OK, Microsoft's Search Engine Scheme May Not Be Completely Stupid

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On Thursday, I somewhat dismissively wrote about Microsoft’s attempt to pay users to use its search engine, while promising potential advertisers they’ll only pay for their ads when someone actually buys. It seemed at the time like a deal struck from a defensive crouch by a software giant who still can’t seem to wrap its head around anything outside of operating systems and making Microsoft Word even more annoying.

But, at least according to MediaWeek’s Mike Shields, the plan seems to be going over pretty well so far:

Microsoft has signed 700 merchants—peddling 10 million products—to run low-risk, cost-per- acquisition search ads. And in a move soon-to-retire chairman Bill Gates hopes will alter the category’s fundamental business model, Microsoft will cut a check to users who click on those ads and make purchases.

“I think years from now, you may look back and say, ‘Wow. You know, search started to get a fair bit more competitive,’” Gates said.

Things are not so competitive now, of course, with Microsoft’s share of search at less than 10 percent, versus Google’s 60 percent. Most advertisers gave cashback at least a puncher’s chance to change that, while crediting Microsoft for trying to stir things up…

Rob Norman, CEO of GroupM Interaction, which is participating in the launch, said cashback’s impact ultimately will be judged on whether it wins Microsoft converts.

“What I’m most interested in is whether it will drive query volume,” Norman said. “The whole product is pretty impressive. My sense is consumers who visit MSN search and maybe hadn’t in six months or so will be pretty surprised with what they find.”

I’m still a bit skeptical about the idea of cashback search engine really taking off — Microsoft isn’t even close to the first company to think of paying people to use its search engine — but I’ll bow to the superior knowledge of those that have a real stake in the game, and wait and see how the Live Search plan ultimately works out. Still, I didn’t even fully quote Group M’s CEO above, who followed up his praise of MSN search with this kick-in-the-ribs closer: