• by Shankar Gupta , December 13, 2005

Marketing executives said they are wary of Microsoft's tentative plan to reimburse online users for using MSN Search to conduct searches, fearing that it will dilute the value of being associated with MSN and attract a lower-value audience.

The plan was put forward by Bill Gates at a conference in India last week. Speaking to an audience of Microsoft partners, Gates reportedly said that the company intends to reward users of its search engines with money, free content, or software.

But some search marketers told OnlineMediaDaily they were skeptical of the plan. "From the marketer's perspective, it raises a bit of a red flag any time you have to incentivize users to use your service," said Bryan Wiener, president of search engine marketing firm 360i. "We would have to get a real understanding of whether people were using the service because it was delivering the best value."

Wiener said that although higher traffic would help Microsoft's search ad product from a direct response standpoint, it would dilute the value that companies see from having their products associated with a good brand name. "On a direct response level, as long as they were not incentivizing the click, it would be good news," he said. "But I think paying users to use your service would stunt the growth of their branding argument--if you're a marketer, you want to be with the big brands because they're a good association with your brand."

Peter Hershberg, a managing partner at search engine marketing firm Reprise Media, added that attracting users with incentive programs is of little use, since few users would change their preferred search engines because of the program, and many of those who would are not the kind of consumers that advertisers seek. "There's some percentage of users that would, but I don't think that those are the users that MSN is going to build a profitable business off of, and I don't think those are the users that MSN is looking to attract," he said.

Hershberg also noted that other search engines have, in the past, offered to pay users to search with them, and have met with limited success. "We should also be cognizant of the fact that this isn't the first time we've seen this before--I don't think advertisers were dying to get in front of I-Won," he said. "AllAdvantage's model was a bit of a failure." I-Won and AllAdvantage are both search engines that have offered their users rewards--cash or gifts--to use the service.

Hershberg said that MSN is probably considering the model to close the gap between their service and that of current market leader, Google--but ultimately, only a better product will win that battle. "As far as Microsoft is concerned, everything is on the table in terms of cutting into Google's market share," he said.

"If MSN is in fact considering going down this path, they might be putting the cart before the horse. They should be having this discussion when they build a product that's either in line with or better than Google's."

As of October, Google accounted for 39 percent of search traffic--while Yahoo! was responsible for 29 percent and MSN accounted for just 15 percent, according to comScore Networks.