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Thursday, June 29, 2006

Thinking of Using Google Checkout? Here's What You Get

  • Cheaper transaction pricing. Process credit cards for less! Hooray.
  • As a retailer, you're probably wondering: what's the catch?
  • You also get: Google telling its users that they're "protecting" customers "against" commercial spam (from you, the inherently suspicious retailer the customer just happens to have chosen to deal with)
  • Google getting data about your customers they really don't think you should have, but it's fine that they have it

Google has been trading money for user data in much of what they've done recently. Google Analytics is free, for example.

I'm guessing that means data is very valuable. So, that's why you're getting a deal.

It would be easy enough to listen to various counter-arguments here. But there's this nagging feeling you get, and sometimes you have to listen to that nagging feeling. Let's say I sell sculptures of giant, genetically-engineered French fries. The world is beating a path to my door. My customer data contains various trade secrets, etc. These are *my* customers. I want them to stay that way, in as many respects as legally and morally possible. I don't want parts of that relationship to start leaking out to the bank, the Mayor, Jay Leno, or some search engine guys. Not unless the bank, the Mayor, Jay Leno, or Google actually bought stock in my company (we'll call it GigaFries, Inc.), or lent it money.

The other nagging feeling I have is that Google is currying favor with "users" by being inherently suspicious of "merchants" in its rhetoric. It's a "judge and jury" approach to business ethics that is starting to wear thin. Back when I didn't know many big words, I believe we called that "elitism".

So - it's not just about a good product, or better usability. It's about much more than that. On paper, it would be great if as a consumer, I could buy without re-entering my details. That's been one of the real drivers of Amazon as a leader. No doubt all of eBay, Google, Amazon, Microsoft, Yahoo, and others would love it if their universal payments system became the standard. They can't all become the standard, unfortunately. Will Google's? Obviously their brand and existing relationships with merchants gives them a headstart, and the "predatory pricing" (CNET's term) gives them a second wind. Note that merchants are even being offered *free* transactions based on how much AdWords advertising they do! So take whatever you pay in transaction fees per month - if you spend a lot on AdWords - and it now feels like you're just burning money needlessly with your current transaction processing provider, be that $50, $200, or whatnot.

But it's hard to say at this stage whether all of this will lead to widespread adoption of Google's service.

Good summary here at CNET. Chris Sherman's article here is excellent. Here is Google's side of the story. This latter - the comments by product manager Eric Lange - shows that Google is going to be using pretty much the biggest hammer they have to induce merchants to adopt their solution. They'll put a "badge" next to AdWords ads run by merchants that offer Google Checkout. A seal of approval, if you will, implying something about the merchant (they're trustworthy?) that in reality proves only one thing: they've opted to use Google's payment processing service. Will this impact quality scores for ad ranking purposes, too? Directly? Indirectly, by impacting clickthrough rates? Sledgehammer!

For me, it's easy enough to come out on the "dislike" side of this announcement. It makes the AdWords auction more complicated. (What if one advertiser is a lead generator only, or sells high cost relationships, and another is a normal retailer? Too confusing with the badges implying that one business is "sealed" by Google, and another isn't.) It ties one's business choices to one's free use of the ad program. Freedom is reduced. New Hampshire is not impressed.

Posted by Andrew Goodman




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