Costly defence

21 May 2008 By Jeff Segal

Under its new ad system, advertisers only pay when a sale is made. And customers get a cashback incentive for using Microsoft search to shop. This is a compelling offer but it s hard to see how it can mint Googlelike riches for shareholders.

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Today Microsoft announced Live Search cashback, a new search advertising program, at the Advance08 Conference in Bellevue, Washington.

The program gives users cash rebates for finding and purchasing certain products found through Microsoft's search process.

Early partners include eBay, Barnes & Noble.com, Overstock.com, Sears, Zappos.com, and WPP. The Live Search cashback portfolio contains over 10m products from some 700 merchants.

In addition, the program will compensate advertisers through a costperaction basis, where advertisers only pay when a transaction occurs. Most internet advertising occurs on a costperclick basis, where payments are based on clicks.

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