Microsoft Pays Public to Use Its Search Engine

Latest Attempt to Lure People From Google Will Offer Cash Rebates

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NEW YORK ( -- Microsoft is taking a page from Consumer Marketing 101: offering search users cash-back rebates.

It's an unusual move for a search engine -- and one that doesn't make Microsoft any money. But the company hopes the tactic helps fill one of its biggest needs: increasing sampling of Live Search.

Microsoft's other attempts, such as games, have been largely unsuccessful. When ComScore introduced its qSearch methodology in July, Microsoft had a 12.4% share of search; by last month that figure had dropped to 9.4%. Nielsen pegs Microsoft's April search share at 9.7%, up slightly from its 9% share the previous year. And Hitwise has worse news: Microsoft has gone from 7.8% in April 2007 to 6.3% today.

"What Microsoft is saying is: 'Our stuff is good, but people don't try it because they don't think of our brand,'" said Ellen Siminoff, chairman of Efficient Frontier. While Microsoft has spent billions on consumer advertising, most of it pushes the company's software products. (It's got to hurt when a firm such as Millward Brown ranks Google the world's top brand when it has nary a consumer ad push of any significant scale.)

This launch, said Microsoft Chairman Bill Gates, is a way of "simplifying the tasks and rewarding the consumers and advertisers for their engagement in a major way." Whether consumers really understand that depends on how well Microsoft explains and markets the program. The company launched an online-only push last week.

Comparison shopping
Several ad executives lauded the idea of giving consumers more of an interest in searching and rewarding them for their time. A user query on Live Search pulls up a list of products with a "compare prices" button alongside them. Clicking the button takes users to a page where they can compare multiple retailers' prices -- and the rebates associated with buying the product from them.

"We talk about consumers being in control. ... This is a shift to get consumers really vested in the process, which is huge," said Liz Ross, president of TribalDDB West.

However, the program doesn't apply to the swath of search marketers who use the channel for branding or other nontransactional purposes, such as driving people to a web destination. For commerce-based search marketers, Microsoft's CashBack program works on a typical cost-per-acquisition basis. Marketers determine how much they're willing to pay to acquire a buyer for a particular product and pay Microsoft that fee only when someone makes a purchase. But instead of pocketing that money, Microsoft offers it back to users in the form of a rebate.

Jim Barr, president of e-business for Sears, Roebuck & Co., one of the marketers participating in CashBack, likens it to an extension of the retailer's affiliate program, except "Microsoft is adding dollars on top of that." It is low-risk for Sears, he said, and puts some of the risk of acquiring customers back on Microsoft as well.

Live Search needs customers. Search is a scale business, and Microsoft can sell to advertisers only as much inventory as it can generate. It generates inventory by successfully luring users to its search engine. To really be a competitive player, it needs to approach 15% to 20% market share, said Bryan Wiener, CEO of 360i. "Microsoft's returns have been good," he said. "The ad platform works. The challenge has been ramping up volume."

Bargain search engine
If it works, Microsoft's new cash-back search policy could also disrupt the company's chief rival, Google. That's because search marketers don't just care about the number of clicks they get from their search ads. Smart search marketers will measure their return on investment down to the conversion level.

So consider that consumer behavior is hard to change in an instant; many people are programmed to go to Google to research products and probably still will, even with Microsoft's carrot dangling in front of them. (After all, as Danny Sullivan points out, Microsoft's CashBack offering is less a research tool than it is a bargain search engine.)

But if even a portion of those people research their buys on Google and then head to Microsoft for the purchase part, Google's conversions go down, and it looks less effective, at least to search marketers measuring this type of thing.

"Part of ROI valuation when you try to figure out how much to invest in each search partner is not only what do they deliver on clicks but also transactions," said Daina Middleton, senior VP of Sunao, Moxie Interactive's emerging-trends, insights and analytics division. "This shows Microsoft is really serious about doing something. They're wanting to be a disruptor."
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