An Early Warning

Here we discuss the dark implications of Paybuyer's technology, as silly as that sounds when we have only a handful of advertisers.

Let's start with an assumption. Assume Paybuyer's model becomes popular like, say, loyalty rewards programs.

What happens then?

The problem is that advertisers can use their competitor's names as search terms. That lets businesses target their competitors' hottest prospects and pay those prospects to view an ad or call. For example, say a buyer enters, "I plan to buy from Sparkle Window Washing." Competitors of Sparkle can then advertise against this search, showing the buyer ads with money lures.

This ultra-precise targeting, combined with a money lure, can kill companies.

Here's how. For argument's sake, assume:

  1. Ten competitors buy "Sparkle Window Washing" as a search term on Paybuyer.
  2. Each competitor offers $10 per call to people who plan to buy from Sparkle.
  3. Each competitor offers prices below Sparkle's.

Under these assumptions, a sizable percentage of Sparkle's imminent customers may ditch Sparkle and buy from one of those competitors.

The point is: a pack of competitors can intercept and strip away Sparkle's customers.

This type of intercepting already happens on search engines, of course, as businesses often buy their competitors' names as search terms. The problem is that this practice may become far more widespread and acute when businesses can pay their competitors' hottest prospects to view ads and call.

That's a powerful capability in a free market economy. While Paybuyer is a privacy advance for consumers, the flip side is that it essentially exposes every company's customer list.

The threat is international. When low-cost foreign businesses can easily get hot prospects in any country on the phone, won't higher-cost local companies suffer? For example, will Kohler, mainstay of Sheboygan, Wisconsin, lose customers to international competitors who can pay for the attention of Kohler's top prospects, at just the right time?

And, the problem is compounded if businesses engage in short-term predatory pricing aimed at killing off competitors, which is difficult to prove and therefore rarely prosecuted (see, for example, what Amazon did to Diapers.com).

What's more, the problem extends to potential attacks on individuals. A business could economically track (stalk) specific salespeople. The business could buy any salesperson's name + company as a search term. Then, any hot prospect that the salesperson is on the verge of closing could enter the salesperson's name into Paybuyer and see a pitch like this:

"If you're about to buy insurance from Tim Smith of Prudential we'll pay you $50 EV to call us first, and we'll sell you the same policy for 15% less." Hypothetical (Unethical?) Business

What happens then?