By Bruce Rutledge
Live Search cashback is the latest attempt by the world's
largest software maker to draw users to its online search
engine, which is a distant third behind market leader Google
Inc and Yahoo Inc.
"This is giving you a reason why you should use a
particular search engine," Microsoft Chairman Bill Gates said
at the company's Advance 08 advertising conference.
Microsoft sees online search as a critical component to
establishing an online advertising powerhouse. By placing
text-based ads next to results from its ubiquitous search
engine, Google has become the leader in Web advertising.
A product search on Windows Live will call up links to
online retailers offering that item. The user who buys that
item from the retailer's site will get 2 percent to 30 percent
of the purchase price back as a rebate.
Consumers would have to sign up for a free Windows Live
cashback account to participate in the program. Rebates would
be issued after a 60-day waiting period to make sure there are
no returned products.
Microsoft's Gates said it will partner with more than 700
retailers including eBay Inc, Barnes & Noble, Sears and Home
Depot Inc.
Redmond, Washington-based Microsoft will offer advertisers
a cost-per-acquisition model of payment, meaning that they only
pay for ads that lead to purchases. The current cost-per-click
model charges advertisers for every click on a sponsored link
associated with certain keywords.
"If you knew the user and watched their behavior you could
do a lot better for them in terms of taking them directly to
the information or presentation they want. Search can be
dramatically better," said Gates.
"We think we're entering a period where there'll be quite a
bit of change (in search)."
The company's effort to gain more market share in Web
search led to its unsolicited offer to buy Yahoo Inc earlier
this year. It withdrew a sweetened $47.5 billion offer a few
weeks ago, but said on Sunday it had re-approached Yahoo with
an alternative deal.
A source familiar with the talks said Microsoft had offered
to buy Yahoo's search business and take a minority stake in the
rest of the company after selling off its Asian assets.
Microsoft executives did not address the Yahoo issue directly
at the conference.
Microsoft also launched Live Search Farecast, based on the
airfare-predicting technology that the company bought in April
through its acquisition of travel site Farecast. Microsoft also
said it will consider cash rebates for flights booked through
the search.
Shares of Microsoft fell 51 cents, or 1.77 percent, to
$28.25 on Nasdaq.
(Reporting by Bruce Rutledge, writing by Daisuke
Wakabayashi in Los Angeles, editing by Maureen Bavdek, Richard
Chang)
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