Next wave of CSEs (dare I say CSE 2.0?) getting some press - Jellyfish, TheFind, MyTriggers...

Bob Tedeshi @ NYT (free sub required) has a good piece on the next generation of CSEs highlighting MyTriggers (CEO scored a Glam Shot with some Elmos+Wiis).  The angle of the piece is that as per-clicks get more expensive, retailers will want a per sale (or per action - CPA) model.  MyTriggers comes out swinging on that.

The article also hits on the fact that there's the potential for better selection with the JellyFish, Pronto, MyTriggers, theFind CSE2.0 folks because they don't only include those merchants that pay and/or the CPA model is more inclusive. 

For example, Victoria's secret won't do CPC because they get so many clicks sans purchases the economics of CSE don't and won't work for them.  CPA would be a better solution.

There's also an interesting data point from comScore I wanted to punch on and will be tracking closely here at CSE Strategies:

“This is still a growing category,” said Gian Fulgoni, chairman of comScore Networks, which tracks Internet use. According to Mr. Fulgoni, comparison shopping sites added eight million users from October 2005 to October 2006, a 14 percent jump. But the 62 million people who used shopping comparison sites in October represented little more than a third of the nation’s online population of 173 million."

The article makes the fact that 62m out of 173m consumers go to CSEs (36%) as small, but I think that's larger than most retailers think about today.  Most retailers I talk to see CSE as a 10-15% kind of a focus so it's interesting to see it's over 1/3 and climbing.  I imagine thanks to the proliferation of CSE 1.0, 2.0 and projects like Google Base, we'll see this number creep up to 50% over the next 12-24 months.

In any case, congrats to the CSE 2.0 guys for great coverage at the perfect time of year.  What did the CSE 1.0 guys have to say?  I'll leave you, as the NYT article does, with this perplexing quote from Shopzilla's Farhad Mohit:

“I thought cost-per-click would destroy our company, but customers are very accepting of it,” he said. “And it allows us to make money.”

Comments

[Farhad Mohit]

Well... my statement wasn't that perplexing in the context of a 1 hour interview, where I described the entire CPM / CPC / CPA universe, what the rationality was for each one and how the uncertainties in the market (i.e. conversion on the merchant side, and impressions on the publisher side) plus integration issues on the CPA side (i.e. the cost of monitoring properly) make CPC the most efficient of the fundementally equivalent models to use.

Along the way of course, I did state that the consumer should be the focus of all this stuff anyway... since, if consumers don't really care, then you are wasting your time pushing one model over the others as your point of differentiation. That's when I explained that counter to my intuition, the transition from sorting solely by customer rating (how BizRate started) to one where the CPC was considered as part of the sorting equation did not "destroy the company" as I had once feared.

In fact, it turns out that consumers cared far more about what value the product delivers -- ease of use, accuracy of our data, the number of stores per item, the amount of attribution (so people can narrow choices) and the quality of results (i.e. relevence) that our search engine delivers for each click -- than what our business model was.

All that said, it's not like we don't get "ajax envy" from time to time when looking at the CSE 2.0 guys with "gee whiz" features...

it's just that figuring out a business model that works (i.e. makes money), while creating a core product that delivers what consumers actually find valuable is far more important than wowing with press releases...

The proof of who is succeeding / failing will be known by the traffic / revenues / profits that are posted in the quarters to come by all the CSEs.

On those fronts, I bet the CSE 2.0 guys get somewhat envious when they look at Shopzilla... ;-)

Farhad.

[Brian Wiegand]

Well

Firstly I would like to say that I have tremendous respect and admiration for Farhad and Shopzilla.com along with the other extremely successful 1st generation CSE's

Jellyfish.com certainly isn't claiming to be the best comparison shopping engine on the Internet by any means, but there are some trends in advertising that shouldn't be ignored and I am not talking about fancy Ajax and Javascript. Lets face it, every company new and old needs to keep innovating.

Three key points that should be highlighted.

1. There is a cosmic shift in the balance of power from the advertiser to the consumer because of the Internet, access to organized information, and the ability for people to communicate very quickly. Tivo, satellite radio etc.... are key examples and trends that are evidence of this permission based advertising shift. Customers are going to reward advertisers that provide them with the most VALUE, not who pays the intermediary the most money(todays current search advertising model.) Value can come in many forms... entertainment, cash, ease of use etc... One of the primary (certainly not the only) uses of a CSE is pricing information. At Jellyfish we feel that if the users can get a share of the advertising fees used to get THEIR attention through lower prices, they will reward us with their attention.

2. The business of selling clicks is going to start fading. Why is the Internet measured on the Gross National Click (GNC) as opposed to the GNP? As everyone knows, there is a gaping hole with PPC advertising and its called click fraud. This will continue to exist because of the mis-alignment of incentives which create inherent biases for the consumer and extra unfair fees for advertisers. There is certainly room for improvement.

3. Finally at Jellyfish, we are the 1st company to create a liquid marketplace using an auction model of CPA rates applied on a product by product basis just like Google did for keywords on a PPC basis. This is where we focused all of our IP.

We passionately feel that if we can improve the model/value proposition for Customers AND Advertisers we will generate success and profitability. I refuse to believe the notion as Farhad states that we should all site around and be envious of Shopzilla and not attempt to disrupt and innovate ;-)

Brian Wiegand
CEO
Jellyfish.com

[Chet Ranger]

Brian, Farhad - thanks to both of you for your insight. As an avid user of Fatwallet, eBates and other buyer-centric sites, I've got to say I'm in Brian's camp as both a buyer and a seller. I want my business being independently pushed by a company that gives some of my fees back to its users. I want to be able to get the REAL best price on an item, and knowing that I'm at least recovering some of a company's seller fees to get my deal = happy customer who will return again and again. Bottom dollar = bottom dollar, period. If Shopzilla gives me an iPod 80gb from B&H for $330, and Jellyfish gives it to me for $330 + 2% cash back, who am I going to pick? I know I'm not the only one using CSE's to game the system by checking prices, following eBates or Fatwallet links and getting my rebates on the lowest web price through them vs. through the CSE. That's already been happening for at least 3 years now and I feel foolish to have only been on the bandwagon for about a year despite understanding it all three years back. I'm 31. I think it's safe to assume that a 28 year old is doing what I'm doing and has been doing it for 3 years now. I think it's also safe to assume that 30-40 year olds who have been using CSE's for 3-5 years must know intuitively that there's a better way to skin this cat and will go looking for it. Gen Y'ers will be all too glad to inform them, and those Gen Y'ers will inform them of whichever site has the most mojo (read: 'Ajaxy gee whiz features'). Am I off base here?