With Windows 7 coming out next year, Microsoft makes big news when it announced to give cash back to users who use Live Search at msn.com and subsequently make a purchase. Hats-Off to Microsoft for thinking innovatively.

This idea has been tossed around by many, but Microsoft plans of giving some of the billions of dollars generated from paid – search back to the searchers themselves. Search engines will take it as the Discover Card – the engine that gives you cash back but Microsoft thinks that perhaps, there is scope of a co-operative marketing opportunity in this case.

Microsoft’s current market share is 9.7%, which will get a boost in the short-term period if they are planning to achieve more share than the Discover Card.

Rejoice for the Advertisers

It was none other then the advertising community who welcomed this idea with open arms. Google’s market share and popularity makes it exceedingly difficult to find alternative opportunities in the search advertising market. Most search advertisers at the most, have to settle for only 5% of the traffic from Microsoft and 20% from Yahoo, with the bigger chunk (75%) coming from Google despite all the rumors.

Almost all the sponsors who pay money for advertising use Google’s AdWords PPC program. Like Google’s, even Yahoo has been experimenting to power their search results as well, giving advertisers reason to concern. Also, with a looming GDP, marketing money generally flow to search, since it’s proven, measurable, traceable, and has a free entry.

Corporate savvies and advertisers understand and totally appreciate that announcement like this one from Microsoft often creates short-term opportunities. But also big opportunities in the marketplace. Advertisers, especially those in retail planning to buy paid placements in Microsoft should test their efforts over the next few weeks. Some of the major retailing partners of Microsoft are Sears, eBay, Barnes & Noble, 1-800-Flowers, Overstock.com, and PetSmart who have already signed on.

The Next Outlook

Of course, the optimum solution to Microsoft’s model would be having every major advertiser, small or big, in the program and not just a select 700. However, the difficult part is getting into the technical details, the tracking to sale, as well as the payout to the individual searches.

By far, Microsoft might just prove this model appropriate, only to have a small start-up with some highly potential MIT students break in and take the search market by storm. Not to forget, stranger things have happened. Just wait and watch how Microsoft’s Cash Back program takes the of market share back from Google.