• by David Berkowitz , May 27, 2008

Microsoft's new Live Search Cashback program has been routinely called a bribe by journalists and pundits. Microsoft and others have tried to bribe users before, but calling Cashback a form of "bribery" diminishes the meaning of the word.

Here's how Cashback works: A consumer searches a Microsoft property like msn.com or live.com for a query such as "shoes." In this case, three ads appear above the natural search results; the second one says "Buy Women's Shoes: Save on shoes at Live Search cashback" with the URL Search.Live.com/cashback and a logo for Cashback beside it. The link leads to a page of shoe listings at the Cashback site. Clicking "compare prices" below the first listing brings up a table with store names, the original store price, the Cashback discount, and the new "bottomline price." For the seven stores here, FootSmart has the highest store price at $91.98, but with its 25% discount leading the pack, it's listed fifth, as the results are displayed by bottomline price.

If consumers click to go to one of these stores to make a purchase, they first enter an email address to register with Cashback to receive information about the discount. Then they must play the waiting game. First they have to wait to accumulate $5 in Cashback rewards, if they don't get that much through the first purchase. Then there's a 60-day period before redeeming it, allowing room for returns  -- and it takes 14 more days to actually get the refund. One better hope the government's tax rebates provide more of an economic stimulus, because this deal's a lot of work. It can easily take ten clicks from the search through completing the transaction.

The consensus seems to be that Microsoft is bribing consumers to search and shop. Andy Beal's headline in MarketingPilgrim was, "Microsoft Gives up Earning Your Loyalty; Launches 'Cashback' to Bribe You Instead." Kevin Maney at Portfolio.com writes, "Good Luck with the Bribing, Microsoft." InformationWeek's Dave Methvin, who generally praises the product search experience at Cashback, still calls it "bribery" that "inevitably will have to end."

So, is this really a bribe?

I have a hard time seeing it that way. Checking dictionary.com and other sources, there are two ways to define bribery. The first is usually illegal: offering money or something of value to corrupt someone's behavior. Microsoft isn't incentivizing consumers to steal Google's servers or sell Yahoo stock en masse to drive down its price; Microsoft is incentivizing consumers to shop, albeit with merchants listed on its own shopping site. Do journalists hate Microsoft that much, to insinuate it's doing something that nefarious? And yes, the question's rhetorical.

Then there's the second definition, worded on dictionary.com as "anything given or serving to persuade or induce." Since you're reading this column, you probably have some connection to marketing. Guess what marketing is all about? Persuading and inducing.

If Microsoft is guilty of bribery here, then we all are. Look at how Cashback works: Advertisers offer a rebate through Microsoft which Microsoft refunds to the consumers who make a purchase there. How come the press isn't up in arms over every other rebate deal? Then look at it from the consumer's perspective. I'm shopping for shoes, I see an ad where maybe I can save money, I choose a retailer I trust with a low price, I click the ad, and three months later I've got $5 in my pocket, along with a decent deal on Manolo Blahniks. Is this really any different than other comparison shopping sites, including Yahoo Shopping and Froogle, where consumers decide based on the product price and retailer's brand?

That's not to say I'm in love with the program. I doubt it will affect Microsoft's market share, and Microsoft's taking a risk. The rebate works as a cost-per-acquisition model for advertisers. Microsoft doesn't take a cut and passes the advertiser's rebate to the consumer in full. Microsoft then promotes the program with its precious search ad inventory, where it's promoting Cashback for high-volume, high-value searches like "shoes" and "digital camera," so it loses out by knocking other advertisers out of those spots.

Ultimately, with Cashback, Microsoft is offering a comparison shopping service for consumers who are already shopping. This is different from other promotions Microsoft has offered over the years that reek of bribery much worse than Cashback. Consider Micorosft's "Search and Win" campaign from February 2006, where it offered rewards like electronics, sporting equipment, and gift cards for consumers who happened to perform a search on one of more than 1,200 pre-selected keywords in February (the list grew in subsequent months). Here, the incentive, or perhaps the bribe, was for consumers to do something they weren't going to do anyway -- first, search MSN, and then search for the keyword that would lead to a chance at winning a prize.

The campaign bombed. According to Search Engine Watch, comScore reported Microsoft's search market share dropped in February, March, and April of 2006; Hitwise and Nielsen//NetRatings also showed MSN declining. The campaign's domain, msnsearchandwin.com, now redirects to a French blog by Braun promoting its cruZer shaver that, based on the site's artwork, seems to target gay men. N'est-ce pas?

As for Cashback, consumers will likely find it when they're already conducting searches on Microsoft's sites. Microsoft needs those users to convert to gain more leverage with Cashback's advertisers so they'll spend more with Microsoft. You could say Microsoft is bribing advertisers.

That's not a bribe; that's an incentive. If it is a bribe, then all marketing is bribery. And whatever Microsoft's doing here, Cashback better work better than Search and Win. Consumers are smart, though. They may just hold out longer -- until Microsoft ups the ante again.