Microsoft challenges Google through an alternative advertising model
May 26, 2008
Microsoft’s new Live
Search Cashback program is expected to shake up the search space. By
offering ”cashback” incentives to the consumers and a shift in the advertising
model the tech giant is hoping to become the major search engine at least among
the online shoppers. With this move, it is questionable whether Microsoft aims
to get larger search engine marketing share (now it is third in U.S with fewer
than 9.1% of the total pie) or it strives to increase its search revenue. The
new program mainly applies to e-commerce related searches, which represent one
of the most lucrative parts of the advertising market and generate 80% of the
overall search revenue.
Basically, CashBack program gives "cash-back" to the consumers
who buy products through Microsoft Live Search engine. After making a purchase
from participating retailers/advertisers, Microsoft pays back to the consumer from
2 to 30 percent of the purchase price, depending on the product.
More than 700 merchants are participating in the program.
Key partners are some of the top Internet retailers as eBay, Barnes &
Noble.com, Overstock.com, Sears, Zappos.com, and J&R Electronics.
Cost Per Acquisition
– an alternative payment model
Live Search cashback service is based on an alternative
payment model - Cost Per Acquisition, in which the advertisers pay only when
the ad results in a consumer purchase. This model gives advertisers a more secure
return on their advertising investment; in contrast to the traditional search
engine Cost-Per-Click model (currently applied by Google) that carries more
risk because the searcher may not complete a transaction and buy a product.
Microsoft’s Cashback service combines the CPA model for
advertisers with a clear payback mechanism to users.
goal is to make Live Search the most rewarding commercial search destination on
the Web. Live Search cashback will help advertisers drive more online sales
while giving consumers a new way to stretch their dollars.”, Microsoft Chairman
Bill Gates commented.
this isn't the first trial of Microsoft in the world of search engine
incentives. Microsoft Live Club is
an ongoing experiment but with significantly smaller scale. After the launch of
the Live club in 2007, Microsoft temporarily increased its search market
share. The tech giant believes that the new service will even better work
Gates added that in a few years time people will look back and say, 'Wow, search
started to get a fair bit more competitive around that time.'
What the consumers have to
Users will need to sign up for Live Search cashback accounts
in order to use the service. The query for eligible products can be typed directly
on the Live Search Cashback site. If not, the consumers need to look for
special icons next to search results in the standard Microsoft Live Search
After consumers make the purchase through the retailer's
site, the designated discount will be paid into an online
account. The refunds will be available via direct deposit to a bank, PayPal
account, or by check.
It is not clear yet whether Microsoft Live Search cashback service is enough to really
change the game and to what extent this move will influence the search engine market.
Anyway, it is a great move for Microsoft and we will see soon how hard
Microsoft will hit Google and what portion from the advertising market the tech giant will cut out of Google’s pie.
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