At the top of Search Mountain waits a giant with world information domination and commerce objectives on his mind. Google is the top search engine and has maintained this status for 11 consecutive months. June 2006 comScore Networks data indicate that Google has 44.7 percent of all searches.
Google is going in a lot of different directions with mapping, mobile and software packs, but the main source of revenue is still from AdSense and AdWords sponsored listings. It is only natural that new services will be designed to facilitate revenue growth in its core business.
In March, 2005 Google acquired analytics provider Urchin. On June 29, 2006 the search giant announced the launch of a new service called Google Checkout-- a system that merchants, advertisers and shoppers can utilize to enhance the online shopping experience.
The giant is now armed with site analytics and even transactional data to support the advertising experience-- but what does a little shopping cart badge near a sponsored listing really mean for advertisers?
The cart badge special
Google Checkout is designed for small merchants and large enterprises alike. While other providers have invested in shopping facilitators like AOL Wallet and Microsoft's Passport, this is the first system to be tied closely to an advertising program.
You may have noticed a little shopping cart badge appearing in sponsored results listings. Of course, one of the first things (beyond the cost) an advertiser wants to know is how difficult it is to implement.
"Google Checkout is a purchase facilitating mechanism but not a shopping cart service," says Benjamin Ling, lead product manager for Google Checkout. "Each implementation is different and it's a bit more difficult than a plug and play. There is some process integration and coding that must take place."
Fee for service, or not
The fee structure is particularly attractive to small vendors and Google advertisers. According to Google, for every $1 spent on AdWords, $10 in sales is processed free through Google Checkout. A $10,000 monthly spend on AdWords will get you $100,000 in sales processed at no cost with no limit placed on spend or processed sales.
Non Google advertisers are charged two percent plus $.20 per transaction compared to PayPal's three percent and $.30 per transaction.
The users' billing information, email preferences and the contents of the shopping cart are collected by Google but kept in the strictest of confidence. Yet, one has to wonder about a single party having access to all of that information.
Is it the badge?
Will the badge provide an unfair advantage to advertisers? Perhaps, if the initial response rates from the little shopping cart icon are any indication of future complications.
"The initial findings are positive, but we want to make sure that we have statistically significant information before releasing the data," reports Ling. "To date, we have seen higher click and click-to-conversion rates with Google Checkout."
Ling also indicated that feedback from buyers and sellers has also been very positive thus far. However, if advertisers with the shopping cart badge next to their listing have an advantage over advertisers without the badge, the subject of arbitrary Google Checkout integration has to be a concern.
Perhaps the level playing field concern is what has kept other providers from integrating a similar system tied to sponsored listings.
The upside of the downside
Proponents of Google Checkout point to capitalizing on the trust relationship Google has established with searchers. Opponents worry that Google may now be able to access too much information and envision a value-based keyword pricing architecture tied to purchase data.
One advertiser imagined a notification that his keywords are now worth a 40 percent price increase since his audience clicks and purchases at a much higher rate than previously determined. Perhaps if said advertiser simply turned over his advertising budget, purchase system and analytics to the company selling his listings, he might just be able to justify the price increase.
I can see how one or two people might have some concerns about Google Checkout.
The question of fairness will have to be addressed, but it is very clear that adding a shopping facilitator to the purchase process is a smart move for Google in collecting yet another piece of the online shopping puzzle.
Kevin Ryan is the chief executive officer of Kinetic Results. Read full bio.
