Google Checkout Promotions Cost Google $58 Million in 2006
Nathan has uncovered the dollar amount Google spent in promoting Google Checkout in 2006 – $58 million. As Nathan points out, that’s the amount spent in promotions and $10-$30 coupons by Google, in an attempt to take some market share from PayPal.
If $58 million a drop in the bucket for megabucks Google? Maybe, but its not the way Iâ€™d want my company to do business. Google is pushing Checkout by buying its way into the market, not on any perceived merits of its product. If your product canâ€™t at least perform reasonably well without you dropping $58 million to get it there, maybe it doesnâ€™t deserve to exist at all.
$58 million to rapidly gain market share in an industry that is currently dominated by just one main player? Bargain! Think about how much Google is saving in traditional marketing and advertising costs, by recruiting merchants to do their advertising for them. Every time a merchant uses Google Checkout – which they can do for free until the end of the year – they’re telling their customers about an alternative to PayPal and traditional credit card options. Why spend hundreds of millions on advertising, when you can get the merchants to do the hard work for you? And, once those merchants take the time to set up Google Checkout, integrate it with their shopping cart, add logos to their site, etc., they’ll likely stay with Google beyond 2007, so long as the transaction fees are competitive (or cheaper than) PayPal or their merchant account.
Of course, the proof is in the pudding. We won’t know how much of a smart move this is, until we see Google Checkout’s market share at the end of 2007.