1. After less than a year, Microsoft decided to discontinue its cash rebate incentive system that paid Bing users if they used the search engine to find and buy products.
2. Commentators barked that the system was clunky, complicated, and cheap—a waste of time and a laughable idea.
3. I disagree. A rebate system is a powerful strategic wedge in online search behavior related to the shopping process. Microsoft quit when it should have retooled.
Not many people knew about it.
About a year ago, Microsoft quietly launched an ambitious program with its whiz-bang new Web browser, Bing.
Basically, it worked like this: If you signed up for an account and agreed to use the Bing search engine on your way to your favorite shopping sites, Bing would give you a percentage of your purchase back as a cash rebate (from 2 percent to 15 percent). Of course, it wasn't necessarily instant gratification, but cash is cash.
And it wasn't just second-tier retailers (although there were a lot of those too), but big names including Barnes and Noble, Macy’s, eBay, and Foot Locker.
Needless to say, most people might (might!) remember the Bing media blitz happening at the same time and would certainly remember Microsoft’s final dance with Yahoo! It’s understandable if some smaller aspect of the marketing mix got overlooked.
But I think Microsoft may have taken the wrong lesson from the low attention level and pulled the plug too early on the rebate program.
Let’s think through the situation.
First off, some snarky Web commentators likened Microsoft to a technology “john,” basically telling people that if it couldn’t get traffic to its browser on its merits, it would be willing to pay for it.
Frankly, that’s just plain silly. Rebates are nothing new in the tech world, and slicing some piece of the marketing budget off to account for direct payments is a proven strategy. I think the opinion has a lot more to do with Microsoft’s overall positioning problem: It’s not as “good” as Google, and it’s not as “innovative” as Apple. It’s perceived, in popular culture although not in B2B, as a struggling giant who has lost its way.
I think the market share question is much more telling.
The graph above shows what everybody already knows: Google is the dominant player in search. The word "google" has become a verb. Bing? Not so much. Certainly, Bing was growing, but at the expense of Yahoo! market share, not Google, which wasn't really a big help if they were going to be on the same team.
So the situation was clear: Microsoft needed dramatic action to reverse a decade or so of ingrained behavior and provide a wedge against its formidable competitor.
And in true Microsoft fashion, it biffed the implementation.
Issues abounded. First, you needed an account, and the sign-up process was a bit intrusive. I am not sure how much I buy that: If they are going to give away cash, it stands to reason people would put up with a little start-up time invested, but I’ll defer.
Second, the vendor list—although significant—was limited. In other words, online retailers needed to be part of the program or it wouldn’t pay out. So if you had loyalty to a particular online retailer, Bing would be asking not only a change in search behavior, but also a change in buying behavior. I can see that—a more inclusive list of retailers (or one that didn’t require the retailer to sign up) could have worked better.
Third, users claimed the shopping experience wasn’t as good as Google. Really? The shopping experience with Google is good? That seems squishy. I think that had more to do with resistance to change than it did actual user experience.
Finally, the delayed gratification of the rebate check was not worth a paltry 2 percent. In other words, the incentive just wasn’t big enough. I’m ignoring for a moment the dozens of blog commenters who wrote they saved hundreds of dollars using the system over its deployment period. I can see where—to the average online shopper—it seems like a lot of work for a little reward.
I am sure these arguments and more were on the table when Microsoft execs pulled the plug. But I think they were wrong.
Google is not invincible, it is simply exceptionally good at the yellow pages function—getting you to what you want online. But getting you to the online buying experience is a different animal altogether and a perfect strategic opening for Microsoft.
To be fair, Microsoft said they’d be back with something better, but I’m suspicious. If they thought it was that good of an idea, they could have simply rolled out the new incentive to replace the old one without downtime.
I am not sure Bing will have another, better shot at Google.