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Microsoft's search perks gambit eyes 22% of market up for grabs

Microsoft will pay and perk you to death to get you to use its search and the move may not be so silly. Why?
Written by Larry Dignan, Contributor

Microsoft will pay and perk you to death to get you to use its search and the move may not be so silly. Why? Roughly 22 percent of the search market is up for grabs so you might as well buy some loyalty.

That 22 percent figure comes from a survey by Piper Jaffray analyst Gene Munster. I wouldn't call his sample exactly scientific, but it's an interesting footnote to the hubbub over Microsoft's latest plan to buy your search behavior (Techmeme). Microsoft rolled out another search rewards program to grab more users (by the way the perks program only works with Internet Explorer).

Also see: Microsoft tries to lure more searchers with another giveaway

Does this make sense for Microsoft? Possibly if you buy Munster's figures.

In a survey of 326 users Munster found:

  • 22 percent of the market is up for grabs;
  • 38 percent of searches start from a browser or tool bar;
  • 46 percent say they never click on sponsored links. "We believe this highlights two factors: a user stigma against search ads, which could be due to lack of education for users who never click and room for improvement upon search advertising for those users who click sometimes rather than frequently," writes Munster.
  • 24 percent of searches are for commerce, 34 percent navigational, 21 percent informational and 21 percent for images maps and other.

Of those stats, the 22 percent of the market being up for grabs is critical. Munster writes:

In our survey, 22% of search users stated they did not know why they used their current search engine. We interpret this to mean that 22% of the search market is still up for grabs and these users represent an important market for Google's continued market share growth and for Yahoo! and Microsoft's continued market share declines. Of the 22% up for grabs, 63% were Google users, and 26% were Yahoo! users.

Munster's conclusion: That 22 percent could be swayed (mostly away from Google) with the right carrots (perks and payola from Microsoft).

Bottom line: Microsoft's search perks and pay program isn't nuts. However, there is a more direct route: Microsoft could use Internet Explorer to grab share. If you download IE it takes a little work to choose Microsoft's search. Meanwhile, IE's toolbar is optimized for Yahoo. In other words, Microsoft is paying you to use its search, but failing to use its best assets--toolbars and its browser.

The reason why Microsoft doesn't have the eye of the search tiger is pretty clear: The Department of Justice and regulators in Europe. If Microsoft really wanted search share it would use its entire arsenal against Google. But it would wind up back in court in minutes.

What's truly ironic about this search battle is that Google is also likely to face regulators too. Google has a full court press on to convince Washington D.C. to let its Yahoo search advertising deal fly.

Let's project ahead. What happens if both Microsoft and Google wind up on regulators' hit list? Could Microsoft take off the gloves then? The answer could be huge in the search wars. For now Microsoft will stick with the pay and perks for its search share.

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