Good morning. It’s “Cyber Monday” and the Google-is-buying-Groupon rumors are circulating again. In fact there is a rumor that Google has already agreed to acquire the daily deals purveyor.
The general rumor of Google’s interest in the group buying leader been going for at least couple of weeks now. It follows similar rumors about Yahoo wanting to buy Groupon for a huge amount. The rumors probably validate that Google and Groupon are talking.
If Google were successful it would probably be cash + stock deal like AdMob. But the price would potentially be much more than AdMob and north of $2 billion, given Groupon’s current valuation. In fact at $2 billion or so, if it happens, it would become Google’s second largest acquisition after DoubleClick.
I’ve argued in the past that Yahoo shouldn’t buy Groupon because it is too expensive for what it delivered. But Google’s got cash to burn. What’s a couple billion, right?
Recall that Google effectively has no meaningful coupons/deals play, although the company is thinking very hard about the segment. Recall also how focused now Google is on local. So conceptually it makes sense. Google tried unsuccessfully to buy Yelp, which would have given the company a local brand and sales channel. Essentially the same is true here. Google would own a local sales force, as well as the Groupon brand and its global-local reach. Google could easily further establish the Groupon brand with some additional visibility and promotion. Think about the combination of Google Places and Groupon promotions.
It would also own a huge consumer email list as well. It sure would be an interesting deal if true.
There would also be no anti-trust issue here that I can see given how competitive the segment is and the fact that it relies very little on search. Let’s see if the rumors are real.
November 29th, 2010 at 12:21 pm
Why would Groupon accept the deal ?
November 29th, 2010 at 12:24 pm
It’s a fair point: I thought an IPO was in their future. And allegedly Yelp “played” Google to get a higher valuation from investors.
But the Groupon growth momentum and the momentum of the space won’t continue indefinitely. This would be a “sure thing” vs. waiting a year or more for an IPO that would be potentially more lucrative but less certain.
November 29th, 2010 at 12:25 pm
[...] This post was mentioned on Twitter by Greg Sterling and Patrick Lauzon, Julien Perreard. Julien Perreard said: RT @gsterling: Google-Groupon Deal Rumors Heating Up http://bit.ly/etPp3y [...]
November 29th, 2010 at 5:35 pm
[...] Google-Groupon Deal Rumors Heating Up [...]
November 29th, 2010 at 6:44 pm
Google’s sitting on what, $30B? Time to put that money to work and buy some growth! Groupon, Twitter and Foursquare would be a good start. And maybe throw in Yelp and use their data to drive personalized recommendations.
November 29th, 2010 at 6:54 pm
Groupon puts Google in something of a different business than it was in, as Yelp would have had that acquisition succeeded. It’s akin in some respects to the recent launch of Boutiques.com.
November 29th, 2010 at 7:11 pm
Google’s already in the SMB ad business, right? Eg: http://www.google.com/help/tags/
Twitter and Foursquare get them some social networking traction in the same way YouTube got them instant traction in video. I actually think Twitter’s “follower” model makes more sense for social search/discovery than FB’s “friend” model since friends do not necessarily provide the best recommendations. Yelp + Foursquare + Groupon would make a pretty interesting local/social solution.
November 29th, 2010 at 7:32 pm
Yes Google is clearly in the SMB + local biz. But the business and culture of Groupon is different. It may be that embracing telephone sales (for Tags) may have cleared the way for this acquisition (if it happens).
November 30th, 2010 at 9:53 am
Thx for your answer.
Do you think that the agreement could happen before the end of the year ?
April 26th, 2011 at 8:56 am
[...] Sterling has written some typically-insightful posts reflecting his view that Google would be significantly overpaying for Groupon at [...]