Microsoft’s Jellyfish Acquisition Locks Up Social Shopping IP

It seems that few understand what’s really going on behind Microsoft’s (MSFT) acquisition of Jellyfish.com. Analysts are poo-pooing it as “not a ‘game changer’” as Microsoft’s Steve Ballmer suggested the company would be offering up. Not so fast, David Hallerman of eMarketer. Google understands the game is about to change and is moving. MSFT is paying attention and is locking up intellectual property in this move—one that combines multiple, successful and innovative digital shopping models.

According to Sam Harrelson (CostPerNews.com, Revenews.com), he sees:

... the Jellyfish.com acquisition as another sign that Microsoft is aiming more for the merchant/retail segment of online advertising rather than the shotgun approach of Google (GOOG) with AdSense and Yahoo’s (YHOO) with its publisher network. Instead of focusing on context, they seem to be coming at the online advertising space from a very ‘vertical-minded’ approach.

I agree. As well, they’re attacking in a very deliberate manner with a fundamentally different approach to Web advertising and media.

MSFT’s approach is and will continue to be much different than GOOG’s or YHOO’s—who have relied for too long on highly “open” and, in fact, vulnerable (to systematic gaming by third party affiliates) advertising platforms. Of course, this has enriched each company—wildly so—but for how long? The writing is all over the wall (i.e. FTC probing VCLK’s use of incentivized marketing, mounting class action lawsuits aimed at GOOG and YHOO’s traffic ‘quality’ claims as compared to what they deliver).

What’s next for Web advertising? NOT what we’ve seen and MSFT is all over this notion. They’re bring more structure to the table—less chaos wherein third party affiliates feed them. Web advertising is becoming more deliberate… it’s being tamed and reigned in.

Advertisers have been slow to wake up to the “slop” that passes for ROI and return on ad spend. They’re beginning to measure and what they’re seeing is not pretty.

The “it’s not a game changer” conclusion relies on things not changing much in terms of how the Web gets monetized. Even Google understands what’s coming next—a slow-down in pay-per-click ad model spending.

Proof’s in the puddin: Look no further than Google’s:

1) Launching a cost-per-action ("pay-per-action") ad model
2) Launching a tool allowing advertisers to manage (automate placement of) pay-per-click ads against a pre-defined cost-per-action

Google understands the game is about to change and is moving. Is anyone paying attention? MSFT is and they’re locking up intellectual property in this move—one that combines multiple, successful and innovative digital shopping models.

Jellyfish takes a best of breed approach and “mashes them up” to the amusement of consumers: Ebates + Woot.com and on the advertiser-side, eBay’s Shopping.com + Google’s AdWords auction environment + Commission Junction’s (VCLK) performance-based cost model (cost-per-action) with a twist of Google (auctioning off ads).

It all ads up to valuable IP that Google, in theory, cannot access.