Microsoft finally did it right
Finally the right move in the right direction: Microsoft Corp. announced its new program called Microsoft Live Search cashback. Microsoft is well-known for spending cash on every company that might bring something in the future, and now it put at least some of them to good use. In October 2007 Microsoft bought Jellyfish, a comparison shopping site, which is now incorporated in Live Search.
Live Search cashback is part of Microsoft's efforts to compete on the web and on the first sight it seems it's a good try. Microsoft summoned a lots of partners, from Barnes & Noble.com to QVC to Sears, and many others. Merchants that are MS's partners will pay Microsoft some amount, a CPA fee, each time a customer completes a sale through Live Search cashback. Similarly to coupons, the fee is a percentage of the retail price, and Microsoft will return that fee to the consumer as a cash rebate. For the start, there are more than 10 million products and more than 700 merchants in the system.
Customers sign up for a Live Search cashback account at the time of their first purchase, collect ad-funded rebates in their account each time they purchase a product, and receive their rebates directly from Microsoft 60 days after completing purchases. Along with presenting Live Search cashback, the company announced that it thinks about adding ad-funded rebate option for travel services will would use Farecast's technology.
It seems that Microsoft made a right move. There is open war on the search engines battlefield and millions of surfers begin their day on the net on the search engine. Internet is already primary source of information and it is known that ad in a magazine or newspaper results in searching for information on the internet. Approximately 68 percent of retail transactions began at some search engine which is, says eMarketer Inc., 3.7 billion commerce-related queries a month. It is then natural for a merchant to use CPA, cost-per-action, and to pay only when a customer makes a purchase. Microsoft Live Search cashback offers merchants precisely that.
Then we have a large number of Microsoft's partners. Of course, at the beginning of the program it is impossible to have all retails in Live Search cashback, but 700 is nice number. It is safe to assume that every day will see a new partner joining in.
Google's business model works in Microsoft's favour, too. Google's revenues are tied to advertisers. The company is worth billions of dollars but it is very tricky situation: Without advertisers Google has nothing. Imagine the departure of all advertisers: Yahoo can be a media company, Microsoft can sell its OS, poandpo.com would continue with good articles, and Google would close its doors. Google is so dependable on advertisers that it makes it very vulnerable.
Microsoft's offer is good because it doesn't try to compete with Google on the field of mass search, instead if offered something new. If Live Search cashback succeed that will be good, and if it fails it won't destroy, it won't even shake MSFT.
Last but not least - a financial crisis is all around us. The price of oil is rose to 130 dollars, food is more expensive every day, and mortgage problem we won't even mention. With crisis that is global, thanks to global communications and connections between countries, every dollar the can be saved should be saved. The prices are not affecting just poor people, a whole middle class is affected and in danger. So, its not question anymore will you spend 2000 or 3000 dollars on vacation, the question is how many times you will fill the tank of your car. There's no point to compare Microsoft and Google as if we live in some ideal world. Books and theories won't help Microsoft, reality will. MSFT chose the right time when every dollar counts and it is probably the strongest point here. The vast majority of surfers are not millionaires, they need every dollar, and they are the reason why Live Search cashback will not fail. ■