Microsoft Live Search has launched an initiative called Cashback which offers a discount for products purchsed on MSN search. This incentive is similar to an affiliate program where the publisher (MSN) receives a cash bounty for purchases made from participating advertisers. Microsoft only gets paid if a user buys a product, compared to normal Pay Per Click advertising (which provides 98% of Google’s revenue) which generates revenue for every ad click.
The interesting part of the Live Cashback promotion is that Microsoft gives 100% of the discount back to the consumer. So if you purchase a digital camera on MSN Cashback

Microsoft needs to do something drastic to get back into the search advertising game. They’re third in U.S. search market share with under 9.1% of the online search market. Six months ago Microsoft Live Search had 9.8% market share. Google, by contrast, has 61.6% and is growing steadily:

Statistics from eMarketer shows over 50% of web users in the US begin online shopping using a search engine. 14% of online shoppers begin a product hunt using a comparison shopping search engine. 15% of shoppers navigate directly to their e-commerce site of choice (amazon.com, buy.com, ebay.com etc.)

Listen to Danny Sullivan, Mike Arrington and Hugh MacLeod debate Microsoft’s new Cashback strategy. Podcast Recorded Thursday, May 22, 2008. download the GillmorGang mp3 podcast.