Intuit and Google strike at the “long-tail”; Intuit buys StepUp

September 14, 2006 | Matt Marshall | Comments | |

intuitlogo.jpgThe Google alliance with tax and accounting software company Intuit is a pretty impressive one, if you look at the details.

Google has long been trying to tap into the “long-tail” of small businesses that aren’t online. Less than half of small businesses are online, and so they’re not taking out ads on Google either. Google stands to profit if it can give these businesses Web sites, and then encourage them to take out ads to be placed beside Google search results.

This alliance with Mountain View’s Intuit is a smart way to do that. Under the accord, small businesses using Intuit’s Quickbooks software get a free web site — significant, because less than half of the businesses using Intuit’s Quickbooks software are online. Google will let small businesses create their own ad campaigns by using Google’s AdWords software from within Quickbooks — with a $50 credit to start.

Dean Takahashi, of the Mercury News has a good summary of the deal’s highlights here (Merc site is temporarily down):

  • Significant will be Intuit’s transfer of a small business’ information about products to Google Base, Google’s database of classifieds. So people on Google searching for specific products will find the company’s products. Intuit will build Google’s Desktop Software into Quickbooks, allowing Intuit’s customers to search their computer for information when they do Google searches.
  • Finally, Intuit said it bought San Francisco’s StepUp Commerce for $60 million. As Dean explains: “StepUp provides a way to take Quickbooks product inventory information and put it into Google Base software, so that consumers searching to buy something can immediately see how much inventory a business is carrying for a certain product.”

    • StepUp had raised under $10 million in venture financing from investors, according to VentureWire (sub required). The investors included Allegis Capital, Granite Ventures, and Pennsylvania Equity Partners. Granite’s Standish O’Grady said he invested in the company’s $6.6 million round less than a year ago, and that the deal yielded a “good return.”

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    • You mention creating "ad campaigns by using Google's AdWords software from within Quickbooks." That's the key to this deal. Google needs to execute this very well. If there's simply a link from Quickbooks to AdWords with a $50 credit, this deal is worthless. Why? The AdWords platform is very complicated. It's not like creating a company description and picking some categories for a YP listing. The AdWords system is dynamic, where ads are ranked based on bids, historical performance, quality of landing page, geographic settings, etc. This is not a "set and forget" proposition.

      Google recognizes this and developed a simpler version called Starter Edition. This is a complete failure for many reasons. For instance, it opts the advertiser into the content network. That means the advertiser is buying contextual advertising which is nothing like search engine advertising. It also only allows for the creation of a single ad. Most small businesses will have multiple products/services to advertise and will need different ad text and keywords for AdWords. Google needs to find a compromise between Starter Edition and Standard Edition. This "Quickbooks Edition" must be for search engine ads only, allow the creation of multiple ads, and provide for simple management and reporting. If Google doesn't create a customized version of AdWords for Quickbooks users, this deal will not be impressive.
    • Richard, thanks for the perspective. So far, Google's had an easy time, gobbling up the low hanging fruit -- i.e., customers like you and me. But now its trying to get to the higher reaches, and you're probably right -- it may not come easily. Schmidt was talking about this two years ago, so its not like they're burning down the barn on this front...