May 22nd, 2008 by admin | No Comments »
Microsoft today announced a programme called Live Search cashback. As part of the offer, microsoft will provide a rebate to the searcher buying the product through microsoft live platform.
It reminds me of the heady days of web 1.0 while websites paid users for watching advertisements, products were heavily discounted and so on. All with the intention of catching the eyeballs and monetizing the same later. All of us know the end result of that.
Why I think Live Search cashback is its stupidest move?
1. Microsoft seems to have not understood the basic of search advertisement. Users go to google for its organic search results and not for the advertisements. Hardly 4-5% of the searchers ever click on the advertisements. I think it is stupid to try to attack search with advertisement.
2. There are 2 types of buyers on ebay. Some who buy the product directly on ebay and some who come to ebay through advertisements. Let us say 90% of the users come to ebay directly and 10% come from advertisements. If the cpc is 1$, then ebay needs to spend only 10$ for 100 visitors. Assuming a conversion rate of 10%, ebay will have to spend 10$ for 5 purchases.
What happens now? Even the 90% people who were coming to ebay directly, will go and conduct a search for the product on microsoft live before purchasing. So ebay will have to provide the discount to all users. Hence total cost for ebay on microsoft will be actually a lot higher than that on google.
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