Six months ago Microsoft had an innovative – perhaps desperate – idea. It was called Live Search Cashback and it consisted of paying users for purchased products via search results, a sort of online rebate. Nobody knew if the move, part of Microsoft’s struggle to succeed in a fiercely competitive market and to build a better search engine would succeed. Microsoft’s latest data says is a two-bladed axe. According to the company advertiser interest is up, however web metrics firms’ market share figures are down.

The Live Search Cashback idea was launched amid controversy in May 2008. According to the company, it would offer “ad-funded cash rebates” to users who bought products by way of ads in Live Search results. Users with a Live account could select payment by check, direct deposit or PayPal. Over 10 million products from 700 partners were included in Microsoft’s offer. Among the partners counted are eBay, Barnes & Noble.com, Overstock.com, Sears, Zappos and others. The amount of rebate paid by Microsoft ranges anywhere from two to 15 percent, sometimes more, but is ultimately up to the merchant.

Live Search traffic instantly went up almost a full percent from May to June, by comScore’s data. Debates ensued over the long term viability of the idea, and the coverage to Live Search Cashback certainly caught the eyes of bargain hunters.

Six months later, we have a different set of numbers and a different picture. Microsoft has registered up to 30 percent more products offered by advertisers through Live Search Cashback, which now totals a range of nigh 13 million. The company’s announcement register an average of 4.5 million unique Cashback users per month since the start of the rebate program, for a total of 68 million commercial queries.

Microsoft Live Search referred almost 12 percent of online commercial transactions during Q2 2008, and was included in the top two U.S. search engines in five of ten commercial categories for conversion rates. These include Computer Hardware, Movies & Videos, Home & Garden, Music, and Travel. All-in-all Microsoft Live Search managed to show “competitive advantage” when it comes to attracting high-quality and big-spending buyers.

Unfortunately, according to web metrics the rebates didn’t manage their initial goal, which is to convert a decent amount of users to the Live Search faithful. Hitwise reports that July through September, Microsoft Live search dropped 0.1% to 5.3 in August then rose back to 5.4 in September. In that same timeframe, however, Net Applications data says that the Live’s market share rose from 2.9 percent in July to 3.5 in August, but then dropped to 3.2 in September. Currently, Net Applications measures Microsoft Live Search at just 1.57 percent for October.

Even if Cashback doesn’t seem to be doing what it was supposed to, Microsoft remains committed to the idea, and even announced partnerships with some more commerce firms. Search is an important battlefront for Microsoft these days, and even if the battle shows little promise any tactic even if dubious that might eventually give Redmond an edge is going to be played.