The Cost Of Google Checkout: $58 Million
MarketWatch looked through a Google regulatory filing and found the number that I’ve been looking for: 58 million dollars. That’s how much money Google spent on promoting Google Checkout in all of 2006. Is that number likely to go down? Maybe, because Google isn’t aggressively discountintg this year like it did last year (just wait till the holiday shopping season, though). Still, there’s another number that’s guaranteed for 2007:
$0
That’s how much revenue Google Checkout will generate in 2007. Regardless of increased or decreased promotions, Checkout won’t bank a dime, because Google has decided that its big promotion for 2007 is not charging any merchant processing fees.
If $58 million a drop in the bucket for megabucks Google? Maybe, but its not the way I’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 can’t at least perform reasonably well without you dropping $58 million to get it there, maybe it doesn’t deserve to exist at all.
(via Payments News > Findory)
The deeper number I want to see is the increase in Adwords spending from merchants who use Google Checkout, and the increase in click through rates from users who see the Google Checkout icon in Adsense ads.
I’m sure the revenue generated doesn’t equal 58 milion, but I’m sure it makes the amount spent look more reasonable.
Also consider this - how much would has Google not spent on advertising for itself and Checkout? Amazon.com says it saves its ad money and uses it on discounts. Microsoft spends almost a hundreds of millions per year on advertising. This makes 58 million spent on a discount seem small.
Comment by Hashim | March 9, 2007
the fact that they are promoting it heavily doesn’t make it an inferior product in itself. buying market share is a perfectly fine strategy, even for a good product. the “doesn’t deserve to exist” argument sounds to me like the “we build it and they will come” version and we know how well that works. giving a year and ~$200 million ($68+whatever they will spend this year) to a product with this much potential doesn’t seem to be out of line either. this is investment + catch up. let the battles begin in ‘08.
Comment by lex | March 9, 2007
[…] The Cost of Google Checkout: $58 Million (InsideGoogle) […]
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Google needs to spend this much (and likely more) to supplant PayPal’s brand equity. If I’m buying online, I’m paying with PayPal.
Google could have slowly built GCheckout’s market share, nibbling at PayPal… but that’s not their style. They have the cash, so why not use it to buy into a market? This works for Google because they have (so far) managed to always offer the best product.
GMail killed Yahoo mail
GMaps killed Yahoo, mapquest
GReader is killing Bloglines
Is GCheckout the PayPal killer? Like lex says, 2008 will be very interesting.
Comment by Greg | March 10, 2007
[…] No more promotions, I mean it Sun 11 Mar 2007 | Posted by Max Leisten under Google Checkout , PayPal In “things that make you go ugh” news I ran across this interesting opinion on Google’s continuous Google Checkout promotions to drive adoption: Is $58 million a drop in the bucket for megabucks Google? Maybe, but its not the way I’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 can’t at least perform reasonably well without you dropping $58 million to get it there, maybe it doesn’t deserve to exist at all. […]
Pingback by ChannelAdvisor Blog » No more promotions, I mean it | March 11, 2007
[…] Thanks to Nathan Weinberg for notifying us. Read Comments (0) […]
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