Startup Chatter by Donna Bogatin

GigaOm, Om Malik: “This is not some PC-maker-schmuck they have in a headlock”

Forbes, Wendy Tanaka: “Microsoft’s advertising stunt”

CNET, Charles Cooper: “Microsoft’s new tack: bribery as a business model”

Search Engine Land, Danny Sullivan: “Hey Microsoft, bribing searchers is fine, frustrating them is not”

Techdirt, Michael Masnick: “Desperation sets in: Bill Gates finally launching his plan to bribe users”

Perhaps it is the bloggers themselves who are the desperate ones, for headline bait.

Google has sunk tens of millions of dollars into its supposed PayPal killer, giddily giving away Google Checkout for free to merchants and “bribing” consumers with big promotions, effectively paying them to search and buy at Google.

While Googley money in a consumer’s pocket is a good thing, though, Microsoft consumer goodwill is nefarious, in the typical tech bloggers’ skewed view of the marketplace.

Not surprisingly, the blogosphere also does not appreciate how Microsoft Cashback IS a Google monopoly killer.

Bill Gates, not so desperately, laid out today at the Advance08 conference the ecommerce market opportunity Microsoft is attacking, at Google’s expense:

U.S. online retail is projected to grow to $335 billion by 2012, and today 68 percent of all those retail transactions begin at a search engine. This translates to 3.7 billion commerce-related queries a month. The primary choice for advertisers to reach these search customers is the cost-per-click (CPC) model, where merchants pay a fee each time a searcher clicks on their ad, whether or not the potential customer makes a purchase. The cost-per-action (CPA) model, where advertisers pay only when a customer makes a purchase, or completes a specific transaction, gives advertisers a more precise return on their advertising investment, and is currently being deployed on a relatively limited basis. The CPC and CPA search advertising models represent the most targeted advertising approaches available today, but there is still room for improvement.

Microsoft hits Google with Cashback in the one place the Googleplex believes itself to be invincible: PPC.

By building both a destination and search driven free-to-online merchants ecommerce business development platform, Microsoft IS making an offer virtual storefronts will find hard to resist.

Instead of continually bidding up their own rate cards, for the sake of GOOG shareholders, online merchants will now be able to market themselves via search effectively cost and risk-free. Microsoft’s Cashback CPA formula is executed more as a direct merchant-to-consumer incentives sales strategy, rather than an advertising buy.

The legions of small, independent online stores that currently subject themselves to the Google always wins black box PPC auctions have an easy and free alternative in Microsoft, no bribes necessary: Cashback debuts with 700 merchants and 10 million products, all available with “cashback.”

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