For some time now, Microsoft has been making hints and/or threats about providing really serious competition for Google’s search engine. Its recent failed merger with Yahoo!, however, seemed to dull their prospects. But they’re bouncing back in unexpected ways.
First, Microsoft is attempting some innovation with a new advertising scheme for their search engine, Live.com: Live Search cashback. Google and other search engines use a clickthrough model, where a business pays the search engine money for each time a web user clicks on an ad through to the business’s landing page or website. LSc, on the other hand, features products with low prices (shipping costs included). When a web user buys a featured product, they earn Cashback points. As soon as the customers’ Cashback account reaches $5, they can claim their money.
Under this model, consumers get to save and advertisers only pay Microsoft whenever they make a sale, not whenever a customer merely clicks through to an ad. Most search engines do not claim responsibility for the strength of the advertisers’ content. Live.com, however, is completely integrated into the advertising of its sponsors.
Second, Microsoft’s President of the Platforms & Services Division, Kevin Johnson, sent out an internal memo a couple of weeks ago addressing the need for a change-up in Microsoft’s product development, branding, and marketing. One of his points implied a “disruption” to current models, i.e., Google. Many in Silicon Valley have yawned about the supposed rivalry between Microsoft and Google, declaring the latter as victor in the search engine wars. However, it seems that there is a bit of a change in Microsoft altogether. In the past, the company has been stereotyped as a slightly less innovative and more stodgy business than Google, Facebook, or Apple. That might all change.
This year, Microsoft was in the headlines for a long time about its attempt in acquiring Yahoo! (Recent reports suggest that a partnership is still possible.) Now, it seems to be that Microsoft is really feeling that it’s missing out on major action, namely that of search engine advertising revenue. If their press release is correct in that “68 percent of all… retail transactions begin at a search engine,” then they certainly are.
Despite the dismissive notions of the trendy technorati, this is the company that made 4 billionaires and an estimated 12,000 millionaires among its employees. It held a de facto monopoly on software for a long time, and its website is still one of the most visited on a daily basis (according to Alexa, it ranked as the 18th most visited site in 2007). Innovation has always been Google’s business and technological prime advantage, and if Microsoft really begins to compete with them in this one regard, Google might be in for an unpleasant surprise.
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