Google Leverages Groupon Model for Search Gains

By Clint Boulton  |  Posted 2011-06-04 Print this article Print

Google can copy Groupon again by offering its own version of Groupon Now, bringing deals to smartphone-owning consumers based on their preferences and locations.

For example, a shopper checks in to a store with Google Latitude and gets pinged with a coupon for that store. Alternatively, a consumer could be walking down the street and receive discount alerts via their phones. This potential is unbridled and untapped, even by Groupon.

"What we're talking about here is the holy grail of search. And Google-relying on search for the vast majority of its revenue-just took a step closer to finding it," Boland said.

Sure, Google Offers is just starting while Groupon has a three-year head start, 7,000-plus feet-on-the-steet salespeople and millions of users. But it's low barrier to entry makes Groupon's local-deals model easier to compete with than Google in search or Facebook in social.

"When all is said and done, it is just a coupon service, and there are already over 300 Groupon knockoffs," Gartner analyst Van Baker told eWEEK. "Consumers will sign up for several of these and cherry pick the deals that they want. I can't comment on the likelihood that Google will succeed as there are a lot of considerations, including how much Google invests in the effort, but Groupon certainly does not own the social-coupon space."

Baker's colleague, Gartner analyst Ray Valdes, said Groupon's brand has an aura of novelty that could wear off over time. Price-sensitive consumers are usually not steadfast when it comes to brand loyalty, he noted.

The hype around Groupon underscores that there is "overheated demand for tech stocks among investors hungry for quick returns in an otherwise dark economic landscape," Valdes said. "I think Google has fortuitously dodged a bullet in terms of saving $5 billion or $6 billion that would have been consumed by the Groupon acquisition."

Google, meanwhile, can sit back and watch Offers grow, or not grow if too many rivals dilute the market. The giant can still savor its $30 billion a year in online advertising from search, mobile and display, and take comfort in its $36 billion in cash reserves.



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