Microsoft`s Search Bribery: a Brief Overview

The furor over Microsoft’s Live Search Cashback program unexpectedly going dark for most of Black Friday highlights an embarrassing situation for the software giant. The company can’t seem to make a dent in Google’s search dominance. In this article, I’ll chronicle some of the ways in which Microsoft has tried to buy its way to the top.

Microsoft’s first attempt to buy search engine loyalty goes back to March 2007, but we’ll start with May 2008, when Microsoft first launched its Cashback program through Live Search. It works as a kind of loyalty program. When users sign up for the program (with a Windows Live ID), they get a special account. They can then search for deals on a wide range of products at the Live Search cashback site, shown above. For every product they search for and buy, Microsoft gives users cash back.

Even if users aren’t searching from the cashback site, as long as they’re searching with Live Search, they can watch for a special icon that clues them in to cashback savings from Live Search. There are plenty of details associated with the program, including waiting periods. But who wouldn’t be interested in seven percent off a Viewsonic 26-inch LCD TV, as I turned up recently?

Since it was Microsoft making the offer, many online retailers got on board. Even eBay partnered with Microsoft – which led to some pretty interesting auctions. One eBayer put $714.28 in cash up for auction for $630. Users could access the page through a Live Search ad link that returns 35 percent of the purchase price – meaning that they made up the difference, and then some; the seller also turned a profit, naturally, at Microsoft’s and eBay’s expense, at least until the two companies plugged the loophole.

The Live Search Cashback program made Microsoft “the laughingstock of the tech blogosphere,” according to ReadWriteWeb. Honestly, any company that would pay for visitors to use their search engine must be pretty desperate, right? Desperate or not, it leaves you with one question: is it working?

Strangely enough, the answer might be yes…and no. ComScore showed that the program boosted Live Search’s search volume by 15 percent a month after it began. But from July through September, Microsoft’s share of the search market, according to Hitwise, remained pretty stable at about 5.5 percent.

A closer look at the numbers tells a more interesting story. If we look only at Cashback-related traffic, we see that it accounted for just under four percent of Live.com’s traffic in mid-July. By mid-September, however, Cashback accounted for more than six percent of the search engine’s traffic. Heather Dougherty, Hitwise’s director of research, noted in a blog post about these figures that the increase in Cashback traffic “underscores the interest in the program, which is likely to be getting a boost from shoppers looking to save money and stretch their budgets, given the current economic climate.”

Of course, thinking about shoppers trying to save money brings us to some fairly recent events that Microsoft would probably prefer to forget. To be exact, it brings us to Black Friday. Microsoft and Hewlett Packard engaged in some heavy promotion the week before, promising 40 percent refunds on everything in HP’s online store. It’s hard to pass up 40 percent off of a desktop or notebook computer. So many people tried to get the discount, in fact, that it caused a “significant spike in traffic” that “caused the system to go down for several hours,” according to the Microsoft Live blog entry covering the incident.

The program stayed down for quite some time after the original traffic spike so that Microsoft could investigate the issue and then rebuild and redeploy the databases and indexes that support it. However, once it was working again, shoppers were in for a very unpleasant surprise: instead of getting the 40 percent discount as promised, shoppers were at least initially informed that they would be getting only three percent back. There is now a procedure in place to let Cashback users claim the 40 percent discount on qualifying Black Friday HP purchases, but the software giant lost a lot of trust in the debacle.

As I mentioned earlier, Microsoft made other bribes to get web surfers to use its search engine. The earliest that I can recall dates to March 2007. In that case, as John Battelle reported, Microsoft began offering its large enterprise customers free service and product credits if they would convince their employees to use Live Search while on the job. Battelle described a PowerPoint presentation which estimated that companies could earn from $2 to $10 per computer per year, plus a $25,000 “enrollment credit.” That’s not chicken feed when you’re talking about the hundreds or thousands of employees that work at a single large company.

Speaking of large companies, one recent attempt to gain further market share in the search area involved Microsoft using its money far more directly, to purchase Yahoo. Indeed, at one point this year, Microsoft put up $44 billion in a combined cash-and-stock deal that would have valued Yahoo at more than $30 per share. That deal fell through, though at the time of this writing there is still some serious speculation that Microsoft will buy at least the search portion of Yahoo’s business. There are also reports that an ex-AOL CEO is trying to raise money to purchase the venerable search engine, so at this point it’s hard to know what to believe.

While the attempt to purchase Yahoo, in part or entirely, seems to have fallen through, Microsoft is still trying to promote the programs it thinks actually ARE working, namely Cashback. Normally there is a waiting period before users get their refunds, in part to make sure that they’re not going to return the item. But in the face of the Black Friday disaster, Microsoft began offering instant cashback on some eBay purchases. It required the user to pay for the item through PayPal, and deposited the refund automatically into the user’s PayPal account for qualifying purchases. The software giant claimed that the new program was in no way connected to, or an apology for, the Black Friday outage, but some bloggers made the connection anyway.

Before I tell you about Microsoft’s latest search bribery, called Search Perks, I want to tell you about another program the company has been running for nearly a year that seems to be very similar. It involves something called Live Search Club. You need a Windows Live ID to log in and use the site. It features a variety of casual, puzzle-based games.

Here’s the lure: these games trigger searches on Live Search. The better you do on the game, the more points you earn (the number of searches you trigger and how well you do are not directly connected). The more points you earn, the more prizes you can earn. Prizes include things like airline miles, hardware, software, and more.

One of my friends, who retired from IBM just a couple of years ago, has earned around 60,000 airlines miles this way. Above you’ll see a screen shot of the site – and you’ll notice on the right hand side an ad for something called Search Perks. You can use it to earn even more points that can be redeemed for prizes, but you don’t have to use Live Search Club to earn points anymore; you can earn them directly through Search Perks.

Here’s how Search Perks works: you sign in with your Windows Live ID, and then you download a “Perk Counter” (it only works in IE, naturally). You get 500 bonus tickets just for downloading the counter. Then, whenever you use Live Search or perform a search on Windows Live properties – up to 25 per day – you earn tickets that you can redeem for prizes. You need to download the Perk Counter before December 31, 2008, and you need to redeem any tickets you earn by April 15, 2009.

So what can you win? Prizes include airline miles (no surprise), cookbooks, music downloads, video games, clothing…but also electronic gear like an Xbox controller or an Intellimouse Explorer. Whether anyone can ever get enough points to earn some of the better stuff remains to be seen.

It also remains to be seen whether this strategy of effectively paying people for their loyalty to a particular search engine will actually work for Microsoft. Loyalty programs do have a long history of success in swaying the uncertain, or those who don’t think there is a significant difference between competitors in a field (I could tell you stories about licking green stamps!). Larry Dignan, writing for ZDNet, noted that Piper Jaffray analyst Gene Munster found that 22 percent of web surfers don’t know why they’re using the particular search engine they favor – and of those, more than 60 percent use Google. Munster’s survey included less than 400 users, but it is still tantalizing. Microsoft apparently thinks its programs will win these Google users over. I’ll believe that when I see it.

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