Microsoft Has Nothing to Lose on MSN's Live Search Cashback Program
Microsoft(MS) recently introduced cashback on your purchases through participating merchants if you find your items through MSN's Live search. Given that Google has been gaining search shares again and again, it's not surprising that people view Microsoft's move as desperate. Well, they are trying something that have been proven to work by Ebates, Fatwallet.
Basically, MS has nothing much to lose in this cashback program. They are betting that price-sensitive consumers in this recession period will want to save a few more bucks via cashback. With a CPA-based pricing model, MS hopes E-commerce retailers will increase their spend on advertising through Live when they see more leads through Live and good conversion rates/ROI(return on investment). MS is just giving up a little bit of income to potentially increase their search market share and e-commerce's advertising spend.
Cashback in online e-commerce is nothing new. Ebates, Fatwallet have been giving cashback for purchases through their links for years using a CPA-based model for merchants. MS's CPA-model in Live officially competes directly with comparison shopping engines like ShopZilla, NextTag, PriceGrabber which offer CPC-based advertising. E-commerce sites clearly favor a CPA model instead of CPC model. so these comparison shopping engines should be really worried about.
What I find disappointing is that one has to go through the Live search cashback site to find cashback deals. When I do a regular search on live.com such as "ipod newegg", even though Newegg participates in the cashback program, there's no indication of the participation in Newegg's natural result listing or sponsor listing. MS should have done a better job of integrating the cashback program with regular Live search.
I don't know how much Google search is actually better than other search engines. What MS realizes is that it's very hard to change people's search engine preference. But people may be willing to try new things when they can gain some personal incentives.
Microsoft, make sure your product search actually finds good deals on products even BEFORE the cashback. People who do comparison shopping care most about the bottom-line prices they need to pay for.
