Thursday, May 22, 2008

Microsoft offers rebates to boost its search engine use

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-start its search engine by offering rebates to people who use it to find and buy products.

Microsoft executives said the programme, 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 new programme 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, reported New York Times Thursday.

"This is a very big part of the $20 billion search market," said Microsoft chairman Bill Gates at an advertising conference. "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, research firm comScore reported that Google's share of all searches in the US grew again in April to 61.6 percent from 59.8 percent in March.

Google gained at the expense of Yahoo! and Microsoft, which experienced declines in search share - Yahoo! to 20.4 percent and 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. The company declined to comment on the Microsoft announcement.

Microsoft said that 700 merchants offering over 10 million products have agreed to participate in the programme. They include, Circuit City, Foot Locker, Home Depot and Hewlett-Packard.

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

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

"Microsoft's issue is lack of consumer share," said Bryan Wiener, the chief executive of 360i, a digital marketing agency that specialises 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?" he said. "Time will tell."

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