Microsoft Catches A Jellyfish

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fish1.jpgMicrosoft is making strides to get ahead of its biggest threat in the online advertising game Google and today reports have filtered out that the company has acquired a site called Jellyfish.com which has done deals with Best Buy and Target ad well as other large retailers.

Jellyfish gives consumers the ability to compare prices of products based on data pulled from several online stores. The retailers partnering with the site pay a fee to Jellyfish to promote its products, and in return the site refunds a piece of that revenue to customers making a transaction through the site.

There is also an auction portion of the site that continues to lower the price of products until they are out of stock. The deal was closed on September 27th; however it was not announced until October 2nd. The financial details of the deal have not been disclosed.

Microsoft CEO Steve Ballmer said that the about 25% of the company’s revenue would be coming from advertising within the next four to ten years according to a report in Business Week, stating that this would be about how long it would take for all media and advertising to go online.

Currently, Google claims over half of all online searches and over one quarter of online ad spending for the U.S. Microsoft has been bulking up its resources to gain some of the audience and advertisers fixated on Google. The biggest buy in this effort has clearly been that of aQuantive. Right now, online ads have accounted for less than 5% of Microsoft’s $51.1. billion revenue for the last fiscal year.

The new site’s auctions and rebates will probably be integrated into MSN online properties. Brian Weigand, founder of Jellyfish said in Business Week, “They are investing heavily in shopping and e-commerce.” Prior to Jellyfish, Weigand started and sold NameProtect and BizFilings adding that he will be staying with this new partnership, “I’m going to give being an entrepreneur within a big company a shot. Microsoft is trying to become more entrepreneurial.”

Besides the commission to refund model that Jellyfish implements, the company hosts a daily auction called Smack Shopping. A smack is a group of Jellyfish where the prices of products get lower and lower until stock runs out. The company sells $5 million a year in merchandise.

Microsoft will continue to buy up companies that will give it an edge over the competition, no matter what the edge may be. The firm will continue to refine its ad serving capabilities as long as the market grows at the rate it has been. Although it will take a lot to catch up to Google, depending on the outcome of the hearing, should Google not be able to close on DoubleClick, Microsoft may just have the leverage by then to go to the head of the class.

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