My initial reaction was disappointment, because I had grown fond of Cashback’s Shopping program rolling in increasingly higher sales while still maintaining easy to manage ROI, based on Microsoft’s brilliant adjustable rate commission system. The hope was, that the program would continue to improve and grow in size as there should have been a lot of updates in the program’s maturation including more responsive content processing, better results pages, and the eventual move to Microsoft skimming some of the commission off the top. However, that never happened, and like most people I am looking for ways to replace performance after July 30th, when the shopping program will move to generating free natural traffic which will likely pull down sales significantly.

Now looking back after a few weeks to take it all in, there are several big takeaways from this announcement.

1) Making a commission based program work, is very very difficult.

Amazon makes it look easy, but really, how easy is it? Google has yet to get a successful program into production. Sure, Google Product Ad Listings is commission based for some, but Google is now putting together a CPC component, so how long will a commission based system be available before perhaps a move to the CPC structure is finalized? Personally, I think Google is accustomed to CPC programs, Google Ad Words  users were used to it, and that’s the direction this is going. So, all of this would have left Microsoft as the best and easiest option, not requiring an order integration beyond placing a tracking pixel, which most retail sites have in abundance anyway.

Microsoft’s attempts to bank roll the program for 2 years, ultimately was deemed to be a losing system because not enough traffic was being funneled through on a consistent basis (ie, not the mass adoption needed). It would have been nice, to set up a commission cut that would have justified keeping the program running longer to see what could be done. However, this seems to indicate the main commission based selling platform will continue to be Amazon.

2: Microsoft is great at killing things.

Really, that’s not fair. Any big company which acquires other companies and technologies, will naturally see some not integrate or die off. Take Google, which acquired and killed Dodgeball, the precursor of Dennis Crowley’s Foursquare. However, after pushing Cashback and Kin out the door recently, it does seems there is some momentum loss from the big launch of Bing. So, when looking at Microsoft programs that are not time honored institutions (looking at you Office 2010), it may be best to have a Plan B when planning ahead.

3. Q4 2010 is going to be very different from Q4 2009

Working within many tightly controlled retail calendars, I can say that almost everyone agrees the October through December defines the success of the year. There is such a flurry of sales in this period, that half the year should be devoted to planning it. That means when looking forward to Q4, a few expectations should be understood now:

A: Google and Amazon will be dominant.

The resulting hole in the traffic network which Cashback resided in, will likely most benefit Google and Amazon as both will become default destinations for shopping. Consumers will be plugging in a product search on Google.com, and those shoppers will be led through a network of well tuned Google shopping networks, including moving through Google Product Search, Google Product Ad Listings,  Google AdWords (not really Product Extensions, too few people click through), and Google’s natural results. Within those networks, Amazon will siphon some traffic away, even while increasingly larger numbers of people are starting in the first place, Amazon.com

Amazon’s site structure and ability to feed the right products to the right people, with a site layout and order satisfaction emphasis that ensures happy customers, Amazon continues to set the standard for what comparison engines wanted to be.

B. Consumers will look for discounts, still.

The Cashback program did show that discounts are still very compelling for consumers, it’s just those consumers need something simple instead of waiting 60 days to see if they get their discount. In addition to constructing discounts, retailers should explore any alternative selling technique that offers a discount, from participating in group discount sites like LivingSocial or GroupOn, to offering discount loyalty rewards on social networks like Twitter and Facebook. More and more, it’s clear that online sales are about communicating to people, not just placing an obvious checkout button.

So, 2010 does continue to be interesting in the realignment of online shopping, so I would expect some more key changes by the time October comes around.

So what is happening with MSN Shopping, um, I mean JellyFish, I mean Cashback, no…I actually mean Bing Cashback?

Of coarse some people still use the Jellyfish reference, but the comparison engine has now transitioned to Bing Cashback. Starting in May, Microsoft began to heavily transition over to their new comparison model by focusing their network on Cashback. This has created a natural conflict with MSN Shopping, which was Microsoft’s sole comparison engine before. The migration in May meant that MSN Shopping CPC listings and Cashback commission based listings were now merged (or conflicting depending on your perspective).

Since the official merger, Cashback merchant’s traffic has increased noticeably as Microsoft begins to push more consumers to the Cashback model. However, the converse reaction on a merchant’s MSN Shopping channel has been a steady decline. In the case where a merchant had both channels active, the commission based of Cashback sourced listings trumped and replaced the CPC or MSN Shopping based listings. This has been very telling in terms of direction for Microsoft. Recently the direction became clearer as Microsoft has now requested that if a merchant has both an MSN Shopping feed and a Cashback feed, that the MSN feed be discontinued. So, the turnover is almost finalized.

Of interest is the Ciao.com acquisition which was also made by Microsoft. In early July, Ciao announced that it was officially discontinuing traffic and that merchants should shut down sending products. The questi0n is why? Has Microsoft purchased and shutdown Ciao for their European based operations? Or is it that Microsoft eventually sees Ciao taking the place of MSN Shopping as a CPC destination?

My guess is that Ciao is valuable based on their international focus and that US based merchants should not expect to see much from Ciao in the future. After-all, Microsoft already had a PPC based channel in MSN Shopping, and we saw what happened there. However, what I have heard is that there is a future for CPC based shopping in Microsoft’s future. For now, merchants should not worry at all about MSN Shopping as this slowly fades away. If not on Cashback already, every merchant should be making the effort to gear up efforts now and get on here. Simply, why as a merchant, would you not want a commission based channel with reasonably easy integration, and where the commission is flexible starting at a low 3%? It’s virtually a no-brainer. Now, if only there were some easier ways to optimize for Cashback….

R.I.P. – Jellyfish and SmackShopping

Sorely missed will be the SmackShopping feature of the old Jellyfish platform which was a social shopping pioneer. The SmackShopping show allowed users to chat and work to catch products at the lowest possible price. Microsoft had kept the feature alive while transitioning over the Jellyfish concept and functionality to Cashback. Rumor is that Cashback will become part of MSN Shopping by the end of the year, but before then, SmackShopping has officially closed up shop. It’s too bad, because even without Microsoft and Jellyfish funneling traffic to the Smack feature, users continued to bid and chat. So it goes in Corporate Takeoverland.

R.I.P. – PriceRunner

Originally an engine which looked like it would have a chance to climb it’s way up into the 2nd Tier of comparison engines, PriceRunner has languished for some time as an also-ran of engines. Traffic has been sparse, and dedication to keeping the engine kicking was sparse as well. Even though category level bidding was added, nothing ever percolated here. So it goes in this post industrial tail spin we are all in. Another company is sifted out as everyone focuses on profitability.

I see the two giants coming together because of a recent war of words between Carl Icahn and Yahoo. Icahn, a large share holder in Yahoo has begun pushing for the ousting of Yahoo’s board of directors and Microsoft has essentially backed the effort saying they won’t further negotiate with the current Yahoo powers that be and can kiss their $33 per share offer good-bye. Because of Yahoo not being very transparent or well understood in the handling of the company, I see the current management loosing the PR battle, being ousted in a shareholders’ meeting, and Yahoo moving toward an awkward merger with Microsoft. (Guess I am going all-in on this one)

What this means to advertising

First and most telling, a slow combination will take place where Microsoft’s ad network will merge with Yahoo’s. While being a software heavyweight, Microsoft has never been successful in the online sphere. Yahoo’s impact has been much greater, and putting the two together would seemingly create actual competition for Google (if not a strange marriage of ideology and methods).

For many, competition is a good thing. It creates lower prices and innovations which help consumers and the rest of the world who need a certain product or commodity. Many feel the same way about Google.

I agree that usually having options does help, but marketers do have options now, with Yahoo many times giving a better ROI, but less revenue, than Google. Prices are also less expensive to jump into the online marketing pool when compared to the CPC rates on Google Adwords. Finally, competition is best between several players, not two. If you need proof, see the Cold War, aka United States vs. Soviet Union. This type of stare down didn’t produce many good results. You need multiple players to create real innovation and competition (see NBC-ABC-CBS, Ford-GM-Chrysler, Honda-Toyota-Nissan, etc.)

It’s difficult to scope out the next 1 to 2 years after this deal is consummated, but it sure makes 2009 into a crucial year for Google and Microsoft’s long term advertising prospects.

Encouraging Innovation

A lesser immediate result, but perhaps more impactful long-term consequence will be trickle down effect within the internal ranks at Yahoo. For a long time, Microsoft has been seen as an evil entity by Silicone Valley. With Microsoft spreading it’s blue grasp over Yahoo, many idealist and innovative personnel will leave the company (including Jerry Yang of course) and move on to other ventures simply because they disagree with Microsoft’s culture and past ways of doing business.

This exact scenario unfolded when Microsoft took over Netscape. With Netscape essentially being brought to a halt, some talented people took the remnants and began building…Firefox. Over the past few years, Firefox has been steadily eating into Internet Explorer’s dominance so now there is a legitimate rival browser available. Working with a relatively small workforce, Mozilla’s Firefox is one of the great success stories of bringing together a lot of ideas from inside and outside a company to build what is becoming a superior program (at least when you look at the add-ons available).

So the net result will be change. I would expect massive innovation, but surprisingly the bulk of long term creation may come from the spin-offs and not the mega players involved. Online advertising will prosper, but the path will most definitely change. (Hey Facebook, you listening?)

JellyFish

JelllyFish offers unique opportunities that it takes most a few minutes to understand. Since their model is so different than others, I will spend more time than usual talking about the opportunities.

Cost Per Acquisition (CPA) aka Cost Per Order (CPO) Opportunity

JellyFish works on a different system than any other engine I have seen. There are 2 main components that make JellyFish unique, the first being their standard billing model.

JellyFish offers a CPA model by taking submitted products and displaying them as a usual engine would. What is different, is JellyFish integrates a special discount, and then only charges when a purchase is actually made. The way this works starts with the merchant, who offers a commission rate to JellyFish, for example, let us say 10%. JellyFish then takes this 10% discount, and passes that discount on to the consumer. The consumer will see the product discounted by a certain percentage and when clicked on, will be taken to the merchant site to purchase. When on the merchant’s site, the consumer will then pay full price, later to be reimbursed the discount by JellyFish directly.

The key is that JellyFish tracks the order through their own tracking code or custom order feed. The exchange of money happens approximately 30 days after the sale is complete. JellyFish then takes the 10% from the merchant account, and transfers the money to the consumer’s account. So the consumer actually buys the item at full price initially, and then sees the money essentially rebated through JellyFish.

Since JellyFish was purchased by Microsoft, they are not charging any fees. So, if a merchant offers 10% commission on a product, JellyFish then gives a 10% discount to the consumer and only serves a bridge with no tolls. Nice huh?

Smack Shopping

Here is the one that throws everyone for a loop. One of the most intriguing, and sticky features of JellyFish is Smack Shopping.

In a special section on JellyFish, an item is posted which JellyFish has received a high commission rate on. Through a variable, time based pricing system, JellyFish lowers the price of an item until a specified inventory sells out. JellyFish will keep lowering the price until this happens, so the consumer is forced to guess when the lowest price happens and attempt to buy at that time. If the price drops below the given commission amount from the merchant selling the product, JellyFish makes up the difference by putting in their own funds. So once again, not a bad deal for everyone involved and good exposure for the product.

Additional Features

JellyFish also features email campaigns and special display opportunities to highlight products, so many options are available. Currently most of these options run for free, so there are truly some unique opportunities here at this growing engine.

Luckily for the merchants already on JellyFish, most others don’t understand the system are haven’t yet found JellyFish to take advantage. As a merchant, if you are looking for a unique audience with growth potential and the ability to keep tight control on margins, this is your spot.

Coming next…SHOP.COM : CPC vs. OneCart

Here is a quick checklist of things I would suggest doing for each of the below comparison shopping engines.

Amazon : Watch your feedback. The feedback rating of the seller is factored into relevancy and exposure for the merchant. This can even push a merchant out of the buy box. A good rule of thumb is to keep feedback above 90% or risk loosing business.

Google : This is a good tip for Google, but also for all other engines as well. Be sure to fill out all payment and delivery information as part of the company policies. Many engines sort and rank based on these items so ensure all shipping information is filled out, any international shipping options are filled out, and any payment information is properly filled out. Also, think about getting Google Checkout if possible.

MSN Live : When uploading a file, also check back for the FTP status and upload status. Live is still in Beta and Microsoft seems to have this as a lower priority. I’ve noticed many times if using an automated upload, things can periodically go wrong and it’s easy to have a feed not processing if you are not checking regularly.

MSN Shopping : Look for additional ad banners and demographic targeting. The nice thing about MSN Shopping is that as part of the MSN network, they have many opportunities to drive traffic from a specific placement in MSN Shopping, all the way to an integrated advertisement on MSN.com.

PriceGrabber : Think about adding featured products which stand out on category pages. If not check out the ROI tracking post from a few days ago: Using the ROI Tracker on PriceGrabber

Pronto : Try to encourage feedback from costumers. Pronto has a cool feedback system where users are encouraged to leave feedback on items, sellers, and manufacturers to create an enhanced 2.0 experience. To leave feedback, just sign up for a Pronto account, click on items and leave the feedback. Having customers do this can help the visibility of a merchant’s popular products here.

Smarter : Check the categorization of items. Over the course of many product feeds, sometimes an item can be placed in another category than what was intended based on the engine’s attempts to properly place products. Check back through the account user inteface (UI) and make sure all products are residing the proper categories every few weeks.

Shopping.com : Check out the recent post on title set up, best advice I can offer: Read the Directions: Optmizing on Shopping.com

Shopzilla – Bizrate : When sending bidding in the product feed, the bids which show in Shopzilla’s UI is not what is necessarily being fed in the product data feed. Make sure to not go back and forth between making bidding adjustments between the UI and the feed, stick to one system and ride with it. Lastly, do this realizing that the UI will be a quick update which can be easily seen, and the product feed update will need to be tracked on the merchant’s or service provider’s side.

Yahoo Shopping : If you are a merchant who regularly changes images, keep in mind Yahoo Shopping will never refresh an image file automatically. If you change your picture, change the image name so Yahoo can process the new request. Otherwise, if you do update the image and keep the same image file name, then you will need to call Yahoo directly and ask for a complete refresh on all images. The support is courteous and friendly, and can get this done within 24 hours.

Another note to all these and engines not mentioned would be a standard rule to set engines to auto replenishment. Many times I have seen a merchant’s feed go down because they ran out of funds. Email alerts can be set up if you have a tight budget, but keep in mind these automated alerts are just as likely to be overlooked as to go directly to your Spam folder. If at all possible, set the feed to auto replenishment so your feed is not down for days until the account is refunded.