nextmuffin – digital marketing crumbs

This question probably sounds like a no – brainer to advertisers with products to sell online. So if you’re ready to go, you could just skip to the LIVE Search Cashback link below and complete the application.

But an announcement like this from Microsoft does raise some questions, and for big advertisers might lead them to question the benefits.

In some circles, LIVE Search Cashback has already drawn derision. As many will note, publishers prefer to monetize advertising space on a CPM basis, guaranteeing their yield per thousand ads (note: this is how Google launched Adwords, before switching to CPC in 2002). And if CPC doesn’t finish the job, publishers will sell on a CPA basis as a last resort in order monetize unsold inventory.

In this scenario, MSN looks out of better ideas, and by sharing the CPA with the end user is effectively nulling any actual revenue for themselves from the transaction (although perhaps they will take a % on each sale as per the affiliate marketing network model).

On the other hand, there is reason to be positive. Advertisers and their digital agencies are sure to jump on board, as a CPA deal is hard to resist. And by incentivising users to join in too, this seems to cover all the bases.

But for me, there’s really just 2 questions that matter:

1) Will LIVE Search Cashback offer users genuinely useful functionality that they can’t get elsewhere?
2) Will it drive additional new sales for advertisers?

The first question is up to MSN to prove. Cashback schemes have been around online for a while, without redefining the way most people search and shop online. Sure, MSN will attract some premium brands affiliate marketing has failed to, but what it really needs to do is offer new and useful functionality that users can’t get elsewhere.

The second question is for advertisers to examine. Signing up to LIVE Search Cashback will doubtless register some sales, but are these sales you would have received anyway? Or to put it another way, how many of those sales are incremental?

This is probably less relevant to most small, medium, and even some large advertisers.

But for companies who are market leaders in their segment, and spend big budgets on brand advertising both online and offline to make sure people know all about their products, will this kind of advertising sell any additional units, or will it just subsidise people who would already buy one?

One example of this could be Apple and the ipod. Is it really conceivable that Apple and the retailers that stock their products will sell more ipods in the next 12 months as a result of listings on LIVE Search Cashback? Or will they sell exactly the same number, but have to pay people a small % in the process.

My advice, as the direct response mantra goes is “test, learn, optimize”. But in this instance, pay particular attention to bottom line sales and see if there is any noticeable shift, or if the source of sales has simply moved from one column to the next.

Links:
How it works for Users
http://search.live.com/cashback/howToUs

Advertiser Sign Up Form
http://advertising.microsoft.com/advertising/cashback

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