MSN Pays To Learn The Hard Way

If I offered you a chance to win prizes every week you read this column, would that make you more inclined to read it?

MSN is conducting an experiment to answer such a question with its new MSN Search & Win promotion. Will consumers flock to the perennial second-tier search engine (compared to the top two) if MSN rewards them for searching?

Many pundits have compared the MSN contest to iWon, the search engine that developed a rewards program for consumers who used its search engine and conducted various activities on its site. Yet iWon debuted in 1999, before Google launched AdWords and GoTo became Overture. This was back when browsing was still a perfectly sound way to access information online, before searching was reliable. If Google swallows its own medicine, then when the company launches the much-rumored Google Browser, it won't be called a browser at all. It will be a Searcher, or something to that effect. Really, who has time to browse?



MSN users in 2006 don't have time to browse. Most won't have time to play MSN Search & Win either. After trying it for a while at, I have to say that it's not that engrossing. A handful of searches bring up a sponsored link from MSN amid the other ads above the natural results; you click the ad to see if you've won anything. Searches that brought up the contest ad included "dvd player," "Xbox," and "shoes." Searches that came up empty-handed included "sports tickets," "scientology," and "Danish cartoon."

Thanks in large part to Google Scholar, I took a cursory glance at psychological research on how external rewards impact intrinsic motivation. Much of the initial research that came out in the 1970s said that tangible rewards such as money hampered people's motivation. Pay someone to do something he would have done anyway, and he will soon be conditioned to valuing the task for the reward, not for his interest in the task.

More recent reviews of the entire body of research on the subject have shown the effects aren't quite as pronounced. For instance, young children are much more affected by rewards than college students. Additionally, tangible rewards (cash and prizes) are what led to decreases in intrinsic motivation; verbal rewards ("Good job!") can actually help. In "Reinforcement, Reward, and Intrinsic Motivation: A Meta-Analysis" (Review of Educational Research, Fall 1994), Judy Cameron and W. David Pierce reviewed 95 experimental studies and concluded, "The only negative effect appears when expected tangible rewards are given to individuals simply for doing a task."

Other reviews, finding the effects of decreased intrinsic motivation more pronounced, note that psychology often butts heads with economics, which assumes that anyone will do anything for the right price. There's room for both theories. You've seen those Klondike Bar commercials, right? People will do crazy things even for ice cream. Meanwhile, NBC's lineup proves that people will do go to extreme lengths, such as eating bugs or sequestering themselves with Donald Trump, for a potential payoff.

MSN is thus choosing economics over psychology. Yet even while choosing a route steeped in economic theory, that route could prove to be bad for business. For one, MSN Search & Win eats into the MSN Search business model.

There are two stages the consumer encounters with Search & Win. The first step is when the consumer enters a search term that triggers an ad for the MSN contest, along with the other sponsored links. The MSN contest ad thus competes with real ads; any click on MSN's ad is a click not going to an advertiser. Whoops. Then, on the landing page, MSN tells the consumer if he won; the consumer doesn't even need to register. So now MSN has a consumer who doesn't click a real ad, didn't need to register, and is most likely bummed because he didn't win. In other words, it's bad for advertisers, bad for MSN, and bad for the consumer.

It gets worse. This consumer searching for a commercial term most likely doesn't know MSN offers any incentives. So now you have a consumer who was really doing product research and might have found the ads relevant. Instead, this consumer is distracted by the MSN promotion, and winds up disappointed from losing (in almost all scenarios). MSN and the advertiser, meanwhile, lose out by missing an opportunity to connect with the ideal searcher.

No matter which discipline MSN adopts--psychology or economics--this search engine is going to get schooled.

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