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.

Slightly old news as it was announced 14 days ago but Ive been a little busy so am finally getting round to posting about it.

Yahoo! has purchased web analytics software solution Indextools for an undisclosed fee.  The tool which one commentator described as”one of the best kept secrets in the industry” has been bought as a direct response to Google Analytics, this is easily shown by the fact that the first thing Yahoo! have done, is make it free! (remind you of any other analytics package?).  Yahoo! has had its own tracking solution for a while but lets face it, it was pretty rubbish.  So this purchase and the immediate action of making it free of charge puts Yahoo! firmly in competition with Google in the combined search, analytics market it in my eyes, gives them an advantage.  I have used Indextools for a number of years and can honestly say it is 100x the package that Google analytics is.  This is a full on, analytics, campaign management, usability, all singing, all dancing tool, which when used correctly can do some pretty impressive things.  Realistically most people wont use all the best bits of Indextools but the savvy internet marketeer could actually get for free with Indextools, what would have cost them £500-£1000 a month in the past, bargain!

I am intrigued as to what Yahoo!’s plans are for Indextools as if they are to continue to offer it for free then are they going to remove some functionality to strip down the software functionality?  I hope not but it probably makes more business sense.  Maybe then offer the additional functionality at a cost, but does that go against what Yahoo! are trying to achieve?

In order to qualify for the package at no cost existing customers are required to sign a new Yahoo! agreement.  I haven’t seen this agreement yet but it will be an interesting read (if such documents can actually be interesting!) as one of the concerns around using Google analytics, and now Yahoo! owned Indextools is the data you are passing to the search engines about your campaigns.  Who owns this information and how can it be used is key in determining whether by selling out to Yahoo! Indextools is likely to lose all its clients.  It may seem a little big brotheresq but would you really want Yahoo! knowing the details of all your online activity?  not just search (and therefore Google) but also you display, affiliate and email campaigns?  because that is what Indextools is best at, compiling data into a logical dashboard enabling you to see all your data in one place.  If Yahoo! is then going to use this data to make competitive decisions then nobody is likely to want to use Indextools anymore.  I suppose we will just have to wait to see the contents of this agreement and its approach to data usage, but I just hope by buying one of the best, most usable tools on the market, Yahoo! hasn’t inadvertently killed it.

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.

Exciting news in the world of search engine marketing, more thoughts and comments to come when I have the time!

Microsoft offers to buy Yahoo

By Franklin Paul and Tiffany Wu - Reuters

February 01 2008

NEW YORK (Reuters) - Microsoft Corp said on Friday it has offered to buy Yahoo Inc, the popular Web portal, for $44.6 billion in cash and stock, seeking to join forces against Google Inc in what would be the biggest Internet deal since the Time Warner-AOL merger.Microsoft offered to buy Yahoo for $31 per share, a 62 percent premium over Yahoo’s closing stock price on Nasdaq Thursday. Yahoo shares jumped to $30.75 in premarket trading.

Yahoo said the online advertising market is growing rapidly and expected to reach nearly $80 billion by 2010 from over $40 billion in 2007. Yahoo added it is “increasingly dominated by one player,” referring to Web search leader Google.

“We have great respect for Yahoo, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market,” Microsoft Chief Executive Steve Ballmer said in a statement.

Yahoo was not immediately available for comment.

The company has been losing market share to Google and warned earlier this week that it faced “headwinds” in 2008, forecasting revenue below Wall Street estimates.

On Thursday, Yahoo disclosed that nonexecutive Chairman Terry Semel was leaving the board, ending its formal ties with the former chief executive, who is credited with reviving the company and then losing touch.

Semel, replaced as CEO last June, had faced heavy criticism for failing to move faster to meet both rival Google’s challenge in Web search and advertising and, more recently, the rise of social networking sites such as MySpace and Facebook.

U.S. stock futures jumped on the Microsoft news, which offset a disappointing earnings report from Google late Thursday.

Paul Mendelsohn, chief investment strategist at Windham Financial Services, said a deal made sense.

“Yahoo is having a really tough time competing against Google. Whether it’s a good price, I can’t see anybody else who is going to outbid Microsoft,” Mendelsohn said.

Microsoft said it had identified four areas that would generate at least $1 billion in annual synergies for the combined entity.

Tim Smalls, head of U.S. stock trading at brokerage firm Execution LLC, was less enthusiastic about the benefits of a tie-up.

“Shocking! To me, the premium seems exorbitant, for what is a dwindling business. I personally don’t see how the synergies of Microsoft-Yahoo is going to take on Google,” Smalls said.

(Reporting by Franklin Paul and Tiffany Wu; Editing by Lisa Von Ahn/Jeffrey Benkoe)

Copyright 2008 Reuters