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:

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 Live.com 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.