It is no secret that Google, despite its ever expanding suite of products across different segments remains an advertising company. The company derives as much as 97% of revenues from advertising – That means $32.2 Bn in total advertising revenue out of the total $33.3 Bn that Google has. No wonder then that Google is currently the undisputed king of online advertising especially search advertising.
However, Google is aware that the market forces will not let it rest on its laurels and just do what it is doing. Microsoft is hell bent on making it big in Online with a clear focus on search (advertising) despite constantly losing money on its online business. Microsoft-Yahoo search alliance is the latest initiative from Microsoft to become a worthy competitor to Google in online search and eventually advertising.
Well, Google is not the one to play the wait-and-watch game. In an effort to conjure up more and more customers for its adwords business,
Google is now offering credit cards to it select US customers allowing them to spend money advertising on Google even when they are financially constrained to do so. The AdWords card will be Master Card issued through the World Financial Capital Bank and will carry an 8.99% annual rate
While the details of the offer is sketchy, the credit card is targeted at SME’s who may not have the budgets to run large ad campaigns especially during seasonal events like Mother’s Day etc. Since last few years, Google has intensified its focus on SME’s globally and has played evangelist for bringing these businesses online.
Adwords Credit Card will no doubt encourage increased spending from consumers and i am sure it will encourage new customers to experiment with adwords and qualify for credit at some point in future.
To think of it, Google is doing nothing new and is only doing what technology vendors have been doing for a while. IBM, Microsoft often finances software / hardware migration programs for universities and companies in order to entrench itself with the customer.
The recurring revenues in future purchases and subscriptions more than make up for the upfront financing. Google is trying the same thing with these adwords credit cards and hopes to build long term customers.
From the sound of it, the strategy looks win-win. However, the exact terms of these credit cards will determine the adoption. If the terms and interest rates are acceptable, Google is expected to gain a significant advertising spend from SMEs
What are your thoughts on Google’s credit card offering for advertising? Will this encourage advertisers to increase their online ad spending with Google?