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Google Grabbing Groupon?

The social media and digital world is all a Twitter about Google’s anticipated acquisition of Groupon for a $6B rumored price tag with another $700 million in anticipated bonuses for Groupon’s exec staff.

All Things Digital’s Kara Swisher scooped many major news services with an outline of the deal terms yesterday, upside, etc.: “Google’s Groupon Offer $5.3 Billion, With $700. Million Profit Earnout”

I agree with Kara Swisher, this deal is good for Google, even with this astronomical buy out. Also, am sure Google is reacting to and wary of Facebook’s own “Groupon Killer” – Facebook Places.

Google-Postcard

Yahoo was rumored to be circling Groupon but don’t think Carol Bartz and crew had the heart, cash and sufficient bandwidth to convince Groupon they would improve the business in any substantive way.

I disagree with others (Greg Sterling with Search Engine Land) who are already saying this deal is not a good one for Google. This potential deal gives Google so much scale (size) and reach into the local market that would take years to build, keeps Groupon out of Microsoft’s or third party’s hands, will add $400-500M to Google’s revenue stream. Finally – gives them real street cred in the social media market.

How Google Grabbing Groupon will reshape the Social Media Landscape and Google:

1) It’s clearly going to push Facebook to accelerate their Facebook Places business tighter integration with  social graph and probably more aggressive deals with vendors.

2) Give Google the visibility, impact and advertising reach into local markets to finally work with SMBs (small to medium sized businesses).

3) Enable Google Maps to be much more leveraged with Groupon deals sold right in the search window – this could scale Groupon’s revenue significantly behind the deal.

4) Not sure how Google will assimilate Android with Groupon – but look for tighter integration with this operating system in some way, this is a no brainer. Not to mention, Google having a bigger footprint in the mobile phone market on the application side via smart phones, the iPad and other tablets.

5) This potential deal could ratchet up potential valuations across the social media landscape, the size alone is a huge milestone. Although it’s roughly a 10X times annual revenue based on a $6 Billion dollar deal plus bonuses, give or take a few hundred million.

6) Groupon has a sales force comprised of 300 people doing outbound calling, cutting deals, etc. – this sales team will give Google the ability to start to be more aggressive in promoting all of its services to much smaller companies and may make them rethink some of their internal HR structure.

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7) This potential deal will raise barriers for any local targeted vendors, create an immediate impression that Google is now the player in coupon deals and local advertising and Google will suck a lot of the oxygen out of the local deals market immediately.

8) Could send a signal to the world that Google is finally a real player in the social media market and gives them their own mobile social graph to leverage moving forward.

Stay tuned, as the deal is not done. Probable and possible though……

3 replies
  1. badass pdf says:

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  2. Spencer Kline says:

    I agree with you that the Groupon purchase is a great move for Google. I would like to add to your very comprehensive list that by acquiring Groupon Google gains a revenue stream that goes beyond disruptive outbound marketing (sponsored search results and banner adds). Groupon’s revenue model ensures taht all parties–the consumer, the service provider, and Groupon itself–benefit from their transaction.

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