Google to launch “Groupon”

The test of success of any brand is if you’re still a brand name, or if you have transformed into a generic word. For Google, the word Google has transformed from a brand to a verb. So, how does a generic free paid search service support a $600+ stock price? Well, Google offers a lot more than free paid search. It’s no secret to industry watcher that Google’s business model is to dominate the World Wide Web.

Why is that important to Google? Because the more services they offer. The more information they gather. The more knowledge they have about internet users. And ultimately knowledge is power, and knowledge makes $$$. The more people use the internet, the more profitable this knowledge becomes. The more people use the internet, the more knowledge there is to know. To capture this knowledge, and ultimately the business opportunity, Google launches new services.

How does this work? You may not pay to use Google search. However, Google asks advertisers to support that service. Advertisers are willing to pay to be featured in Google search because Google has knowledge about your search. Advertisers can leverage this knowledge to maximize the impact of their ads. So, advertisers pay Google. Google search gets funding for continuous operation. You use Google search. You see an ad that was specifically target to you. You click on the ad. You buy a product making advertisers money. Advertisers pay Google. And the circle of life continues.

The latest Google service to be launched is a social coupon service, currently named Google Offers. Mashable obtained a confidential document detailing a program that’s built on a social coupon model comparable to Groupon, Living Social, or a variety of clones already exist. Google spokesperson is reported to confirm the program:

“Google is communicating with small businesses to enlist their support and participation in a test of a pre-paid offers/vouchers program. This initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with customers in new ways. We do not have more details to share at this time, but will keep you posted.”

The news did not surprise industry watchers, as it came shortly after Google’s failed bid to acquire Groupon back in December.  It was reported that Groupon rejected the $6-billion offer and it’s rumored that they are entertaining the idea of an IPO.  However, with Google getting into this business category, Groupon’s future prospect is greatly hindered.

Despite being the entrenched player in the social coupon category, Groupon falls short in several areas in going against Google.  The biggest threat to Groupon is indeed Google’s business model.  Google ultimately can offer a suite of solutions and analytics.  Google can become a one-stop shop for a small business owner, making a marketing campaign easier to be executed by a small business owner.  Google is already a part of internet users’ lives, and can eventually serve up Google Offers to internet users in a variety of touchpoints.  This level of integration is probably something that Groupon is never going to match.  Therefore, it’s fairly conceivable that all else equal, a campaign with Google would be more successful than a campaign with Groupon.  Eventually, a vision of Google search tying to an ad that links to the coupon.  You Google-map a place on your mobile, and a coupon is served to your phone.  You rate a local business on the recently launched Google Places (with Hotpot), and a related coupon pops up.  However, until all that vision comes to life, Google Offer is an immediate success because it just need to place a few link on the many existing Google services people already use everyday to draw attention to this new one.  A shout out on search, picture sharing, blogs, etc.  The launch can be big and immediate.

The opportunity is endless, making it very attractive to advertisers.  In addition, Google’s strength in analytics makes this option more appealing.  One problem with these social coupons is that you cannot understand its true effectiveness.  Coupons got redeemed, but are these all deal seekers?  Did I truly engage these new triers?  Is this a one-time business?  (Sidenote: Tom Fishburne warned his readers this week against jumping on the Social Coupon Bandwagon for exactly this reason.)  Well, Google can serve up a whole suite of analytics that can help you analyze the success of the campaign.  It can also monitor noise around the internet to see the strength of word-of-mouth generated by the campaign.  Did paid search increase?  Did you get a better rating?  You can follow up with a paid search campaign that continues to raise top-of-mind awareness, and keep the engagement going with your consumers.  This makes Google not just a viable player in this market, but likely the biggest player in this market virtually immediately after the launch.

Photo Credit: by Steve Rhodes

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3 comments

  • Kudos! What a neat way of thinikng about it.

  • Thank you Doug for your comments. It’d be interesting to see how this category plays out.

  • Google will surely be a tough competitor in this space. They do things big, and as you describe in the article Jeannie, they have both the suite of tools *and* the market reach to potentially offer even more value than their competitors can deliver. Nice article.

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