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Will Paybuyer's Model Supersede Google's?

We think so because:

  1. Google makes advertisers pay for clicks from window shoppers and click-fraudsters. Paybuyer makes advertisers pay only for clicks from verified imminent buyers.
  2. Google keeps all the advertiser money for itself or its affiliates. Paybuyer lets imminent buyers take 90% of the advertiser money.
The Paybuyer Model Also Offers Economically Enforced Relevance

Still, many buyers won't prefer Paybuyer (and its inevitable imitators) unless its ad listings are as relevant as Google's. So, the open question is, will the listings be as relevant?

The Paybuyer model imposes extreme financial penalties on irrelevant and uncompetitive listings. Its environment appears tougher in this respect than Google's.

How so? Realize that, in the near future, Paybuyer-type directories will have listings that are ranked according to which pays buyers the most EV money. For instance, the highest ranked listing under a term like "piano" might pay $3.00 EV, the next highest might pay $2.50 EV, and so forth.

So, if a highly ranked listing advertises an irrelevant or uncompetitive product, searchers will click on that listing preferentially, because it pays more than lower ranked listings, then consider the value of the advertised product, and then buy from another business that offers a better value, causing the advertiser to lose money rapidly.

If the listing does not generate adequate sales the advertiser will have to kill it, fast.

Thus, Paybuyer is a survival-of-the-fittest environment where highly ranked listings are "attacked by searchers" and quickly die if they don't provide relevant and attractive offers.

Conversely, relevant listings that provide excellent value will generate sales and, in general, profits. The profitable listings will survive, leaving a relevant, attractive directory for buyers.