Microsoft’s Cashback Offers Over Live Search–Effective?
Microsoft has announced their new innovation over the online advertising competition–a cashback program at the Advance08 Conference in Redmond, Washington. The idea is Microsoft will pay a portion of a purchase price (from 2 percent to more than 30 percent) to individuals who use its Live Search engine to find products online and buy them from participating retailers.
According to ZDNet.com, Microsoft has been experimenting with ways to reward users with points, prizes and cash — via programs like the “Live Search Club” — for the past year-plus. While the Live Search Club program did boost temporarily Microsoft’s search share, it didn’t help it beyond a few percentage points. A number of high profile e-commerce sites are participating in the early stages of the program, which is being dubbed “Live Search Cashback” and is based at least partially on technology developed from Jellyfish, a company Microsoft acquired in 2007. A message on the Jellyfish site says the site is down “currently offline to perform necessary service upgrades and enhancements.”
This maybe sounds like a desperate action, but personally I think it was a great move. The Live Search Cashback program moves from the traditional Cost-Per-Click (CPC) into Cost-Per-Action (CPA) while giving back a huge numbers of revenues to it’s user while tries to gain more shares from Google’s programs–AdWords and AdSense.
According to TechCrunch.com, Microsoft had to do something fairly drastic to get back in the search game. They’re third in U.S. search market share with under 9.1% of the total pie. Just six months ago they had 9.8% market share. Google, by contrast, has 61.6% and is growing steadily (click to enlarge) :
Without search market share, Microsoft can’t get search revenue market share. And it isn’t just a matter of splitting up the pie. This is a winner-take-most market: Having 9% of search doesn’t mean Microsoft has 9% of search marketing dollars. Far from it - publishers go to Google to partner on ads, which means advertisers must go there to get inventory, and a very healthy auction system pushes up prices. So not only does Microsoft (and Yahoo, and everyone else) have much fewer queries than Google, they are also generating much less revenue per query as well (more detail of the analysis).
So the question is–will it really works disrupting Google’s dominance? The answer is yet to be seen.
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Comments
Agreed. The only challenge for Microsoft–maybe for now–is the worldwide expansion difficulties that I think is quite harder than Google’s simple yet brilliant programs (AdWords and AdSense) which is more general and global.
But personally I still think that this move was a great move. If Microsoft keep trying on fighting Google’s AdSense and AdWord market, it’ll be quite a hard one just like Yahoo’s online advertising program. So, instead of fighting face-to-face with the market leader Microsoft is trying to use it’s virtually unlimited resources to “bought-back” some market shares.
I, too, can’t wait to see Google’s respond.
Microsoft, or Yahoo, for that matter, cannot just bank on their future on America. History tells us that empires rise and fall. What if America would go down in history? Are Yahoo and Microsoft prepared for an American debacle?
Google is most prepared for anything. Its business model is global in operation. Google can do business in Cambodia or in Congo.
Yahoo’s Publishers Network excludes webmasters outside the U.S., which I think is not profitable in the long run.
Microsoft must at least include European countries and some countries in Asia so that its Cashback would be profitable in the long run.
Microsoft’s new program excludes people living outside the United States. We’ll wait how Google will respond to this program and the whole world will be part of it.