Google Offers didn’t do particularly well in August – total revenue dropped 23% from July despite a 22% increase in its total number of deals. However, Google’s Daily Deal product has radically improved in September. Through just the first three weeks of the month, Google has already surpassed last month’s total revenue of $265k and is on track to more than double this figure by month’s end.
Google isn’t running significantly more deals in these markets – deal performance is markedly improving. Through the first three weeks of September, revenue per deal is up 160% and vouchers sold per deal has increased five-fold.
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Google Catching Up to Industry Leaders in Key Metrics
Google is still running far fewer deals than either Groupon or LivingSocial in any given market and is still in far fewer markets. Yet in the markets it has been active in for at least a month, Google is closing in on LivingSocial on average revenue per deal and is selling more vouchers per deal than both Groupon and LivingSocial.
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Google’s improvement in these two key metrics is critical because once Google believes it has found a successful Daily Deal formula, it has more than enough resources to scale Google Offers within and across markets.
In many cases, Google’s success has been a result of working with high profile national and local brands. For example, in Portland, Google teamed with Fandango to sell more than $80,000 of movie tickets. In San Francisco, Google partnered with the iconic record store Amoeba Music to generate almost $25,000 in revenue. In addition to boosting revenue, these deals help to generate buzz and capture new users.
Positioned to Leverage Strength of Broader Local Portfolio
Google’s most notable deal so far this month was an offer for tickets to the Museum of Natural History in New York, which grossed over $85,000 after Google featured the deal on its highly-trafficked homepage. This represented Google’s first attempt to take advantage of its vast online reach to promote Google Offers and, unsurprisingly, this deal quickly became Google’s highest-grossing deal ever. The success of this deal highlights the potential of Google Offers if Google continues to leverage its homepage or any of its other far-reaching channels (Gmail, Maps, etc.) to promote the product.
Google further demonstrated its commitment to establishing a leading position in the local e-commerce market through a series of key moves in September:
- New markets: Google Offers launched in five new cities, more than doubling the number of active cities.
- M&A: Google acquired the German daily deal site DailyDeal.de and the well-known restaurant review publisher Zagat.
- China: Google released a daily deal aggregator in China – a country that the company has previously been hesitant to invest heavily in.
- Google Wallet: Most importantly, Google Wallet launched earlier this week. From the outset, Google’s vision has been that Google Offers would be tightly integrated with the payment and redemption capabilities of Google Wallet. With the recent (albeit limited) launch of Google Wallet, Google Offers will finally have the opportunity to begin leveraging Google’s mobile transaction capabilities.
Of course, Google Offers remains far behind Groupon, LivingSocial and plenty of others in total Daily Deal market share. Nevertheless, Google’s willingness to leverage its powerful existing distribution channels and its recent strategic moves in the local e-commerce space demonstrate that Google Offers is well-positioned to compete with the likes of Groupon and LivingSocial if, and when, Google chooses to deploy the full suite of tools at its disposal.
Photo: Yipit Blog
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