Marketing 101: Why Microsoft Shouldn't Offer Prizes Or Cash For Searching

I was reading the TechCrunch  blog and found this article: Microsoft Throws Prizes At You For Searching. The basic idea is that when you use Live Search Microsoft will give you tickets which, I guess, will be put into a drawing to win prizes. Oh yeah, and to participate you need install a piece of tracking software which is only compatible with Internet Explorer. Earlier in the year Microsoft came out with a Cash Back program that gave you cash back when you bought a product from an advertiser on Live Search. It worked like a mail-in rebate, with just as many hoops to jump through.

I've had similar discussions about this with TalentMover. We're thinking about community tagging and how that can improve resume and job post matching by providing a human touch. After all, the accuracy of multiple human eyeballs is exponentially better than any algorithm an engineer could write. Anyways, we started to get into discussions about rewarding people for tagging more resumes than our minimum requirement (because more input provides more accurate results - like increasing the sample size of a survey). However, we quickly dismissed the idea for one very basic reason.

By offering incentives above and beyond the value of the product/service you are inherently saying: What I'm asking you to do is not compelling on it's own. If I didn't offer this, you wouldn't do it. Therefore, I need to entice you to do something you really don't want to do because the reward is not good enough. I'm admitting my product is at parity with, or inferior to, other alternatives.

This is really bad.

When your product/service reaches the point of parity, there are two options you have. You can lower prices, because you're no longer special, or you can improve your product/service to make yourself special again. Since search is free to users, Microsoft chose lowered their price to a negative number to generate business. This is not a sustainable business model for two reasons: 1) They're losing money and 2) Prices changes are the easiest thing for competition to match.

At TalentMover, we decided to improve the tagging process to make it easier, faster and more enjoyable. In addition, we're kicking around some other ideas to make tagging other resumes even more valuable. The point is that we decided to improve the service rather than lower our price and Microsoft should do the same.

I'm not 100% sure what this would look like, but improvements can be made on the quality of results and the ease of use. Microsoft could also focus on different ways to deliver search results (Not just in a browser?, Not as a list?). The bottom line is that to compete effectively you need to offer more than a discount for the same product. Until then, Microsoft is going to struggle with search. Hopefully, this is just a quick fix until Microsoft can actually offer something of value.