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On discussion boards and blogs all across the internet the news that Microsoft will pay cash to people using the Live Search engine to find products or services to buy, is viewed as a desperate attempt to fight Google’s quasi-monopoly. But to affiliate marketeers, this move makes perfect sense.

Last week Microsoft added a cash-back feature to its Live Search service. People using the search engine to find something they end up buying, will get money back, depending on the amount spent.

This is classic affiliate marketing; a publisher points a person to a shop, collects a payout for sales made, and shares this revenue with the buyer, thus creating an incentive for the consumer to cooperate with the publisher again in the future.

Instead of scraping traffic together on various websites, Microsoft has now applied this concept to it’s Live Search engine. The fact that Microsoft has already settled deals with 13 of the Top 40 retailers such as eBay, Barnes & Noble.com, Sears and Overstock.com to participate in this system, accentuates this concept isn’t as much desperate, as it is creative, clever and logical.

Whereas Google traditionally was seen simply as ’the better’ search engine, people now have a direct incentive to choose for one search engine over the other. Microsoft has effectively introduced competitiveness to searching for information on the internet. Their strategy is to popularise this concept as much as possible, hoping to make the Live Search portal a logical choice for online consuming.

Microsoft’s cashback program is regarded as highly original, and depending on its popularity, will force Google to follow. This may effectively lead to a price war, benefiting consumers directly. If Google doesn’t respond, they will certainly start losing market share.

Moreover, advertisers prefer CPA models by far, as it eliminates click fraud from which the CPC model suffers almost incurably. As Google’s revenue relies heavily on getting paid per click, it’s not going to be very straightforward putting some of that at risk and shifting more towards CPA models. Whether or not Google responds, and how if they do, will be interesting to watch.

Link : MS Live Search Cashback

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