Saturday, December 4, 2010

Billions of local searches on the line in Google's Groupon offer

Groupon is only 2 years old. However, it’s one of the biggest companies in local enterprise marketing. Google has made a deal for Groupon. The offer values the company at over $ 5 billion. If the deal goes through, Google might be expanding its local-search dominance, however expand its small and medium business industry.

Groupon’s local business

Started in Chicago, community enterprise marketer Groupon has been increasing exponentially within the last two years. There are 2,500 people employed by the company around the world. Annually, it creates half a billion in revenue. Every day, a discounted offer gets sent to e-mailed subscribers. That is the way the enterprise works. Usually, small and medium community companies use Groupon to bring customers in with their deals. Groupon obsessively tracks the buying habits and demographic data of its subscribers to offer them deals they are more likely to purchase.

Google's problem with local search

Though Google is the major leader in web search, it has a problem targeting small and medium local businesses. There is expected to be a drop in paid local search on Google. Within the next five years it will drop about 20 percent. Small business will use Google advertising and sponsored search results. Then they’ll drop the company. Ad revenue on Google only comes from community companies just a little bit. In fact, only 18 percent does. Facebook is also challenging Google’s dominance by targeting community businesses using the launch of Facebook Places. Anti-trust investigations in Europe are hitting Google due to the rankings of search engine results. The company, if found at fault, might lose a lot of revenue.

What would take place with the Groupon/Google Package

Groupon might do well to accept Google's $5.3 billion offer. The deal might be good for both companies. Groupon, a relative infant in the tech world, might get a huge return on its initial investment. Google might be given access to a huge trove of customer data – everything from consumer e-mails to pricing data and spending habits. The simple search and paid search revenue is something Google wants to expand from. This is what the package might allow to happen. In 2009, Google tried to buy Yelp for the same reason which is why this deal is not new. There is a difference though with the Google-Groupon deal. Community buying opportunities might be changed for many consumers.

Articles cited

All Things Digital

kara.allthingsd.com/20101129/googles-groupon-offer-5-3-billion-with-700-million-earnout/

Adage

adage.com/digital/article?article_id=147349



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