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Fri, May 23, 2008 - Page 10 News List

Microsoft to offer Web search rebates

NY TIMES NEWS SERVICE , NEW YORK

Microsoft chairman Bill Gates speaks during the “Microsoft advance08 Advertising Leadership Forum” in Redmond, Washington, on Wednesday.

PHOTO: AP

With its share of the Internet search market in steady decline and its pursuit of an alliance with Yahoo in doubt, Microsoft is taking a new approach to jump-starting its search engine — offering rebates to people who use it to find and buy some products.

Microsoft executives said the program, called Live Search cashback, is part of a plan to come up with new approaches to areas of the search business where they see opportunities to make inroads against Google, the market leader.

The new program focuses on searches for products to be bought online, which Microsoft executives said account for roughly a third of search queries and a majority of search advertising revenue.

“This is a very big part of the US$20 billion search market,” Microsoft chairman Bill Gates said at an advertising conference run by the company. “Make no mistake, we are about having the best search, having the best results.”

Some innovations in the business model of search, like Live Search cashback, “will help drive that,” he said.

Live Search cashback is essentially a marketing effort by Microsoft to promote its search service, which lags far behind those of Google and Yahoo in popularity. On Wednesday, the research firm comScore reported that Google’s share of all searches in the US grew once again last month, to 61.6 percent from 59.8 percent in March.

Google gained at the expense of Yahoo and Microsoft, which saw their shares of the market drop, Yahoo to 20.4 percent, Microsoft to 9.1 percent.

Google has put marketing dollars into some of its services, but it has managed to dominate in search while spending virtually no money to promote its search engine. Google declined to comment on the Microsoft announcement.

Microsoft said that 700 merchants offering more than 10 million products have agreed to participate in the program. They include Barnes & Noble, Circuit City, eBay, Foot Locker, Home Depot and Hewlett-Packard.

“It is a great opportunity for buyers who come to eBay,” said Matt Ackley, vice president for Internet marketing and advertising at eBay. “And it is all about driving demand for our sellers.”

EBay is one of the largest buyers of search advertisements on Google and other search engines. Ackley said that if Microsoft’s program is effective, eBay might shift some of its advertising dollars to Microsoft from Google.

In most cases, Microsoft will determine the amount of the rebate that shoppers will get. On a Samsung digital camera that costs US$90 to US$107, rebates range from 2 percent to 5 percent.

“Microsoft’s issue is lack of consumer share,” said Bryan Wiener, the chief executive of 360i, a digital marketing agency that specializes in Internet search. “This is an interesting effort to try to motivate consumers to use Microsoft without cheapening the process. Will the incentives be enough? Time will tell.”

As part of the program, Microsoft is also unveiling a new business model that allows search marketers to pay for ads only when people buy a product, rather than when they simply click on an ad.

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