I really hope sweeping changes are in the works. Right now the site is down.
I really hope sweeping changes are in the works. Right now the site is down.
Herman, thanks for passing along…
MeziMedia, Inc.’s Financial Statements for the six-month periods ended June 30, 2007 and June 30, 2006. Note that MeziMedia is made up of more than just Smarter.com and revenue/expenses are not broken out by operating division.
An editor at one of the major ecommerce magazines recently asked me a slew of questions for an article, but didn’t use any of my material (or at least I haven’t found the article). Didn’t want it to go to waste, so here’s the Q&A:
Can you comment in general on the growing complexity of comparison shopping engines over the past two years? Specifically, can you comment on how they are offering the ability to compare a broader range of attributes than price – and why?
I don’t think the main shopping engines have grown in ‘complexity’ over the last couple years. In fact, the improvements in user experience that have come with everything ‘Web 2.0′ has basically been lost on the shopping engines. Many of these sites have been set up to monetize traffic as quickly and efficiently as possible as opposed to providing a great user experience. In this way, the established shopping engines have not added many new comparison features. Some newer engines, though, like TheFind and Like.com are creating much richer shopping experiences, encouraging consumers to browse by comparing similar features or styles.
Is price still the main reason consumers look to comparison shopping engines?
Consumers are definitely looking for great deals, but they want those deals from quality merchants. So most consumers sort by price, but then look for the highest rated merchant with the lowest price. Price might be at the top of the list when consumers arrive at the shopping engine, but consumers have learned that some deals are definitely too good to be true.
What is your perspective on the ROI generated for retailers from participating in comparison shopping engines as compared with other PPC marketing channels such as paid search and affiliate programs? Have you seen any supporting data?
The shopping engines provide targeted traffic because consumers who visit these type of sites are often much further down the buying funnel; they are figuring out how much to pay and who to buy from. In this way, conversion rates should hypothetically be higher than other online marketing channels. In many cases this is true, but performance on the shopping engines can vary by merchant, by category, and even by engine. A merchant might be ROI positive on one engine and not on another. Compared to other online marketing channels, the shopping engines are competitive. If a merchant is using PPC engines or managing an affiliate program, that merchant also needs to test out the shopping engines. That’s the beauty of online marketing, with a solid analytics program and a little effort, a minimal spend, say $500, can quickly determine the utility of a new marketing channel.
What about the demands of the data feed? How often do retailers send data feeds to the major comparison engines now – Daily? Hourly? Real-time? Is it more frequently than previously, and why? Is this still a technical barrier to smaller merchants using comparison shopping engines?
Data feeds are extremely difficult for all merchants to manage. The shopping engines need to improve their technology to meet the demands of the merchants. Google AdWords is the standard for online marketing and the shopping engines are just starting to realize this.
The current reality is that merchants are fed up with submitting data feeds. Every shopping engine has a unique data feed specification. Every shopping engine has dozens of quirks which aren’t properly documented, making data feed submission a frustrating experience. So at this point, only the most technically advanced merchants or savviest marketers submit data feeds frequently. Most merchants submit it and forget it because it’s too difficult to deal with.
Data feed management and data feed submission aren’t problems for just small businesses, either. Major brand name retailers have difficulty normalizing their data for the shopping engines and because the shopping engines want data from Target, Wal-Mart, and Amazon, feeds are often processed with poor data quality.
Furthermore, many shopping engines only process feeds a couple times a day. During the peak holiday shopping season, this means that merchants might be paying for clicks, but sending consumers to out of stock listings and thus losing money. Even if the merchant had submitted an updated feed with updated inventory status, the shopping engine might not have processed that information yet.
What is your opinion of the value to retailers of being on second-tier comparison shopping engines as well as, or instead of, the major comparison engines?
The most important piece of advice I can give any merchant is to use an analytics program to track results. Once a merchant has this in place, I’d definitely recommend starting out on some of the main shopping engines, but also testing a couple of the second tier engines. The shopping engines get their traffic from a variety of sources and a merchant might find that Smarter or Become outperforms Shopping.com or PriceGrabber. Most of the world has categorized the engines by traffic – first-tier engines being the highly trafficked ones, second-tier engines being the lesser trafficked ones. However, traffic isn’t the only thing that matters to a merchant. The quality of the traffic matters, too. So if a merchant is properly tracking clicks, costs, and sales, that merchant might find through testing that some of the second-tier engines perform much better than the first-tier engines.
What is your opinion of the value to retailers of social shopping engines, such as StyleHive, ThisNext, etc?
I think that these sites are very much in their infancy and playing around to find a business model. And because Google AdWords allows anyone to monetize traffic, they can play around for a long time and get some buzz for being different. Social shopping has potential, but as opposed to looking at these small players, I’m much more interested in what sites which already have a large social network, like Facebook, or a large number of consumers, like Shopzilla, will do with social shopping. Facebook already has the social component. Adding a layer of commerce on top of that huge social network could be incredibly powerful. Shopzilla already has a huge number of consumers visiting the site. Adding a layer of social networking on top of that consumer base could be incredibly powerful. I think these opportunities are much more exciting than stand alone social commerce sites.
A number of reporters have asked me how much I think MSFT paid for Jellyfish. I’ve said $30-50m based on the ROI numbers from one of the investors which were part of the Wisconsin State Journal article: “Initial investors made about 15 times our money in 14 months and second-round participants made about twice their investment.”
Just wanted to point out that the Milwaukee Journal Sentinel said the purchase price was $50m, according to sources familiar with the sale.
Ok, I had this whole post written and then my computer froze up on me. Matt and Toni, you really need to work an auto-save mechanism into WordPress!
Yahoo! has Yahoo! Shopping.
Google has Google Product Search.
Microsoft has a hodgepodge of partners/in-house clients for MSN Shopping and now owns Jellyfish.
Ask (IAC) has Pronto.
Experian Interactive has PriceGrabber.
eBay has Shopping.com.
EW Scripps has Shopzilla.
Providence Equity Partners owns a chunk of NexTag which continues to kick ass for most merchants I talk with.
ValueClick has PriceRunner and Smarter.
Accoona even is in on the game with Buyer’s Edge.
So who is left to buy Become?
Here are three possibilities:
1. One of the other shopping engines
I don’t see this one happening as I don’t think there’s a good fit technologically or culturally, but here’s why it could. Right now the shopping engines are getting squeezed by Gooogle and this pressure will only get worse: Google is going to push Google Base/Google Product Search more heavily, Google is definitely going to kill (and in some cases already has killed) the shopping engines’ organic rankings because of AdSense heavy landing pages, and as Google Checkout badges become even more prevalent and Google Adwords’ Quality Score continues to clamp down on poor landing pages, the shopping engines will have to spend more money to compete. All bad news.
By acquiring Become, the suitor gets a cash flow positive business, good technology (some smart developers), and a couple million more page views a month. Good developers are hard to find these days and a couple million page views can be very valuable in such a strong online advertising market.
Become is a small piece of Transcosmos’ ‘Marketing Chain Management on the Web’ strategy (see page 12 of 40) which includes investments/JVs with Optimost, Ask.jp, DoubleClick, Neilsen/Netratings, IVP (a provider of ecommerce services). Become already powers Ask.jp’s shopping search site. I’m sure there are deeper synergies to be had with the rest of the portfolio.
AOL outsources most of AOL Shopping to PriceGrabber. AOL could knock out a middle man and potentially make more money (get the whole click fee vs. 70% of the click fee) through running its own shopping engine. Or if AOL Shopping doesn’t want it, sister company Advertising.com could pick it up and add Become as another attractive advertising solution. Advertising.com currently covers: display, search – both paid and organic, affiliate, behavioral, lead gen, promotions, and video. Why not shopping search? Picking up a couple million page views a month could be extremely attractive to the ad network. If not Advertising.com/AOL, there are a number of other ad networks out there who could find Become attractive: Specific and Tribal Fusion come to mind…I don’t think ValueClick is going to be gobbling up another shopping engine tomorrow, but they could also be a suitor in the future. The online ad networks have become very good at making online buys as efficient as possible. I like the idea of them bringing increased efficiency to the shopping engines.
From the Financial Times:
The internet company, which has been re-evaluating its business under its returned chief executive, paid €475m ($672m) in cash for Paris-based Kelkoo in March 2004, as part of a push to bolster its European operations. However, it acknowledged on Tuesday that it had not progressed as expected.
As many of you know, I know almost nothing about the international shopping engines. All the major US shopping engines have a foothold in France, Germany, and the UK. PriceRunner seems to be a leader in some countries. Ciao seems to always be mentioned.
Would appreciate some international readers posting comments. A couple years back I talked with Scott Macon who I believe is currently the Managing Director for Shopzilla. Scott, if you’re reading this, can you shed some light on what you think might be up with Kelkoo? Is Yahoo! just trying to focus (on mobile, broadband, local, etc.) or is there actually something wrong with Kelkoo? Thanks.
Well, three weeks ago I said that a shopping engine should acquire Jellyfish. With shopping being one of its four core focuses for search going forward, Microsoft stepped up to the plate and made the purchase.
As the release (appropriately done through the Live Search site) explains: “Jellyfish has done some really innovative work in comparative shopping engines. We think the technology has some interesting potential applications as we continue to invest heavily in shopping and commerce as a key component of Live Search.”
While not overtly saying it, InfoWorld discusses Jellyfish’s pay per action advertising program as part of the allure of the business.
While neither company released financial details of the acquisition, The Wisconsin State Journal seems to have scooped everyone with the following. You can do some back of the hand calculations to determine a rough estimate of the valuation.
“The company raised $5 million worth of financing last October…” [the second round]
“Brian and Mark did a tremendous job, ” said Ken Johnson, Kegonsa ’s managing director. Initial investors “made about 15 times our money in 14 months, ” Johnson said; second-round participants made about twice their investment.
Congrats to the Jellyfish team!
Once again, a venture backed shopping comparison engine has a successful exit:
Jango acquired by Excite ($35m)
Junglee acquired by Amazon ($250m)
C2b acquired by Inktomi Product Search ($90m)
MySimon acquired by CNET ($700m)
Cadabra acquired by Overture ($250m)
Kelkoo acquired by Yahoo ($579m)
PriceRunner acquired by Valueclick ($29m)
Dealtime/Epinions formed SDC acquired by eBay ($500m)
Bizrate renamed Shopzilla acquired by EW Scripps ($500m)
PriceGrabber acquired by Experian ($485m)
NexTag acquired by Providence Equity Partners ($833m – for 66% of the company)
MeziMedia (owner of Smarter.com) acquired by ValueClick (up to $352m)
Jellyfish acquired by Microsoft