‘Google Groupon’ Category
Swisher’s contacts have confirmed that the deal could be done by the end of the day although nothing is set in stone until the ink has dried on the dotted lines.
At $5.3 billion, Groupon’s purchase would be worth more than Doubleclick and Youtube combined and unlike the latter would bring in significant revenue from day one.
Google is Groupon’s main traffic provider but ironically, Facebook which already has its own Facebook Deals service, does account for around 10 per cent of Groupon’s traffic.
That said, while Groupon’s current situation allows it to command a huge premium should the acquisition go through, some have questioned whether Google wouldn’t just be better off investing the money in its own local based services and reaping the benefits in the long run.
We do however believe that it does make sense for Google to buy Groupon because it would give them a huge lead in location based services ahead of Yahoo or Facebook.
The big rumour of the day is that Google may be buying cluster purchasing outfit Groupon for an eye-popping $2.5 billion, not bad for a company that was launched in November 2008 and which already serves 250 markets worldwide.
But even that multi-billion pot of money sounds like a bargain when one takes into consideration the fact that Groupon generates estimated revenues of $50 million per month or $600 million annually.
In fact, Forbes has called it the fastest-growing company in web history, one that surpassed Google, Facebook and Yahoo without breaking a sweat.
Unlike Youtube, which Google is still financing, Groupon is already turning a profit by squeezing its partners very hard (taking half of the revenues of every deal).
It fits Google’s plans perfectly, as John Battelle pointed out, since it connects commerce, search, social and small business altogether and is doing exceedingly well in a highly competitive market.
It could be compared to the all-important “glue” that will make Google’s location based services (Google Latitude, Google Places, Google Maps, Google Street View, Google Mobile QR & NFC) coherent.
Some however have questioned the short-sightedness of websites like Groupon which have thrived during the recession and encourage people to find the cheapest deals regardless of the impact these may have on the businesses involved in the process.
A research by Rice University in September found out that more than 40 per cent of businesses surveyed in the study said that they would not be running Groupon promotion again.
It’s been only a few days since Google announcedBoutiques.com, a decidedly very un-Google project that captured our attention; now there comes the rumour of the possible acquisition by Google of Groupon for $5 billion.
Not only would that be Google’s biggest acquisition yet, more than Doubleclick a few years ago, it would also confirm a shift in Google’s strategy which puts it on collision course with some of its partners.
Already, the purchase by Google of ITA, a US-based company, for $700 million, has caused many in the online travel sector to express the fears that Google could become the 900-pounds Gorilla in their market.
Groupon would eliminate one middleman and bring Google presence in the booming cluster buying market, one which it can use to its own advantage.
Many are suggesting that Google could use it to inject some significant growth its location-based services, for example by mashing that up with Google Maps or Street View.
For the likes of Tradedoubler or Affiliates4u though, Google’s purchase of Groupon may seal their fate. Google has already understood that the only way to sustain its massive growth is to start looking beyond the usual CPC and into CPA where the big money is.
Given how well the likes of Moneysupermarket, Moneyexpert, Kelkoo or Pricerunner are doing even during a recession, it’s only a matter of time before Google launches its own offer and turns into a commission monster.
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