Salesforce to Integrate Google's AdWords

The companies hope to give small business an entry into online advertising.
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took the wind out of its own hot air balloon with all the preview talk about a partnership with


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, which was finally announced Tuesday.

Nevertheless, the alliance should make competitors nervous.

The two companies announced Salesforce Group Edition software featuring Google AdWords, which will replace Salesforce's Team Edition, said Bruce Francis, Salesforce vice president of corporate strategy.

The alliance is a follow-on to Salesforce's 2006 acquisition of Keiden, whose software tracked AdWords, said Sean Whiteley, who founded Keiden and is now director of search marketing at Salesforce. "This time, we had all the product experts in the room" from the beginning of the concept phase, Whiteley said.

"This is a real break with the past," Francis said. The product addresses "what we see as a massively underserved market." Small businesses tend to be risk-averse to advertising online. The software will give them a way to create online ads using templates and tools, track their leads and analyze their ad-generated revenue.

Salesforce's penetration of the enterprise and its linking with AdWords is applicable across industries, says Loftus.

The partnership "will cause a reaction by all the other platform players," says John Loftus, managing director of the technology group at Safeguard Scientifics. "Whatever the relationship evolves into,

it threatens


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and the like."

"There will also be a lot of innovation that will spill over into technology and software," Loftus says.

"But there's a bigger strategy behind it," he says. "It's the start of an ecosystem between the two," in which many small software companies will thrive. Google began the move with its launch last week of Gears -- its way to enable offline use of Google software applications and part of a bigger play to "commoditize Microsoft's strength."

Google's goal is to displace the software-as-a-product model with software on demand.

Salesforce is discounting the price of the new package, which is directed at small and medium-sized companies. For the first 30 days, Group Edition featuring AdWords is being sold in a five-user edition for $600 -- half the list price.

The product launch is the first for Salesforce in which the software was developed with a partner from the ground up, Francis said.

Google and Salesforce have undergone a "mindmeld" in recent months over a shared guiding principle to deliver services over the Internet. "The business model that underpins both companies: Pay as you go, and pay for what you use," Francis said.