Salesforce.com and Google announced a strategic global partnership today, but it wasn't the widely expected tight integration between Google Apps and Salesforce.com's hosted customer relationship management (CRM) software. Instead, the two vendors brought out their first jointly developed and co-marketed product combining Google AdWords with Salesforce on-demand CRM.

Speculation reached fever pitch in recent weeks that Salesforce.com and Google would integrate their respective hosted applications to counter Microsoft's move into on-demand software with its Live applications, which will include a hosted version of its Dynamics CRM offering and SAP’s recent announcement of its move into this market, with A1S. There were even suggestions that Google was ready to acquire Salesforce.com.

The two companies have a lot in common in terms of their company culture, their technologies and their belief that pay-as-you-go internet applications will become increasingly popular. "There's a natural fit," said Kendall Collins, senior vice president of marketing at Salesforce.com, of the relationship with Google.

The two vendors have decided to work together on a new offering to target small to mid-sized businesses (SMBs) and integrate AdWords with Salesforce CRM. Lindsay Armstrong, Salesforce.com co-president for Europe, Middle and Africa (EMEA) said the shared vision of on-demand, multi-tenant architectures between the two allowed Salesforce.com to work with Google to re-architect its product for SMBs within a year of buying the Google Adwords/Salesforce mashup application, Kieden.

AdWords allows companies to advertise their products to people using Google's search engine and to associate their ads with specific keyword searches so the ads may appear next to particular search results.

Using the new product, which is called Salesforce Group Edition featuring Google AdWords, a company can connect to AdWords and create an advert linked to particular search results. Customers clicking on that ad are taken to the company's website and encouraged to complete a form with their contact details, which then automatically becomes a new lead in Salesforce CRM. Those leads can then be shared around the company and managed through Salesforce CRM.

Users will also be able to link existing AdWords accounts to Salesforce CRM and to create new AdWords accounts, Collins said.

Potential customers can try out and then purchase the new product from a special microsite on the CRM vendor's website.

The new product will immediately replace Salesforce.com's Team Edition offering, Collins said. 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 (£301) 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.

Under the terms of the non-exclusive agreement, Salesforce.com will take 100% 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.

Armstrong said the monetary value from ad revenue was not a motivating factor in the move. Instead, the relationship would “get more radically simple products into the hands of SMBs, for whom IT or even marketing are not core skills, so they can get to manage their advertising revenue effectively.”

Salesforce.com's goal is to ensure that all of its CRM offerings have some component of AdWords, Collins said.

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.

"Where will we go next?" Collins asked. "Stay tuned."

Additional reporting by Miya Knights, CIO UK