On Wednesday, Microsoft announced a concept it hopes will give it the edge in the search engine wars: ad-funded cash rebates for customers who find and purchase products.

Dubbed Microsoft Live Search cashback, the new program partners with qualitys like eBay, Barnes & Noble.com, Overstock.com, Sears and Zappos.com . The complete Live Search cashback product portfolio includes more than 10 million product offers from more than 700 merchants, including more than 13 of the top 40 U.S. retailers.

Live Search cashback is built on technology and partnerships acquired through Microsoft’s October 2007 purchase of comparison shopping site Jellyfish. The company additionally announced it has delivered a new Live Search travel destination, Live Search Farecast, making it easy for searchers to find the best travel deals on the Web.

“We believe search can offer much more value to consumers and advertisers than it does today, and we see Live Search cashback as an fundamental opportunity to deliver

additional value,” Gates said. “Our goal is to assemble Live Search the most rewarding commercial search destination on the Web. Live Search cashback will help advertisers drive more online sales while giving consumers a new way to stretch their dollars.”

Exploring New Search Models

During his keynote address, Gates outlined three areas of focus for the company’s broad search vision: relevancy and selection, rewarding advertisers and consumers for engagement and expanding the role of search around the set of tasks like commerce, entertainment, navigation and reference through improvements in its user experience, intelligent tools and access across devices.

The opportunity to reach consumers via search advertising is huge and growing. According to eMarketer Inc., U.S. online retail is projected to grow to $335 billion by 2012, and today 68 percent of all those retail transactions start at a search engine. that translates to 3.7 billion commerce-related queries a…

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