Analysis: Microsoft Cashback for search coming to the UK

Microsoft’s Live Service cashback scheme is an ad-funded program that pays cash rebates to customers who find and buy products using the software giant's search service. The Live Search cashback service uses technology from Microsoft acquisition Jellyfish.

After its initial launch in the US in May, the company is set to introduce the service to the UK soon.  Speaking with Netimperative, Simon Norris gave his insight into how the service would fare over here:

Overall, the concept is good and there is a good chance of it being highly significant in the long term. In practice, however, there is still a long way to go.

Firstly, cashback is only relevant for people doing searches in circumstances where they intend to buy.  Lots of searches have no connection with purchases – they are just looking for information.  One of the great things about search engines is that they serve the searchers’ requirements well regardless what they are looking for.  If cashback is going to succeed, it may need to be convincing enough for users to shift all their activity to a different engine.

Secondly, it opens up some really complex issues relating to the way different vendors and products are presented on-screen and I don’t think (in this initial form) Microsoft has addressed these.  They shouldn’t be underestimated – the way Google’s paid search platform ranks and presents results has been key to its success. 

Search rankings

With a paid search model, broadly speaking the companies that pay the most appear in the most prominent positions.  With cashback, what the users will want to see is the best deals appearing at the top of the screen.  That probably means the best price after the cashback is deducted.  

However this doesn’t always fit with what is in the best interests of the search engine.  This is an issue that shopping comparison sites have been grappling with for years (and never really managed to crack).  At the moment, it would seem that 100 percent of the cashback goes to the purchaser so Microsoft earns nothing.  This would need to change in the longer term.  Would Microsoft take a percentage of the cashback value?  Or a percentage of the overall retail price? What impact does this have on the way vendors present their products – i.e. would a high retail price with a big discount give them a better position than a low price with a small discount? 

Also, what about the quality of the advertiser’s site/service and the effect this may have on the likelihood of the visitor making a purchase?  A site with a low conversion rate would be bad news, as the search engine gets nothing if no conversion takes place.  But what if they were offering the best price?  How can this be factored in to the way different vendors are ranked and presented on-screen?

Technical Issues

There also seem to be some more straightforward technical issues.  Microsoft doesn’t have a Paypal-type service.  This is a shame, as it might have made the whole process a lot more palatable.  Users often don’t see any information about the cashback during the purchase process, so need to take it ‘on trust’ that the cashback will be processed correctly.  Microsoft acknowledges that using some payment methods (Paypal, Google) may result in cashbacks not being paid. 

So overall, it is undoubtedly a good fundamental concept idea with significant potential.  However, it doesn't have much chance of making a big impact for Microsoft unless/until it gets a lot of refinement.  Microsoft would need to get lots of vendors to support it, but I don’t think this would be a problem if it was better refined. 

The technical challenges are not insurmountable.  However it is a shame Microsoft didn’t offer a more rounded proposition from the outset.  It may succeed in forcing Google to launch something comparable, but it has now given Google plenty of advanced notice so it can start preparing its response.  Historically Google has been very effective in responding to these situations, and there’s no reason to think it will be any slower off the blocks on this occasion.

Simon Norris is the founder and director of search marketing agency Periscopix

www.periscopix.co.uk