Microsoft Hooks Jellyfish.com

by Ken Schachter on 02 October 2007, 14:23

Categories: General news - Internet - Finance
Topics: microsoft , widgets , Mpire , Ken Schachter , Jellyfish.com , Shopatron , Brian Wiegand , Ed Stevens

 

In a spate of activity aimed at satisfying the cravings of online shoppers, Microsoft has hooked revenue-sharing product comparison site Jellyfish.com, Shopatron got $6 million in series B funding to extend its bricks-and-clicks strategy, and Mpire launched a WidgetBucks program.

Terms of the Microsoft acquisition were not disclosed. Jellyfish.com had raised about $6 million in funding from investors that included company executives and Kegonsa Capital Partners, based in Fitchburg, Wisconsin.

Jellyfish.com was co-founded by Chief Executive Brian Wiegand and President Mark McGuire, who previously collaborated on NameProtect, a vertical search engine that provides trademark research. Venture-backed NameProtect was acquired by Corporation Services Company in April.

Jellyfish, based in Middleton, Wisconsin, wants to turn the cost-per-click advertising model popularized by Google on its head. Under Jellyfish’s cost-per-action model, advertisers pay only when web surfers buy.

The site lets online shops of such stores as Target and Home Depot specify a buyer discount, essentially letting merchants bid for consumers. Jellyfish, which has several patents pending on its method, then passes along at least half of its commission to the buyer.

The site also offers a live Smack (group of jellyfish) Shopping channel. Online shoppers bid for items as their prices are progressively dropped. As they bid, however, shoppers are unaware of how many items are available.

“It’s a big market,” said Jellyfish.com Chief Executive Brian Wiegand. “Obviously people are innovating. Google has paved the way, showing us there’s a market for advertising on the Net. There’s a big pot of gold if you can find a new model.”

Mr. Wiegand said the 26-person Jellyfish.com is the third startup he has sold.

“Normally, I don’t stay on, but this one offers interesting global opportunities,” he said.

A Microsoft executive stressed Jellyfish.com’s potential role in the company’s search engine strategy.

“We think the technology has some really interesting potential applications as we continue to invest heavily in shopping/commerce as a key vertical for Live Search,” Alex Gounares, Microsoft corporate vice president, search and advertising platform group, said in a statement. Microsoft disclosed the acquisition on its Live Search blog Monday night.

On Tuesday, Shopatron, a provider of click-to-brick services to brand-name manufacturers, announced it had closed on $6 million series B funding round to propel a move into Europe in early 2008.

San Francisco-based private equity firm Kern Whelan Capital led the round and was joined by prior investors, including Rivenrock Capital.

The San Luis Obispo, California, company lets branded manufacturers such as Salomon, Callaway Golf, and Brooks Running offer online buyers the option of having goods shipped or going to a local retailer who has the items in stock.

Ed Stevens said Shopatron initially was focused on ensuring that manufacturers did not alienate retailers by taking orders online.

Shopatron’s business model began to change in 2006 when retailers like Wal-Mart and Circuit City released data that showed many buyers preferred to pick up an item from a store rather than have it shipped.

“It’s a whole new market opportunity,” Mr. Stevens said.

In another effort to alter the face of online shopping, Seattle-based shopping service Mpire rolled out WidgetBucks.

Widgets are small programs that can be inserted on web pages.

WidgetBucks lets web publishers and bloggers make money by placing a shopping widget with contextual advertising on their pages.