that actually delivers viewers some value.  Unfortunately, the Fox effort seems to be more of the former.  From the WSJ article, a Fox representative is quoted as saying “It’s something that pops up that is unexpected and the viewer says ‘What the hell is that?’  It may keep them around for a while longer.”  Yes, the viewer may stop once and watch, but if Oleg isn’t that funny or entertaining, don’t expect that viewer to stop again (or watch the rest of the commercial break, for that matter). 

Oleg, you have a tough job.  Good luck being funny enough to get me to put down my Tivo remote.

The Wall St Journal had some coverage yesterday of the current Ask.com advertising campaign in the UK, where Google dominates with around 75% market share.  Ask.com has created a multi-channel campaign in which they try to create an underground movement to challenge Google’s “Information Monopoly.”  You can check out the website here.     

Unique strategy, to say the least.  It did get me talking about Ask.com, but I don’t think Jellyfish will be taking out ads anytime soon showing how much online shopping is done at Shopping.com, Shopzilla, or PriceGrabber :-)  Stop the Pay Per Click Madness!  Good luck with that one Ask.com.     

Brian Quinton at MultiChannel Merchant published a great article yesterday on the Google CPA beta test (article here).  In addition to some of the same observations I have made previously (here), Brian highlights a few additional potential limitations to Google’s CPA initiatives that I think are worth mentioning.  These include:

• Advertiser Concerns Over Sharing Transaction Data with Google.  Several ad industry experts quoted in the article highlight this as a concern, especially for large clients.  Because Google often controls such a large share of their online advertising wallet (non-CPA based), the advertisers don’t want Google to know their actual ROI on that advertising, out of fear that this will lead to higher rates, more competitors, etc.
• Double Counting Conversions.  Conversions may take place days or even weeks after a user clicks on a Google CPA ad and picks up a Google tracking code.  But what happens if that same user also accessed another tracking link from a third party affiliate network for the same offer prior to the actual conversion?  The result is that the advertiser may get charged CPA ad fees from both Google and another CPA network for the same action.  This is one of the things that I love about the Jellyfish model, since our customers have a built in incentive (through cash back savings), to ensure that they utilize the Jellyfish CPA link immediately prior to their purchase, creating less likelihood of a double counting issue.  

The article is worth the read for anyone following Google’s CPA test.