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Microsoft introduces new search business model

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Redmond, Wash.—Microsoft Corp. Thursday announced it will pay customers to use its search engine, as it steps up its rivalry with front-runner Google.

Microsoft will offer ad-funded cash rebates to customers who find and purchase products through a new program called Microsoft Live Search Cashback. It is built on technology Microsoft gained through its October 2007 purchase of comparison shopping site Jellyfish.

Among 700 marketers that have partnered with Microsoft in the program are Barnes & Noble.com, Crutchfield, HP, Newegg.com, OfficeMax, TigerDirect.com and WPP Group.

The ads are based on a cost-per-action (CPA) model in which the advertiser only pays when the customer makes a purchase.

Participating merchants choose to pay Microsoft a CPA fee each time a customer completes a sale through Live Search Cashback. The fee is a percentage of the retail price, and when the transaction is complete, Microsoft returns the fee to the buyer in the form of a cash rebate.

“Our goal is to make Live Search the most rewarding commercial search destination on the Web,” said Microsoft Chairman Bill Gates, in a statement. “Live Search Cashback will help advertisers drive more online sales while giving consumers a new way to stretch their dollars.”

—Carol Krol

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