Analysis: Google Offers gives Wallet a reason to exist
Google Wallet won't be available even in New York and San Francisco for a few weeks yet and the company tells Banking Day it has "no specific dates to announce" regarding an Australian launch.But Google's system for redeeming marketing promotions, Google Offers, is already in the field. It announced its first US deal yesterday: $3 for $10 worth of drinks and pastries at Floyd's Coffee in Portland, Oregon.Google Wallet has received far more exposure, but Google itself describes Wallet and Offers as two parts of what is essentially a single electronic marketing system for the offline world. Google's commerce and payments chief, Stephanie Tilenius, last week explicitly described a system that does two things together "all in one tap, while shopping offline": it allows payment via an Android smart phone, and redeems consumer promotions.Of the two, payments interest Google least: this function has been outsourced to Citi, MasterCard and others. Redeeming promotions is what drives the scheme.In commercial terms, Google has always been primarily a direct marketing firm. The company has long dominated global search-based advertising and last month took from Yahoo the number one spot in US online display ads. With more and more online direct marketing territory conquered, Google is keenly eyeing offline direct marketing - a far bigger opportunityFrom Google's perspective, offline commerce has one horrible failing: you can't generate a rich stream of electronic purchase data from the initial ad impression to the ultimate sale the way you can online.Google Wallet and Offers together aim to solve this problem in exactly the same way direct marketing pioneer Lester Wunderman did in the 1940s: with redeemable promotional coupons. Wunderman's coupons, clipped out of magazines and newspapers by frugal consumers, let his clients track the source of their sales 60 years ago. Google's new system does exactly the same for today's discount-hungry consumers, but with digital precision, using smart phones. When a shopper likes a promotional discount offer, Google Offers will let her send it straight to her Wallet with a single tap.None of this guarantees Google's success in this space. It still has to beat lingering security concerns, and get handsets into users' hands. It has to convince retailers to create the offers. It has to integrate coupon redemption into the payments process. It also has to wait for more merchants to install contactless payments facilities - even in Australia, which currently has more than a tenth of all the world's contactless terminals. And it has to engage customers, who, as Banking Day has previously reported, so far show little interest in contactless payments.That's a lot to do, even for Google.