Search Adv…You Get What You Pay For

Last week Microsoft announced the launch of a new search advertising model that gives cash back for completed purchases. Live Search Cashback is an about-face to Google’s search advertising model that in my opinion provides more value to advertisers. Google search advertising is based on  cost-per-click (CPC) where Live Search Cashback is cost-per-action(CPA). This means merchants only pay for an advertisement when it directly leads to a sale instead of merely interest (or accidental clicks).

I believe this would eradicate the click fraud issue with CPC. Moreover, surely the CPA fee charged by Microsoft is more than that of a Google’s CPC, which could provide more revenue to Microsoft once Live Search Cashback gains a foothold and it starts to retain some of the fee instead of handing it all to customers. Simply put, CPA makes more sense and I am all about innovating systems for greater usability and efficiency. While I dont think this alone will defeat Google, I do think it will push the industry toward more effective search and likely overall online advertising.

 The Future of Search agrees and even looks at how Microsoft’s acquisition of Farecast could play a huge role. Results will crown the victor here and advertisers will determine whether quantity of clicks or quality wins out. Im betting on quality.