With Google controlling over 60 percent of measured search queries online, Microsoft is getting desperate to pull marketshare and protect one of its cash cows: Office. Earlier this year Microsoft launched a Live Search Cashback program, and the company is seeing some positive results.

Google’s strong position in the search market has enabled it to rapidly push outward toward other mediums like video, print and mobile. Essentially Google has become a software company that uses JavaScript extensively to make web sites truly interactive and more productive.

Advertising dollars have always powered Google’s success, and they continue to do so. Microsoft knows that, but so far has been unable to crack through Google’s web of sophisticated webware and intuitive search results. That could be changing though with the Live Search Cashback program.

It targets users where it matters: their wallets. With every purchase made through the Live Search Cashback program, users receive a cut of the profit. The major difference being that Microsoft is only paying out on a per-action basis instead of a per-click basis. That means advertiser dollars are virtually guaranteed to bring in a percentage of new business without being wasted on unqualified leads.

Though Microsoft loses a piece of the profit, advertisers love the greater ratio of advertising dollars spent to revenue gained.

Live Search referred 12 percent of all commercial transactions across the web – a number that is much smaller than Google’s referral share, but one that is also significantly larger than Live Search’s market share, which hovered around 9 percent during the same period, according to TechCrunch.

That could make Google a little bit nervous, though so far its auction-based price model continues to pay out very well. Microsoft’s desperate move could be paying off, and it could appeal to a different set of users who are particularly sensitive about clicking on any sort of “sponsored” link.

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Entry was posted on Thursday, November 13th, 2008 at 10:16 pm under Google, Internet, Microsoft.

Read more entries by Matt Jansen.
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