Google Model Killer?

It's plausible.

Can our pay-the-buyer model kill Google's pay-the-search-engine model? It quite possibly can. Here's why:

  • Google makes advertisers pay for clicks from non-buyers and fraudsters.
    Paybuyer makes advertisers pay only for clicks from verified buyers.
  • Google keeps all the advertiser money for itself and its affiliates.
    Paybuyer lets buyers take 90% of the advertiser money.

The Paybuyer model has economically enforced relevance.

However, Paybuyer won't kill the Google model unless its ad listings are as relevant as Google's. Will they be? We think so because Paybuyer will provide a unique economic mechanism for enforcing relevancy.

Here's how it works. In the future, listings in Paybuyer-type directories may have different payment amounts under the same search term. For example, the highest ranked listing under "piano" might pay $3.00 EV, the next highest might pay $2.90 EV, and so forth.

So, if a high paying listing advertises an irrelevant or inferior product, buyers will still click on that listing more than they click on lower paying listings because the listing pays more. The buyers will then be exposed to the irrelevant or inferior product, and choose to purchase from another business, causing the advertiser to lose money rapidly.

If a high paying listing does not generate sales, the advertiser will have to kill it, fast. Thus, Paybuyer is a survival-of-the-fittest environment where highly ranked listings will be attacked by buyers 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.

Pay-for-placement may change.

It should be noted that pay-the-buyer-for-attention systems may sort search results differently than the pay-for-placement methods of Google, et al, in which results are ranked by payment amount, from highest to lowest, influenced by a quality score. Imagine that a buyer has a threshold amount of money that she expects to be paid for her attention to a message, and that she'll click on every listing that pays her that amount. In this case, what's the advantage to an advertiser of being #1?

Perhaps the last position that meets the buyer's threshold is the best position because it might represent the last sales message the buyer is exposed to, assuming she clicks #1, #2, #3... For instance, if #6 pays enough for her to click, that position may be more desirable than #1. One can't say exactly how sorting of results will play out in pay-the-buyer directory systems, but one can say it is likely to differ from sorting in pay-the-directory systems.

It should also be noted that search term bidding itself will likely be different in pay-the-buyer directories and may become simpler than the current practice, especially if buyers express their payment thresholds. Advertisers could, potentially, instruct a directory to pay each buyer her threshold demand, while not exceeding a cap. The possibilities are various.

The survival-of-the-fittest principle remains.

Even if rankings are not ordered by payment amount, the basic principle remains: buyers will find listings that pay enough, and if those listings don't provide value, they'll be killed off.

Simply put, Paybuyer's model financially penalizes irrelevant and uncompetitive listings. In this respect, its environment should be as tough as or tougher than Google's.