Wednesday, October 1, 2008

Putting Money in the Meter…Microsoft CashBack

I’ve had a chance to think a little bit about the discussions this week on the “Future of Search” panel and truthfully, I’m a bit confused.

I’ve decided to reflect on Microsoft's presentation because I have been patiently waiting for internal feedback on the consumer search incentive program they launched this spring. Martin Stoddart, Senior Product Manager of Microsoft Live Search gave quite an optimistic view on Microsoft’s future in the search game earlier this week at IAB MIXX and I’d like to share some of his thoughts on how Microsoft plans to slay the dragon (disguised in librarian clothing).

Stoddart’s view is that disruptive forces are at work pushing the search product to a new level (phase 3) that is geared towards the more experienced search consumer demands for enhanced results (rich semantics for example), paid engagement & rewards.

Honing in on the disruption, Stoddart described Microsoft’s consumer reward system as a much more attractive and advanced business model than the “aging” cost per click method. In May 2008, there was a big roll out of the CashBack program and Stoddart highlighted the model as a success. Although he didn’t share numbers on the program which is currently only available in the US, he sounded pretty convinced about the direction things were going.

Here’s where (my) confusion sets in…

Essentially, Microsoft has created an enormous consumer affiliate program to encourage searches on its platform and in doing so, has created somewhat of a closed market environment where users will get cash back or discounts on purchases made from Microsoft merchants.

So I’ve stumbled hard on the oxymoron of “enhanced results, rich semantic search etc.” and the proposed closed search (commercial) environment. How can your search be rich and closed at the same time? It feels a bit like AOL circa 1995 no?

In theory, affiliate programs can be successful at capturing market share but with the growing trend of consumers demanding transparency, mobility and freedom to select from infinite online options, the thought of receiving rewards for a finite list of merchants seems archaic and somehow (for lack of a better term) uncool.

Martin went on to describe some of the features that were in development at Microsoft. All of them made a lot of sense and it’s true that Microsoft has all the assets to string together the laundry list of enhancements required to compete over the next few years.

I guess my question is whether paying consumers to come to a relatively closed environment will hold down the fort while Microsoft works on developing the items that are required to deliver rich results to the users of the future. By holding down the fort I mean: drive loyalty, maintain its already battered market share or optimistically, steal from the dragon’s lair. In a way it feels like the company is putting money in the meter while it dashes around internally to come up with the phase 3 experience.

I'll dig around the media buying side over the next few weeks to see where the media budget votes are on this one.

Items on the development list included:

  • Best of search and browse
  • Intent-based refinements
  • 1 click simplicity
  • Immersive verticals
  • Opinion Index to expose the wisdom of the crowds
  • Predictive Pricing
  • Query Suggestions
  • Comparison tools
  • Traffic aware routing
Multi-Device Access
  • Mobile Product Search
  • Turn-by-turn Directions
  • Gas Prices
  • Movies
It's a tall order for anyone.

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