Live Search Cashes In on Cashback

Rather than buy Yahoo for search share, Microsoft can directly buy search share. What a concept—and it might just work.

As reported yesterday by Todd Bishop's Microsoft Blog, Microsoft has launched the new "Live Search cashback" program. The company officially announced the new service today, actually while I was writing this post.

The concept: People use Live Search for stuff to buy, and Microsoft gives them—can you guess from the program's name—cash back. It's a simple concept: Microsoft pays people to use its search service—and not for the first time.

About this very time last year, Microsoft launched Live Search Club, which for a time substantially boosted Live Search share. The share gains didn't last, but surely the marketing lessons did. There are more ways to gain search share than algorithms and relevant results.

While I can't help laughing about cashback, I commend the concept. It's a much better way for Microsoft to buy search share—giving money back to existing or potential customers rather than to Yahoo shareholders. Microsoft will spend a whole lot less, too.

Microsoft isn't satisfied just courting search users. No surprise, there's an advertisers' program, too. Somebody has got to pay for all that cash back.

Buyers can use Live Search or the Live Search cashback site to find items; those with cashbacks are designated with a coin embossed with dollar symbol. I searched for "Nikon camera" and found that major photography dealers, including Adorma and B&H Photo, are participants. B&H Photo cashback ranges from 2.5 percent to 3.5 percent of the purchase price. Adorama is a flat 3 percent.

What I wonder: How many of the cashback merchants already had relationship with Microsoft through MSN Shopping? Certainly Adorama and B&H Photo are MSN Shopping merchants. This cashback deal sounds so familiar; like the discounts MSN Shopping has offered during the holiday sales season.

I'm a firm believer in live and learn, so I put Live Search cashback to the test early this afternoon. I started by searching for "Nokia," thinking about a new cell phone for my wife's birthday or accessories for my N95-4 (U.S. 8GB model). Search brought back just too many items for such a generic company name, so I chose from the handy list of cashback-supporting stores. First up, TigerDirect, from which there is 5 percent cash back.

The redirected URL immediately revealed what I had suspected. Live Search cashback derives from Jellyfish, which Microsoft purchased in October. On the redirect, TigerDirect opened to its main page and a message that the cashback discount would apply for the purchasing session. I had to manually search for items at TigerDirect, with no clear assurance that there would be cash coming back. I put an 8GB SDHC card in the shopping cart but got all the more nervous at checkout. Microsoft treats two of the three purchasing options, Google Checkout and PayPal, as "alternative payment" methods that might not get rightly reported.

I next tried direct search from Microsoft's cashback site. This time, I chose a 4GB SDHC card from Adorama, which led me to the retailer's Web site and the same nebulous checkout scenario. It wasn't at all clear that there would be a discount, so I abandoned the shopping cart. For many retailers, shopping cart abandonment is the top online nightmare scenario. Somebody was ready to buy but failed to. But Microsoft would get its search click either way. Again, simply brilliant pay-for-search strategy, even if Microsoft pays nothing to the buyer.

My question: To whom belongs the customer service problem if the purchase doesn't show up in the buyer's Live Search cashback account? Retailers don't want buyer's remorse, but they'll get some if the process doesn't work right.

Whoa, something else: Microsoft will pay nothing to Live Search cashback users for at least 60 days. Microsoft holds on to those cashbacks, just in case buyers return the items (surely nobody would seek to get that cash back only to later return the item). Once 60 days has passed, Microsoft pays within 14 days. I chose PayPal to receive my cashbacks.

I can't wait for Google's response to this. Will the search provider pay people to search? Here in the United States, Subway restaurant ran a several-month five-buck footlong special. The result: Competitor Quiznos, whose subs had cost much more, now offers $5 subs and Subway made the deal permanent for eight sandwiches. Competition is great, huh?

Oh, but can poor Google compete the same way as Microsoft? I wonder. With search share close to 60 percent, Google could run afoul of U.S. regulators for anticompetitive behavior. Paying for customers could make big problems for Google. Meanwhile, Microsoft can just pay away. It's simply brilliant competitive strategy.

A closing remark about the irony of Live Search cashback. For years, scammers, spammers and the like have forwarded e-mails about Microsoft paying cash for forwarding the e-mails. It was a laughable concept that suddenly becomes plausible. Microsoft pays for search—or at least the purchases for search items. What next? Microsoft Points (for Xbox and Zune) for writing positive reviews about products? It's just another form of advertising? Right?