Microsoft Cashes Out Cashback Incentives for Searches

Two years ago Microsoft started offering search users a cashback program for buying items through its Internet search service. Now, Microsoft has announced it is shutting down the service effective July 30, 2010…and all signs point to the main reason being lack of user interest.

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Microsoft initially launched the Cashback program back in 2008 as an incentive to get users to user Windows Live Search; the Cashback incentive program moved to Bing when Microsoft launched its latest Internet search service a year ago. However, while Bing seems to have settled into a relatively stable third-place ranking amongst the major search engines, the Cashback program hasn’t fared so well: although Microsoft got over 1,000 merchant to participate in the program, Cashback never gained much traction amongst Internet users.

“When we originally began to offer the Cashback feature, it was designed to help advertisers reach you with compelling offers, and to provide a new type of shopping experience that would change user behavior and attract a bunch of new users to Bing,” wrote Microsoft’s senior VP of Online Audience Business Group Yusif Mehdi, in the Bing blog. “But after a couple of years of trying, we did not see the broad adoption that we had hoped for.”

Cashback was intended to offer discounts to users who did their online shopping through Bing or other Microsoft services: when users searched for a product or service, if a Cashback deal was in place, a discount would be reflected in the price and carried over to the retailer’s site when the user went there from Microsoft’s search pages. Microsoft says some merchants got good returns on money spent with Microsoft through the Cashback program, but the service had a few critics too,including folks who folks they could sometimes beat Bing’s Cashback deals simply by going to the retailers directly.

Cashback users will be able to redeem their Cashback savings through July 30, and Microsoft is waiving the minimum $5 minimum payout beginning July 31 to encourage users to redeem any savings they have accrued.

Microsoft says it plans to apply lessons learned from Cashback to new programs aimed to help both advertisers and Internet users, but revealed no details.