May 21, 2008, 9:52 AM — Microsoft launched a comparative shopping feature in its Live Search engine
on Wednesday. The service offers consumers a rebate on purchases made through
the site, a scheme that could lure shoppers from Google and Yahoo.
Products found during a search eligible for a rebate are denoted with a gold
coin icon with a U.S. dollar sign in the center. The rebate is based on a percentage
of the purchase price and is determined by the advertiser.
For example, a search for a 4G-byte flash memory SD card from SanDisk showed
a rebate of $2.12 offered by a retailer for a card priced at $52.99.
So far, the cashback option will only be available to U.S. citizens. Shoppers
must set up a Microsoft cashback account, where the rebate money is held. When
the amount reaches $5, Microsoft will either mail a check or transfer the money
to a PayPal account or bank account. The rebate money is not released until
60 days after the purchase date in case the item is returned.
The cashback program offers an advantage for advertisers in that they only
have to pay when they sell an item, known as a "pay-per-action" fee.
It also avoids the problem of click fraud, where bogus clicks on an ad drive
up marketing costs.
With the U.S. economy slowing, Microsoft's cashback program may be more appealing
to advertisers with smaller budgets who only want to pay for completed transactions
rather than for click-throughs from Google ads, said Mike Davis, senior analyst
for Ovum in London.
"The Microsoft bit will potentially be more attractive to people with
less money to spend," Davis said.
The cashback feature also thrusts Microsoft into an online retail market where
it could potentially affect businesses such as eBay and Amazon.com, Davis said.
Persuading people to change search engines isn't easy, since people tend to
stick with the one they're most comfortable with, said Alex Burmaster, an Internet
analyst with Nielsen Online. For many people, that's been Google.
But it's a step in the right direction for Microsoft despite a consensus that
Google will most likely dominate the search market for at least the next two
years, Burmaster said.
"I think Microsoft should be applauded for doing this," Burmaster
The cashback site is one way Microsoft is trying to draw interest in its Live
Search engine, which ranks a distant third place compared to Google and Yahoo.