ANALYSIS
Google's AdWords Presents a New Frontier for CRM Marketers

Google (Nasdaq: GOOG) made its presence felt in the front office market in a big way this week when both Salesforce.com (NYSE: CRM) and NetSuite announced within hours of each other their embrace of Google AdWords as an integral part of their marketing solutions. To be sure, the AdWords platform by itself will not solve the lead generation challenge faced by most marketers, but this approach does at least recognize the need to close a loop when a customer expresses a need and it offers a helpful solution.

Many companies, most notably Salesforce.com, have been hawking the concept of what Marc Benioff frequently refers to as "mash-ups" for a while now. If you aren't sure what a mash-up is, it is simply the amalgamation of two disparate on-demand applications that produces something new and useful, sort of like a peanut butter cup, but not as tasty.

Three Dimensional

The common example of a mash-up takes street addresses from a database application and places them on a map or satellite image to provide a visual rendering of what was once merely a two dimensional list. Real estate agents, for example, find this kind of mash-up useful when planning to show a few homes to prospective buyers. The potential uses for mash-ups are as numerous as your imagination. Making Google AdWords work with Salesforce.com and NetSuite is more than a typical mash-up, and most of the work is done on the database side to register the words, track them and make the buy.

At the same time it's clear why each company chose Google, or vice versa. Google owns about 80 percent of the ad word market, which is estimated to be worth more than US$10 billion this year and growing at a rapid clip. Marketing has always been the weak link in many CRM systems for many reasons. Companies have not invested as much in marketing as they have in sales or service. Unlike those other departments, organizations keep marketing on a shorter leash, and no one is ever satisfied with the results gained for the amounts spent. Marketing done right is an expensive proposition, and companies are forever looking for ways to cut costs, often with predictable results. That's why this combination may hold a lot of promise.

The capabilities this kind of combination provides include a lot of lead harvesting for sales people as well as accounting that helps organizations manage their marketing spend. Most importantly, this kind of application makes obsolete the notion that marketers know that half of their budgets are wasted -- they just don't know which half. These announcements ensure that marketers will know which words get traction and which don't, and it will enable them to make adjustments accordingly.

Sleeping With the Enemy

Nevertheless, the things that interest me the most about these announcements is that they happened virtually together, and the fact that Google's fingerprints are all over everything. I am not saying this is a bad thing by any means, but it does signal some changes for the CRM industry and beyond. For example, Google has been the proverbial eight hundred pound gorilla in the marketplace for a long time, and a paradigm of a new economy company that charts its own course and that is inventing an important part of future infrastructure in the process. The question needs to be asked "Now what?"

There has been a lot of talk about what happens to the software industry in general if applications can be delivered on-demand and if they can be supported by ad revenues, free to the user. You can already see examples of on-demand word processors and spreadsheets that mimic the functions of Microsoft's (Nasdaq: MSFT) PC-based applications. In fact some of the companies developing these products are headed by ex-Microsoft product managers.

Those applications could erode market share for Microsoft. So far Microsoft is responding in the same way it originally did to the emergence of the Internet. Perhaps NetSuite and Salesforce sense this, and, since they already march to a different drummer, they are taking a strategy of "if you can't beat them, join them."

Power Play

The last point I want to make about this scenario is the power of the platform. Salesforce.com announced on Tuesday that it bought Kieden to be its point application in this new endeavor. Spending money like that is a clear sign of how important Salesforce thinks this direction is, but most interesting to me is the fact that Kieden is an AppExchange application, built on the Salesforce platform by an independent company and operated there as well.

A couple of years ago, I wrote that, for many reasons, this platform-based approach would be the way the software world worked in the on-demand future. At the time I thought no company would want or be able to build or buy software solutions for every contingency, and a federation of vendors would coalesce around a limited number of platform vendors. So far, it looks like we're on track.