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Salesforce.com Inc. and Google Inc. announced a strategic global partnership Tuesday, but it wasn't the widely expected tight integration between Google Apps and Salesforce.com's hosted CRM (customer relationship management) 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 Corp.'s move into on-demand software with its Live applications, which will include a hosted version of its Dynamics CRM offering. 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 been looking at where their businesses intersect and where they could both derive substantial business. They decided to work together on a new offering to target small to midsize businesses (SMBs) and integrate AdWords with Salesforce CRM.

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 immediately connect to AdWords and create an ad linked to particular search results. Customers clicking on that ad are taken to the company's Web site 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 (http://www.salesforce.com/google) on the CRM vendor's Web site.

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 US$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.

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."