Thursday, May 22, 2008

Microsoft Launches Innovative Search Rewards Program

I'm posting about Microsoft's new Live Search Rewards program because of the relationship it has to both the Internet Retail space and because it seems to suggest the makings for a potential online payment platform. Considering that Microsoft is going to offer cash rebates to consumers who use their Live Search to "find" and "purchase" products...they would have the desire to complete the process by implementing a way for consumers to pay for them via the very same platform.

The numbers suggest huge potential. Here's an excerpt from The Empire Strikes Back" in the Washington Post:)

This (Live Search cashback) only applies to e-commerce related searches for now. But frankly that is all that matters. Only about a third of searches are commerce related, but those searches generate 80% of search revenue. Get the commerce searches and you've got the revenue. And here's another interesting statistic - 68% of online purchases begin at a search engine or shopping comparison site. Only about 30% are from direct navigation to the ecommerce site itself. Will it Work? Yes, it will work and it will almost certainly increase Microsoft's market share in search, particularly in commerce search. The question is, how well will it work? A year ago Microsoft basically did a trial run of Live Search CashBack with Live Search Club, which lured searchers to Microsoft with offers of prizes to users for using Live Search. Microsoft went from 10.3% to 13.2% market share in a month, a nearly 30% rise. Live Search CashBack, which gives a much more straightforward layout to users, should see significantly better results.
Here's Microsoft's announcement regarding Live Search cashback...

Microsoft Corp. announced it will offer ad-funded cash rebates to customers who find and purchase their favorite products through a new program called Microsoft Live Search cashback. Key partners (including eBay, Barnes &,, Sears,, and WPP) joined Microsoft Chairman Bill Gates at advance08, Microsoft’s annual advertising customer event, to announce their participation in the new program.

The complete Live Search cashback product portfolio includes more than 10 million product offers from more than 700 merchants, including more than 13 of the top 40 U.S. retailers.

The company also announced it has delivered a new Live Search travel destination, Live Search Farecast, making it easy for searchers to find the best travel deals on the Web.

“We believe search can offer much more value to consumers and advertisers than it does today, and we see Live Search cashback as an important opportunity to deliver additional value,” Gates said.

“Our goal is to make Live Search the most rewarding commercial search destination on the Web. Live Search cashback will help advertisers drive more online sales while giving consumers a new way to stretch their dollars.”
During his keynote address, Gates outlined three areas of focus for the company’s broad search vision:

** Delivering the best search results by continuing to focus on relevancy and selection

** Expanding the role of search around the set of tasks that searchers are most often working to accomplish - including commerce, entertainment, navigation and reference - through improvements in its user experience, intelligent tools and access across devices

** Innovating in the economic model that today powers the search business by rewarding both advertisers and consumers for engagement

Today’s announcements of Live Search cashback and Live Search Farecast signify that commerce queries will be the first of the four tasks on which the company will focus.

As part of this “Commercial Search” strategy, Microsoft aims to make Live Search the premier search engine for the growing category of search queries that help consumers conduct research and "purchase goods or services", and which are critical to merchants aiming to drive online sales of their products.

New Business Opportunity for Search Advertisers

The opportunity to reach consumers via search advertising is enormous and growing. According to eMarketer Inc., U.S. online retail is projected to grow to $335 billion by 2012, and today 68 percent of all those retail transactions begin at a search engine. (This translates to 3.7 billion commerce-related queries per month).

The primary choice for advertisers to reach these search customers is the cost-per-click (CPC) model, where merchants pay a fee each time a searcher clicks on their ad, whether or not the potential customer makes a purchase.

The cost-per-action (CPA) model, where advertisers pay only when a customer makes a purchase, or completes a specific transaction, gives advertisers a more precise return on their advertising investment, and is currently being deployed on a relatively limited basis. The CPC and CPA search advertising models represent the most targeted advertising approaches available today, but there is still room for improvement.
With Live Search cashback, Microsoft helps merchants maximize their advertising investments and drive more sales by providing consumers with an added incentive to buy - a cash rebate.

Participating merchants choose to pay Microsoft a CPA fee each time a customer completes a sale through Live Search cashback. The fee is a percentage of the retail price, and when that transaction is complete, Microsoft returns that fee to the consumer in the form of a cash rebate.

“Our business is to connect consumers with brands in the most effective and efficient ways. Microsoft’s Live Search cashback creates a real incentive for consumers to connect with our clients,” said Sir Martin Sorrell, chief executive of WPP. “We believe this is a major development in the evolution of search marketing and look forward to participating and measuring the results.”

Key partners participating in the Live Search cashback offering include Abe’s of Maine, B&H,, Barnes &, Circuit City,, Crutchfield, eBags, eBay, Foot Locker,, The Home Depot, HP, Jockey, J&R,, OfficeMax,, PetSmart, QVC, Sears, Spiegel,, Vitamin Shoppe, & A complete list of Live Search cashback partners can be found at

“We’re happy to be partnering with Microsoft on this innovative program,” said John Donahoe, president and CEO of eBay Inc. “By combining eBay’s marketing expertise and incredible volume and velocity of trade, PayPal’s leadership in online payments, and Microsoft’s cashback program, we see a great opportunity to deliver more value in the eBay marketplace.”

Live Search Farecast

Also available is the new Live Search Farecast, which includes technology acquired through Microsoft’s April 2008 acquisition of Farecast Inc., the award-winning travel site known for helping users find the lowest airfares by predicting when to buy.

Starting today, Live Search Farecast results can be found at and via Instant Answers in the main Live Search results page. Microsoft will explore the possibility of also incorporating an ad-funded rebate option for travel services in the future. The keynote address from advance08 will be available for Web video playback at

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