Cashback is not the Answer

May 21, 2008

Since everyone else has already laughed at Microsoft’s attempt to buy search market share, I was going to try to play devil’s advocate. Can’t do it. Sorry.

-Cashback sites like David Lewis’ Cashbaq make money and therefore Microsoft will make money. Unfortunately, I don’t think the point of Live Search cashback is just to make a couple bucks off of running a cashback site. If Microsoft thinks it can buy off consumers with cashback deals and get those consumers to come back to search for everything else they are using Google to search for, I think they are mistaken.

As I discussed with Om this afternoon, the whole idea sounds more like a gimmick than anything else. People don’t want a gimmick, they want an incredible search engine which returns answers to their questions.

-The Live Search cashback announcement was a great PR stunt. Consumers are hurting and no one had ever heard of Jellyfish, so re-branding it Live Search cashback and telling everyone that big retailers are on board with great cashback offers is really cute. I’m sure traffic will spike temporarily and shoppers will buy and Microsoft will run a profitable shopping engine. The leading shopping engines generate revenue in the low hundreds of millions. That’s chump change for Microsoft.

-But what about it’s strategy to do this in many verticals? Farecast integration was the other big announcement today. We’ll hear other ones soon. Ok, now I kinda buy that one. Isn’t that kinda what Google is doing with the navigation links that were added when Universal Search was announced? But as opposed to Google using technology to bring together a better search experience, Microsoft is buying disparate vertical search engines. Has Microsoft just given up and outsourced search?

-If Live Search cashback was more than a gimmick, wouldn’t they have rolled it out for all their shopping sites? Sure, they eventually could, but according to PriceGrabber, their syndication relationship with MSN Shopping and Live Product Search remains intact. I’m sure the PPC model associated with the PriceGrabber partnership is too lucrative to give up anytime soon.

-So the saving grace for this gimmick could be getting retailers to engage with Microsoft’s other advertising opportunities. I’m sure Microsoft will get a thousand additional merchants using Jellyfish – I mean Live Search cashback – because of the buzz.

But CPA based advertising isn’t good enough and Microsoft knows this. Instead of allowing merchants to sign up with an online form and start advertising immediately, as Jellyfish allowed, Microsoft is making merchants fill out an ‘interest inquiry’ form which asks if merchants are using other online advertising methods such as Search, Contextual, Content, and Display. I’d expect Microsoft to use this data and push merchants to sign up with AdCenter just as much as they push merchants to sign up for Live Search cashback. While this synergy of advertising offerings reminds me of In Good Company when Teddy K is talking about the Dalai Llama eating his Krispity Krunch while uploading prayers onto the Net, Microsoft is bringing together a lot of great technologies as it highlighted in a terribly formatted email this morning to advertisers about the new Microsoft Advertising, “our new business-to-business brand unites the power of MSN and Live Search with advanced platform technologies such as adCenter, Atlas, and DrivePM.”

To sum it up, I don’t think the launch of Live Search cashback will change things that much for Microsoft. I like Microsoft’s focus on ecommerce – there’s a lot of money to be made there – but putting Jellyfish front and center isn’t going to solve its search woes.

Microsoft’s main press release of the day, outlining the new search business model says “Microsoft aims to make Live Search the premier search engine for the growing category of search queries that help consumers conduct research and purchase goods or services, and which are critical to merchants aiming to drive online sales of their products.”

Too bad Google is already hard at work on the premier ecommerce search strategy, combining Google Product Search, Google, Google Analytics, Google Checkout, and Google AdWords. Oh, and there’s no reason Google Product Search can’t be run on a CPA based model.

Jellyfish’s Day in the Sun

May 21, 2008

Live Search Cashback

Yesterday I sent an email to Brian Weigand of Jellyfish asking him about potential Jellyfish integration into Microsoft Search. This seemed like a logical thing to ask considering that Jellyfish recently completed integration with Windows Live and Arrington mentioned on Monday MSFT’s announcement “On Wednesday, we will be announcing a major new initiative that our search teams have been driving. We are getting better and better with our core algorithmic search, and at the same time, we are investing to differentiate in vertical experiences and to disrupt the current model. You’ll hear more about our plans Wednesday.”

So Arrington now has the complete story of Microsoft offering Cashback to search engine users. Live Search Cashback is live and seems to be purely based on Jellyfish’s system – same advertisers, same UI, same cash back model. At the same time, Jellyfish’s own Cashback shopping site has been down for a while (at least a week, I think). Not sure if Jellyfish will just transition to a Smack Shopping only site while powering the back end of Live Search Cashback.

Right now if you try to sign up to advertise, you’re brought to a Microsoft Advertising page with the following notice:

Microsoft Cashback Shopping

Arrington is framing this as a way for Microsoft to attract advertisers:

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 search engine, generating more advertising revenue for Microsoft and simultaneously hurting arch-rival Google.

I’ll comment on this after I listen to the official announcement today.


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