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Did Groupon Make the Right Decision? What’s Google’s Next Move?

How Will Google Penetrate the Local Deals Market?

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As you probably know, Groupon recently turned down Google’s $6 billion acquisition offer. CEO Andrew Mason was reportedly concerned about the direction Google may have taken it in, as well as what would happen to its employees. 

A lot of people are surprised that Groupon turned the offer down, as it would’ve been Google’s biggest acquisition to date. Groupon is doing pretty well so far though, and is clearly confident that it can remain a leader in the space down the road.  The company is bringing in $800 Million in annual revenue according to the latest reported numbers.

Did Groupon Make the Right Decision? Share your thoughts

Can Groupon remain a leader in this space though? It pioneered an interesting new take on online offers, but many imitators quickly began coming out of the woodwork. None have made anywhere near the mark Groupon has on the industry so far, but that doesn’t mean they won’t eventually. 

In fact, just today a partnership between NimbleCommerce and Adility was announced. "The group buying market has three core elements: platform, publishers and deals," a spokesperson for NimbleCommerce tells WebProNews. "Some companies, like newspapers for instance, are their own publishers and may have their own advertisers. All they need is the technology. Enter: NimbleCommerce, which powers OpenTable, ValPak, YellowPages.com, The Philadelphia Inquirer’s Philly.com, AnnArbor.com, and others. Other major web properties are their own publishers but may not have a sales team to source the ‘daily deals’– Enter: Adility which offers thousands of daily deals."

A report from Experian Hitwise last week showed that Groupon is doing substantially better in market share than its closest-competitor LivingSocial. However, LivingSocial just got a nice chunk of change from Amazon – the web’s largest retailer. That could be huge. LivingSocial CEO Tim O’Shaughnessy has even been quoted as saying flat out that the company will use Amazon’s investment to overtake Groupon in market share. 

LivingSocial vs Groupon  - Data from Hitwise

Apart from that, Facebook, which has over half a billion users, recently launched Facebook Deals, which could also make a substantial impact in the space. And of course there’s Google. 

Google clearly sees value in what Groupon does. A lot of value. What’s their next move going to be? Will they acquire one of Groupon’s competitors? Will they just start their own Groupon-like service? The company is already placing a great deal of emphasis on local, and has a huge advantage with its local search results, in terms of getting deals seen by potential customers. 

"Groupon has cracked the code for getting local businesses to spend marketing dollars online," writes TechCrunch’s Erick Schonfeld. "And increasingly, those businesses are going to choose between spending those dollars on Groupon versus on Google."

"You might not think of Groupon as an advertising company, but the way most merchants rationalize offering such deeply discounted deals (typically 30 to 50 percent off) is they treat it as a marketing expense," he adds. "It is a proven way to get new people into their stores, spas and restaurants. Maybe they lose money that first visit, but it is the cost to gain a new customer. Those dollars come out of their marketing budgets, which are often tight."

Google will not just give up in this space. That doesn’t mean it will be successful in displacing Groupon as the market leader in local deals. Google’s still trying to figure out its social media strategy, which could end up being a key factor in its offerings in this space. 

Unlike social media, however, Google is already considered a go-to place in local. It may have more luck here.

How do you think Google should proceed in this space? Share your thoughts.

Did Groupon Make the Right Decision? What’s Google’s Next Move?
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  • http://www.spekios.com Henrique

    Google has the advantage of being able to use the whole array of services they already have, to better market the local businesses online. With a bit of ingenuity, they could eventually come up with some sweet deals for theses businesses, offering them bundle packages of online marketing + coupons.

    As I see it, this is an area where Google might have the upper hand, and they should use it as their entry point into Groupon’s market.

    • Chris Crum

      They’ll use it one way or another.

  • http://websitemagazine.com Guest

    I called it. Evidenced right here: http://ow.ly/3ifWk

  • http://www.freeguninfo.com Adsense Publisher

    They turned down a 6 billion dollar offer?
    I would have said yes!

    • Chris Crum

      I think most probably would have.

  • http://www.crearecommunications.co.uk/ KJ

    It’s nice to see a company resisting this kind of money and it looks like they’ll do well in the near future. Meanwhile they could always wait for a bigger offer.

  • Guest

    Google will fail at local business deals too. Google is a failure. They don’t want to pick up the phone to call business owners. There is no human touch with Google. They don’t want to build real businesses. All they want is automation, money fast, integration of all services violating user privacy left and right. That’s why they fail at everything they do. They will never triumph in the social arena unless they buy facebook. Google is perceived as a giant, faceless and greedy corporation full of white ole dudes. Facebook is perceived as a kid running a site from a college somewhere. Most people root for the underdog.

    • Guest

      It is safe to assume that your conception of FAILURE is being one of the largest technology enterprises, with billions of dollars ..and as far as the human interaction .. just one stupid question .. who answers when you call a bank or any other company for that matter isn’t it an AUTOMATED SYSTEM ? … is call ADVANCEMENT .. companies want to use tools to keep moving along with technology and progress. and that is certainly part of the secret of google success .. they know that they want and what they don’t want… – and that is exactly why they went for groupon , they want that space and they will get it .. if is not groupon it will be gottahalfit.com or something else .. well .. groupon will continue to grow eventually .. if is not eaten by the competition first … my 2 cents .. stupid move on groupon’s part …

  • Guest

    I thought Google is working as well with Adility?? Anybody has some info about that?

  • http://mobile.fall-o.com Leslie Banks

    All attention is naturally being paid to the big guys and perhaps without thought or consideration to the bubbling Group Buying Market inspiring new and Powerful ideas, technologies and internet mechanics that are building more powerful systems yet to see the limelight. 2 years from nothing to a Billion Dollar company is rare, granted, but not impossible for others to reach such heights and maybe even higher by the simple addition of other ingredients.

    Alexa is the tool most webmasters use to keep an eye on the competition. Do some research on the little guys and you’ll find at least one making just a big an impact at their level as Groupon are doing at theirs. Watch Out Groupon! Make way for Flutterbuck.com … and then some!

    Thanks for posting this article. Awesome news for participants of the New kid on the blog about to make an impact like no other!

    - Leslie Banks -

  • http://www.FlutterBuckStar.com Latrelle

    I believe I would have taken the offer, But, on the other hand;) Just think, this time next year they might offer triple the amount.
    It proves to me that I am with a company that is headed in the right direction! FlutterBuck is doing the same concept as Groupon, EXCEPT, FlutterBuck is sharing their profits with their associates.
    We are building our teams as we write this and people are catching on to the idea of just how BIG this will become!
    If you want to look at what I am offering others, take a look at this site.
    http://we-pay-daily.com/Star
    Its free to join and you will be at the beginning of something huge!
    Thanks!!

  • http://www.DaytonSEOservices.com Carlos Scarpero

    Groupon was really dumb not taking the money. They have no uniqeness in this space at all. Anyone with a couple hundred bucks and a script can start a Groupon clone tomorrow. Meanwhile, Groupon’s policies are not friendly to merchants, which I think will lead to their eventual downfall.

    • Guest

      Sure anyone can start anything for a couple of bucks but that doesn’t mean they will reach 10 million visits a month anytime soon. I believe Groupon is not stupid and probably thought this through.

  • http://www.faceformers.com Brenda

    Good for Groupon! They are smart to think not purely from a monetary perspective but also keeping true to their integrity and valuing their employees.

  • http://flutterbuck.com/flutterbucks Leslie Banks

    Groupon are wise to refuse. They have only Scratched the surface and know this. However the demand is so great they can’t keep up with the folks they are trying to serve. Waiting lists of up to 3 months or so to take more orders for local businesses and members never being able to contact them personally. Googles participation or take over would not improve this on the contrary, Google are well known for their lack of “personal” service.

    If they these guys have so much money to play with and with everything to play for what is wrong with the idea of investing some of those profits into giving a Mega business the personal touch with staffing? And what in the name of service happened to Service! We are all people wishing for the same thing on that front! Why not supply it?

    My earlier post draws attention to the underdogs and one in particular that is learning from all the mistakes the Big Boys are making .. about to take Full advantage in a big way by undercutting Groupon’s Costs to businesses by as much as 20% and not profiteering for profiteering sake. Donating money to a worthy cause with Buzz Marketing Campaigns matching penny for penny in their world record attempt http://www.tenmillionpennies.org/LeslieBanks campaign officially recognized by Guinness Records.

    Customers can also interact with their own Personal Agent and Corporate who are about to take Group Buying to the next Level by offering affiliate and Agents Very Lucrative rewards for doing something they love in in the first place by helping people, myself included, with rewards as Good incentives to do so. Yes I mentioned affiliates and agents earning Real incomes for their efforts of promotions and servicing the local, national & international deals and businesses, something Groupon are not active promoting. Network Marketing and Flutterbuck’s approach is unique and attracting the Cyberspace Marketers to take Group Buying to the next level on the other side of the screen and we are seriously succeeding! Agents apply via an online application form:

    http://www.globalconsumernetwork.com/invite/LeslieBanks

    There is only one way we are going and that is Up. So while Groupon and Google are caught up in price wars, we at Flutterbuck are aiming to make this experience a personal delight for All involved. Customers, Businesses & Affiliates!

    This is a Whole New Approach to the Group Buying Trend that will effectively change the way we all do business via Flutterbucks deal a day platform saving between 50-90% on retail for things we do, see, eat, buy or experience and all purchased via the internet! Using the internet this way saves and makes money for all who are involved!

    Everyone WINS!

    - Leslie Banks -
    http://flutterbuck.com/LeslieBanks

  • http://www.realestate-qld.com Charles

    One factor not taken into account is the life span of a business (or anything else for that matter). Take the best performing business 20 years ago. Where is it now? Such is the natural law of change.

    Charles

  • http://www.misslin.eu chris

    How often have we heard someone refusing an extremely large offer that made the news. I don’t believe Croupon is worth that much but they wanted the advertising from the press coverage. Added to this a heavy marketing campaign, on google funnily enough, putting Croupon all over the internet and no wonder they got so many visitors (you need to give a valid email address so make up one if you don’t want to be spammed for ever after) Even if the product is good, it’s not original and will be copied ad nausea.

    As for human contact, Google liaised with Thompson directories very efficiently. Do correct me if I am wrong.

    A bon entendeur

  • http://richinwriters.com Guest

    Personally i would have taken the 6 billion but Groupon is showing some heart. The problem with Groupon is that its replaceable. But we’ll see maybe they have some tricks up their sleeves

  • http://www.iralic.com Ira Lichtenstein

    I have been studying Groupon. They show you how many sales each Groupon gets. They also show you the selling price. I believe Groupon takes in half the cost of the coupon. When they sell a $40.00 coupon for $20.00. I think they get $10.00. They sometimes sell 150,000 coupons just in one city on one day. Groupon is a cash register right now. If its sales numbers are going to continue to grow at its present rate, it is definitely worth more than 6 billion. The problem is that someone else could come in and copy them. If google comes out with Googleupon and charges the restaurants a smaller fee and give a better value to the enduser, I think Groupon could lose some serious marketshare. Google already has enough emails to compete with Groupon’s database. If someone offered me 6 billion, I would take the money.

  • http://www.snerdey.com Snerdey

    They should have taken the cash or better yet go create another amazing cash cow to sell ;)

    On the other hand..

    With their zillion members across the world big G should have offered much more if they really wanted it.

    Kinda seams to me that two mistakes were made.

  • http://www.sitebyjames.com/ james

    I think for there to be a healthy eco system, one which is profitable for large industry and smaller business, there needs to be a variety of brand names offering a variety or service and product.

    From a consumers perspective, anything which does not involve variety could come off like a slot machine in terms of appeal and acceptance. People innately understand where there money is going. A purchase today is less about survival and may have elements of cause or purpose.

    I don’t have anything else to really say except that regardless of what anyone believes, the web is still a gold mine. Groupon, if they took a risk, they took the right one. Jmo…

  • http://www.hoyquiero.com hq

    I can’t believe it, Groupon can’t even deal with the big demand

  • Guest

    Opentable has the potential to take significant business away

  • http://www.flutterbucksavingsclub.com Lori Bray

    Wow, now that’s money! Congratulations to Groupon for not selling out to Google. They have a lot more in store for their customers as read here: http://ow.ly/3ifWk Google may come back with a bigger offer. With the rate of Groupon’s growth, the scenario may be reversed in the future. ; ) With this information, I am even more excited to be a part of FlutterBuck Social Group Buying. FlutterBuck.com is a one of the variations you may be looking for. With it’s 12,000+ agents available and growing (since July) you can be assured you will receive the personal touch in a timely manner. Plus the fact that Groupon takes 50% from the retailers while FlutterBuck retains a much lower 30% profit. With FlutterBuck, you can save a load and earn as well with its proven uni-level compensation plan. We have much to offer the customers, the international and local businesses and the affiliates looking for a secure financial future.

    Please take a moment now to help FlutterBuck create a New World Record by donating one penny to a worthy cause. You will be rewarded! http://www.tenmillionpennies.org/LoriB331

  • http://www.globalconsumernetwork.com/jvtur Jvtur Tur

    Here is another approach Google gatto deal with GCN Groupon FlutterBuck Group Buying.
    Retailers now have an option to traditional, costly and risky advertising media. With traditional media, you are expected to leverage hundreds, thousands and even tens of thousands of dollars into advertising mediums that do not have any guarantee of customer acquisition on the back end.

    Today, you have a new option for attracting customers. A new trend has exploded online over the last year and a half that has become an overnight billion dollar industry. It’s also opened up an exciting, inexpensive and risk free way of attracting new customers to your retail business.

  • Jon

    I am a small business owner and used Groupon. They published the ad and deal differently than what I agreed to. In the end it was not a good deal for my type of business in any respect, neither as business generator nor as marketing expense. I can see it possibly working well for restaurants or other businesses looking for people to basically sample their services and then hopefully come back regularly, but if you provide product or service that is not consumed by the general public as often as food, entertainment, or clothing it is a big mistake to use these type of coupon services. You basically end up nearly going out of business by putting incredible stress on your workload and time to serve a bunch of grouponers, essentially for free, on top of taking care of your regular paying customers – - believe me the $10 – $30 bucks a business makes on each coupon purchase does not make up for the financial loss of providing the hugely discounted service to droves of “Grouponers,” sometimes at the detriment of your regular loyal customers.

    I give them credit for revolutionizing local deals for consumers, but they should be more responsible to both businesses and consumers. Clearly making $800 million a year (and growing, I assume) perhaps now they can afford to be more responsible, and I agree should make the benefit more appealing to businesses, and transactions more transparent to consumers. I’ve noticed you don’t see very many businesses return to Groupon, so that should tell you something.

  • Guest

    I Hate Groupon!!!!
    I am a local pub in the UK that had a refurbishment and thought groupon was a good way to help relaunch the business. First time I used them they released the voucher earlier than agreed and we upset a load of people because the Kitchen wasn’t even ready to open for another month and they couldn’t use the vouchers.
    I put this down to an error and gave it another go with a different food offer. I gave them a copy of my new menu my website address www.threetunsreading.com and a detailed discription of what was on offer and insisted that I proof the voucher before going live.
    Well I was totally and utterly ignored. They gave me less than 12 hours notice that the voucher was going live, ignored all requests to see a proof, Even though I gave them a menu and a website address to take info from, they must have found the most outdated website with info 2-4 years old using photo’s and menu’s prior to refurbishment. They email this to 25,000 in my local area that I’m trying to market to that the place has been refurbished and now offers great surroundings and atmosphere and an all fresh produce menu. They couldn’t have got it anymore wrong and then after I am straight on the phone about what they have done it takes them 6 hours to fix it and refused to send out ammended email….
    And yes they used to take 30% of the vouchers value but now take 50%.
    Good luck to whoever takes on Groupon and I hope you offer a better service than what I’ve experienced from Groupon………………

  • http://www.cars-10.com/ Red Car

    I thing they are doing well alone.
    They do not need Google because they have direct communication with their members.

  • http://www.localdealsites.com/ Dave

    $6 billion seems insane but Groupon has made some smart moves with their lightning fast expansion and relentless online advertising. There are hundreds of smaller competitors (LocalDealSites.com lists over 130 Groupon-like daily deal websites http://www.localdealsites.com/ ) and they all have pretty much same model… but none with the reach and clout that Groupon has, which is the differentiator. Their revenue is just growing too fast to understand what the valuation should be. Still, takes some guts to walk away from that kind of money!