Cashback is not the Answer


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.

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6 Responses to Cashback is not the Answer

  1. blogation says:

    Brian, I disagree. I think cashback is a legitimate alternative to the current status quo in CSEs.

    That being said, I agree that Google will no doubt blow this away.

    And finally, stay tuned for a blog post from me on Search Marketing Standard later this week or early next week that discusses the five companies that could make or break the CSEs: Google, MSN Live Search, TheFind, ZTail, and . . . SingleFeed!

  2. Adam says:

    Brian.. I agree with your summation that CPA is a paper tiger. Anyone that submits to Shopping.com CPA and others can verify that.
    Yes we were on jellyfish from day one!(even before!)
    I watch those wires like a hawk..
    Just waiting for the flood of orders from Search cashback.. Will keep you posted..
    Where can I find out more about the new product that google is working on..My friends at a major etailer hinted this to me..they are a beta partner in the analytics thing and Gproduct search.
    btw.. your right on that point as well. google product search is now strong enough to survive on a CPA basis. G-d help us all if they start charging per click..
    Keep up the great work.. your look on the industry is always very to the point and razor sharp!

  3. Adam says:

    Is cashbaq an affiliate site..or is direct sign-up available like jellyfish/MCBL?

  4. swoda says:

    Nice post Brian. I agree with you 100%. I like cash back. Everyone likes cash back. Of course. Given the choice between cash back and no cash back, we would all take cash back.

    That really isn’t the point though as you point out. MSFT needs a better search engine and experience. In my humble opinion, this is a defensive strategy for MSFT. If you can’t beat Google head to head, you might as well destroy the business economics of search. If you are successful, then Google won’t have the same ability to erode MSFT’s core franchise(s). In my opinion, MSFT’s cash back initiative is essentially the flip side of Google’s distribution of OpenOffice.

    Keep up the good work!

    Steve

  5. Trevor says:

    I know this is an old post, but I couldn’t help but comment that Live Search Cashback is a lot like the Mojave project in one way: Microsoft just wants you to actually USE their product before judging it.

    As the Mojave Project demonstrated (and MSFT has been mocked a lot for this) if people actually approach Vista without preconceived notions they quite like it. The MSN search engine gets dissed an awful lot in the blogosphere and among internet power users, but I submit that it provides a very adequate user experience for average users. How’s that for devil’s advocate?

  6. [...] August 28, 2009 Bing Cashback – Why Merchants Should Submit their Feed Today – June 5, 2009 Cashback is not the Answer – May 21, 2008 Jellyfish’s Day in the Sun – May 21, 2008 Microsoft Acquires [...]

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