Microsoft Outlines New Search Business Model: Live Search Cashback Rewards Consumers and Advertisers

Editor’s Note, May 22, 2008 –
The list of key partners participating in Live Search cashback has been modified since the release initially published.

REDMOND, Wash. — May 21, 2008 — Microsoft Corp. today announced it will offer ad-funded cash rebates to customers who find and purchase their favorite products through a new program called Microsoft Live Search cashback. Key partners including eBay, Barnes & Noble.com, Overstock.com, Sears, Zappos.com, and WPP joined Microsoft Chairman Bill Gates at advance08, Microsoft’s annual advertising customer event, to announce their participation in the new program.

The complete Live Search cashback product portfolio includes more than 10 million product offers from more than 700 merchants, including more than 13 of the top 40 U.S. retailers. The company also announced it has delivered a new Live Search travel destination, Live Search Farecast, making it easy for searchers to find the best travel deals on the Web.

“We believe search can offer much more value to consumers and advertisers than it does today, and we see Live Search cashback as an important opportunity to deliver additional value,” Gates said. “Our goal is to make Live Search the most rewarding commercial search destination on the Web. Live Search cashback will help advertisers drive more online sales while giving consumers a new way to stretch their dollars.”

During his keynote address, Gates outlined three areas of focus for the company’s broad search vision:

  • Delivering the best search results by continuing to focus on relevancy and selection

  • Expanding the role of search around the set of tasks that searchers are most often working to accomplish — including commerce, entertainment, navigation and reference — through improvements in its user experience, intelligent tools and access across devices

  • Innovating in the economic model that today powers the search business by rewarding both advertisers and consumers for engagement

Today’s announcements of Live Search cashback and Live Search Farecast signify that commerce queries will be the first of the four tasks on which the company will focus. As part of this “Commercial Search” strategy, Microsoft aims to make Live Search the premier search engine for the growing category of search queries that help consumers conduct research and purchase goods or services, and which are critical to merchants aiming to drive online sales of their products.

New Business Opportunity for Search Advertisers

The opportunity to reach consumers via search advertising is enormous and growing. According to eMarketer Inc., U.S. online retail is projected to grow to $335 billion by 2012, and today 68 percent of all those retail transactions begin at a search engine. This translates to 3.7 billion commerce-related queries a month. The primary choice for advertisers to reach these search customers is the cost-per-click (CPC) model, where merchants pay a fee each time a searcher clicks on their ad, whether or not the potential customer makes a purchase. The cost-per-action (CPA) model, where advertisers pay only when a customer makes a purchase, or completes a specific transaction, gives advertisers a more precise return on their advertising investment, and is currently being deployed on a relatively limited basis. The CPC and CPA search advertising models represent the most targeted advertising approaches available today, but there is still room for improvement.

With Live Search cashback, Microsoft helps merchants maximize their advertising investments and drive more sales by providing consumers with an added incentive to buy — a cash rebate. Participating merchants choose to pay Microsoft a CPA fee each time a customer completes a sale through Live Search cashback. The fee is a percentage of the retail price, and when that transaction is complete, Microsoft returns that fee to the consumer in the form of a cash rebate.

“Our business is to connect consumers with brands in the most effective and efficient ways. Microsoft’s Live Search cashback creates a real incentive for consumers to connect with our clients,” said Sir Martin Sorrell, chief executive of WPP. “We believe this is a major development in the evolution of search marketing and look forward to participating and measuring the results.”

Key partners participating in the Live Search cashback offering include Abe’s of Maine, B&H, Backcountry.com, Barnes & Noble.com, Circuit City, Cookware.com, Crutchfield, eBags, eBay, Foot Locker, GiftBaskets.com, The Home Depot, HP, Jockey, J&R, Newegg.com, OfficeMax, Overstock.com, PetSmart, QVC, Sears, Spiegel, TigerDirect.com, and Zappos.com. A complete list of Live Search cashback partners can be found at http://www.live.com/cashback.

“We’re happy to be partnering with Microsoft on this innovative program,” said John Donahoe, president and CEO of eBay Inc. “By combining eBay’s marketing expertise and incredible volume and velocity of trade, PayPal’s leadership in online payments, and Microsoft’s cashback program, we see a great opportunity to deliver more value in the eBay marketplace.”

Available to Consumers Today: Live Search Cashback and Live Search Farecast

Live Search cashback, built on technology and partnerships acquired through Microsoft’s October 2007 purchase of comparison shopping site Jellyfish, launched online today at http://www.live.com/cashback. With Live Search cashback, Live Search users can easily find some of the best deals on the Web either at the cashback gallery — where they can compare prices and get ad-funded rebates on more than 10 million products — or by discovering cashback ads in Live Search sponsored listings. Customers sign up for a Live Search cashback account at the time of their first purchase, accrue ad-funded rebates in their account each time they purchase a product in the Live Search cashback program, and receive their rebates in their cashback account directly from Microsoft 60 days after completing purchases.

Also available today is the new Live Search Farecast, which includes technology acquired through Microsoft’s April 2008 acquisition of Farecast Inc., the award-winning travel site known for helping users find the lowest airfares by predicting when to buy. Starting today, Live Search Farecast results can be found at http://farecast.live.com and via Instant Answers in the main Live Search results page. Microsoft will explore the possibility of also incorporating an ad-funded rebate option for travel services in the future.

The keynote address from advance08 will be available for Web video playback at http://www.microsoft.com/presspass.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass on Microsoft’s corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/presspass/contactpr.mspx.