Jellyfish pioneers a new type of online business model

By Tom Foremski - August 3, 2006

I just got out of a meeting with Jellyfish, a shopping engine with a unique business model that bypasses the pay-per-click based economy of most commercial sites. If the Jellyfish approach works, it could go a long way to cutting down on the deluge of advertising and spamming.

It also addresses some aspects of the "attention economy" that Steve Gillmor, Doc Searls, and others have been discussing.

"The Internet experience is becoming diminished by all the efforts to gain pay-per-click revenue. We have a value per action model that is based on final sale, and I think over the next five years the Internet will move to that kind of sales-based model," says Mark McGuire, co-founder and president of Jellyfish.

"We share 50 percent of our revenues with shoppers," says Mr McGuire "Shoppers see a list of prices from retailers, their final cost and how much rebate they will get from us." (On a $180 digital camera shoppers can get a rebate of about $5.)

Retailers only pay Jellyfish when a sale is made, which makes it risk-free for the more than 1,000 retailers on the site. An advantage of this type of reward system is that it cannot be gamed as in the pay-per-click model where an auction and search engine placement determine retailer costs.

Jellyfish relies on uploads of data from the retailers rather than crawling sites, such as Become.com, Froogle, and other sites. This type of data is cleaner and easy to organise. And the behavioral data it collects is used to provide repeat visitors with a more targeted shopping experience. And they share in the value of that behavioral data through rebates from Jellyfish.

I asked if the revenue split is after expenses. "No, it is top line revenue. That's why we chose the name Jellyfish, we want to be completely transparent. You get half of what we receive and we will pay it out as cash as soon as it reaches $10."

This is a fascinating business model because it rewards customer loyalty plus the behavioral data collected could result in exposure to fewer, but highly targeted ads; and the customer shares in the sales commissions--that's a double value to users.

I'd love to try out this type of approach in helping to monetise journalism. For example, if a type of Jellyfish version of Google AdSense were used, the producer of a news story with Jellyfish ads next to it could share in the final sales revenues.

Those revenues should be much better than the pay-per-click revenues AdSense shares with web sites, and it could also result in fewer ads needed to support the costs of content production.

Jellyfish launched as a beta in June, and Mr McGuire says there are some interesting initiatives coming out in the next few months, that will try to build on the "value per action" business model.

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Try shopping on Jellyfish with our referral link!



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By Tom Foremski - August 3, 2006 | Permalink | Comment | Category: Thoughtleaders
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Comments (2)

mark brown:

Jellyfish is nothing but a hub for affiliate sites. What's the big scoop?

Go to commission junction sign up and you too will have 1000 advertisers. It’s ridiculous to even compare them with Froogle or Become.com.


Jellyfish are slick affiliate marketers using a multi level marketing approach to advertising that has been done again…and again. The user/shopper is simply their down line. There is nothing new and innovative about this business model, Yub.com , Fatwallet.com as well as of hundreds of other sites have been doing this for years. They are a search engine that indexes affiliate merchants from Commission junction and Linkshare. No merchant directly advertises with Jellyfish, they are affiliates of these sites through third party sites, (Commission Junction). What they are clever at is fooling intelligent people that they have devised a new way to monetize the "data base of intentions" which is simply ridiculous. Are you an affiliate marketer for Jellyfish???

Posted: August 5, 2006 11:50 AM

Mark McGuire:

I wanted to respond to the comment from Mark Brown regarding Jellyfish's use of affiliate networks such as CJ and Linkshare. Yes, we are utilizing a few of these networks in our beta site, but we also working directly with a number of merchants who are feeding products directly to Jellyfish.com. These direct relationships will continue to grow as we build out our offer.

As to the comparison with Yub or Fatwallet, neither of these offerings have built a comparison search engine and neither provide a dynamic, auction-based marketplace to bid up commission rates and provide the end consumer with additional cash back. What we are trying to do is much different and more radical than a simple cash back site that contains a directory of links to stores and static cash back percentages.

If interested, you can read more about our model and some of these key differences here:

http://www.jellyfish.com/blog/2006/07/06/spreading-the-jellyfish/

Posted: August 14, 2006 11:12 AM

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