Microsoft chairman Bill Gates announced a new feature for users of MS Live Search (clicking a search ad and buying the advertised product through the Microsoft search engine, then receiving a cash reward) that is clearly intended to kick market-dominant Google in its PPC (pay-per-click) search advertising shins.

This cash-back-for-clicks shot across Google’s bow would benefit retail and consumer search engine users far more than the pay-per-click search advertising that helps buyers and sellers find each other in the B2B wholesale merchandise industry. (For one, savvy wholesalers do their search marketing through industry-specific vertical search engines. And for two, the cash-for-clicking program was designed for retail-level e-commerce through a general consumer search engine.) 

Still, Microsoft is tossing an interesting business grenade into the competitive battleground of search marketing, because what Bill Gates announced is a PPA (pay-per-action) business model for Microsoft Live Search. Pay-per-action – or pay-per-purchase as it’s also called – is a method of charging the advertiser only for searcher clicks that result in a certain action, like a merchandise sale.

This PPA plan from Microsoft Live Search works a little differently. It rewards a consumer searcher who (1) is loyal to the MS Live Search engine; (2) clicks on Live Search’s pay-per-click ads; and (3) buys something online from that click-through. That pay-per-action searcher gets a bonus or cash rebate back, a kind of “Thanks for clicking with us” incentive. 

Neither pay-per-purchase advertising, nor this new plan to pay cash to the click-through purchaser, has ever been a feature of The Big Three GYM (Google, Yahoo, Microsoft). It does not bounce back cash for any purchase through the search engine; participating merchants have to be lined up. And the search engine has to be willing to share search ad revenues with those merchants’ customers.

Then there is the question: What happens if it works? Even if the cash-back incentive drives thousands of new search users to MS Live Search, would Google — which takes 50% or more of the search marketing revenue pie in domestic and international operations – would Google notice? Reduce its pay-per-click search advertising rates? Offer pay-per-action advertising, too?

Alternative Outcome: It might be more like giant Goliath (Google) stubbing a tiny search ad revenue toe … and our hearing the small, third-ranked David (Microsoft) howl from either revenue loss, or not keeping enough click-and-buyers coming back for more to keep the program going.

We’ll keep tracking this pay-per-purchase experiment by one of The Big Three consumer search engines. Maybe it’s the Next Big Thing in search engine marketing.