As promised, I’ve posted some thoughts on Microsoft’s Cashback program over at Thomson’s Future of Search site. From the post:
….In essence, Microsoft has taken the affiliate model – where merchants pay channel partners for leads which turn into sales – and turned all of us into potential partners. If it sounds like a crass play to buy your search allegiance, well, it is. But Goto.com was crass too, and it turned into a multi-billion dollar market, the ultimate expression of which is Google. So before you judge it, it’s worth thinking about a bit more deeply.
There’s no doubt that with Cashback, Microsoft is attempting to disrupt the search marketplace. But there are only a few axes around which you can do that. One, you can disrupt the presentation of search. This is very hard to do, but it’s happened before, and will happen again. Secondly, you disrupt the business model of search. And third, you can disrupt how search is created (ie, the secret sauce of relevance). There are startups along every one of these axes of disruption. But with last week’s news, Microsoft is focusing on the second one (business model). Unless, that is, you read between the lines. That’s when we see the beginnings of disruption along lines one and three as well. ….
…. Lost somewhat in the analysis so far, I think Farecast is a key part of Microsoft’s strategy – it’s a disruption along the first axis of search – how search is presented. Those of you who have read Searchblog for a while may recall my initial post on that site: Rip Me Off No More. It really struck a nerve, I had more comments on that post than nearly any other in the history of my site. Turns out, people really like a search engine that promises to 1. help them find the best price and 2. does it in a trustworthy, intelligent, and timely fashion. …..
… Is disrupting the business model by paying search customers when they buy something a good idea? I think it is. But it’s not going to work unless we trust the search results in the first place. That’s where Farecast comes in. In the short term, Cashback will probably goose Mircosoft’s user loyalty numbers, which should also boost its share of searches overall. But longer term, the key to winning will be the integration of Farecast-like innovations into Microsoft’s offerings. I’d look for these to come in the next year, if not sooner.
Let me know your thoughts…
This is not really search- it’s deals. This is a competitor to Froogle, MySimon, DealTime, Shopping, etc etc. and not a true competitor to Google. Does Microsoft really want to start a “who can pay more” battle with Google, because that’s definitely not a battle they can win at this point, especially with the trust factor you mentioned.
PS the redesign looks clean and great!
People have attempted to disrupt via presentation, but nobody has in fact actually caused any disruption. Can you name one search provider who has been able to capture > 10% market-share by disrupting on the presentation layer?
So Google and Microsoft begin to engage in a very serious “search” turf war based on “buying into” or “holding onto” marketshare.
Seems to me that small businesses, the backbone of our economy, stand to benefit most from that kind of battle. And, when (not if) a serious presentation model disruptor threat surfaces, like Searchme, I think could prove to be, those disruptors just become easy pickings for either Google or Microsoft to acquire.
Change is now jangling in the air and Microsoft has deep pockets. Who wouldn’t want to “partner” with them with that business model that makes them the equivalent of an online commissioned salesman?
I, for one, wish Microsoft well on executing their “buy in” strategy. Their timing is excellent. This downward cycle gives them the potential of becoming a truly meaningful long term economic stimulus coming from the private sector.
Steve Hafner, CEO of Kayak.com provided an interesting analysis of the Farecast purchase at the Travolution Summit in London last week:
Microsoft is in a tough spot. They’ve gone on record to say they want to compete against Google. They’re not really going to get there with horizontal search so they’ve got a strategy to go vertical search. So they’re assembling the Microsoft Office of vertical search. You’ll see them buy a real estate site, a job site, a travel site, and weave that together into a search volume competitor to Google.
About Kayak he said:
Our mission statement is: Number one travel site world-wide. Best place for advertisers to market their services. And do it with the lowest operating costs ever seen. We’re going up against Google, we’re going up against Expedia, and we’re doing it with a Craigslist operating philosophy. It’s crazy.
There’s more. Full interview:
http://www.wilhelmus.ca/2008/05/kayak_ceo_steve_hafner_intervi.html
Love the new look of the site John.
http://www.yagoosoft.com
I agree with buy roseville potter. i dont believe they can win right now against google who is almost a monopoly right now. It will be interesting to see how far microsoft can go with it. I am sure they have a few ego’s over there that would not lay down easily.
In any online business there alws seem two obvious ways to get ahead….one is to redefine the way system works or beat the system instead. Google did ace job with Search, Adsense, Adwords few years ago by redefining the way people perceived Search or Internet Advertising. Microsoft (no wonder its a great firm) hasn’t been able to bring the “Wow” factor. Thus, I must say that their latest “Cashback” initiative seems a good start in this direction (atleast in theory). Agreed – they can;t beat the ubiquitous Google but then the Cashback is like a “Deals” site as mentioned above. And people won’t use it as a basic search engine – its NOT future of search for sure.
But then if I plan to buy a Plasma TV & get a good Cashback…I guess I wud definitely try MS Live 🙂
Quite a thought provoking post though….!
~Chinmayz
I noted something a couple days ago that *EVERYONE* had apparently missed:
Wall St. and tech opinion seemed to be almost diametrically opposed on this! :O
See http://gaggle.info/post/59/financial-business-news-vs-tech-opinions