When Google introduced its payments system (and more) Checkout earlier this year my belief was that it had to break with its long-standing approach of not doing any marketing and push the product because it was potentially important to the company’s future. After a slow start, Google has been doing that — though in a very Google way.
It has run some online ads but also elminated any fees and offered consumers discounts to help speed adoption. Here’s a NY Times (reg req’d) article today that offers a very upbeat assessment on where Checkout stands:
Yet, to lure merchants to its advertising system, Google offered them $10 worth of free transaction processing for every $1 in advertising they spent on Google.
But Google recently got more aggressive. On Nov. 8, it waived transaction fees for all merchants, regardless of whether or not they were Google advertisers, through the end of the year. Then, on Nov. 27, it began offering Checkout users $10 off $30 purchases at many e-commerce sites and, in some cases, $20 off $50 orders. And on Dec. 5, it announced that transaction processing would remain free to merchants through the end of 2007.
In other words, Google plans to lose money on every Checkout transaction for more than a year. Yet the company believes it will be worth it.
Part of the speculation in the article is about Checkout being integral to an eventual CPA-based ad option (probably for online merchants) like Jellyfish or Snap. Google has reportedly been testing CPA (cost per action).
Here’s what showed up this morning when I searched on the word “checkout.” Note the PayPal ad on the right and mutiple Google links (click to enlarge picture):
Here are some earlier posts on Checkout.
Greg Sterling is the founding principal of Sterling Market Intelligence, a consulting and research firm focused on online consumer and advertiser behavior and the relationship between the Internet and traditional media, with an emphasis on the local marketplace.