dticorp
Joined: 19 Aug 2006
Posts: 1755
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| Posted: Thu Apr 19, 2007 12:30 pm Post subject: Finally, PayPal Takes the Google Threat Seriously |
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Finally, PayPal Takes the Google Threat Seriously
http://blogs.business2.com/beta/2007/04/finally_paypal_.html
Finally, eBay's (EBAY) PayPal subsidiary is addressing the threat from Google (GOOG) Checkout by teaming up with Yahoo (YHOO). The two companies have launched a promotion where they're giving away free payment processing and $100 in search advertising.
As with Google Checkout, this new deal lets advertisers save money on credit-card processing in exchange for paying up to advertise on a search engine. The notion is that Web users are more likely to click on ads and complete a purchase when they see a shopping-cart icon.
Google says that the lift in purchases (and search ads from happy merchants) is enough to warrant giving away credit-card processing, which usually costs about 2 percent of purchases, to advertisers who are spending money on AdWords. But for now, just to get people to sign up, it's giving away credit-card processing to everyone until the end of the year.
PayPal can't afford to just give away payment processing; that's one of the main ways it makes money. But if you're willing to sign up for a Yahoo Search advertising account and use PayPal's Express Checkout service, it will give away free processing until the end of the year, too. (I expect that eBay, which is set to announce earnings today, will give the Street some indication of the cost of the program in the conference call, which I plan to blog live.)
For Yahoo, this is a good way to get small merchants - Google's target - to try Yahoo search advertising. And for PayPal, it both promotes its newer Express Checkout service and gives its large merchant customer base a reason not to defect to Google. But I've got to think Yahoo is cutting PayPal in on some of the resulting advertising action - otherwise, this deal doesn't make economic sense.
However tricky it was to negotiate, this partnership shows how far Google has overreached. Yahoo and PayPal were once mortal enemies; Yahoo bought a PayPal competitor, launched a service called PayDirect, and was the last big PayPal competitor to fold its tent.
Rest of the article here:
http://blogs.business2.com/beta/2007/04/finally_paypal_.html
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