Friday, 23 May 2008

Microsoft offers incentives to searchers

In a new move widely reported in the press (including by the Washington Post), Microsoft has announced a new incentive to try to encourage more users to conduct their online shopping through the Live Search engine. Cash incentives are being offered to shoppers through the new 'Live Search Cashback' scheme, so that listed products could offer users discounts of up to 10% of the sale price.

This is a bold - or desperate - move by Microsoft, depending on how it works. The clear intention is to provide a monetary incentive to get users to change their search habits, since the quality of the search results offered by Live Search don't seem to be making any headway against the dominance of Google. It may certainly lead to more traffic from online shoppers looking for a bargain, but it may not significantly change their online search habits.

Microsoft says that its new cashback program covers more than 10 million products from over 700 merchants. These participating merchants will pay Microsoft a fee each time a customer completes a sale through Live Search Cashback and this fee will be a percentage of the retail price. When the purchase is completed, Microsoft will then return the fee to the consumer in the form of a cash rebate, so in reality Microsoft is simply acting as a middleman through their search tool, in the form of an affiliate programme.

The Washington Post article reports that this new scheme is part of Microsoft's plan to "innovate and disrupt" in the search industry, and certainly it is thought that if elements of the cashback plan are adopted more widely by other search services, then it is likely to change the Internet advertising business in fundamental ways, including adapting the ways that search engines provide an 'independent' service, to one where conversions and profits could drive search results.

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