Update: Live stream of Bill Gates keynote and Live Search Cashback press release is here.
Update 2: Our complete analysis of Live Search Cashback is here.
Microsoft will announce a new search advertising model tomorrow at the Advance08 Conference in Redmond, Washington - some parts of the site are already live on Microsoft now (see screen shots below). The core of the new service will be a new set of 18 new vertical search offerings that will give users cash back on any purchases made from advertisers.
A number of high profile ecommerce sites are participating in the early stages of the program, which is being dubbed “Live Search Cashback” and is based at least partially on technology developed from Jellyfish, a company Microsoft acquired in 2007. A message on the Jellyfish site says the site is down “currently offline to perform necessary service upgrades and enhancements.”
The goal, of course, is to lure high value searches away from Google. Only a small percentage of total searches are highly valuable, usually because advertisers are right on the cusp of selling something to the searcher (searches for books, for example, or mortgages).
Microsoft’s hope is to lure advertisers with a promise to pay only if a purchase is made, unlike Google’s pay-per-click model that carries more risk because a searcher may not complete a transaction. And by offering a percentage of the fee collected from advertisers, Microsoft hopes to convince searchers to take the last mile to a transaction through the Live.com search engine, generating more advertising revenue for Microsoft and simultaneously hurting arch-rival Google.
The new product will be announced tomorrow morning by Kevin Johnson, the President of Microsoft’s Platforms & Services Division. We will be live blogging the event.
Farecast, a company they acquired last month, will likely power travel, one of the 18 verticals.
The Yahoo Angle
This fits with Microsoft’s recent re-engagement with Yahoo and a new proposal to take over Yahoo’s search business. Microsoft will look to make a big splash with advertisers right away. By removing risk (moving from CPC to CPA) they will get part of the way there. But Microsoft also needs to offer advertisers enough inventory to make it worth their while - Yahoo search traffic does that.
But even without Yahoo, Microsoft may find a warm reception from advertisers, who currently see a virtual monopoly by Google in the search advertising space. It’s in their best interest to have as many strong players vying for their business as possible, so any competition to Google may be worth their time.
Look for more details tomorrow morning.
Lot of affiliate marketers have already used their affiliates’ link to make their own personal purchases which means direct cash back. I’m sure lot of people have thought about setting affiliates network to actually benefit visitors, not just affiliate. I think Microsoft is going to the right direction.
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Dang, we were talking about this strategy inside Microsoft more than two years ago. Glad to see it finally made the light of day. I don’t know if it’s enough, though, to really change the game but it makes it certain I’ll read TechCrunch tomorrow.
Robert: good to see you, my friend. Next time you’re vlogging from NY, be sure to drop by. We have some new girls and one of them loves Twitter and FriendFeed just as much as you do.
Is that mean I will get cash back if I use live.com to search?
If MS knows what those high value searches are (based on what advertisers are bidding), why doesn’t it also create pre-packaged pages (like Mahalo) and give a better search experience for these keywords than Google?
this is big
It seems that Techcrunch needs better spam control for the comments…
Anyway, I think this is a great move for Microsoft. One of the big problems in the advertising world is the fact that we measure just the last ad click, which means that it doesn’t matter if you saw 5 campaigns and did 10 searches, just the last search before the actual purchase will be accounted.
While this situation stays, getting people to do the last search on Live can really hurt Google.
Ironically, Atlas (acquired by MS) are actually doing great job right now trying to change this situation and come up with a new attribution model.
Cash back seems like a great rewards program. This should be big.
haha!
HAHAHHA!
heh.
Pay to search. Make it up in volume. Reverse monetization (de-monetization?). Where have we heard those before?
@scoble — hahaha!
Why not just make an easier to use version of AdSense, pay more, and get webmasters to use it?
Somehow I think this will make search results bad. Microsoft will give preference to search results for companies that participate in cash back over all the other kind of relevant information. Yahoo did that with their search when they started. Companies pay Yahoo a premium to be placed on the top of the search results. In the end, the users will lose out because the only thing that would come as a result of users search are advertisement not good information. I hope Google doesn’t go this way because I prefer to use a search engine for information purposes.
Hmmm, interesting
WTF, where creativity gone? after spending billions?
The program is live now.
Just click on the Live dot com logo on this post, it will take you to the Live home page and look to the right for “Get cashback”.
Certainly an interesting model for search. I’m not sure how strong the incentive is for the user to complete the transaction though. Depends on the cashback offer I guess. I wonder what their CPA rates will be like. That might raise the bar for other online advertisers.
This reminds me of a suggestion to Microsoft I read somewhere during the first days of their Yahoo! bid. Instead of buying marketshare for $40 billion, they could just pay people to use their search engine, and assuming only half the people they pay are honest, $1000 each would still get them 20 million customers for the same cost.
I’ll repeat my usual saying: Paying incentives to drive usage is the last refuge of the incompetent.
This model has existed since the dawn of the Internet era, with folks like Ebates.
You’re basically admitting that your product is inferior.
Is this some kind of May fool’s joke?
It sounds like one of the many ill-fated “We’ll pay you to surf the internet” schemes. If it wasn’t MS (which happens to have $50B to burn) then I reckon this would be sent straight to the deadpool…
It’s basically a promotional gimmick.
As you can see on the “cashback” program (it’s live now), if you buy a Canon camera, you get $2.19 cash back, buy a Bulova watch you get $8. Wow! “Generosity”, thy name is Microsoft.
CPA! Where do I signup?? I love the idea of customers getting cash back - makes them spend more, and MS takes business away from Goog - win-win-win baby!
Clearly Microsoft has their head up their ass. The one and only tool remaining at their disposal is CASH!
Are you still going to insist that it’s Yahoo that needs Microsoft? This ass-move of paying users to use your service is so pathetic it shows how Microsoft was and still is desperate to buy itself some talent from Y!. All that CASH has been rotting its brain since XP came out circa the stone age.
But it’s ok, Microsoft’s joker Mike Arrington will keep spinning idiotically for a nice wad of CASH!, Microsoft’s CASH.
Actually, CPAs and CPCs don’t compete each other as most advertisers tend to mix them in their portfolio. The real question is, what happened to Google’s CPA program ?
GM and Ford offer cash back to buyers, and they’re on their way out - and losing credibility daily..
Sounds kinda similar.
I hope this isn’t a poorly executed act of desperation.
Did Microsoft acquire AllAdvantage.com/Agloco?
This is essentially an admission of defeat of Microsoft’s search R&D. Now, how is it that Yahoo needs Microsoft? I’m so sick of the constantly barrage of Arrington posts about how Y! is doomed and this deal must happen, Y! needs MSFT, etc.
I like this. Will advertise on CPA basis!
holy crap this could be BIG.
btw - for people to compare Ebates to MSFT is way off mark. MSFT is a cash cow that can survive a nuclear winter. Now I see a huge advantage for MSFT to gain YHOO search. Makes lots of sense!
Is a nice ideea th offer cash back, but i doubt about the honnesty of this action, so w’ll se in the next few week if it’s really works.
microsoft about yahoo
Any one knows what those 18 new verticals are? Travel looks like one but the remaining 17?
CPA - long term money
CPC - short term money
Way to go M$
Google get your CPA model to your usual Beta trend ASAP!
well good for advertisers ….. but really old school! not even close to being creative
My friend said, Microsoft is most dangerous company in the world. They spend million dollars destory high price companies. He show me picture of netscape, aol-timewarner, apple, linux, dr dos, MikeRoweSoft. etc…
This is why people should never write bad stuff about Microsoft. Don’t touch microsoft.
models like this NEVER work out well. it’s only going to bring a short term surge of low quality traffic.
Desperation is not sexy!
@ Scoble
Please tone down the Microhype, this and the telescope tears shows some blatant bias.
This is pretty desperate attempt at buying market share. It will be fun to see the releases as this will create a short term traffic bump, but will like most of MSFT’s products of late will fade into obscurity.
hmmm….seems like a day late and $5 short. I don’t get it
Peace,
Parris Whittingham - New York City Wedding Photographer
search engines are playing by the rules of economics. their margins will come under pressure as more competitors try to increase market share by giving up margins. Google cannot expect to make truck loads of money for long long time just with its brand name and economies of scale. some day you will see search engines paying users five to ten dollars for every thousand or ten thousand searches they make.
Or it could be done this way….
Partner with e-tailers who provide a discounted rate to searches and traffic brought their way via live.com.
IF I can get a discounted rate on an Amazon product just by using live.com one i can’t get with Google then you got me and millions more. Heck, I purposely use live.com to go to Amazon for X product, rather then going straight to Amazon.
If you can’t improve the technology, let the sales guys take the charge! - This is MS’s motto! I am wondering how can they even think to scale up such “amazing” ideas!
only in america
MSFT should’ve learned from HRC campaign on the fact that desperation and kitchen sink strategy does not trumpet change, creativity and innovation. GOOG is winning the search game simply because they have a perpetual passion to be innovative, actions like this goes to show how disconnected they are from the internet.
Rebates are a pain to use and often go south. How will e-rebates be any different?
$5 back for a $900 camera… no thanks. Come on Microsoft, come out with something good to compete with Google! I think everyone would love the true competition… But this new site does not cut it. It will only bring out low quality traffic.
This just proves Microsoft does not know what they are doing with search.
haha! AH, its TOMORROW…. where are the details?!!?!?!??!
just seems like another way for Microsoft to try and make money…cuz um, apparently they do not have enough.
great idea - but execution will determine if this can succeed in taking market share. definitely gonna try it, though.
for a major strategic announcement for msft this seems a bit of a retread. many others have tried similar schemes (cash back, company shares, discounts etc…). It’s an arbitrage play that always pencils out nicely (especially when enterprise value is factored in) but users to date haven’t embraced it in a meaningful way.
Bill
director, workhound.co.uk
This is actually a pretty interesting model. They are essentially adding a transaction cost to search. This is really the first model that takes into account the knowledge problem with search advertising (as users become more knowledgeable of what an ad is, they click on it less).
A loser’s concept.
Quality of search is what, well, people who search need.
This is a Coupon strategy not a CPA strategy. Advertisers still pay CPC and there is a kicker to the customer (not the advertiser) in the form of a cash rebate if they complete the transaction. Advertisers don’t pay a “Bounty” to MSFT for sales which are completed.
This is not something that has been done before that I know of. Programs like eBates.com use affiliate programs (CPA Ad Programs) and give some of their Bounty back to the consumer - making a margin. MSFT is disintermediating the Affiliates and giving the reward to the Consumer.
With the amount of (often successful) loyalty programs and sites out on the Internet, there is a strong business case for this to be a success. We’ll see how well MSFT executes (one of their constant challenges).
For Google this is a pretty big shot accross the bow. There is only one money making enterprise at Google - Adwords and the AdSense extension to the Adwords platform. If they start competiting with MSFT (and maybe Yahoo Search powered by MSFT) in this space they can kiss their margins goodbye. And they will still be supporting all their “Free” products.
Interesting times indeed.