Comet Hopes Shopping Cursor Points Way to Profits

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After turning its attention away from online advertising via rich media cursors, Comet Systems is aiming to finally turn a profit with its new comparison-shopping application.


The New York-based company added the Shopping Cursor earlier this month, allowing consumers to compare prices on products from several online retailers. Two million of Comet's 75 million users have downloaded the Shopping Cursor so far.


This is the latest chapter in Comet's nearly three-year effort to get its software downloaded on as many computers as possible and licensed on as many Web sites as possible, and to turn critical mass into profits. The privately held company has not been profitable since its founding in 1997.


Comet Systems is touting its Shopping Cursor as a business-to-business service. The comparison-shopping tool pops up at specific product pages on the Web via a technology partnership with Clickthebutton.com.


When Shopping Cursor users click on a product, a 1.5-inch-by-2-inch box pops up from the cursor, showing a list of prices that PriceGrabber or DealTime has compiled. If the user chooses one of the prices offered, he is linked to that retailer's page.


"We are a syndicator of information. All we are doing is sending millions of people their way," said Ben Austin, vice president of marketing communications at Comet Systems.


The service is geared toward price comparisons on high-ticket electronic items such as DVD players as well as products such as books and CDs.


When Shopping Cursor users find a merchant via DealTime or PriceGrabber, that merchant pays a referral fee to the site, which pays Comet Systems a portion of the fee.


"These are very, very high-revenue referrals," Austin said. "A site that sells a Palm Pilot will probably pay a significant amount of change to acquire that user."


Austin also noted the advantage of using Shopping Cursor to target offers to certain users.


"When someone at a specific travel page is purchasing a ticket, they are ripe to be given an offer for a ticket on American Airlines, for example," Austin said.


Comet executives are optimistic that the firm's comparison-shopping technology and other search functions -- partnerships with Smartmoney.com to provide stock information and with Rollingstone.com to provide music information, for example -- will be the services that finally make Comet profitable.


One of the firm's applications, the Comet Cursor, has been functioning primarily as a free plug-in that turns users' cursors into images they select, and its Smart Cursor provides dictionary and encyclopedia searches. Also, on Web sites that use Comet's free software, users' cursors change automatically into graphics that the site selects. For example, Comet Cursor users who visit ComedyCentral.com see their standard cursor switch to a graphic of Kenny from "South Park."


In addition, Comet Systems entered the online advertising fray in late 1999 with its Cometized Banner, matching the user's cursor with banner ads on certain pages. Through partnerships with ad-serving firms DoubleClick and 24/7 Media, Comet appeared to be committed to becoming profitable via online advertising.


Despite some success in that arena -- some campaigns had high brand recall and click-through rates -- Comet Systems executives noticed the start of an online advertising downturn in 2000.


"The online advertising marketplace was having serious problems," Austin said. "We made a very dramatic move to invest $10 million and a year of development in the Comet Cursor III platform, which provides searches and information to users."


However, Austin said, "Looking for more funding in this market is difficult. We expect revenues from Comet Cursor searches later this year."


The company has not completely abandoned the online advertising model. It still works with a few companies on individual cursor ad campaigns when contacted.


"We've learned that personalized cursors, due to overwhelming traffic, is a much larger business than we imagined, and cursor advertising is a small business. So we're adding searches and information," Austin said.


In addition, Austin does not rule out additional advertising services in the future.


"We are one of many companies that have a lot of hope for the online advertising market down the road," he said. "But right now, the way the market is, with DoubleClick posting a loss, for example, that is not where we're going to hang our hat."


Comet Systems has steadily increased its user base, primarily by word of mouth, links, referrals from partner sites and search-engine placements.


1-800-Flowers was one of the first sites to sign on with the company for the Comet Cursor, using it to change cursors into tulips and bursts highlighting product features. About 400,000 sites now use the free software.


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