New ad model.
Paybuyer is the first practical, general system for paying buyers, and only buyers, to call advertisers and view ads.
In addition, it's a new search model that can replace today's pay-the-search-engine model. To see why, consider an example: if you enter "auto insurance" into Google and click the top link, the advertiser pays Google ~$45. Click the 3 top links and Google gets ~$135. Wouldn't real buyers, the real targets of advertisers, rather take that money if they could? Sure they would.
It certainly makes economic sense for advertisers to pay buyers money for their attention before purchases. Yet, it hasn't happened on a wide scale. Why not?
Well, when companies, such as Cybergold and AllAdvantage, have tried pay-ad models, non-buyers have taken 99% of the money. In other words, pay-ad models failed because there was no efficient way to identify and pay only buyers.
Now that's changed. Paybuyer lets advertisers give buyers, and only buyers, money for their attention. Crucially, the payments are just for attention - the buyers have no obligation to purchase from any advertiser.
How does it work?
Paybuyer uses probabilistic payment, which is the most efficient micropayment method, as Rivest has pointed out.
Paybuyer asks users what they plan to buy and then enables relevant sellers to pay those users for clicking, calling, and watching videos (not enabled yet). The payments that users receive can be used to play a Double-or-Nothing game to win up to $1,048,576. These payments have an explicit expected value and offer the chance of a larger prize.
The key to the system is this: only verified buyers can collect the prize money. For example, a user who says she plans to buy auto insurance will receive payments from auto insurers. She can collect the payments by providing a receipt proving that she bought auto insurance after her search. Or, if the payments are too small to induce her to provide a receipt, she can play Double-or-Nothing as many times as she likes. The game lets her run up the prize to a level that makes it worth her while to provide a copy of her receipt.
And, if she doesn't want to take the time to play, the system will do it for her, until it reaches a $64 prize, which she can collect or use to play more Double-or-Nothing.
Of course, if she loses, she doesn't have to trouble herself with proof of purchase. So, only a small fraction of purchases are verified, but each verification is worth the buyer's time, letting her collect a prize larger than the original payment.
Bottom line: the system combines efficient probabilistic payments with efficient probabilistic verification of purchases, ensuring only buyers receive cash.
More efficient targeting.
We call this technology verification-based, pay-the-buyer targeting. It's far more accurate than current targeting methods (contextual, behavioral, demographic, geo, and search) because they're prediction-based. Prediction methods increase the probability that an advertiser will reach a buyer, "the right person at the right place at the right time." But, prediction is only a guess. Verification is a guarantee.