Why Google Could Up Its Bid For Groupon

Eric Schmidt

After 2 weeks of speculation, Groupon has reportedly spurned Google’s $5.3 Billion Dollar offer. Here are two reasons why Google may up its offer:

1) Google would be in position to do something that hasn’t been done yet – crack the code on local online advertising by mixing it’s ubiquitous reach and search presence with the soon-to-be launched Groupon feature called Groupon Stores.  In case you are not aware, Groupon Stores (which are currently being tested in Chicago, Dallas, and Seattle) are the online equivalent of a merchant’s physical storefront which will allow businesses to create and launch their own deals whenever they want – at a cost.

In typical Groupon fashion, they will take a cut – 10% for deals that are self-promoted and 30% for deals that Groupon promotes as well. So instead of only offering 1 deal per day per city, Groupon will soon be offering hundreds. My guess is that after a Groupon acquisition, in 1 year when you type “Spa” and your city into your Google search bar, you would be inundated with search results filled with Groupon Spa deals near you. Consumers would get more deals, merchants more customers, and Googlepon more commission. Where these ‘stores’ would fit into the Google algorithm, and subsequently how they would rank is an interesting question. I wouldn’t be surprised if they appeared on the top of relevant search results (just like another Google owned property, Youtube videos) or if they were to set aside some inventory in their paid search area. Or both.

2) Google would become the hub for local businesses by leveraging the hell out of Groupon’s sales force and SMB expertise.  Two of Google’s lesser known products, Google Boost and Google Places, should both see significant….well…boosts. We’ve written here before that due to lack of awareness (and handholding), most small business are not even signed up for these services. By leveraging the Groupon sales force, with their pre-existing and future relationships with small businesses all over the world, Google would be in a great position to strengthen both of these products and ultimately become the online hub for local businesses….euthanizing yellowpages, killing Yelp, displacing Merchant Circle, and a slew of other companies in local.  Antitrust anyone? Within 1 year, all local businesses will have a page just like this, and they’ll surely be a Groupon Deal or 5 on each!

This post originally appeared at 8coupons.com and is republished here with permission.

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