bing is the sound of your cash rebate

Aug 19, 2009 | Mobile & Web

Bing shopping

Bing Shopping, previously known as Live Search Shopping, and before that MSN Shopping, had launched a cash back rebate program back in mid-2008, and yet very few people heard about it.  The terms are pretty generous: you searched for the product via bing/live/msn shopping, and if you purchased the goods you get a percentage back of the purchase price.

What was surprising to me was how little known it was.  Here you have one of the Big 3 search engines offering consumers 4-7% back for Buy.com purchases, as well as a whole slew of other stores like Overstock, Barnes and Nobles, Newegg, Walmart; not small potatoes on the eCommerce space.  And as long as you click thru Bing to get to these retailers, you get the rebate back after a little bit of work.  But it seems like nobody has ever heard of it; and that included me, living in the shadow of Redmond, with all the friends in the world working in Microsoft.  Two weeks ago I haven’t heard a peep about it, and I consider myself a shrewd bargain hunter.

And up until recently, that was a microcosm of what MSN/Live Search was all about.  They couldn’t get people to pay attention to them even when they were doing things right, or even when they were throwing money at you.  They could have had the most amazing search technology in the universe and it wouldn’t have moved the needle in search market share.  I think Bing’s marketing campaign and a rash of good press coverage have changed that, a little.

But back to the rebate cash-back program.  This is not a new offering in the web.  Shopping site Fatwallet has ran a cash back program for years.  And if you look closely at the list of stores, you’ll find alot of similarities between the participating stores on Fatwallet’s list, and the Bing Shopping list.  But Fatwallet is a bit of a niche site, for those bargain hunters who really go to alot of trouble to save a bit of money.  Bing search takes the concept to a whole new level of accessibility.

I believe Fatwallet, an independent site without major financial backing, is able to offer the discount because these retailers offer to kick back some commission back to Fatwallet for driving traffic to their site.  Add on the loss rate for users who don’t bother claiming the cash back later on, Fatwallet was able to make a decent profit on the scheme.  For example, if you go thru Fatwallet to Buy.com, you can collect upto 2.66% of rebate.

But that’s meager compare to Bing’s 4-7% rebate for Buy.com(which doesn’t even count the ongoing “double days” promotion, where the rebate is doubled to 8-14%).  It could very well be that the Bing folks are able to drive a harder bargain with Buy.com than Fatwallet was able to, or that Bing were able to throw in search advertising and other goodies to sweeten the deal to Buy.com, but I wouldn’t at all be surprised that Microsoft is throwing money into the program out of their own pocket.

And it makes sense as an investment for Bing: Shopping is one of the key scenario for search engines, and if this cash back program can generate new user interest in using Bing rather than  Google, or even better yet, get them to stick with Bing for the long haul, Ballmer would be happy to pay for the program within reason.

How long this last is anyone’s guess though.  Google Checkout had done something similar when they launched, running a promotion during the 2006 holiday season, where you get $20 off any $50 purchase.  It generated a bit of buzz, and certainly enticed a good amount of folks to setup Google Checkout account, but I don’t know that it fundamentally changed their competitive position vis-a-vis PayPal.

My take is that Bing’s cash back program will help, but throwing money at users won’t fundamentally alter the challenge that is facing Bing.  And at some point, Ballmer is going to have to answer to shareholders about the cost of this program, and whether it is effective as a customer acquisition tool.

 

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