Comments:

Some food for thought Jeff. To what degree was the decision/strategy to buy MeziMedia (and PriceRunner in the past as well as the UK shopping comparison site whose name slips my mind at the moment) a play towards advertisers or VC stockholders? Both probably factored into the equation, but I lean towards stockholders carrying a lot more weight in the decision.

Advertisers should be looking with a critical eye at the potential conflicts of interest which arise when their Network also owns part of the distribution (aka affiliates or in the case of VC publishers). Although I’m doubtful of how many advertisers will do that. In the case of MeziMedia the conflicts of interest which might not be so good for the advertiser are compounded by the conditions of the buyout. There is a lot of cash (about 2/3 of it) tied to MeziMedia achieving certain performance benchmarks down the road. The ante is upped quite a bit for MeziMedia. And I’m aware of some of the ways MeziMedia has derived their revenue/traffic in the past, which really isn’t necessarily in the best interest of advertiser’s ROI. However, VC will probably be able to show some nice growth figures in a future VC Earnings Call attributable to the buying of MeziMedia in the not so distant future. The buy also would seem to go towards what I’ve head VC stating as a goal in past Earning Calls of continuing to increase the amount of revenue that comes from within VC (individual VC companies doing business with one another).

I think that the fact that the Value Click press release didn’t even mention CJ indicates that this really isn’t considered an affiliate play at all. They consider the coupon site to be more of a comparison shopping portal than an affiliate publisher. I don’t think that making Coupon Mountain an affiliate publisher exclusive to CJ advertisers would really be a “billy club”, but more of a pea shooter against the other affiliate networks. That tactic would also surely cut the legs out from underneath Coupon Mountain’s revenue stream as they need a large number of advertisers to attract a large audience of consumers. It sounds to me to be more of a small comparison shopping add-on in the US, and hopefully they have some volume of business in the far East that is worth a lot. The deal sounds like a lot of money to me. If it doesn’t go well, look for Value Click to sell off CJ to recoup and try buying a shopping portal with better US presence.

Hi, Mike…
I’m forced to agree with your logic.  Here’s where I’m settling:

The bulk of Mezi’s revenue comes mostly from coupon and cash-back business.  Comparison and something over in Asia is the strategic investment. 

Hence, the earn-out hurdle becomes logical and IMO Kellie’s suggestion that the likelihood of advertisers becoming (shall we say) “taken advantage of” increases.  Pair this up with Brian Smith’s comments (observations, actually) regarding historic Q4 rate hiking by comparison engines and it all snaps into place for me.

I tend to believe that VCLK, eBay, Experian et al are hedging on Mercent, ChannelAdvisor et al to help streamline relationships between advertisers and comparison sites.  However, in doing so the transparency creates extreme inefficiencies which threaten to destroy margin.  How long until the bubble bursts and what breaks it?

How long until a serious backlash against price shopping by retailers?  Is it possible to see a bunch of big retail players get tired of playing this game (shifting prices by the minute to keep everyone guessing, burying actual prices on their sites and not sharing with engines, etc. et.c) and walk away?

These companies realize that there is always going to be comparison shopping and bargain hunting by consumers. That behavior is not going to go away. The technology that enables it, and ways to monetize services around it will continue to evolve. Continue to expect consolidation in that category as nobody has really staked out a solid leading position, and new concepts along the lines of buzzillions.com and other social media tag concepts start to create barriers to entry. I don’t see any bubble bursting there, but maybe some slow bleeding of margin until someone can really differentiate and build a captive audience. I don’t think it will be the rebates or coupons that will be the loyalty key, but real information that consumers can trust.

Thanks for taking the time to post such a detailed and informative article. It has given me a lot of inspiration and I look forward to more like this in the future.
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