Microsoft says rebate program draws new searchers

SEATTLE -- Microsoft Corp. said Thursday that paying people to use its Internet search engine is attracting new consumers, although there is little evidence that those people are making a habit of it.

Under Microsoft's Cashback program, launched in May, the company rewards shoppers with rebates from a few cents to $20 or more on items they find using its search engine, Live Search.

When Microsoft began Cashback, the company said it would measure its success by the number of items advertised in the system, growth in its share of searches that lead to transactions online, and how happy merchants are with returns on their investment in Cashback ads.

In an interview, Frederick Savoye, a senior director of product management for Live Search, said the number of items advertised on Cashback has grown to 13 million, from 10 million at launch. Companies like eBay Inc. and Hewlett-Packard Co. say the ads they place on the Cashback site perform better than other paid search advertisements online.

A study conducted at Microsoft's request by research group comScore Inc. found that the software maker snagged 12.9% of product searches in the second quarter of the year. That's better than Microsoft's overall share of U.S. search queries, which was around 9% in that quarter, according to comScore, and that could mean Microsoft has found a viable way to draw new searchers.

However, overall search leader Google Inc. and No. 2 Yahoo Inc. both still outpace Microsoft in commercial queries, nabbing 58.2% and 24.3%, respectively.

Savoye said that 4.5 million people have been using Cashback every month since it started, and that the program has been effective in boosting Microsoft's overall search share.

Data from comScore, however, show Microsoft's search share rose less than a point to 9.2% in June, the month after Cashback launched. In July, Live Search's share dropped to 8.9%.

"We still have work to do, but we're very, very focused here," Savoye said.

Microsoft declined to say how much money it plans to spend on the rebate program.