My initial reaction was disappointment, because I had grown fond of Cashback’s Shopping program rolling in increasingly higher sales while still maintaining easy to manage ROI, based on Microsoft’s brilliant adjustable rate commission system. The hope was, that the program would continue to improve and grow in size as there should have been a lot of updates in the program’s maturation including more responsive content processing, better results pages, and the eventual move to Microsoft skimming some of the commission off the top. However, that never happened, and like most people I am looking for ways to replace performance after July 30th, when the shopping program will move to generating free natural traffic which will likely pull down sales significantly.

Now looking back after a few weeks to take it all in, there are several big takeaways from this announcement.

1) Making a commission based program work, is very very difficult.

Amazon makes it look easy, but really, how easy is it? Google has yet to get a successful program into production. Sure, Google Product Ad Listings is commission based for some, but Google is now putting together a CPC component, so how long will a commission based system be available before perhaps a move to the CPC structure is finalized? Personally, I think Google is accustomed to CPC programs, Google Ad Words  users were used to it, and that’s the direction this is going. So, all of this would have left Microsoft as the best and easiest option, not requiring an order integration beyond placing a tracking pixel, which most retail sites have in abundance anyway.

Microsoft’s attempts to bank roll the program for 2 years, ultimately was deemed to be a losing system because not enough traffic was being funneled through on a consistent basis (ie, not the mass adoption needed). It would have been nice, to set up a commission cut that would have justified keeping the program running longer to see what could be done. However, this seems to indicate the main commission based selling platform will continue to be Amazon.

2: Microsoft is great at killing things.

Really, that’s not fair. Any big company which acquires other companies and technologies, will naturally see some not integrate or die off. Take Google, which acquired and killed Dodgeball, the precursor of Dennis Crowley’s Foursquare. However, after pushing Cashback and Kin out the door recently, it does seems there is some momentum loss from the big launch of Bing. So, when looking at Microsoft programs that are not time honored institutions (looking at you Office 2010), it may be best to have a Plan B when planning ahead.

3. Q4 2010 is going to be very different from Q4 2009

Working within many tightly controlled retail calendars, I can say that almost everyone agrees the October through December defines the success of the year. There is such a flurry of sales in this period, that half the year should be devoted to planning it. That means when looking forward to Q4, a few expectations should be understood now:

A: Google and Amazon will be dominant.

The resulting hole in the traffic network which Cashback resided in, will likely most benefit Google and Amazon as both will become default destinations for shopping. Consumers will be plugging in a product search on Google.com, and those shoppers will be led through a network of well tuned Google shopping networks, including moving through Google Product Search, Google Product Ad Listings,  Google AdWords (not really Product Extensions, too few people click through), and Google’s natural results. Within those networks, Amazon will siphon some traffic away, even while increasingly larger numbers of people are starting in the first place, Amazon.com

Amazon’s site structure and ability to feed the right products to the right people, with a site layout and order satisfaction emphasis that ensures happy customers, Amazon continues to set the standard for what comparison engines wanted to be.

B. Consumers will look for discounts, still.

The Cashback program did show that discounts are still very compelling for consumers, it’s just those consumers need something simple instead of waiting 60 days to see if they get their discount. In addition to constructing discounts, retailers should explore any alternative selling technique that offers a discount, from participating in group discount sites like LivingSocial or GroupOn, to offering discount loyalty rewards on social networks like Twitter and Facebook. More and more, it’s clear that online sales are about communicating to people, not just placing an obvious checkout button.

So, 2010 does continue to be interesting in the realignment of online shopping, so I would expect some more key changes by the time October comes around.

So what is happening with MSN Shopping, um, I mean JellyFish, I mean Cashback, no…I actually mean Bing Cashback?

Of coarse some people still use the Jellyfish reference, but the comparison engine has now transitioned to Bing Cashback. Starting in May, Microsoft began to heavily transition over to their new comparison model by focusing their network on Cashback. This has created a natural conflict with MSN Shopping, which was Microsoft’s sole comparison engine before. The migration in May meant that MSN Shopping CPC listings and Cashback commission based listings were now merged (or conflicting depending on your perspective).

Since the official merger, Cashback merchant’s traffic has increased noticeably as Microsoft begins to push more consumers to the Cashback model. However, the converse reaction on a merchant’s MSN Shopping channel has been a steady decline. In the case where a merchant had both channels active, the commission based of Cashback sourced listings trumped and replaced the CPC or MSN Shopping based listings. This has been very telling in terms of direction for Microsoft. Recently the direction became clearer as Microsoft has now requested that if a merchant has both an MSN Shopping feed and a Cashback feed, that the MSN feed be discontinued. So, the turnover is almost finalized.

Of interest is the Ciao.com acquisition which was also made by Microsoft. In early July, Ciao announced that it was officially discontinuing traffic and that merchants should shut down sending products. The questi0n is why? Has Microsoft purchased and shutdown Ciao for their European based operations? Or is it that Microsoft eventually sees Ciao taking the place of MSN Shopping as a CPC destination?

My guess is that Ciao is valuable based on their international focus and that US based merchants should not expect to see much from Ciao in the future. After-all, Microsoft already had a PPC based channel in MSN Shopping, and we saw what happened there. However, what I have heard is that there is a future for CPC based shopping in Microsoft’s future. For now, merchants should not worry at all about MSN Shopping as this slowly fades away. If not on Cashback already, every merchant should be making the effort to gear up efforts now and get on here. Simply, why as a merchant, would you not want a commission based channel with reasonably easy integration, and where the commission is flexible starting at a low 3%? It’s virtually a no-brainer. Now, if only there were some easier ways to optimize for Cashback….