Blog Post

Why Google Is Doing Checkouts?

The discourse and discussion in the blogosphere today is Google Checkout.

“The goal here is to make it be one nanosecond from the time the customer decides to buy to the time the transaction is complete and the product is on the way,” Eric Schmidt, Google CEO says in an interview with The New York Times.

End of CPC Advertising?

Read between the lines – this is a dangerous and most brilliant assault on the “cost per click” (CPC) plans of Microsoft, Yahoo and everyone else who is coming to the party … late. This move is about cost-per-action advertising. It is about kicking up the online advertising business … another notch!

Lets compare the two – CPC and CPA based ads. In case of CPA, there are no wasted dollars, no click fraud, and all the revenues are coming from sales. As an advertiser, you have no risk. You sell, you make money, Google gets a piece of the action. Why would you bother with other options?

Who Is Impacted?

This move impacts three companies mainly – eBay, Yahoo and Amazon – because these are the three premier gatekeepers of online point-of-sale info. Google doesn’t have the information, and needed it. If (bold for a reason :-) ) Google can make the Checkout work, the three giants suddenly have lost their advantage over Google.

Having said that – Amazon and eBay are more at risk. Despite having a large number of “proprietary eyeballs,” they lack their own advertising system, and need to depend on third party. Both should have built one, but they didn’t. Costly mistake perhaps, since they have existing merchants & eyeballs, and could certainly monetize their own traffic if they did.

Yahoo is in a better position comparatively speaking since it has its own advertising system. (Maybe there is room for a big merger in the web-space? Sramana Mitra believes eBay+Yahoo should just get on with it.!) A closer alignment might be necessary if these companies need to create a CPA based advertising model, and thus blunt the Google incursion into their e-commerce sales / reduce their advertising costs (many of which go thru Google).

Why Google Is Doing Checkouts?

Going forward, the much talked about Google Payment system (the Paypal rival) could give them even more leverage and hurt rivals in the process. But in a larger scheme of things, it could be trivial. Why because for Google, the real advantage is not just to gain payments market share & revenue, but to increase AdWords sales and reduce click fraud through the creation of a fundamentally better advertising system — that is, CPA-based ads.

Yahoo / eBay / Amazon had one significant advantage over Google the past few years — knowing point-of-sale data. As of today, it is not that much of an advantage. Sure they can launch CPA-based ads themselves also, but by the time that happens….

41 Responses to “Why Google Is Doing Checkouts?”

  1. There is more to selling than simply advertising. There is more to buying than simply seeing an ad. If a direct link from ad to purchase worked, then all TV ads would have a 1-800 number so that viewers can “place orders now”. They don’t. The ones that do are long infomercials. The long, info part is about providing more information than “here it is. Buy now”.

    The shopping cart integrated into an ad idea may work in some cases, but I think there will still be a lot of CPC advertising, where by visitors read, think, book-mark, and return.

    As for the likes of Amazon and eBay, they have a completely different business model. I would not shop on Amazon for example, if they had ads. I go there for books. They do a great job of selling books, and now a whole lot more besides. I go there when I already know what I want. I don’t surf until I find an ad telling me what I want!

    It’s just another tool in the commercial toolbox, in my opinion.

  2. Though not as big as Amazon and eBay, affiliate network marketers like tradedoubler and valueclick’s commission junction will also be impacted by Google’s CPA-Adsense launch.

    One thing is for sure, online advertising just got more accountable , transparent and measurable. How is traditional advertising going to survive ?

  3. Eddie Smith

    Just CPA is missing the point…
    CPA based advertising has been around for a long time, and there’s a plethora of performance-based CPA networks that Google will compete with and put the screws to on deals.

    The Big Deal is Google’s ability to integrate its payment system into credit card transaction networks to tie online behavior to offline CPA transactions, and then have the advertiser paying based upon land-based store sales. How Google makes money from local advertising, which all the networks are struggling trying to figure out, is to tie online behavior (click on a coupon) to a registered user’s credit card via G-Pay, and then associate this behavior to the advertiser’s CPA goal (purchase at the store).

    Think about it… Once the user has registered their credit card with Google, Google acts as a trusted party to tie the consumer’s online interaction with merchant’s ads that are redeemed at their offline store. Search for “jewelry stores” in Palo Alto, you see 20 strores but one has a 40% off coupon redeemable in 24 hours. You click on the coupon, Google acknowledges your action, then you visit the store, buy and see the 40% off on your receipt.

    That’s a transparent CPA model that benefits the consumer, the merchant and makes Google (or any network for that matter) money from offline sales.

  4. Nice to learn I’m a minor leaguer in the affiliate ball game not subjecting my ecommerce merchant clients to the cookied antics and reach of major league or AAA affiliates. By insulating and focusing their programs to legit physical click affiliate partnerships they reap the benefits of any changes Google might throw at them. They have always ruled the natural SERPs and controlled the PPCSE spends by tight daily limits, with no desire for CPC traffic that doesn’t convert better then natural indexing results.

    My first move upon learning of Google Checkout, knowing all the Adwhore forces Wayne monitors are seeking leverage or defensive positions, was to go directly to several Cart/ecatalog providers and demand Google-Checkout API interfacing. Why? So I could arm myself as client webmaster and AM with answers to the inevitable questions coming my direction as this Google-Checkout, Adwords branding & CPA move hits the media. My affiliates have to get referral credit and my clients need first mover exposure.

    Not surprisingly the Cart/ecatalog providers were in continuous meetings on this very subject. Google has smartly restricted Google-Checkout Adwords branding to those entities willing to fully interface cart checkout to this consumer friendly payment option. The quick make a
    Google “Buy It Now” procedure button restricts passing product options, and doesn’t meet Google’s branding display guidelines as to % of total ecatalog offerings to display the Adwords logo. Here comes the merchant made for Adwords micro sites as they seek relief from the affiliate cookie cannons and PPCSE click cheats.

    My advice for Google to generate Google-Checkout traction is for them to purchase someone like and push it upon their Adwords merchants as an immediate interfaced hosted solution. Turn Volusion into a real multi-merchant single checkout cart/ecatalog system and make it the engine for phase II of Froogle and the private AOL shopping community. For months they have digested the model which guarantees Ad blockers and 100% CPA reporting are taken out of Waynes 4 risk factors. (#1 & 2)

    Physical clicks, via the Google Checkout Now buttons, given only to trusted consumer responsible merchants, is an entry barrier to all the common blackhat affiliate players and the Adwhore cookie cannons. There goes #4.

    If Google foregoes any membership in the IAB and DMA refusing any temptations for selling off conversion stats, surfing habits and consumer privacy info they are home free on #3. Can they pull this off by siding with the all powerful ecommerce entity that has no representative inside the Ad industry boardrooms. The consumer in control of the mouse. If they really have learned the meaning of my aged tagline “What have you done Today to put real value into a click … from a shoppers viewpoint” they will turn the pay-per-performance industry on it’s ear.

    Meanwhile Google CPA and Checkout will offer me an easy way to double sales again for my clients… without hurting their enviable conversion ratios. I have no blackhat, PPCSE abusers or grey area affiliates to even factor into any Google campaign decisions. They just keep on averaging 1 sale per 20 physical clicks, year after year.