Last week, Microsoft announced it will be giving cash back to people who use Live Search (i.e., search at msn.com) and subsequently click-through and make a purchase. Kudos to Microsoft for this innovative program.
While the idea of giving some of the billions of dollars generated from paid search back to the searchers themselves has been tossed around by many -- including yours truly -- for quite some time, Microsoft finally went out and did something about it. It's now like the Discover Card of search engines -- the engine that gives you cash back. Perhaps there's a co-op marketing opportunity here (tongue-in-cheek)?
However, they better hope they achieve more market share than the Discover Card. In the short term, it should definitely be a boost to Microsoft's current 9.7 percent market share of the search market.
The advertising community also welcomes it with open arms. As Google gobbles up more market share, it's become exceedingly difficult to find opportunities in the search advertising market. Most advertisers, at best, usually only get 5 percent of their traffic from Microsoft and 20 percent from Yahoo, with the remainder coming from Google (despite what the various reports indicate).
Almost everyone who pays money for advertising uses Google's AdWords PPC program. Also, Yahoo has been testing using Google's paid search results to power their search results as well, giving advertisers cause for concern. Also, with a looming recession, marketing dollars generally flow to search, since it's proven, measurable, trackable, and has a low barrier-to-entry.
Savvy corporations and advertisers understand that announcements like this one from Microsoft often create short-term, but often big, opportunities in the marketplace. Advertisers buying paid placements in Microsoft should test bumping up their efforts over the next few weeks -- especially those in retail. A majority of Microsoft's 700 partners are in retail: Sears, eBay, Barnes & Noble, 1-800-Flowers, Overstock.com, and PetSmart are just a sampling of the merchants they've signed on.
This Will Never Work...Surprise, It Already Does
People always make the mistake that everything on the Web is new, when often the construct is old, it's just the delivery mechanism that's new.
Microsoft giving cash back for searches is almost the exact same thing as a frequent flier program.
Starwood has many hotel properties (W, Sheraton, Westin, etc.) = Microsoft's 700 merchants
Users call Starwood reservations = Users search on MSN Live
Starwood gives points for bookings = Microsoft gives cashback for purchases/bookings
The Next Step
Obviously, the optimal solution of this model would be to have every merchant in the program, not just a select 700 or so. The difficulty of this optimal solution, without getting into the technical details, is the tracking to sale, as well as the payout to the individual searches.
Hence, Microsoft might just prove this model to work, only to have a nimble start-up with some smart MIT students swoop in and take the search market by storm. Stranger things have happened. Remember: Google used to power Yahoo a few years ago -- oh wait, it's "Back to the Future" again on that one, too.
Don't look now, but Microsoft's Cash Back program just might steal that cash (in the form of market share) back from Google.