MediaCom Insider: Groupon: A Bridge Too Far for Google - "What Google's Failed Acquisition of Groupon Reveals" - Michael Kujanek - MediaBizBloggers

Local advertising is now a 100 billion annual business in the US alone with the potential to exponentially grow as targeting and personalization capabilities improve This robust growth is in no small part driven by the fact that Americans spend approximately 80 of their disposable income within a couple miles of their homes and thus it should be no surprise that advertising services amp8211 Google and Groupon alike are amping up to grab the biggest shares possible of this opportunityFurthermore the hardships stemming from the global economic recession and the pressures placed on American household budgets have conspired to fuel demand for something like a personalized local coupon advertising service like GrouponSo what led Google to attempt its 6 billion acquisition of GrouponWhile previously not active in the local deals market Google had taken a shotgun approach to building much needed relevancy in local advertising Sure national and regional advertisers have seen immense success in the growing search market however local businesses have not had it as easy The challenges of less resonant local search results read Google Maps spam and difficulty in reaching prospective customers down the street have set a high barrier to entryIn all fairness to Google it has vastly improved its local search ad products in recent years to provide local merchants with more tools Local businesses now have more ability to place ads across multiple channels desktop and mobile search contextual display comparison shopping etc and formats text image video Adding some relevance to the local experience are quotad extensionsquot to display a map location relevant products and even couponsWhile growth of local search has been formidable it has been recently overshadowed by the explosive rise of the local deals market as evidenced most prominently by the performance of the market leader GrouponWhat the explosive rise of the local deals market and a leader like Groupon amp8211 translates to is a new viable expansion opportunity for merchants It is an emerging channel that will drive incremental spend by local advertisers Bottom line for Google Groupon constituted an exponentially valuable opportunity to capture more local advertising dollarsGroupon has proven its success in providing a personalized relevant experience that connects merchants and consumers and builds lasting relationships between them a potent quality that Google has aspired to achieve in local search advertising Accounting for Groupon39s critical mass its business model closely interweaved communities with its ties in social media driving further engagement ultimately allowing for selfperpetuating viral growth without an end in sightAs a local deals service Groupon boasts an attentive user base of millions worldwide providing it with a wealth of information about its users As Groupon furthers its investment in personalization it will be able to provide smarter technology for consumers deepening an already valuable relationship with merchants Adding local search and mapping tools would undoubtedly empower the tool as wellSo why did Groupon decide to pass on the 6 billion offer by Google The success of Groupon39s business model has driven exponential growth resulting in its increasing billion dollar valuations Give in to a 6 billion offer or see the company through to greater riches is what it came down to With strong homegrown brand recognition secured VC funding and demand showing no signs of subsiding anytime soon the decision may have well been based upon price and pride Not surprisingly the bid rejection was embraced by prospective investors salivating at the prospects of a Groupon IPO possibly in 2013 On the other hand some insiders have raised concern as to whether Groupon39s 15 billion dollar valuation as of January 13th is overinflated Can Groupon uphold its value This may be its key challenge in the near future Or perhaps Groupon will help drive the next quotdotcomquot stock boom with the likes of Skype and FacebookIn essence Google needed Groupon more than the reverse Like past acquisitions by Google the bid for Groupon was publicly seen as nothing more than a money grab For Groupon the offer failed to meet its perceived value and the company39s owners decided to maintain its independence What is clear is that Google demonstrated its readiness to assert itself in the online group buying space at a high cost likely inspired by the proven success of Groupon39s ever profitable business model The upcoming launch of Google Offers amp8211 announced January 20th is proof of Google39s determination Though will it catch up with Groupon Google failed in competing with Facebook in its Orkut product and still lacks in local search Time will tell whether Google39s group buying initiative may yet again be a bridge too farMichael Kujanek is Group Search Director at MediaCom Interaction He can be reached at MichaelkujanekmediacomcomRead all Mike39s MediaBizBloggers commentaries at The MediaCom InsiderCheck us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerMediaBizBloggers is an openthought leadership blog platform for media marketing and advertising professionals companies and organizations To contribute contact Jackmediadvisorygroupcom The opinions expressed in MediaBizBloggerscom are not those of Media Advisory Group its employees or other MediaBizBloggerscom contributors Media Advisory Group accepts no responsibility for the views of MediaBizBloggers authors

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MediaCom Insider: Groupon: A Bridge Too Far for Google - "What Google's Failed Acquisition of Groupon Reveals" - Michael Kujanek - MediaBizBloggers

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