This past Thursday, search engine giant Google (GOOG) snapped up rating company Zagat for a rumoured $125M. The acquisition gives Google a lead in the online review services market as well as an entryway to local commerce–not to mention the big money in advertising revenues these services attract.
According to the LA Times, small businesses spend more than $140 billion per year on local advertising. Which may help explain why Google is placing local business exposure as one of their top priorities.
Google envisions the union with Zagat as a bridge between online and offline activities. Google’s local information services will work in conjunction with the ratings authority, hoping to capitalise on modern consumers’ reliance on online reviews.
The LA Times reports: “Zagat — which has expanded from restaurants to other categories such as golf courses, shops and nightclubs — will supply a wellspring of trusted reviews to Google, which has not been able to generate the reviews on its own and has drawn criticism for lifting snippets from other websites.”
This acquisition also serves as something akin to a slap in the face for Yelp, which Google tried and failed to acquire for $500M in 2009. While Yelp accepts all reviews, Zagat provides an abbreviated but organised concentration of consumer feedback. The difference could make Google an equally convenient but more trusted source.
Google stock dropped over 12 points (2.35%) by Friday afternoon.
Interested in exploring Google’s performance?
Use Kapitall’s Compar-O-Matic to compare changes in average analyst recommendations of Google and its competitors:
Use the Turbo Chart to compare GOOG’s performance against the S&P500.
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