Why Zagat Might Be a Smarter Purchase for Google Than Yelp
By now you’ve heard the news that Google has purchased Zagat Reviews. For those of you who aren’t familiar with Zagat, it has a worldwide set of reviews that travelers have relied on for decades to choose the right restaurant. Google famously flamed out in its bid to buy Yelp in 2009, and has finally added the restaurant reviews it has craved. Not everyone thinks that Zagat was a worthy relacement for Yelp. One wag was quoted in TechCrunch as saying, “If you were losing to Wikipedia would your next move be to buy Encyclopedia Britannica?“
As big a fan as I am of the snarky comment, however, this one doesn’t ring true for me. I totally understand how Yelp reviews are very important and I see why Google went after them first, but I am left wondering whether Google ended up far better off than people think, perhaps even better off than if they had bought Yelp.
First, regardless of whether they bought Yelp or Zagat, Google has desperately wanted to have its own reviews to add to its local offerings and now they have them. What’s more, I believe that Zagat reviews have a better brand image than Yelp’s. Whatever advantage Yelp might have had in cachet over Zagat was that Zagat might have seemed old school, but now that Google owns them, you can bet they can overcome any dowdy image that might have dogged them. How long before you see a Zagat app on Android that allows you not only to search for restaurants but to be one of the raters yourself?
Then, there is the question of the price. That same TechCrunch article linked above pegs the price at somewhere below $66 million, because there is no government review needed for acquisitions under that price. Contrast that to the half-billion dollars reportedly rejected by Yelp. Even if you print money the way Google does, having an extra $400+ million to spend on other things can’t hurt. They could buy six more content companies the size of Zagat, for example and still have some change left over.
But people who criticize this deal are missing something else. Zagat is not like Encyclopedia Britannica, because Zagat reviews are not written by one person based on one opinion. Zagat’s has a system that uses hundreds of thousands of surveys to combine for their restaurant ratings. Their system is full of fact checkers and other checks and balances to make sure that the reviews are accurate.
Now, think about that. Suppose you take that systematic process that Zagat has painstakingly worked out over the years and you hand it to Google. Google could very easily start with Zagat reviews and then add a social media ratings and review component that allows Zagat’s to scale their reviews way higher than they do now. And fact checking of reviews is woefully missing from ratings systems today and sorely needed. Even simple things like, “Is the restaurant still open?” or “Is that phone number still accurate?” would be a major improvement to Google’s local offerings, because Google just doesn’t keep data up to date today.
So, stay with me here. On top of what Google bought that everyone knows they bought–Zagat’s restaurant ratings–is it possible that Zagat’s system of collecting and curating ratings could be applied to other businesses, too? All of these rating systems have developed the Yelp way, aggregating many ratings of unknown quality. Google, for all of its love of technology, was the first one to implement a search ranking system based on links, allowing the human element to affect search quality–permanently for the better. It wouldn’t shock me if Google wanted to use humans in a scalable process that improved ratings quality.
But even if this deal is about nothing more than buying a set of restaurant ratings, it is still a very good deal for Google. Expect to see these ratings incorporated into Google forthwith, which is a major improvement for all restaurant searches.
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