Posted by: Rob Hof on May 21, 2008
Microsoft on Wednesday is launching its latest attempt to make a dent in Google’s dominant market share in search and raise its currently single-digit percentage of search queries: Live Search cashback—a service that pays people cash back on purchases made from certain advertisers when they use Live Search to find the products. Here’s how it works, from the cashback site:
Microsoft had tried paying users before, such as with prizes on its Live Search Club site. This program is much more extensive, and I suspect advertisers who are worried about Google’s dominance will give it a try if only to keep Google honest. Some merchants also will like paying only for sales made, not per click, which can be open to fraud. And kudos to Microsoft for trying something different.
But it all feels a bit gimmicky. Paying users to come to a site never seems to have been a great strategy, especially compared to simply providing a service that works better.
Also, there seems to be a lot of friction built into the process. First, you have to sign up for an account, always an obstacle; on Google, you just type in words. Then, you have to go out of your way to search on the cashback site. Not least, you have to wait to get paid to account for returns. It seems like all this is going to turn off a lot of people who aren’t natural-born coupon clippers. Danny Sullivan at Search Engine Land gave it a real workout and came away unimpressed, though Mike Arrington at TechCrunch thinks it has a chance to disrupt Google if it catches on.
UPDATE: Steve Baldwin from search marketing firm Didit, in the comments below, makes a good point: I don’t necessarily agree with him that cost-per-acquisition is the perfect model—Web publishers justifiably don’t want to get paid only when a sale is made, because a click is logically worth something. But if Microsoft can compile a sizable list of prime lead prospects, that may well be worth a lot. The question is whether this will in fact attract a lot of people.
And if it does end up working, Google could do something similar, and it has the search economics to make it work even more profitably. I guess this program is a lot cheaper than spending up to $21 billion to buy Yahoo’s search ad business, though.