What does it take to dominate web search? One might think a search engine that produces quality results is all that matters, and this is exactly how Google stole the game from Yahoo, Netscape and others back in 90’s. What can you do though if your product has not been that great but you have a huge amount of cash burning your pockets? I am sure Bill Gates and other folks at Microsoft have been asking themselves this same question.
Buying your way into the dominance
Back in October 2007 Microsoft acquired a startup called JellyFish which sort of pioneered CPA model of doing business in the search world. As a way to get things going they offered a cash back incentive to the customers who bought products via their search engine. The idea is not exactly new and there is a whole class of sites called Rewards Programs that build their business around cash back. What JellyFish has done differently was that they promoted the search aspect of it. Many of the rewards sites back then didn’t have a convenient search function, and some required you to sign up for an account before you could do anything. JellyFish prominently displayed search on the front page and only required you to sign up before you make the purchase.
Yesterday Bill Gates announced at the Advance08 conference about a new project Microsoft is undertaking to get on Google. They call it Live Search cashback and the entire initiative essentially boils down to integrating into Live Search the JellyFish idea of CPA based product search. Consumers can get to the savings from the main Live Search page by clicking on the “Get Cashback” icon in the top right corner, or by going to Cashback.com, a domain Microsoft acquired for those unfamiliar with Live.com brand.
Good for consumers, bad for affiliates
The way all Rewards Programs work is by paying consumer a part of the affiliate commission they receive from the merchant when the consumer buys something using the program. Microsoft’s move into the niche essentially popularizes the cash back concept and makes it available to broader masses, which no question is good for consumers. Just as cash back credit cards, rewards programs is a great way to save while shopping.
On the other hand, the fact that Microsoft has become a “super affiliate” may not do well with businesses who rely on Live Search to bring in sale leads or do affiliate arbitrage. This is clearly a conflict of interest here and will cost Microsoft some of the adCenter customers.
As for the long term Google vs. Microsoft aspect of this move, it is clear Microsoft is desperate and is trying different things in an attempt to gain the search market niche. I will be curious to see how another acquisition they made recently plays out in that aspect.
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