Google Checkout Flexing Muscle

Google (NasdaqGS:GOOG) is serious about its new Checkout service.  How serious?  Serious enough to invest in it -- forking over more cash to all of its participating merchants.  This time it's not just advertising credit or low shopcart fees, Google is funding deep discounts on anything its participating merchants stock.  Example below.

Considering the predicted focus consumers will have on discounting this holiday season, merchants should enjoy the added promotion.  Google's bet is that it will help merchants adopt the Checkout shopcart even faster.

Momentum: Distributors

Surprisingly, Google is also securing serious traction with its advertising distributors.  A closer look at how Web merchants and their distributors (affiliates) are using Checkout provides more insight.

Established affiliates and distributors (i.e. comparison shopping engines) show strong signs of embracing (not fearing) Google Checkout as a serious conversion (turning browsers into buyers) enhancer through use of that same exclusive, deep discount.  Distribution partners of Web merchants, like Dealtime (see below), are wasting little time in pointing consumers at the cash incentives offered by Checkout.

Why is this a surprise?  Not all affiliates provide "native visitors"; many, rather, provide arbitraged visitors (via paid search media) which retailers are, themselves, increasingly getting better at netting.  Established affiliates, however, rely less on use of paid search advertising to attract shoppers.  These affiliates are not threatened by Google's interest in offering merchants a very attractive, self-funding direct-to-consumer advertising solution like Checkout. They're embracing it!

Does Google risk driving away its once cherished affiliate advertisers?  Perhaps but Google has managed to reduce inventory, improve ad quality overall and raise prices quite well in 2006.  In fact it's taken a fairly anti-affiliate stance in many cases, weathering the storm very well as it weans itself off of affiliate dollars and moves to "go direct" to advertisers.  Affiliates and distributors who in the past relied on search to garner visitors are increasingly turning to other forms of Web selling such as drop shipping.

Momentum: Retailers

Will advertisers continue to tolerate the higher click prices?  Time will tell. 

Consider Google’s heavy courtship of National Retail Federation (via Shop.org) members this week in NYC.  Consider the quantity of large, medium and small advertisers jumping on board and the rate at which Google is signing them up since rolling out the service just a few months ago. 

Finally, consider Shopping.com’s bold move into Google’s turf (using both a shop cart and cost-per-acquisition approach).  [Shopping.com is owned by eBay (EBAY).] It would appear that Shopping.com smells blood as does eBay who bans the use of Checkout among its merchants.

Momentum: Partnerships

Google hasn’t waited long to strike up some interesting partnerships such as a promotion with Citibank credit & debit cards that rewards shoppers who sign up for both services.  They’ve even got a merchant referral (affiliate!) program.

What other partnerships has Google stricken to enhance the growth of Checkout and what are advertisers themselves saying about Checkout so far?  Will Shopping.com be the first shopping comparison [SCE] engine to go “back to the future” by returning to (don’t forget this is how all SCE’s were born) a cost-per-acquisition fee model?

Comments

[JeffMolander]

To clarify, Dealtime and Shopping.com are the same company. Dealtime rebranded itself in 2003 but kept the old brand around in both US and UK.

Also, it's interesting in that Shopping.com (along with many others it competes with) has always been troubled by its merchant partners' disdain for their bidding on brand names/performing arbitrage in search engines. Now Shopping.com wants to get hands on more customer data -- to own them (via their universal cart move). Should be interesting!

[DavidJackson]

Thanks for the clarification.

[Mike Hyland]

Interesting move by eBay/shopping.com/PayP... to try and head off Google Checkout's move to protect consumer privacy from Gorilla marketers like them. I'll assume they've all read my solution to the common ills of the affiliate advertising networks, and their pool of merchants... www.ecomcity.com/safeh... They sure know the PPCSE search term arbritage game regarding brand names when paying their monthly search partner bills to Google.

Capturing the shoppers privacy information at the point of sale always was the holy grail of direct marketers. Just ask the MetaRewards folks. An earlier article here on Shopping.com (Oct 6th) launching a single session multi-merchant shopping cart with PayPal checkout bastardizes my Safe Haven Sales network model with their hidden gottcha. True it launches them into a CPA revenue network model turning each merchant's product feed into both a PPCSE keyword fee and/or per sale commission source. Conflicts arise on both who owns the customer and who spins what happens to all the samll Shopping.com Dealtime.com affiliates driving traffic to those sites.

Needless to say the Google Checkout folks rather work on a model where the consumer doesn't become a victim of the Adwhores.