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Google Offers on the Way, Should Groupon Have Sold?

Google Offers Prepares to Go for Groupon's Throat

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Google has a new project in the works that appears to be a direct competitor to Groupon. It’s called Google Offers. According to an official fact sheet about the product, obtained by Mashable, Google Offers is "a new product to help potential customers and clientele find great deals in their area through a daily email."

Should Groupon have sold to Google when it had the chance? Share your thoughts.

This sounds exactly like Groupon, and based on the screenshot embedded in the document (view the whole thing here), it looks quite similar too. 

Google Offers Set to Take on Groupon?

"For businesses, it’s a smart and easy way to find new high -value customers and bring them right to you," the sheet says. "With our prepaid model, there are no out-of-pocket expenses to spread the word about your business to the millions of Google users and subscribers in your local area. You only pay when a customer buys your offer."

Benefits mentioned in the document include: getting in front of potential customers in your city, bringing in both new and valuable customers with great deals, exposure across Google ad networks at no additional cost, managing your offer with tools to track and measure ROI, and getting paid quickly with no out-of-pocket expenses. 

It then proceeds to outline a five-step process for businesses to create an offer, market it, run the offer, collect the money, and serve customers. 

Now, the product is not widely available yet, but the company has confirmed that it is in fact real. Google gave Search Engine Land the following statement:

Google is communicating with small businesses to enlist their support and  participation in a test of a pre-paid offers/vouchers program. This initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with  customers in new ways. We do not have more details to share at this time, but will keep you posted.

So, the keyword there is "test", but it’s hard to imagine this not turning into a full-fledged offering, considering the company’s obvious thirst for jumping into this space. As you probably know, Google recently offered a reported $6 billion to acquire Groupon, the leader in the deals space, but Groupon turned it down, and is reportedly preparing for a $15 billion IPO. 

The question is: was Groupon smart to turn down Google’s offer? All valuations are based on growth, and a lot can happen in a year – especially a year when Google is one of your main competitors.  And Google already has a lot of relationships with businesses and users (through various products, search, business listings, advertising, etc.) that Groupon is still working on building. 

During Google’s earnings call, in which the company discussed the new changes in management, co-founder Sergey Brin alluded to some new products that are coming, but would not get specific. We wonder if this is one he was referring to.

Google’s former VP of Search Products and User Experience, Marissa Mayer, who recently shifted to Google’s products and services related to local markets and geolocation, pointed out recently that Google already has Groupon-like products

"I think that when you look at our overall suite of services, especially around our advertising, we already have some things that are like this," Mayer said in an interview with Media Beat (embedded below). "We have things like coupons and offer extension ads that allow merchants to basically make offers to our users. So we’re looking at how we can take that technology and put it to use, especially in the location space."

Well, Google Offers would be a much more obvious product to compete in the space, and could only complement Google’s existing offerings, which span far and wide. According to Google’s earnings report for the fourth quarter of 2010, Google generated $8.44 billion in revenue. Obviously much of that is from advertising. You can see the exact breakdown as reported here

Google’s advertising reach is far and wide, and the company is increasingly returning local search results over true organic web results in general searches. If Google Offers gets incorporated into this (and it’s hard to imagine that it won’t), it’s going to be incredibly powerful. It’s worth noting that Google Offers also utilizes Google Checkout from the looks of the screenshot, but that’s another story. 

So, one has to wonder if Google made the right decision by rejecting Google’s offer. Should the company have accepted or does it have the power to remain a leader in the space? 

Groupon is rapidly expanding into more countries (sometimes by acquisition of other Groupon clones), and it just raised nearly a billion dollars in a recent round of funding. Groupon says it intends to use this toward fueling global expansion, investing in technology, and providing liquidity for employees and early investors. 

Groupon is also gearing up to advertise during the Super Bowl pre-game (the game itself was sold out). This should attract a lot of eyeballs, and could help spread the Groupon brand name to a lot more people who aren’t already using it. 

It’s also worth noting, however, that last year, Google ran it’s first-ever TV spot during the Super Bowl. The leak of Google Offers comes at an interesting time (just before the AFC and NFC championship games, which will determine who goes to the Super Bowl, to be played next month). Could Google have something in store for the Big Game this year? 

Before announcing his new role with the company, Eric Schmidt discussed the key points of Google’s strategy for 2011, and they are all about mobile. And where does local search work the best? 

Perhaps it’s premature to say, but Google may become a force to be reckoned with in the deals space that Groupon is currently enjoying. Google hasn’t had the best of luck in all of it’s endeavors, but this has potentially huge ties to both of the things Google is best at – search and advertising.  Plus, it’s not like acquiring more Groupon clones is out of the question. 

Related: If You’re Not Local, How Can You Compete in an Increasingly Local Google?

Will Google dominate the deals space? Tell us what you think in the comments, or join the discussion on our Facebook page.

Google Offers on the Way, Should Groupon Have Sold?
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  • http://www.autoreverseweb.com Souleye Cisse

    I would be shaking in my boots if I were at groupon management. I think they were right in the reasons that they gave for turning google’s offer: clash of culture etc… but that was without reckoning with the potential of having them as competitors. google is a very innovative company, has a lot of money in the bank and the way they’re expanding, it looks like they’re poised to rule the world. of course they’ve had a lot of bad press recently, and a brain drain fueled by the perception that it’s too big to manage creative talent. in that respect I believe that the management shuffle is just cosmetic for pr gains.

    • Chris Crum

      I have no doubt that Groupon knew something like this was on the way.

    • http://str82u.co Str82u

      I agree, Groupon should be concerned. There are several others trying to emulate them but Google is the one that can do it in a scary, competitive way. “Places” has tags and coupons to offer, expanding beyond the “Places” pages is an obvious next step.

  • http://www.lyradesigns.com Guest

    With Yelp and several local news services doing group offers, Google is just another service saturating the group buy market. Then again, Google Offers could be the next Google Buzz.

  • Adsense Publisher

    I think Groupon was crazy not to take Google’s offer.
    Google already has the reach that Groupon is just now trying to develop.

    From what I understand there will be a limit to how many sold can be sold and a timer to limit when those purchases must be made by. Not much different than Groupon there of course.

    Where it does differ is with Groupon you have to set how many have to buy or you’ll not sell anybody anything. Imagine loosing out when you had 50 people want to buy but you set your Groupon to 75. Now you just lost out on 50 sales that were guaranteed.

    Now I see the point if you don’t sell X units, it could end up costing you money to provide the offer to just 1 person, but if you sold many more units you might actually turn a profit. So Groupon does have a point there, but that’s about the only one I could see for why to use Groupon over Google’s new offers. If you have only a few to sell, use Google, if you need to sell a certain amount of units to make a profit then use Groupon to guarantee the number of sales or you don’t sell.

  • http://www.feelfree.co Guest

    With all these moves from Google buying or trying to take over every company, I think their plan is to make the internet their father’s house meaning without Google you cannot get anything done, they want us to always pass through them in order to get something done.

  • http://www.greatlegalmarketing.co.uk Boyd Butler

    Google should win the battle for local offers if it makes
    it simple for local businesses (a doubt in my mind) and
    it makes it better value than Groupon.

    Adwords is not easy to use for the average
    local business owner, (who don’t have specialist
    knowledge) so a lot of hand holding will be needed.
    (Google is not good at hand holding).

    Local newspapers should be the threat to Google
    if they can build their own database of consumers
    locally and use their relationship with local businesses
    and their helping hand to work direct and targetted offers.

    My view is that Google was right not to buy Groupon
    but really needs to do a better job of selling.

  • http://www.gbrdirect.com Rob L

    Absolutely Groupon should have sold, for two huge reasons. 1. No-one walks away from 6 billion dollars and 2. No-one wants a gorilla like Google competing in your space with a directly competing product. Groupon is going to die a slow and painful death I’m afraid

  • Guest

    So anything google wants google better get or else they will steal the idea. Wake up people before google wants a cut of your public utilities. Google has increased profit 30% while sending us all smaller amounts of traffic all the time. Raising keyword costs to the point we do not make money. Competition causes us to lower pricing and google could care less. That is one business partner I do not need or want. They may be the only game in town and thats why more people each year are living in alleys each year. Not less.

    • http://www.pinellaslife.com DLC

      Google – don’t be evil. When the news about groupon hit the media I said “google will develop a product like it and go after them.” Honestly I have had just about enough of google and their antics. They don’t play nice and they hurt other businesses … not good at all. I am not sure how we (the people) let a company get that big and have that much power when they don’t even have a customer service phone number.

  • http://www.preentertainment.co.cc/ pre ent

    It’s only a matter of time before some real strong competitor comes up against groupon. even as few weeks ago, i had some clients come up to me with a similar project for a groupon-like website. it’s only a matter of time.

  • James

    They offer one product (recently they added some new slight variation), but in the end it is one product. It won’t take much expense or effort for someone else to come in and beat them at their game.

    Plus, try and get a product listed with them. They talk about all this great customer service, and it may be true, but definately not for a merchant. I have called and emailed at least a half a dozen times and can’t get the local rep to call or even email me back–they seem to have a big backlog (which means merchants will go elsewhere) or poor management. Here what they replied after repeated contacts:

    “Sorry for the delay. Due to the large amount of submissions we receive, this process can take up to a few weeks for a decision to be reached. This is so we can determine the best, most profitable course of action for both businesses and customers alike. If our sales team thinks it is a good fit, they will be in touch. If you do not hear from them, please understand that they still have your information on file for future opportunities and greatly appreciate your interest.”

    BASED ON THAT REPLY, DO YOU THINK THERE IS A CHANCE FOR GOOGLE TO KNOCK THEM ON THEIR BUTTS? OH YES!

  • http://www.simplyclicks.com Simply Clicks

    Anybody remember Google video?

    • Chris Crum

      Yeah, it’s still functional, and I use it from time to time. (I know it’s not the same as it used to be).

  • TP3139

    I personally cant stand Google.
    They are heavy handed and grab every opportunity
    they can get their grubbie little hands on to overcharge
    you and wipe competition off the face of the Earth!
    Having said that any time they would like to give me 6 BILLION
    dollars i”ll Tatoo my address and bank account # and S.S.#
    on my forehead. What, are ya stupid!
    Forget the gigantic house and 27 cars you could buy.
    With that kind of money you could have all of that and change
    the world in some way.
    Which is way better than watching your unbelievably overpriced
    company fade to oblivion. There wil be no great IPO, no rches
    and living large. This Groupon guy is a fool of epic proportions.

  • http://ncmediaweb.com NC Media Web

    Google will play ball until they win, however Groupon sent a strong message but not taking the deal. Which shows that the web is not all about money. I think most of us would have sold had that offer come our way, but like FB; Groupon wants user value. This is the same thing that made Google into what it is today. So ultimately it will come down to which the users like the best and if given some time and accepted input, Groupon could become a worldwide resource.

    Yes the business service side in both Groupon and Google are some of the worst I have seen. Considering emails cant be responded and no one picks up a phone, that needs to be fixed first and foremost. Google is a strong competitor but with many flaws. All Groupon has to do is figure out the flaws and fix them. They have a great business model and even stronger user value so keeping Groupon down wont be easy.

  • http://www.dailydealpool.com Guest

    I don’t really think this is surprising. Google is one of the top companies out there today, and if they don’t get something they want, they will just make their own! Now there is going to be a lot of competition for Groupon.

    http://www.dailydealpool.com is a great site to use to find the best deals and sales in your area. They’ll email you daily with a list that you can use to find the best local savings.

  • Guest

    Google offers will go nowhere. It has the “Google” name, number 1. Number 2, Google is not good at customer support and likes everything automated. Number 3, Google is a Jack of all Trades, master of none. Number 4, they rarely succeed at anything. They have to buy everything to succeed. Of course, there are rare exceptions, Android. Number 5, they’ll make the game unaffordable as soon as they can, just like Adwords.

    Groupon has nothing to fear just like Facebook had nothing to fear with Google Buzz. Google offers will go nowhere and project will be abandoned probably in a couple of years or less

  • Guest

    They could be a threat. But to be honest, Frugal wasn’t that successful. I have a feeling that whatever excitement of flair coupon shopping might have, the Google brand will do it’s best to eliminate all traces of it.

    No offense to anyone.

  • Zhen

    Google has way too many things going. People don’t like that; it’s too overwhelming, and they get confused. Groupon is a single, dedicated business to help users find deals. Google offers will go nowhere. Just the name is the beginning of their failure. Google Offers will be a liability for them as it will hurt their Adwords business. On top of that they are not good at customer support.

    I don’t know if it was a good idea for Groupon to sell or not but I don’t see that business model being profitable in the long run. Unless they put some Pico de Gallo on top I don’t see them going for long. There are a ton of deal sites out there, businesses are a limited pool and a lot of business owners who use Groupon at the end of the day are realizing that Groupon is not that great of a deal.

    Google Offer is a FAIL.

    • Chris Crum

      Seems a little premature to call it a “FAIL” before it’s even launched. I can’t see Google going forward with it if they thought it would hurt their AdWords business rather than complement it.

  • http://www.joomabc.com ritasu

    Groupon really start a smart revolution in internet purchase.
    So, I think everyone could try Groupon mode website if you have
    good resource of providers and ideas. It is so easy, you just
    need to buy a Groupon clone template .

    Groupon really should have sold it stake to Google. Coz google can easily build its own group buy website based on its tremendous internet power.

  • http://www.FullWebPress.com Carissa Johnson

    Google is “keeping up with the Joneses” both internally and externally. In response to the often confusing and knowledge-necessary tool that AdWords is (and to reach out the the SMB market who is still placing ads in the YellowPages) they introduced Boost. AdWords done simply and locally focused on Google Places and their move towards local search results. If you havent tried it out, jump on it. For local business, it trumps AdWords exponentially. And they it is automated in typical Google fashion, but it is actually EASY. Yes, and easy to use Google product. If you have spent years obsessively studying Google and know how to find your Local Business Center Dashboard! (sarcasm intended).

    I have just recently tried the Google Offers Ad Beta, and it is too soon to tell how it will go. But just examining the number of people I know who use Gmail, then Google Offers could possibly crush the competition with that captive audience alone. As the saying goes, this one is Google’s to lose.

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