Marketing Ninja

In one of today’s TechCrunch items it was announced that Windows Live Search has seen a considerable increase in ROI for its advertisers and an overall increase in advertising revenue as a result of its unorthodox “cash-back” rewards system for users who purchased goods discovered through Live Search’s paid advertisements. The system was highly scrutinized at the time of its announcement, but it just goes to show you that zigging when everyone else is zagging can yield success even in a market as uncompetitive as search.

I don’t think Google or Yahoo! will be following Microsoft’s lead. Google doesn’t need to as a result of its dominance in the paid search advertising market. Yahoo! looks like it might be pulling out from search altogether and moving primarily to content / banner advertising.

Either way, it’s interesting to see some movement in terms of advertising dollars in search, but Microsoft’s move has yet to produce a sizable increase in actual search traffic. If the cash-back system ultimately produces a better ROI for advertisers despite the decrease in reach, we might see an interesting “supply-side” shift in search marketing.

If the increased ROI for Live Search advertisers results in a wider, deeper array of bargains and discounts for Live Search users, we might see a number of frugal searchers migrate from Google and Yahoo! to Live Search. Although marketers typically try to avoid bargain seekers, these users would not be bargain seekers in the classical sense; online “bargain seekers” are people who will rarely, if ever, pay for anything online that they can’t steal or substitute with something that’s lower quality but free. These users by contrast are able and willing to pay for goods consumed online but they simply want better deals.

Should the supply of good deals on Windows Live Search attract searchers away from Google it might create an interesting consumer niche for Microsoft, where in effect Live Search’s audience is smaller than Google’s but its audience is composed of the customers that advertisers value most – people who are looking to buy something right now. I don’t see this happening in the next fiscal year, but if the cash-back system is maintained and if it produces significantly better returns for advertisers then it could emerge as a wind shift in search.

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