Microsoft Corp. announced a plan to pay consumers who buy items they find through the software company's search service, the latest in a series of moves to gain ground on Google Inc. in the lucrative business of Internet search.
The idea to get consumers to use a search service by enticing them with financial rewards has been tried by companies before with little success. Microsoft, a relative latecomer to the search business, believes it can improve upon the concept by implementing it on a broader scale and by coupling it with new options for advertisers.
Microsoft Chairman Bill Gates announced the new service, Microsoft Live Search cashback, at the company's annual event for advertisers. The program includes products from 700 merchants, including Barnes & Noble.com and Overstock.com. Consumers who buy items from participating merchants after searching for them and clicking on an ad can get a cash rebate via an online Microsoft account they create.
The offering is designed to help attract a greater share of commerce-related queries.
Microsoft also is hoping the program will draw new advertisers seeking a more precise return on their investment and choices beyond traditional models, such as paying every time an ad is viewed or clicked on.
Merchants who participate in the program will be able to select a variety of options for buying advertising from Microsoft, including paying Microsoft only when a customer completes a sale. Google has begun testing a similar model that calls for advertisers to pay Google only when a consumer completes a specified action, such as buying a product or filling in a form.
The Live Search rebates are set as a percentage of the purchase price of an item and vary among merchants. Users can find a 5% rebate on a $60 coffee maker or 2% on a $120 digital camera, for instance.
Ellen Siminoff, chairman of search-marketing company Efficient Frontier Inc., said advertisers are eager to test new models that can help them spend their dollars more wisely, but that a variety of tools already exist to help them calculate spending on the likelihood it will result in a particular action, such as a sale. She predicts marketers will spend more money on the program if it increases the number of searches through Microsoft's search engine.
In April, Microsoft sites captured 9.1% of the U.S. search market, roughly flat from April 2007, according to comScore Inc. Google's market share in the period rose to 61.6% from 56.1%.
Microsoft withdrew an unsolicited offer to buy Internet giant Yahoo Inc. May 3 but has floated a proposal that includes acquiring Yahoo's search-advertising business, according to people familiar with the discussions.
The software company has tried to use financial incentives before to lift its share of the search market. In 2006, Microsoft tried a sweepstakes-like search service through which users could win prizes if their search terms matched those on a random list. Last year, it started its Live Search Club, in which users earn prizes for completing puzzles that involve searches.
The company's latest attempt is based on technology and partnerships Microsoft acquired by buying comparison-shopping site Jellyfish late last year. The company also said Wenesday that is was exploring the possibility of incorporating cash-rebate options into travel services bought through Live Search, which will begin displaying results from another recent acquisition, travel Web site Farecast.
By Jessica E. Vascellaro and Robert A. Guth
The Wall Street Journal; May 22, 2008
