Microsoft buys Jellyfish.com comparative shopping site

Microsoft has bought comparative shopping Web site Jellyfish.com, which gives its customers a cut of advertising revenue from retailers, offering a rebate on purchases made through the site.

Microsoft sees Jellyfish.com as a way to augment its e-commerce and search offerings, although no details were immediately available on how the company may transform the site or wrap it into other offerings. Microsoft revealed the acquisition in a blog posting Tuesday, but did not say how much it paid for the site.

"We think the technology has some interesting potential applications as we continue to invest heavily in shopping and commerce as a key component of Live Search," Microsoft's search engine blog announced.

Advertisers choose the level of commission they will pay to Jellyfish.com for sales made, at least half of which Jellyfish.com says it will give back to purchasers as a rebate. Jellyfish.com ranks products according to the price including that rebate.

While the discount the consumer will receive appears in the search results, Jellyfish.com doesn't immediately apply the discount to the product. Instead, the money is kept in an account for 30 to 60 days to account for product returns, refunds, and to guard against fraud. After the waiting period, a check can be mailed when the accumulated rebates exceed $10.

Jellyfish.com is not the only company to sell adverts based on "pay per action," rather than pay per click.

In June, Google expanded its beta trial of a pay-per-action program, opening it to worldwide users of its AdWords service. The pay-per-action ads can appear in Google's regular contextual ads results that Web site publishers put on their page, or publishers can choose which pay-per-action ads go on their page based on content.

Jellyfish.com tells merchants that its cost-per-sale advertising model is risk-free and not subject to e-commerce problems such as click fraud, where advertisers overpay for fraudulent clicks on their ads. So far, Jellyfish.com says it lists at least 5 million products.

Jellyfish.com, started in mid-2005, is based in Madison, Wis.