Early Results of Microsoft Buying Search Audience

An InformationWeek story notes that MSN and Microsoft Live slice of search volume jumped from 8.4% in May to 13.2% in June, according to Internet metrics company Compete, and that what has increase business is prizes for users:

"A good portion of the additional Live searches are coming from the Live Search Club, where you can apparently play games for points which you can redeem for fine Microsoft products," said Steve Willis, a Compete analyst, in a blog post Monday. "All of the games involve using Live's search engine - to get the points, you have to search with Live."

Much of the story looks at whether this is realistic, but even if it is, this actually isn't good news for Microsoft. This is a classic example of bribing customers - I actually mentioned it here in April. Glad to hear that volume may have increased, but the problem still remains that this is not sustainable customer development. The theory is that if you bribe people to do business with you, some amount will remain out of habit so that when the bribes (whether called rebates, subsidies, or by another name) eventually stop. That might be true, but does anyone check the profitability of these "catches?" Someone drawn nothing more than one company's freebie is subject to being distracted by another's, and so the likely lifetime value of said customer mercenary will be low. Compare that with the acquisition costs, and it could be that you're actually losing money with each increment.