Microsoft has released the latest set of data for its controversial Live Search Cashback program, which offers users monetary incentives to click through and buy goods from the ads they’re shown. The results? Things seem to be looking good from a ROI perspective, as users are responding to the ads more than they typically do on other search engines (though this isn’t very surprising, as they are being offered money). More significant is the fact that Microsoft’s share of ad dollars has risen significantly, especially in proportion to its relatively weak market share (which has largely languished, despite the new program).
Microsoft is reporting that according to Comscore, Live Search referred 12% of all commercial transactions across the web – a number that is much smaller than Google’s referral share, but one that is also significantly larger than Live Search’s market share, which hovered around 9% during the same period. This makes the Live Search user base very appealing to advertisers, as it shows that they’re more likely to purchase goods than their Google counterparts.
Since May, Live Search has seen strong advertiser response – the company reports a 30% growth in Cashback offers made to customers, with 20 of the web’s 50 top online retailers in the U.S. are now on board. To help bolster its offerings, Microsoft has partnered with e-commerce shopping carts Miva Merchant, Early Impact Inc. (ProductCart) and 3DCart, which help small and mid-sized retailers run online stores. These smaller companies will now be able to promote their goods through the cashback program.
Microsoft also reports an average 4.5 million unique users of CashBack – a significant base but only a drop in the bucket compared to the gains needed to catch up with Google. After an initial bump in search market share the engine’s traffic quickly declined back to its former value. Clearly CashBack isn’t the answer to all of Microsoft’s search engine woes – even if its ads are seeing encouraging returns, Microsoft still has to pay out a significant chunk of the proceeds to users participating in the program. But it’s a good differentiator, and at this point innovation is probably the only thing that can take a sizeable bite out of Google’s market share.
“monetary incentives to lick through”
I’m not sure how much money would be enough to “lick through” to Live Search.
I’d do it for free.
I agree, the results are not surprising considering that the users are being offered money and they are looking to purchase something, which makes them much more likely to click on ads. I think this was a good ploy by Microsoft to capture quality traffic, but one can’t help but wonder if the higher advertiser interest will compensate for the loss in revenue through the cashback program. I guess MS thinks that’s still money wellspent given that ultimate goal is to steal marketshare away from Google.
I guess it’s all relative depending on how much they can charge for the clicks. If more advertisers are flocking to the CashBack program, ad rates will slowly tick up and it’ll be a self-sustaining program. However, if MS is losing a boatload of cash on this, I don’t see how they can continue doing it.
As a point of reference, I bought a plasma TV via the CashBack program on eBay and got $200 back on a $780 purchase. I don’t care how much eBay paid for that click, $200 is a lot to give back. Don’t know the dynamics of the eBay program and whether they are shouldering some of the cost with MS.
Microsoft is doing to Google Search what Hulu is doing to YouTube
This is an excellent analogy, except that Google makes money, and youtube does not. But in the frame of adding a new revenue model on top of a proven technique, sure.
it won’t work.
Very much agreed.
except that it IS working. Didnt you read the article???
The ebay program must be a huge success, but I worry they are pumping up top line revenue this quarter that isn’t sustainable for future quarters. It would be interesting to know on the 25% ebay cash back who is paying for what. Also, Ebay buy it now prices are being inflated because of this deal
I am using cashback as my primary shopping tool as long as these deals exist, but when the ebay deal went away I stopped using it. I don’t see this working long term
Find it on Google, switch to Live, recreate the link, save some cash.
The disproportion between Live search % and cash % suggests this.
What happens once the cash incentive goes away is needed.
Yeah, that is most people doing. thanks microsoft, I sold tons of my stuff via buy it now. and also bought a lot of stuff from microsoft. I even had a script once I did the search on google/yahoo and automatically login back to cash to get the free money from microsoft. It will be great as so far, I already got tons grant from microsoft.
I only see this succeeding if you can get a deal on a product that you can’t get cheaper on another site. Otherwise, this sounds like online Amway, where you are constricted to purchase from only one store to ensure that you get some cash-back, but you might be losing more from not shopping around for deals than you gain in cash-back.
Search it on Google; click on their ads. Then go buy it through live. Advertisers will realize that Google is not producing any results, so why pay them? There will be a shift towards Microsoft if this keeps happening.
The last paragraph is really the killer: yes, the early numbers from Cashback are interesting but the fact remains that Microsoft is paying big bucks for these numbers so the net profitability of this idea is questionable to me.
The question of whether it’s profitable or not is probably a moot point for Microsoft – look at how much of a loss has been made on producing xboxes, and considering the importance MS is putting on competing in search I’d say they’d be prepared to lose a whole lot more here.
What I’d be interested to know is at what point Google would consider doing the same. Say cashback really takes off – surely Google could just implement an identical program and immediately redress the balance? Sure, it’s not quite that simple, but with their clout I can’t see there being any shortage of willing partners.
Microsoft never intended this to be a profit making solution. Their aim was to de-value search which they are doing. By passing the cash on to customers (100% CPA normally) they are taking away profitable search queries from Google. If an advertiser sees less conversions from a search query with google they will be willing to pay less for the click. That’s money Google were getting previously. I said when this launched it was an ultra aggressive strategy. This is microsoft doing to google exactly what google have done to them. Attack them in their core market (google docs etc.), not aiming to make a large profit but aiming to stop their competitor from profiting.
What I love about Live Search is that I’ve made back nearly $350 from it over the past year. I only go there when I’m planning a purchase, click through to the site I want to buy from, and BAM, $10 here, 40 there, it adds up quick!
There are plenty of other US and UK cashback sites on the net, so users don’t have to use MSFT’s poor search engine to get cashback, there are other (better and more trusted) sites out there.
I hate waiting for the payouts. Other then that, I love it.