MSN is onto something with their Live Search. If you haven't noticed you can get cash back at numerous merchants across the web by shopping through MSN Live Search. Cash back has been met cooly in the past by consumers contrary to popular belief. Many have tried (Shopping for one) and entire sites are dedicated to the concept (Cashbaq is a good example).
But play this idea through - none of the other cashback sites really have had the traffic volumes of MSN. Some have grown really fast, but don't have the average monthly unique visitors of Live. The major development for ecommerce folks is that Live search is a revenue share opportunity - meaning retailers pay MSN only if MSN drives a sale. This is the good thing the Jellyfish acquisition brought to Microsoft. Right now, MSN is passing back some/all of the revenue share earned directly back to the consumer in the form of cash back. A sort of self funding marketing and traffic building program.
The current implementation begs the question: "What if MSN rolled revenue share out to their entire search program and what would be the impact on Google?" One way to compete is to change the game, specifically, change the pricing game off of CPCs and onto revenue share. Obviously this is a retail-centric model, but imagine if MSN came in under Google on the ad pricing and ROI, which I bet they are for many retailers. Obviously search volume is a major factor, however, if you want take some wind out of Google's sails this would be one way to do it. Google is a one trick revenue pony today. Nothing in their revenue portfolio compares to the revenue earned from their Adwords/AdSense business.
MSN stands to win on two fronts (1) increasing search share like they did in June (2) suck the margin out of the market by pricing on a revenue share. MSN has failed increasing search share alone, so making the entire channel less lucrative is a logical albeit devious strategy. In this specific case attacking sales margin is a viable alternative given how far behind MSN is lagging behind Google.
I for one would love to see the world get off CPCs, go Live Search with cashback!
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