June 7, 2010, 4:46 PM

Microsoft to launch new programs for Bing after retiring cashback program

More than 1,000 retailers took part in the search engine’s rewards program.

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Microsoft Corp. plans to establish new programs to encourage online shoppers to search for products and retailers on Microsoft’s Bing search engine, writes Yusuf Mehdi, senior vice president, online audience business group Friday in a blog posting.

“For merchants and advertisers, we have some ideas for making it easy to get a broader array of products and offers into Bing, and we’ll share some details on this later this summer,” Mehdi wrote.

Microsoft announced Friday that it would end its Bing Cashback program on July 30 at 9 p.m. Pacific time. Consumers will have a year to redeem any remaining cashback rewards. Microsoft did not detail what kind of incentives it might offer after the cancellation of the cashback program. Microsoft launched Bing Cashback a year ago as it was introducing Bing as its new search engine, replacing Microsoft Live.

For now, Microsoft may face a backlash from the more than 1,000 retailers who were taking part in the program, says Scot Wingo, CEO of ChannelAdvisor Corp., which provides e-commerce technology and services that help retailers sell through multiple online channels.

“However, Bing seems to have considered this and is implying that they may be releasing a cost-per-click-free model, similar to Google Product Search, which would appease any retailers since that means free traffic,” he says.  Retailers can provide data about their products to the Google Product Search shopping service; there is no fee when consumers click on products that come up in search results as a result of those feeds, unlike the paid search ads on Google search results pages, which generate a click fee for Google when someone clicks.

Microsoft sites accounted for 11.7% of U.S. searches in March, up from 11.5% in February, says web measurement firm comScore Inc. By the end of 2009, consumers were using Microsoft sites for 10.7% of searches, up from 8.3% in the beginning of the year, with Bing accounting for most of the growth.  Still, Google leads in search, with 65% of all U.S. searching going through Google in March.

“Bing Cashback has been an impressive growth driver for the company, resulting in 50% plus growth for Bing ,” Wingo says. “That being said, they’ve had a bit of a hard time getting word about the program out there to consumers. I’ve frequently had to explain it to consumers, and it can be confusing compared with instant rebates and coupons.”

While many large and mid-sized retailers participated in the cashback program, the program may have reached the point where incremental returns were becoming low for Microsoft, says Udayan Bose, founder and CEO of NetElixir Inc., a search engine marketing firm.  “We think this point was reached in the fourth quarter of 2009.”

He says the average cashback amount varies by category but generally is between 8% and 10%. Consumers can earn back a percentage of the product price as cash back from retailers, with each retailer setting the amount of the rebate it offers. Consumers can receive rebate checks or have the funds transferred to bank or PayPal accounts.

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