Buying market share – when all else fails, get your wallet out

Six searches are conducted via Google for every two on Yahoo and one on Microsoft Live. That's not how Microsoft would like it. So the news from Microsoft last night (well, by British Summer Time anyway), CASHBACK!

Here's how it's worked so far.  The search engines deliver paid-for results alongside so-called organic (not paid for) search results.  When someone clicks on one of these paid-for results / aka "sponsored links" / aka "ads", the search engine charges the advertiser.  If these ads were served on an affiliate site, the affiliate site owner gets a share of that revenue.

So everyone is a winner.  The search engine makes serious revenue (Google made $1.31 billion on revenues of $5.19 billion in the last quarter, the majority from search related ads), searchers see ads relevant to their search query, and the advertisers attract relevant visitors to their websites.

Now Microsoft wants more of those searchers using their Live service than Google, and what better way to achieve that than to make it worth their while. Microsoft has announced a scheme whereby advertisers will offer consumers who click their ads on Microsoft Live a discount, the value of this discount being passed to Microsoft which then passes it to the consumer. The advertisers can afford this as Microsoft won't be charging them to advertise, but will charge them on purchase.

This achieves Microsoft's stated intention to move beyond CPC (cost per click) advertising, and into CPA (cost per action or acquisition).  Incurring an advertising cost only upon registering a sale has been considered by many to be a holy grail.  The maxim "Only half of my advertising is effective, if only I knew which half" is crushed, and advertising becomes a fixed and known cost of sale.

What's more, this may be described as the first big swing towards the "attention economy". That term refers to remuneration of consumers for the dedication of their attention to a certain organisation or brand (here's a post on this topic I wrote last September about the European mobile phone service Blyk doing much the same thing).  And it also helps answer the question I asked in February about how Microsoft's Engagement Mapping service might actually work.

This may work out to be the biggest "bung" in Web history, and it's going to be a very interesting battle.  On the basis that Google search is more relevant / more accurate (why else have they such a commanding lead?), I wonder whether searchers will continue to look for the best search results, or the best discount.  Perhaps they will simply divide their searches up into non-remunerative (Google) and remunerative (Live)?