When small businesses need to make investments into IT or other operations, it’s often the companies selling them the goods that help with financing solutions. Now it looks like Google is using that model to help drive more dollars to AdWords search advertising. Google says that from Monday it is launching a new service in the UK, AdWords Business Credit, which offers credit to companies specifically in the SMB sector to boost their online ad spend with the company.
This is not the first time that Google has offered credit to drive more AdWords investment — it’s been running a pilot with 1,400 companies in the U.S. for a year. Before that Google had run special offers giving people credits for more Adwords spend each time they invested into Adwords. This, however, is the first full commercial service of this kind.
The track record in the U.S. has been positive enough to see the company moving to full launches: in a blog post, Brent Callinicos, VP Treasurer for Google, notes that 74% of those in the U.S. pilot now use AdWords Business Credit as their “primary form of AdWords payment.”
Google will be following the UK launch with more invitations to users in the U.S. ahead of a full launch there as well.
The UK launch is being run with Barclaycard in the UK and Comenity Capital Bank in the U.S. — both MasterCard-based cards.
In its Q2 earnings, Google noted that revenues, which it derives primarily from advertising, were $10.96 billion, a 21% increase over the year before. Revenues from the UK were $1.18 billion, or 11% of Google’s revenues in Q2. That’s level with the year before, and it could be that Google is going for a two-sided strategy here: both increasing business in the UK market, as well as coming up with more aggressive solutions for building up its ad business among a sector that has perhaps been hardest hit with the downturn in the economy.
While Amazon has lately been offering credit to its merchant partners in the form of Amazon Capital Services, Google is clear to note that AdWords Business Credit is only for AdWords — no other purchases allowed.
Interest rates in the UK will be variable 11.9% APR Representative, while the U.S. will be at 8.99%, as it has been in the pilot. Neither card will have annual fees, Google notes. This is lower than basic credit card rates but given that the spend on these cards will all be going towards Google, it’s a lucrative credit bet for the company. “You can assume we’re not doing this to lose money,” Callinicos said in an interview in the FT. He also noted, though, that this is not seen as a “profit center” for Google in the bigger scheme of things.
