googlesalesforce.jpgSearch engine Google and hosted software provider Salesforce.com announced a joint product that combines Google’s search result advertising program, AdWords, with Salesforce’s customer relations management software.

The goal of the product, called Salesforce Group Edition featuring Google AdWords, is to allow the companies to work together to target small to mid-sized businesses.

The deal is less than many market observers had anticipated, but is significant because it aligns Google and Salesforce on the application side, at a time when Google is upgrading its applications effort. Google faces efforts by Microsoft to leverage its software business to enter the advertising business more aggressively.

Here’s how the Google/Salesforce product works: A company using the product can connect directly to Google’s advertising platform, called AdWords. The company can decide to place an ad for itself beside a desired search result. People clicking on that ad are then taken to the company’s Web site, where they are presented with a form to fill out. This becomes a new lead in Salesforce’s CRM software.

Here’s more from InfoWorld:

The new product will immediately replace Salesforce.com’s Team Edition offering, said [senior vice president of marketing Kendall] Collins. It will be available in 14 languages and in the 43 countries where Salesforce.com operates. Under a promotional deal, the new offering will initially cost $600 for a five-user edition per year, as compared with $995 for the five-user Team Edition. The list price will end up as $1,200 per year. For users in Canada, Mexico and the U.S. who are new to AdWords, Salesforce Group Edition featuring Google AdWords also comes with a $50 AdWords credit.

Under the terms of the nonexclusive agreement, Salesforce.com will take 100 percent of the $600 annual subscription fee, while Google will garner the lion’s share of the advertising revenue generated, with the CRM vendor receiving a small undisclosed portion of those ad sales. Google’s hope is that teaming up with Salesforce.com will enable the company to reach new SMB customers.

It’s likely that this is the start of an intensification of the Google, Salesforce.com relationship, with perhaps the tight integration of Google Apps and Salesforce CRM to come.