Microsoft Gives Back with Cashback

On May 21, Microsoft announced the launch of Live Search Cashback, which is their attempt to regain a share of the search advertising market from Google. The service offers cash rebates to consumers who search for and purchase products through Live Search. The reviews have been all over the place thus far, so let’s hunker down and find out for ourselves what this new program is all about.

At the official launch event, Microsoft Chairman Bill Gates announced the goals of this project as well as some of its key partners. “We believe search can offer much more value to consumers and advertisers than it does today, and we see Live Search cashback as an important opportunity to deliver additional value,” he said. As of right now, the program offers over 10 million products from over 700 merchants, including 14 of the top 40 U.S. retailers, such eBay and By making commercial search their top priority in their overall search vision, they are capitalizing on the fact that more and more shopping is done online, with 68 percent of all online retail transactions starting at a search engine, according to EMarketer.

This also gives advertisers the opportunity to lean more heavily toward the cost-per-action (CPA) model of search advertising, which requires advertisers to pay only when a customer actually makes a transaction. Cost-per-action offers advertisers a more reliable way to analyze their investment than cost-per-click (CPC), which requires payment whenever a searcher clicks on an ad. So now, whenever a customer buys a product through Live Search, Microsoft takes the revenue collected from the CPA fee and gives it back to the customer. Obviously, Microsoft hopes this will draw even more consumers and, consequently, more advertisers, thus sticking it to Google.

By now, many of you are probably wondering what Microsoft is getting out of this. Well, not much, but we’ll get into that more later in the article. Right now, let’s get into some of the specifics and actually take the program on a test run. Follow me to the next section.

{mospagebreak title=Test It Out}

Live Search cashback is based on the technology of fellow comparison shopping site, which Microsoft purchased back in October 2007. The search and purchase process is very straightforward, so anyone can use the program and sign up for its benefits. A customer will be granted the chance to register an account when they make their first purchase and receive a rebate via check, direct deposit, or PayPal 60 days after each purchase.

The first step is conducting a search at the Cashback website. Just as an example for this article, I am going to run a search on digital cameras. As you might imagine, a search as broad as that brought up a number of results with several different vendors for each item. Since I have not done any product research at this point, I merely went ahead and clicked on the first result, the Samsung S860.

The following page displays a selection of vendors selling the camera along with price information, including cashback opportunities. It seems to me that the higher the “Total Store Price” is, the higher percentage of cashback you will receive. In my case, the first option offered two percent cashback, which is a total of $1.90 out of $94.95. I know, that doesn’t sound like much, but each purchase adds to your account. Speaking of which…

If you click on “Go To Store,” the next page will have a place for you to enter your email address, where you will get an email from Microsoft explaining how to claim your rebate. You must then continue on to the store and make your purchase. Keep in mind that you will not see the cashback feature on the store’s website.

Once you make the purchase through the store’s website, you can check your email for the aforementioned message telling you how register your Cashback account. The email will provide a link to the setup page, where you will be instructed to provide the standard information required to set up an account.

The cashback account is actually part of the overall Microsoft Live account. In it, you can see your cashback rewards and set up your various payment preferences, among other things.

So, as you can see, the process is not very difficult. The only major problem will be whether users actually trust Microsoft to pay these rewards in the long run. That 60-day grace period does seem like a bit of a pain, especially for $1.90. However, if Microsoft can live up to its end, they should be able knock Google down off its ever-rising perch, at least for the time being.

{mospagebreak title=Attack on Google}

Right now, Google has 61.6 percent of the search market share, according to comScore, and is growing steadily. Microsoft, on the other hand, has 9.1 percent and is slowly shrinking. So they had to do something drastic in order to steer a large chunk of search traffic in their direction, and perhaps just as important, away from Google.

Additionally, it’s worth noting that Microsoft’s main source of revenue comes from Windows and Office. Google and others have already started to make desktop software obsolete. So it would be felicitous for Microsoft to muster some kind of retaliation.

This isn’t the first time someone has tried to offer cash rebates for buying products through their site (e.g. Ebates and Fatwallet), but it is the first time it’s gone directly through a search engine. If Microsoft can accumulate a majority of search traffic for ecommerce, that would be more than a step in the right direction. And what better way to attract people than to give away cash?

Clearly this only pertains to ecommerce-related search traffic, which, as I mentioned earlier, is an ever-growing market. Throw in the fact that 80 percent of search revenue comes from commerce-related searches, and you have yourself a winning formula. Or is it?

Remember, Microsoft is giving most of their revenue back to the users! How do they stand to benefit? They don’t, really. Don’t get me wrong, they probably won’t lose money, but the main goal is to see that Google gets hit as hard as possible. I guess they call it a search “war” for a reason.

{mospagebreak title=The Skeptics}

As you might guess, Live Search cashback has more than its share of doubters. It’s safe to say that anything launched by Microsoft nowadays will attract a large group of pessimists. First of all, so many people have grown accustomed to Google being their primary search engine that they may not even bother switching to an unfamiliar, less reliable source, especially when they can find sites that offer the same rebate deal as Live Search cashback on Google.

Then there’s the fact that Live Search will skew its results towards their own affiliate vendors. Granted, there are over 700 vendors with more likely to join, but those willing to do comparisons on other search engines might be able to find a better deal. Remember, it’s very easy to check competing sites and search engines; they’re always just a click away on the Internet.

And because this is a copycat business, who’s to say that Google or anyone else won’t come up with a similar service of their own? Unless Microsoft, actually does take over this share of the search market, most users will probably use other search engines to at least compare prices. After all, we are in a recession.

Google’s world class search engine has rampaged through its competition for years now, a role Microsoft was all too familiar with just a few years ago. Microsoft was on top of the tech world for so long, it’ll be interesting to see what the reaction toward Google will be in the next couple of years if they continue to control a vast majority of the market. Microsoft knows from experience that if you control most of a market, it’s nearly inevitable that people will start to get unhappy with you. 

In fact, we’ve already started to hear the rumblings of dissatisfaction with Google. Luckily for them, Microsoft is willing to shoulder the majority of that load once again — sure, it might make the software giant disliked even more, but they’d be glad to take on the excess market share. Still, I’m sure Google can handle the burden.

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