Microsoft News Tracker

Back in September of this year Microsoft shipped the Zune 3.0 release in their annual counter to Apple’s unveiling of new iPods. The expectation was that that was it for the holiday season, but last week Microsoft rolled out a bundle of Zune surprises for holiday shoppers.

First there were the price decreases on the flash Zunes (US $):

Not exactly doorbuster specials, but still a nice bonus.

Then there was the new Zune Pass subscription model:

Zune, Microsoft Corp.’s digital music and entertainment service, today announced landmark agreements with major and independent music labels to bring significant new value to the subscription music model. The Zune Pass subscription service currently gives consumers on-demand access to millions of tracks for $14.99 per month. Starting today subscribers will also get to select 10 tracks per month to keep and add them to their permanent collection (an estimated $10 value).

Hit the link for the list of music publishers, large and small, that are participating, but it includes the so-called "big four" as well as number of independents. I don’t know that this is necessarily a Zune incentive, but it sure is an incentive for Zune purchasers to acquire a Zune Pass . An interesting factoid is that "About 90% of Marketplace tracks will soon be available in DRM-free MP3 format."

And finally, there was a Zune 3.1 software update which provided, "a handful of free games, a refresh to Zune Social and incremental improvements."

All of these embellishments are swell, but the real question is whether they will give the Zune team any traction in their uphill battle with the iPod. It’s too early to tell, but I hope Microsoft isn’t counting on their new Zune ad campaign from Crispin Porter + Bogusky. If viewers have to turn to Google to explain the ad, it’s too obscure.

Last week Microsoft issued a press release touting the success of its Live Search cashback incentive shopping program which was announced in May. Besides the 30 percent increase in the number of product offers available plus new big name retailers participating, there was testimony from reference customers like eBay and ShoeMall about how it had improved their ROI in paid search.

The way this works is that the retailers pay Microsoft a commission for Live Search cashback sales and Microsoft in turn gives cash back to the buyer as an incentive. The incentive would be less than the commission at a normal incentive shopping site, but no one knows what Microsoft is paying. The point is that at least the reference retailers are happy with the return on their commission payments. Since this is effectively CPA advertising as opposed to CPC, it’s hard to see why they wouldn’t be unless hooking into the Live Search cashback infrastructure required a bunch of IT rework.

In any case, if Microsoft wants a incentive shopping site, they have certainly got a big one, but the real game always seemed to be to boost the usage of Live Search and there the results are less clear. To that end, Microsoft touted a comScore study that “in the second quarter of 2008, Microsoft Live Search referred almost 12 percent of total U.S. commercial online transactions and about 13 percent of total U.S. online spending among key retail categories” which still raises some questions.

As Danny Sullivan observes, it is hard to tell what this means without knowing what the percentages were before Live Search cashback, but the reported numbers are only slightly higher than the 10% US search share that comScore regularly gives Microsoft. Not to worry – Microsoft tells Sullivan that the “the immediate goal is to build usage and loyalty.” Somehow we knew that, but it isn’t clear that that is the story the numbers tell. Judgment on that will have to be deferred, but I think it is fair to say that Live Search cashback itself is off to a robust start.

Rupal Parekh at Ad Age reports that Microsoft has quietly brought in Crispin Porter + Bogusky to handle Zune advertising:

Microsoft has quietly handed creative duties for its Zune digital music player to Crispin Porter & Bogusky, expanding the ad agency’s work for the software giant, people familiar with the matter said.

MDC Partners’ Crispin is the shop Microsoft called in earlier this year in the hopes of injecting some cool into the brand. That chunk of business is worth some $300 million in billings. The result has been the somewhat erratic "I’m a PC" campaign, Microsoft’s response to rival Apple’s long-running and successful comparative ad onslaught.
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Microsoft put $41 million in domestic measured media behind Zune last year, and $18 million for the first half of 2008, according to TNS Media Intelligence.

It occurs to me that after the Jerry Seinfeld and Bill Gates comedy duo fiasco, I have never weighed in on the successor "I’m a PC" campaign. Quite frankly, it struck me as the kissing cousin of the “public service” style advertising that big companies like IBM used to prefer – not overtly bad, but rather bland and hardly what one would expect from the bad boys at CP+B. Perhaps Zune will give them more scope for their famous wackiness. Of course, the real question is whether it will do anything for the Zune.

Yesterday, Microsoft launched yet another incentive program called SearchPerks for Live Search users. If you are a US Resident and using Internet Explorer 6.0 or higher, you can head over to http://www.getsearchperks.com before December 31, 2008 (or the 1,000,000 user cap is reached) to sign up and download the Perk Counter software that will track your Live Search usage.

According to the SearchPerks Terms and Conditions, for every Live Search you get a "ticket" (up to 25 a day) and you can cash them in for the same prizes as in the ongoing Live Search Club promotion which started back in July of 2007. You must claim your prizes no later than October 15, 2009 and while it isn’t in the terms, apparently the counter stops adding tickets on April 15, 2009 according to many news reports (e.g. Search Engine Watch).

Obviously the idea is to get the users to try Live Search in hopes it will become their favorite search engine, but I’m frankly dubious that this will do anything to boost Microsoft’s anemic Web search share. I guess we’ll see come April.