Microsoft Integrates Cashback And Products Vertical

Microsoft announced yesterday that it had folded its Cashback program into Live Search Products. Cashback began as a incentive program for consumers to use Live Search as well as CPA-based advertising vehicle for retailers and e-commerce sellers. Cashback icons appeared beside ads responsive to commercial queries for participating marketers:

Cashback icons (like Google Checkout icons) drove more clicks, but Microsoft didn’t get paid unless or until users actually transacted. (In other words: free impressions and brand advertising.) The program was based on technology and the CPA model employed by shopping site Jellyfish, which Microsoft acquired in 2007.

Opinion of Cashback at the time of launch was very mixed. I thought it was a clever concept and, unlike others, not a simple bribe to help drive additional search traffic. But some bloggers and analysts found it a “desperate” attempt to lure searchers from Google and Yahoo. While the program didn’t directly impact Microsoft’s search market share, it was reportedly successful on a number of fronts:

• 20 of the top 50 online retailers in the US and 140 of Internet Retailer’s Top 500 are now participating in the program. These include new advertisers AT&T, Drugstore.com, FTD, Gap (including Banana Republic and Old Navy), Kmart, RedEnvelope and Saks Fifth Avenue.
• There’s a 30 percent increase in product offers available.
• There have been an average of 4.5 million unique users per month visiting Cashback who have conducted more than 68 million commercial queries.

Now when users do a product query, they still see participating Cashback advertisers, but that information is also integrated into the product vertical:

Kumo (or whatever the ultimate brand will be) is coming and so we’re likely to see more changes when that launches in the next several months. Cashback makes sense even more during a recession. Indeed, Microsoft should expand financial incentives for consumers to use its product search with deals and coupons from retailers and manufacturers.