Karen Webster

The “Why” Behind Google Buy

Remember the piece I wrote last week about whether payments can save the Internet ad giants?

Well, it appears that Google not only thinks it can, but is doing something about it.

Google announced on Friday evening that it is turning the World Wide Web into a searchable and buyable marketplace – on mobile devices. It will be adding a buy button to those ads those ads that appear at the top of the search page. Clicking on a buy button will take searchers to a Google-hosted page where said products are displayed and can be purchased via Google’s buy button and using a card that can also be stored for future purchases. This buy capability is limited to selected searches to start.

So what does this all mean? The debut of Android Pay? The demise of PayPal? A “Hail Mary” pass to save its search business?

The news is fresh and the details not yet well known, but here are a few things that this move could mean for Google, payments and commerce, more generally.

Let’s start with the basics – why Google did this in the first place.

Google’s Buy Button Is All About The Conversion.

Google is in the search business, but we all know it’s really in the ad business. That’s where it makes almost 100 percent of its revenue. And in the online search ad business, ad platforms only make money when people click. A click doesn’t guarantee a conversion—which is an actual sale or action on the part of a customer—but it sure helps. And conversions equal revenue for merchants. So let me repeat: more clicks means more money to Google; more clicks means more conversions and money to merchants.

comScore reports that 29 percent of all search activity is now done on mobile devices – and more of that is happening on phones than tablets – for the simple reason that more people own more phones than own tablets. And those numbers are steadily increasing.

But conversions on mobile devices sort of suck. So a click on mobile simply isn’t worth as much to a merchant as a click on a desktop.

The combination of a tiny screen (where 50 percent of the conversions are done by mistake) and the resulting low prices paid for ads on these mobile screens make for a pretty anemic revenue stream for search engines, a fact that we’ve seen play out again and again in Google’s earnings over the last several years.

So, what better way to increase the chance of valid clicks and conversions – and up the revenue ante – than to monetize advertising through payment?

Presenting a consumer searching for a product on a tiny screen with the ability to then also buy without the friction-laden experience of typing in card information onto a tiny screen, is a really good way to boost conversions – especially since that searcher has exhibited purchase intent by initiating their search in the first place.

OK. So that is all well and good, but assumes that consumers start their search for the stuff they want to buy on Google. And that’s where The GOOG has a big problem to solve.

Google’s Buy Button Is All About Not Losing Out

PwC reported recently that an “impressive” 49 percent of consumers start their product searches on a search site. That means that an even more impressive 51 percent – or the majority of consumers – don’t.

That also means that Google isn’t getting the eyeballs it once was and therefore never even has a shot at clicks or conversions. It also means that its competition for conversions and revenue isn’t other search engines – where they are still the big dog – but the places now where consumers do search and buy on the same site.  Google these days cares a lot more about the 51 percent of product services that start outside of search engines than the paltry percent that starts on Bing, Yahoo, or other direct search engine competitors.

Places like Amazon, Walmart, eBay, One Kings Lane, 1stdibs, Ruby Lane, Net-a-Porter, Expedia, Hotels.com, and the list goes on, are all places where consumers now start their path to purchase for the stuff they want to buy and then buy it right then and there. Consumers also go to places like Pinterest, Trip Advisor, and Yelp to get recommendations about what other people are buying, see pictures of the things they might like to buy and punch through directly to a retailer’s site to buy it once they are in the know. Sites like Lyst and Wanelo curate items based on users’ interests and preferences and send curated picks to registered users daily.

All this is to say that there is a reason that 51 percent of people don’t start with Google anymore. So, Google is hoping that by giving the 49 percent of people who still do an option to search and buy in one step, they can stop this downward sloping trend.

Now, Google’s buy buttons are intended to increase conversions by minimizing friction, so when it comes to payments, here is a little advice to the Google buy button team.

Google’s Buy Button Should Not Be All About Android Pay

We don’t really know yet how payments will happen with this new Google mobile device ad-enabled search-facilitated, shopping-driven buy button.

Some are already saying that this will be the THE LAUNCH OF ANDROID PAY!!!!

Who knows.

But my advice is for everyone, including Google, to stop obsessing about having a payments scheme named after yourself and start thinking like a digital commerce friction fighter.

Which would mean, in this instance, letting consumers use PayPal, Visa Checkout, MasterPass, or any other way to pay that they want – including <gasp> Apple Pay when they punch through Google’s buy button to make a purchase.

Making consumers create and then use a Google Wallet to activate Google buy button functionality only introduces friction and maybe even enough friction that consumers won’t give it a try. Keep in mind, 51 percent of consumers have already thumbed their noses at Google as a starting point in the path to purchase, and Google Wallet has so few registered accounts that they don’t even disclose numbers. (It’s reported to be fewer than 20 million.) So it’s not as if Google is starting from a position of strength as a mobile payments powerhouse.

Igniting Google’s buy button might end up being a whole lot easier and faster if instead of introducing a payments scheme named after themselves that they simply let a thousand payments options bloom and let consumers use any third-party wallet they wanted. Including their own, if people for some reason didn’t want to use PayPal or other wallets. But Android Pay would be an “or,” not the “only.”

Now, Google’s move to embed buy buttons into mobile-driven search is further affirmation of a huge trend that is transforming point of sale and how it will evolve over the years to come.

Google’s Buy Button Is All About Exploiting The Mobile-Enabled Commerce Trend

While Google’s arch rival Apple Pay is duking it out at the POS for physical store supremacy using NFC technology (which Amazon’s Patrick Gauthier says solves last decade’s problem), Google is skating to where the commerce puck is going – online and online via mobile devices. That’s where there’s oodles of friction today.  And that yields plenty of friction when it comes to converting the best of commerce intentions to actual sales.

Fifty percent of all eCommerce traffic is now driven via mobile devices (up 26.5 percent from the year prior) and 23 percent of all online sales is driven by mobile devices (up 35 percent from last year).

That’s all great stuff and an encouraging sign of the future of commerce. But unless a consumer has a PayPal account or a card on file at a retailer, buying online via a mobile device is a huge pain in the you-know-what. And that pain point is why 76 percent of all online sales are still driven by desktop, despite the fact that people spend 60 percent of their time on mobile devices. The cold, hard, sad reality is that they only spend 13 percent of their retail dollars there.

Google and its buy button wants to be part of the solution that closes that gap.

Of course so do lots of others. But in the end, the Google buy button, just like everything else in payments, will be decided by the consumer.

Google Buy Button Is All About The Consumer’s Interest In Using It

And that will be highly dependent upon how Google decides to approach the execution of its buy button strategy. If it makes people adopt Android Pay as a condition for using it, it might not go as quickly as if it doesn’t. Yet if it operates across all platforms and operating systems – which it appears to be doing – it will eliminate the friction of tying itself to an operating system or device that could limit its potential ignition. And if it starts with a great portfolio of merchants, it improves its chances that much more that consumers will at least give it a try.

Macy’s is said to be one of the merchants that it will onboard first. You gotta hand it to Macy’s – they are game to try just about every innovation out there – most recently the American Express loyalty network, Plenti, which they report is performing quite well for them.  They are testing and experimenting with lots of things in order to learn what consumers really want to use and how mobile and digital will transform their consumer’s retail experience.

But Macy’s is also a surprisingly major online retailer of its own – according to Internet Retailer – they are the fourth largest just behind Amazon, Walmart and Target. Giving those searchers another touch point on the Web to see and then buy from Macy’s could portend an interesting partnership for Macy’s and the Google buy button.

Now, some wonder why Macy’s and others would want to climb on board the Google buy button bandwagon since it’s said not to allow consumers to click through to the retailer’s site where they can capture all kinds of juicy data about that consumer. Since these buy buttons are part of ads that retailers are already paying for in response to product specific search terms, what do they have to lose? If Google buy buttons can accelerate conversion, that’s just all good stuff.

Google buy buttons also reinforce one other big sea-change in payments – one that we’ve been talking about for some time.

Google Buy Button Is All About Making Payments Invisible

The whole goal of sticking a buy button in a sponsored ad is to drive conversion – see point No. 1 – by eliminating the friction from payment and increasing the odds of a sale. But the buy button is all that a consumer sees and once a payment method has been registered to it, that method of payment becomes invisible. The experience becomes all about commerce. And, the less friction there is in the payments experience in a digital world, the more invisible payments becomes.

And accelerated commerce – increasing the odds that a browser anywhere becomes a buyer – is the end game for everyone in payments and retail.

So that’s my two cents on Google’s new buy button initiative.

What’s yours?

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