Microsoft have announced today that they will be launching a cash back system for purchases made using its Live search engine.  Utilising partnerships with ebay, paypal and jellyfish they will offer remuneration to users who find a product using live search and then make a purchase.  This is an amazing step from Microsoft into a market traditionally held by the affiliate world and heralded by the networks as the big growth area for affiliate marketing.  My own experiences of cash back sites are limited due to the way it opens the advertiser up for fraudulent enquiries/sales by incentivising the individual.  that doesn’t mean to say it cant work in the right situation and the entrance of Microsoft into this world not only says they have identified it as a growth area but also could have major implications for the cashback industry as a whole.  On the one hand it could bring the service to the mass market and mean the user base for such size grows exponentially over the next year or so.  On the other Microsoft may decide they want to dominate this industry and use it as a USP for Live search and decide to crush the independent sites in the way only they can.  Id certainly be getting a bit twitchy if I was a cashback publisher at the moment.  full article below

May 20, 2008

Microsoft to Launch “Live Search Cash Back” Tomorrow

The major Microsoft Live Search announcement scheduled for tomorrow will be the official launch of a new product: Microsoft Live Search Cash Back.

The program in partnership with eBay and its PayPal unit will offer cash back to consumers who search on Microsoft Live and make a purchase. The announcement will be made in conjunction with a taped message from eBay CEO John Donahoe. The technology is based on the acquisition of Jellyfish by Microsoft in September, 2007.

The announcement is expected to be made by Satya Nadella, SVP Search, portal & Advertising Platform Group, Microsoft, prior to Bill Gates’ presentation on “Connecting the Future.” The goal is to differentiate Microsoft’s vertical search experience for users while leveraging improvements in the core search algorithm.

Microsoft believes the Live Search Cash Back program will align the interests of consumers and the search engine, putting Microsoft “on the same side as the consumer.”

The job of Live Search will be to match the most relevant products with the most relevant consumers.

Microsoft will likely offer advertisers a CPA (Cost-Per-Acquisition) model rather than a traditional search engine Cost-Per-Click (CPC) auction.

Tony Hsieh, CEO of Zappos, said in a taped interview that the program would help overcome the barriers of first-time buyers of shoes online.

A Barnes & Noble executive stated that clickthrough rates and purchases had increased through the use of the Jellyfish pilot program.

The following message is posted on the Jellyfish.com Web site:

“As part of our pledge to save you money on the products you buy, our Cash Back rewards service is currently offline to perform necessary service upgrades and enhancements. Jellyfish Account holders will receive an e-mail notification when our Cash Back service is up and running again. Thanks for your patience.Using Jellyfish, consumers could compare prices of products from a number of online stores. Retailers paid Jellyfish fees to feature products. A portion of that fee was refunded to consumers who bought through the Jellyfish site.

Jellyfish also offered “Smack Auctions.” During each Smack show, Jellyfish would auction off new products in a unique price dropping format. Every second that ticks off the clock, Jellyfish would drop the price of the product, until the deal sold out.

Jellyfish founder Brian Wiegand is agroup manager at Microsoft. Last year, ye stated, Microsoft is “investing heavily in shopping and e-commerce.”

Microsoft closed the deal on Sept. 27, 2007 but didn’t announce it until Oct. 2, 2007.

This isn’t the first foray of Microsoft into the world of search engine incentives.

Microsoft Live Club is an ongoing experiment with incentivizing searchers but never on the Live Search Cash Back scale. For example, Microsoft Live Search Club lets users play games. A completed gives earns tickets toward prizes, such as Zune accessories, song downloads and ringtones.

Microsoft’s official statement on the announcement:

On Wednesday, we will be announcing a major new initiative that our search teams have been driving. We are getting better and better with our core algorithmic search, and at the same time, we are investing to differentiate in vertical experiences and to disrupt the current model. You’ll hear more about our plans Wednesday.

Is microsoft about to revive the rumours and constant wondering about Facebook buyouts?  After every billionaire tycoon and his dog were linked with buying the social media phenomenon it has all been quiet for a while.  Now apparently it has come out that Microsoft has put the feelers out about a purchase of the social network.  Full article from search engine watch below:

About Face(book): Microsoft Feels Out Social Network Acquisition

Though Bill Gates was out there telling people Microsoft is not interested in making non-Yahoo acquisitions right now (at least in the search/social world), word comes that Microsoft bankers have sent “feelers” to Facebook about a full acquisition.

Here’s why this is a solid move:

1. Microsoft already owns 1.6% stake in Facebook, worth $240 million
2. Microsoft formed a data portability partnership with Facebook and 4 other networks
3. At least two Google execs have jumped ship to Facebook in recent months

While Facebook has yet to “overtake” MySpace in the social media market, it is a viable competitor. And I’m sure Ballmer would love for Microsoft to own a social network that even Apple has used as a marketing ploy as of late. Recent commercials for the iPhone entice potential customers through the ability to access Facebook on the popular mobile device.

Additionally, internet users are turning to their social networks during their search process. Consumers want answers and reviews and social networks help them get opinions from trusted sources.

The Facebook move would likely be seen by many as a better fit than Yahoo. But expect just as many to see it as a negotiating ploy in their bid for Yahoo. Though Microsoft has officially withdrawn its bid for Yahoo, many analysts expect Ballmer and the team to return to the table for another stab at a grab for the search engine.

It looks like Microsoft might be refusing to take no for an answer in their bid to buy out Yahoo! in a bid worth $40Bn.  After having their bid rejecting because the Yahoo! board believed it significantly undervalued their brand and investment in technology Microsoft are rumoured to be responding by attempting to ignite a proxy fight to take over the company.  Such a proxy fight would see Microsoft nominate a group of directors sympathetic to a deal for shareholders to vote on at Yahoo’s annual meeting.   According to Morningstar this is Microsoft using the carrot and the stick approach, just both at the same time! The carrot of the share price, 62% above trading price, and the stick which comes in the form of the threat of a proxy battle.  The drama continues and maybe Microsoft will get their way after all!

Yahoo!’s board have unanimously voted to reject Microsoft’s astronomical bid of $44.6bn (£22.4bn) claiming the offer significantly underalued the company! Rich considering the offer was 61% up on their closing share price from the previous day.  Yahoo!’s explanation is that the bid undervalued the strength of the Yahoo! brand, user base and recenty investment in advertising technology.  My take is that they arent too keen on becoming a Microsoft company and having a consolidated position in the market as they already have a larger share of the lucrative search marketplace and a comparitive stance in other areas of online as well.  I wonder whether this will open the door for a bid from Google as had been rumoured last week or whether Yahoo! would rather continue the fight on their own against the big G.  This probably wont be the last we hear about alliances and a consolidating market but Im not sure any future deals will be on the same scale.

NMA article here

Ive finally gotten round to having a little think about the big news story of the week, Microsoft tabling a bid of $44.6 Billion in cash and stock to buy its rival Yahoo.  There has been no official comment from Yahoo on the reports but I thought Id document my thoughts on the impace this could have.

The portal market

Yahoo and MSN are the two big players in the portal market, the one stop shop for all you web needs, search engine, web mail, news feed, weather reports, all in one place.  This is where Microsoft will gain a massive advantage and pretty much gain complete dominance.  Aside from the ISP sites, which gain their visitors through having a default homepage setting in the ISP setup process, Microsoft will have a dominance in this field comparable to Google’s in the search market (more of that in a minute!).  So what does this mean to MSN? Well instantly they will take on board the lions share of the portal advertising revenues around the world.  Yahoo has built an advertising model which is highly lucrative and brings in a huge amount of revenue each year, utilising the latest behavioural targeting technology to keep online advertising moving forward.  MSN obviously has its own advertising model and ideas on how the market is going to advance but they will automatically boost their ad revenues with the purchase.  It also sets them up well for the predicted rise in online ad spend over the next few years, from $40 billion to $80 billion if you believe the predictions, dominance in a market this size is a mouth watering prospect.

The search market

This is where it gets really interesting.  Microsft has struggled to gain a foothold in the search market since it launched its own PPC model in 2006 and I forecasted in a previous post (Microsoft sets its sights on 40% market share) that a purchase may be on the cards if they were to achieve their targets.  The purchase of Yahoo Search Marketing (YSM), if part of the deal, would possibly take their market share into the double figures in the paid search arena.  Their system is good at present, the quality of their traffic is good, its just the volume they have been missing.  YSM would help boost this and make them a legitimate number 2 in this arena and they undoubtedly have the fire power to make dents in Google’s dominance (see their response here).  It does raise the question, what does this mean to search agencies?  the market which was due to fragment with the launch of wikia search, AOL breaking out in the US, Ask hinting at the same, is now significantly consolidated if this deal does actually go through.  Does this make SEM simpler? Not really but it could be perceived that way, a post for another time I think.

How do they manage it?

This will be interesting, does Yahoo become Microsoft branded?  or is it just another property of the technology giant?  Does it become Microhoo? Yasoft? Mahoo? or does it become Yahoo - a Microsoft company? and more importantly for internet marketers do they keep the two infrastructures separate, the advertising interfaces, the search algorithms, the display advertising models.  This is what will be the key determinant of what this means to the industry and what it means to digital agencies.

Whether the deal goes through remains to be seen, when it goes through is another question yet to be answered. What is undeniable is that it is going to influence the online advertising market significantly, in what way, remains to be seen.

In last weeks media week Microsofts’s UK head of marketing, Alex Marks, discussed microsofts marketing strategy and attempted to justify the money they had pumped into Facebook.  Denying it was a simple land grab and a chance to hold of a Yahoo or Google purchase Mark’s validated the purchase by speaking about how Facebook satisfies a basic human need to communicate and engage with fellow human beings.  He also goes on to say how internet behaviour is becomingly increasingly commnuity based seemingly suggesting that the future of the internet lay in propoerties such as Facebook.  Apparently we are no longer talking about social networking sites but social utility sites much more than quirky communication tool and are becoming a tool for managin offline relathionships online.  With the sum totoal of its wares so far the exclusivitiy of banner advertising on Facebook Microsoft has a long way to go before they convince anybody that they got a bargain for their £118M stake.

Tags: facebook, microsoft, aquisition

Following Microsoft’s $240 million investment in Facebook for a small slice of their pie rumours are rife about this deal paving the way for the integration of live search functionality within the social networking site. The inflated valuation of the small stake is undoubtedly an attempt by Microsoft to keep Google at bay but could also be an indication that there is elements of the deal which incorporate an agreement to have live search integration. If this is the case then it could be a good investment for Microsoft as they have struggled to achieve any significant share in the search market place and the volumes available through their paid search platform have disappointed advertisers since its release.

The benefits to Facebook come from the simple fact that users would no longer need to leave the site to perform a search and so would spend more of their timeon the site, thus increasing appeal to advertisers. Oh, and theyve probably negotiated a revenue share on the money generated from Facebook based searches too. The only question that remains is will people using Facebook actually want to perform a web search? Well Myspace and Bebo both have the functionality, powered by Google and Yahoo respectively, so logic would suggest there is something in it. Whether thats worth $240 million, only time will tell.

How the search function may look:

The Purchases of google and Microsoft give a great indication of the way they see the market moving. This article tells of Microsoft’s recent purchase of TellMe, a provider of voice activated search technology. No prizes for guessing that this ties in with the markets interest in mobile search. Everyone appears to be fighting to be the best equipped for when the mobile market takes off. Apparently 2007 will be the year for the adoption of the technology and 2008 will be the year it takes off. I still remain to be convinced about the extent of mobiles emergance but one thing is for sure this wont be the last of the purchases in this market in 2007.

Microsoft Buys TellMe, Voice-Activated Mobile Search Provider
by Shankar Gupta, Thursday, Mar 15, 2007 6:00 AM ET
MICROSOFT FINALIZED A DEAL WEDNESDAY to purchase TellMe, a directory assistance provider and voice-activated mobile search firm, giving Redmond a possible edge in the race to develop a better mobile search tool.
Greg Sterling, principal of Sterling Marketing Intelligence, said that despite the manual dexterity mobile search users are developing, using a tiny keyboard still offers a sub-par user experience.
“There’s still usability problems that are pretty significant,” he said. “Keying in search queries is awkward. This is really about improving usability, and driving consumer adoption.”
Microsoft is reportedly purchasing the voice-recognition and directory assistance technology firm for between $800 million and $1 billion. A statement released by Microsoft specifically called out “search services on mobile phones that integrate with Live Search for mobile offerings” as an area of interest between the two companies.

apparently micorsoft is planning to expand its content offering and also the use of adcenter. verticalisation of the content network is essential if it is going to survive and be a useful medium in search marketing. google have done it through site targetting, miva are planning on completely restructuring around it and now microsoft is looking to follow suit. The obvious result of this (or what they will tell you) is much more targetted traffic. this has not been seen yet on Miva’s precision network (and costs have risen!) but if it is done well I can see it working. In the majority of markets though it will always be the poor relation to the main search network. It is still open to fraud and I still question whether unless a user is actively searching that they have a high enough propensity to click and ad and then ultimately convert through the website.


Microsoft’s adCenter content ads expanded
Advertisers looking for a better way to control and influence their online advertising efforts are going to get some help from Microsoft. Looking to increase how online marketers interact with their ad serving software, the company is expanding their adCenter offerings. According to reports, the expansion will give advertisers more control over online campaigns.
by Kristina Knight
The expansion will also give advertisers more outlets within the canopy of the MSN network.
MSN’s networks like Health and Fitness, Tech and Gadgets, Travel and Money currently house the majority of content ads from advertisers. With the new system, advertisers will control which networks show their ads, even going so far as to determine which specific content pages the ads appear upon. They will also be able to determine whether or not to allow ads within Windows Live Search results pages.
Advertisers can choose to run ads either on network content pages, on Live Search results pages or both. They can also track ad sales results from each platform.
There is no word when or if the content ads will be offered outside the Microsoft Network umbrella, but the potential to offer advertisers specialized ads on other platforms, like through Yahoo’s Panama platform or through Google’s AdSense platform is possible.

Raises the question which has been posed many a time before, who is responsible for the copyright of material on search engines? personally I think it would be very difficult for the search engines to police this (cant believe Im on their side!) but agree that they do have a certain responsibility to apply the appropriate filters to reduce it. It is an arguement which I cant see begin resolved any time soon and unless someone comes in and forces them to stop, google will continue to make money out of copyright material.

Microsoft has accused Google of adopting a ‘cavalier’ approach to copyright over the search engine giant’s use of books, films, music and TV programmes without permission, and criticised it for making millions of dollars from other people’s intellectual property.
In a speech to the Association of American Publishers, which will be held in New York later today, Tom Rubin, associate general counsel at Microsoft, is set to accuse Google of exploiting copyright and intellectual property through its search engine business.
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Rubin will state: “Companies that create no content of their own, and make money solely on the backs of other people’s content, are raking in billions through advertising revenue and IPOs.
“Google takes the position that everything may be freely copied unless the copyright owner notifies Google and tells it to stop.”
Rubin will also defend Microsoft’s business practices by highlighting how it seeks copyright permission before using material created by a third party.
Google has come under fierce criticism in recent months from a host of media companies, including Viacom, which forced Google to remove over 100,000 of its video streams from YouTube.
Viacom join NBC Universal, which has accused Google of “only protecting copyright when it wants to”, and 20th Century Fox, which issued a subpoena to the search engine in January demanding it remove episodes of hit drama ‘24′, starring Keifer Sutherland, from YouTube.
In the speech Rubin is set to accuse Google of, “bestowing upon itself the unilateral right to make entire copies of copyrighted books,” by publishing printed works online without permission.
Google has responded to the criticism by saying it only publishes extracts from books when it has the author’s permission. The company also said it generated $3.3bn in ad revenue last year, which it said proved it was not generating revenue from third party content.
Microsoft has recently sent letters to chief executives of large media companies, asking for support to stop internet piracy. The company now joins Walt Disney, News Corporation, Viacom and Time Warner in attacking Google’s use of third party content.