Did Google by Groupon on the eve of Cyber Monday? That's the story the rumor mills are churning. Benchmark Capital led the charge with a report that the search giant snapped up the coupon king during the weekend in a $2.5 billion deal.
Neither Google nor Groupon could be reached for comment. Google's company blogs don't even hint at a deal. But Benchmark Capital seems confident of its sources.
Launched in November 2008, the Chicago-based Groupon is a deal-of-the-day web site featuring geographically specific deals from local merchants. If a certain number of consumers sign up for an offer, then the deal becomes available to everyone. But if the minimum is not met, nobody gets the deal.
"We view this move positively," Benchmark wrote in a research report. "While expensive, Groupon provides Google entry into the emerging daily-deal segment. Groupon is local in nature, which could build on Google's positioning in the 'long tail' with small and medium-sized businesses. There are potential synergies with Google's core search."
Google's Second-Largest Acquisition
As Greg Sterling, principal analyst at Sterling Market Intelligence, sees it, the rumored Groupon acquisition would be significant for Google in two ways.
"It would immediately thrust Google into the center of the deals-and-coupons segment, where they have no offering. Indeed, it would instantly make Google the 800-pound gorilla of deals. It would also provide Google with a local sales channel that could sell other things to local businesses," he said.
"It's unclear how long the daily-deals frenzy will last, but it's one of the hottest segments in the market that combines areas that Google is very interested in: Offers and local. It would also probably become Google's second-largest acquisition -- if the purchase price is correct -- after DoubleClick."
Exploring the Deal Space
Groupon has made daily-deal sites popular by providing its millions of customers big discounts on products and services from local businesses in more than 50 cities across the United States and in Canada. Groupon set its sights on global expansion with $135 million in venture capital it secured from DST and Battery Ventures in April. A Google acquisition would clearly escalate the opportunities.
The daily-deal and coupon space has grown as traditional social-media players like Twitter, Facebook and Yelp are moving into the deal action in one way or another. In July, Twitter launched a new service that would point customers to some of the best deals on the web. Dubbed @earlybird, the service competes with deal sites like Groupon, Livingsocial and Tippr.
More recently, Facebook and Yelp got into the game by tying geolocation services with deals through check-in features. Facebook launched Deals in early November. Yelp followed suit a few weeks later with Yelp Check-in Offers. Both services essentially reward consumers with discounts for checking in at retail locations.