The Microsoft Live Search cashback program, which began in May 2008, has gained significant traction and is now one of the leading retailers in several markets. In a recent press release, Microsoft announced that “20 of the top 50 online retailers in the U.S. and 140 of Internet Retailer’s Top 500 are now participating in the program, including new advertisers AT&T, Drugstore.com Inc., FTD, Gap Inc. properties (including Banana Republic and Old Navy), Kmart, RedEnvelope and Saks Fifth Avenue.”
Currently, Microsoft Live Search cashback has about 4.5 million unique visitors per month, has 13 million products available, and has generated more than 68 million commercial search queries. According to a comScore study funded by Microsoft, in the second quarter of 2008 Live Search referred about 13 percent of total spending in the United States among key retail categories. (Of course, “key retail categories” is notably vague.)
While these numbers paint a rosier picture of Live Search cashback than reality likely would, the fact still remains: even if Live Search is a less sophisticated search engine than Google’s (in differences that aren’t noticeable to the average individual), the Live Search cashback program has yielded positive results for Microsoft, and will most likely continue to do so as awareness increases.
In this way, I think Microsoft has taken a page out of the book of competitors such as Google: provide a service that is of value to consumers, and your popularity will bubble from the bottom up. Granted, there is still a notable value in sales increases for the retailers that work with Live Search cashback, but the most significant change from traditional corporate initiatives is that there is an obvious value-add for the consumer—lower prices.
The logic behind Live Search cashback is that the retailers are getting the same share of the pie as always. Rather than charge retailers, say, 10 percent off the profit of each product and then pass 5 percent to the consumer, Microsoft bills the retailers through the same way as paid search, then passes some of that revenue on to the consumers.
If Live Search cashback continues to be supported by retailers offering high quality products, then I believe it will continue with notable success. However, one key weakness of the site is that the listings are paid; therefore, you can’t expect quite the same honesty as in a traditional search. However, cost does remain supreme in a tough economy, as consumers have shown in this case.