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by Stephen Logan on 21st January 2011
Having had their advances rejected by Groupon, Google has wasted no time in releasing rival ‘Offers’ service.
Google have continued their long tradition of ‘if you can’t buy them, beat them at their own game’ with the leaked announcement of Google Offers [Mashable]. The Groupon clone is being readied for release by the Grand Poobah of search a matter of weeks after the group discount site rejected their advances (and $6 billion).
Elbow room may be in short supply soon though if Google are to join the fold. Currently Groupon lead the way with LivingSocial catching up quickly. But as many media commentators have suggested, this is an industry that can accommodate plenty of competitive companies. Although, with that said, Google will be bringing plenty to the table.
Coming off the back of a steep 29% increase in profits, the Californian search giant isn’t short of cash or contacts. They have the brand recognition and pre-made marketplace to make almost any product work. The social side of the business may have taken a battering, but more often than not Google succeeds – by hook or by crook.
Having deep pockets could certainly pay dividends in this market. With some providers feeling short changed by what they receive from Groupon, many could be tempted to leap over to Offers – should it become a workable product. As they are immensely profitable in most other fields, including PPC advertising of course, Google have the power to undercut competitors and secure some serious partners (if they take it seriously).
This doesn’t have a great impact on search or indeed Google’s core business, but it will certainly have some people worried. Not least the investors who have pumped $1 billion into Groupon (giving it a mind-boggling value of $15 billion – month of Sundays anyone?). The $6 billion offered by Google seemed a lot, and now it probably looks like even more [see: Google Keep Investing – This Time It’s Groupon].
Having taken steps to muscle in on shopping comparison, holidays and properties in recent years, it appears that the coupon market is the next big thing for Google. The scariest thing for all competitors is that they can afford to throw money at it and will more or less be able to hit the ground running. Offers isn’t going to be a start up and whilst it’s not something they’ve done previously, you can be sure there will be some pretty smart people working on it in the background.
It will be interesting to monitor this over the coming year. Whilst it won’t have a huge impact on the search engine or Google’s primary business interests, seeing how Groupon would cope with a competitor of this size and whether they can justify that $15 billion valuation is intriguing. With Amazon jumping on board in the form of LivingSocial and creating an instant surge with their record breaking $10 for $20 voucher deal for their own site, it’s getting serious.
Can a start-up with a new idea take on the muscle of Google and Amazon? Should Groupon have taken the $6 billion and run? We’ll certainly find out soon.