Will cash back boost Microsoft's search?

The software maker is hoping that a business model long used by bargain hunter sites will have broader appeal to consumers and marketers.

REDMOND, Wash.--Microsoft's Live Search cash back program may be a new business model for Microsoft, but the underlying economics have actually been used outside the company for some time.

Bargain hunter sites, such as FatWallet, also offer cash back programs using much the same model that Microsoft is employing with its program.

In both cases, the referring sites get a certain percentage of the sale and give part or all of that money back to consumers.

Sites like FatWallet tend to appeal toward hard-core bargain hunters. One of the questions that looms over Live Search cash back is whether such programs have broader appeal.

Microsoft is playing up the change in economics for advertisers, who are able to pay just based on the actual sales that their advertising yields, as opposed to paying for everyone that comes to their site or views an ad.

As expected, the software maker announced more details of the program on Wednesday, ahead of a speech by Chairman Bill Gates. Initial partners for the program include eBay, Barnes & Noble, Circuit City, and Zappos.com, among others.

Microsoft said it will give its entire cut back to consumers, benefiting from the added search traffic as well as the user data customers are required to give in order to take part in the program.

The company also announced a Live Search-branded version of Farecast, the travel cost prediction service that it acquired last month.

Featured Video