Jellyfish Rewards Consumers with Cash Back

A while back MSN and Yahoo! were discussing paying search engine users or, more precisely, rewarding them with cash or prizes for loyalty. It seemed like a bad idea. But versions of this are starting to happen at real estate site MyNewPlace and Redfin (in the form of discounts). Now in the shopping context, Jellyfish seeks to do something similar.

On the new shopping engine, stores compete for top placement by discounting products (or paying higher ad fees) and the site shares "cash back" from retailers' discounting to create loyalty. The model is CPA — if there's a transaction, Jellyfish gets paid and shares part of that money with the consumer.

If consumers can understand all this and start to use the site in large numbers, it could be disruptive of the shopping search model, which is mostly based on PPC or traffic referrals (except for SNAP, which uses a CPA model). For a long time I've thought that a CPA model would flourish in a shopping context and that merchants would love it. (Merchants might not love the discounting though, but it substitutes for their marketing spend.)

Challenges:

• The dominant use case of comparison engines is price comparisons as a prelude to offline shopping. Jellyfish won't necessarily change any of that behavior and doesn't differentiate itself when price comparison is the chief consumer objective
• To realize the discount, apparently, consumers must start at Jellyfish and complete the transaction in the same session. This necessitates a change in consumer behavior — most transactions are latent and occur in subsequent sessions. They'll be wanting to modify this requirement.

Here's more about the site and its model. Here's the press release. I'll be talking to them later today and will blog more later. For now, here's the WSJ (sub. req'd) and Brian Smith (Comparison Engines) write up.