Microsoft Trumpets Cashback Successes

cashback

Microsoft Live Search Cashback launched with great expectation in some quarters that it would grow Microsoft’s search share dramatically. That, so far, has failed to happen. But Microsoft says it is making progress toward its own more realistic goal of growing commercial search traffic over the long term, highlighting some new figures it says show progress in that area.

Microsoft, according to a comScore study it commissioned to examine commercial search queries, referred almost 12 percent of commercial online transactions to web sites in the second quarter of 2008.

Sounds great, but…

  • What exactly is a transaction considered to be? How’s it measured?
  • What percentage of transactions did Microsoft refer BEFORE Cashback?

Microsoft didn’t send me a copy of the actual report in time for this article, but I did get some answers to the questions above. For the first:

Commercial transactions for this analysis are defined by ecommerce purchase activity at sites within the 10 evaluated categories among the 500 total sites tracked for ecommerce activity by comScore including eBay, Amazon and many others.

So, comScore looked to see when purchases happened at a variety of web sites and, when they did, tracked back to see if searches at Microsoft were linked to the purchase.

Sounds good, but has Cashback helped increase commercial searches (and thus, assumedly, transactions)? To know, you need to know what percentage it was referring before Cashback. Alas, that figure isn’t given:

This was a custom study that MS commissioned with ComScore to start measuring impact at the baseline. It is admittedly early data, and unfortunately does not include retroactive analysis.

Another issue. Microsoft handles about 10 percent of search queries in the US overall, according to comScore and others. So at 12 percent, it might be seen to have a slightly more “commercial” audience that it hopes will mean bigger ad revenues — but not a dramatically different one.

This leads to another figure — that Live Search had about 13 percent of total US online spending in key retail categories — and more questions:

  • What was the spending before Cashback?
  • If spending is up, since Cashback effectively is giving merchants themselves back the money they spend on ads, how does that “increased” spending help Microsoft?

On the first question, Microsoft again said they had no retrospective data. On the second, they pointed out that the immediate goal is to build usage and loyalty. So if spending is up — but net revenue is unchanged because of the need to give back to merchants, they hope this will change down the line if Microsoft builds up a reputation that pulls in the “commercial” searcher.

More metrics that initially sound good. eBay is quoted in Microsoft’s release on the news that:

Microsoft Live Search cashback (www.live.com) has improved our ROI on paid search by 50%, and based upon our shared success, eBay is increasing its search marketing spend with Microsoft Live Search by threefold.”

In general, Microsoft said merchants in the program overall are seeing various increases in ROI. They’re getting people more likely to purchase. Of course, Cashback is a program designed to pull in the most likely people to convert, those seeking out a bargain. And Microsoft is paying those people a rebate. So the results aren’t that surprising. The issue remains — can this be a long-term strategy that works? Or if rebates are lowered, will searchers go away?

As for eBay increasing its spend, given that the rebates are funded out of what’s being paid in ads, why wouldn’t they? The cost of increasing is nothing or near to nothing for eBay.

Some additional stats, ones without the need for a lot of hard questions!

  • 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.

The program is now expanded through partnerships with Miva Merchant, Early Impact (ProductCart) and 3DCart. Through the agreements, retailers using these shopping carts on their sites can now make use of the Cashback system to offer rebates.

Related Topics: Channel: Industry | Features: Analysis | Microsoft: Bing | Microsoft: Marketing | Top News

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About The Author: is a Founding Editor of Search Engine Land. He’s a widely cited authority on search engines and search marketing issues who has covered the space since 1996. Danny also serves as Chief Content Officer for Third Door Media, which publishes Search Engine Land and produces the SMX: Search Marketing Expo conference series. He has a personal blog called Daggle (and keeps his disclosures page there). He can be found on Facebook, Google + and microblogs on Twitter as @dannysullivan.

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