Having built an impressive merchant base from
scratch, Google’s electronic wallet is flexing its muscles a
little, charging online retailers that do not advertise on Google
for use of the search company’s Google Checkout product. It is a
not-so-subtle message to online merchants, and it is working
Anthony House, a Google spokesperson, told EPI.
scratch, Google’s electronic wallet is flexing its muscles a
little, charging online retailers that do not advertise on Google
for use of the search company’s Google Checkout product. It is a
not-so-subtle message to online merchants, and it is working
Anthony House, a Google spokesperson, told EPI.
Google offered the service for free since
December 2006 as it sought to build it nascent merchant business,
but now, with thousands of merchants and hundreds of thousands of
consumers on board, it has upped the ante in search of additional
advertising business.
December 2006 as it sought to build it nascent merchant business,
but now, with thousands of merchants and hundreds of thousands of
consumers on board, it has upped the ante in search of additional
advertising business.
Google Checkout operates like a typical online
wallet, letting consumers create a free account on the Google
Checkout site. They can then shop at multiple stores without having
to retype credit card numbers and other information. All of the
information is stored in a consumer’s Google Checkout account, so
there is no need to leave credit card or other information at lots
of individual retail sites.
wallet, letting consumers create a free account on the Google
Checkout site. They can then shop at multiple stores without having
to retype credit card numbers and other information. All of the
information is stored in a consumer’s Google Checkout account, so
there is no need to leave credit card or other information at lots
of individual retail sites.
In May, Google began charging merchants who do
not advertise on Google $0.20 per transaction processed through
Google Checkout, plus 2 percent of the total sale. Rival PayPal
charges 1.9 percent to 2.9 percent plus 30 cents a transaction,
while credit companies typically charge about 1.95 percent and
$0.30 for every purchase.
not advertise on Google $0.20 per transaction processed through
Google Checkout, plus 2 percent of the total sale. Rival PayPal
charges 1.9 percent to 2.9 percent plus 30 cents a transaction,
while credit companies typically charge about 1.95 percent and
$0.30 for every purchase.
The goal is to further increase Google’s
dominance of the market for text-based paid search advertisements
(ads) that appear near search results. Paid search is the largest
segment of the multibillion-dollar online ad market, and Google is
miles ahead of the competition already. Linking payments to search
ads forms a powerful combination that extends the search engine’s
dominance further into online shopping.
dominance of the market for text-based paid search advertisements
(ads) that appear near search results. Paid search is the largest
segment of the multibillion-dollar online ad market, and Google is
miles ahead of the competition already. Linking payments to search
ads forms a powerful combination that extends the search engine’s
dominance further into online shopping.
According to Google, advertisers with Checkout
have enjoyed a 10 percent increase in the number of times consumers
clicked on their ads. Google also says advertisers’ conversion
rates – the amount of times consumers made a purchase or filled out
a form – increased by 40 percent after they joined Checkout.
have enjoyed a 10 percent increase in the number of times consumers
clicked on their ads. Google also says advertisers’ conversion
rates – the amount of times consumers made a purchase or filled out
a form – increased by 40 percent after they joined Checkout.
While the vast majority of the merchants in
Google Checkout are small and midsize businesses, larger retailers
such as online jeweler Blue Nile, Dick’s Sporting Goods and Toys R
Us have also signed up for the service.
Google Checkout are small and midsize businesses, larger retailers
such as online jeweler Blue Nile, Dick’s Sporting Goods and Toys R
Us have also signed up for the service.
The goal is to lure new merchants and then
provide them with incentives for trying a new marketing strategy:
placing ads alongside Google’s search results. Google’s plan for
Checkout has always been about more than online payments. The
service is a calculated effort to expand Google’s base of
advertisers, which provide the bulk of the company’s
revenues.
provide them with incentives for trying a new marketing strategy:
placing ads alongside Google’s search results. Google’s plan for
Checkout has always been about more than online payments. The
service is a calculated effort to expand Google’s base of
advertisers, which provide the bulk of the company’s
revenues.
By converting merchants into advertisers Google
Checkout hopes to rival PayPal, which has millions of merchants and
123 million users worldwide. In the most recent quarter, PayPal
processed $9.1 billion in transactions, an increase of 37 percent
compared with a year earlier. While most of those were payments
between eBay buyers and sellers, the number of PayPal transactions
outside eBay rose 59 percent, to $3.3 billion.
Checkout hopes to rival PayPal, which has millions of merchants and
123 million users worldwide. In the most recent quarter, PayPal
processed $9.1 billion in transactions, an increase of 37 percent
compared with a year earlier. While most of those were payments
between eBay buyers and sellers, the number of PayPal transactions
outside eBay rose 59 percent, to $3.3 billion.
Google Checkout’s growth has not necessarily
come at a cost to PayPal. A recent report by US investment bank
Goldman Sachs said that based on conversations with various
merchants, Google Checkout appeared to be making gains against
traditional payment options and that PayPal’s share of online
transactions was also growing.
come at a cost to PayPal. A recent report by US investment bank
Goldman Sachs said that based on conversations with various
merchants, Google Checkout appeared to be making gains against
traditional payment options and that PayPal’s share of online
transactions was also growing.
One key difference is that Google stands to win
in more than one way from online payments. First, the ad of stores
who accept Checkout are highlighted with a Google icon – a Checkout
shopping cart. That increases the likelihood that users will click
on those ads, which creates more revenue for Google. What is more,
once users click on an ad, the availability of Checkout makes it
more likely that they will complete a transaction.
in more than one way from online payments. First, the ad of stores
who accept Checkout are highlighted with a Google icon – a Checkout
shopping cart. That increases the likelihood that users will click
on those ads, which creates more revenue for Google. What is more,
once users click on an ad, the availability of Checkout makes it
more likely that they will complete a transaction.
Checkout also gives Google more detailed
knowledge of its users’ buying habits, which the company could use
to customise the delivery of ads or search results to specific
users. If Google can perfect that model – and they are well on
their way to doing so – then it has created a new revenue stream
linking payments and ads.
knowledge of its users’ buying habits, which the company could use
to customise the delivery of ads or search results to specific
users. If Google can perfect that model – and they are well on
their way to doing so – then it has created a new revenue stream
linking payments and ads.
The benefits also flow to merchants. Google
ranks ads based on a secret algorithm that combines factors like
the price advertisers are willing to pay and the click-through rate
of a particular ad. The idea is that ads that are clicked most
frequently are those that users find more relevant.
ranks ads based on a secret algorithm that combines factors like
the price advertisers are willing to pay and the click-through rate
of a particular ad. The idea is that ads that are clicked most
frequently are those that users find more relevant.
“Google Checkout is a natural extension of our
commitment to improving the user search experience,” said House.
“Nearly 40 percent of users start the shopping process with search,
but more than half abandon their shopping carts before they
complete their transactions. Checkout helps improve those
experiences by allowing users to easily identify convenient and
secure places to shop, and then quickly purchase the goods they
need from those merchants.”
commitment to improving the user search experience,” said House.
“Nearly 40 percent of users start the shopping process with search,
but more than half abandon their shopping carts before they
complete their transactions. Checkout helps improve those
experiences by allowing users to easily identify convenient and
secure places to shop, and then quickly purchase the goods they
need from those merchants.”
The alternative payments market certainly is
one of the most competitive spaces online these days. A study
completed by Brulant, one of the US’s leading interactive marketing
firms, shows that 30 percent of 100 leading online retailers
currently offer alternative payment methods – a 25 percent increase
since February 2007. Of those, Bill Me Later saw the highest
adoption at 21 percent, with PayPal closely behind at 19 percent
and Google Checkout at 10 percent, double the adoption it saw in
February 2007.
one of the most competitive spaces online these days. A study
completed by Brulant, one of the US’s leading interactive marketing
firms, shows that 30 percent of 100 leading online retailers
currently offer alternative payment methods – a 25 percent increase
since February 2007. Of those, Bill Me Later saw the highest
adoption at 21 percent, with PayPal closely behind at 19 percent
and Google Checkout at 10 percent, double the adoption it saw in
February 2007.
“One of the most surprising findings in our
most recent evaluation is the increase in retailers offering all
three alternative payment methods,” said Adam Cohen, a principal
with Brulant, in a release “As recently as February of ‘07, none of
the retailers we surveyed offered all three methods. Today we find
5 percent adoption of all three, and at a variety of retailers from
Toys R Us to PetSmart and Rite Aid. This reinforces the ‘customer
is king’ mentality, as retailers begin to offer a multitude of
choices for checkout.”
most recent evaluation is the increase in retailers offering all
three alternative payment methods,” said Adam Cohen, a principal
with Brulant, in a release “As recently as February of ‘07, none of
the retailers we surveyed offered all three methods. Today we find
5 percent adoption of all three, and at a variety of retailers from
Toys R Us to PetSmart and Rite Aid. This reinforces the ‘customer
is king’ mentality, as retailers begin to offer a multitude of
choices for checkout.”
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