Loose Cannon: Microsoft's Live Search Ain't Dead-On

When a marketer proposes a shopping scheme that relies on changing consumer behavior, eye-rolling within the trade press becomes almost audible.

But if that scheme happens to be the brainchild of Microsoft, even the battle-weariest of us are loath to dismiss it out of hand.

These are the circumstances surrounding Live Search, Microsoft’s shopping-focused search engine, which offers cash back on certain purchases. The thinking behind Live Search is that consumers will choose it, over other engines, to find merchants and make online purchases.

This would be a wonderful proposition if a Web search immediately led to a purchase. But products that require more consideration, such as higher-ticket items, often aren’t bought right after the initial search. Shoppers log off and consult with friends. They look at catalogs. They go to dinner and ponder their objects of desire. Consumers who are influencers rather than purchasers ask their parents, or their spouses, or whoever controls the purse strings.

Because of this, the discounts must be compelling enough for prospects to return to Live Search once they are ready to make a purchase, as opposed to going back to the site actually selling the merchandise. Live Search savings don’t apply to consumers who search for something online and then buy it in a retail outlet or through a call center, or who surf straight over to the selling site without going through Live Search when they make their purchase.

Live Search’s discounts range anywhere from one percent to well into the double digits, although electronics and computer equipment tend to be on the lower end of this scale, if a casual browsing is any indication.

For the sake of argument, let’s assume the discounts are substantial enough to cause a consumer to return to Live Search, click through to the merchant’s site, and complete the purchase. Is this a customer a marketer wants? Probably not. This type of customer will cherry pick bargains wherever he can find them, as opposed to developing loyalty to a Web site.

The chance of this customer buying ancillary goods with higher margins is minimal. Thanks to the Web, this type of customer can always find a lower price on ancillary merchandise, especially if a marketer sells products that are effectively commodities.

Microsoft collects rebates from participating merchants, banks them, and two months later hands them over to registered Live Search users. I can see consumers taking a chance and exploring Live Search a few times. But they’re likely to be put off by the delay before rebates are credited to their Live Search accounts. According to Live Search’s promotional material, there’s at least a 60-day lag after a consumer makes a purchase, after which “you can claim your cold, hard cash”.

A sixty-day wait for a rebate on a low-ticket item? Cold, hard cash my foot; that’s cash that has undergone rigor mortis. (Microsoft’s promotional materials claim the delay is necessary in case shoppers decide to return their purchases.)

The B-to-B market, which is better temperamentally suited to weather such delays, might find it worth its while to take advantage of these discounts, especially when buying office equipment in bulk. But business customers should be able to negotiate similar discounts with a single vendor, rather than relying on several potentially unknown suppliers.

In Live Search, Microsoft has designed a no-lose program for itself. The program throws off a nice bit of pocket change for Microsoft, in the form of the 60-day float on purchases. Small rebates on thousands, if not millions, of transactions, will add up to a healthy chunk of interest for the company. But participating merchants, who don’t get highly desirable customers in return for these rake-offs, probably won’t see much in the way of bottom-line benefits.

And I’m not confident Live Search will radically change basic search behavior. Not in a world where “google” has become a generic verb, and Yahoo has embedded its own search function within its customizable portal pages.

So kudos to Microsoft for trying something to shake up the search engine shopping experience. Unfortunately, simple cash back isn’t that something – and neither, most likely, is Live Search.

To respond to the opinions in this column, please contact richard.levey@penton.com