Groupon – defensive or attacking move by Google?

groupon

Over the past year or so, ‘deal’ sites have been cropping up all over the place. They are the new hot property online. A good irish example is boards.ie’s boardsdeals.ie. Basically using their existing userbase to negotiate deals with businesses for discounted products & services. If you’re an irish business and have the opportunity to be seen by 400,000 people, it’s only natural to want to get a bit of that action. So you’ll offer half price stuff or some kind of great deal to get people parting with their hard earned cash…

Rumour has it google have bid $6 billion for groupon which is the most popular deals site, at least in the US. That’s insane for a number of reasons, mainly because groupon is only two years old :mrgreen:

ibood.eu is an older site but with a similar concept. It has one deal per day open to anyone in the EU. I haven’t bought anything on it myself but i have been tempted. There’s something about seeing an item at half price and knowing there’s only limited stock available at that price that makes your eyes pop out. Because ibood only has one deal per day and regularly sells out in minutes, i’m thinking to myself “i don’t have time to think about this, i just have to buy it”.

Do i need it? Probably not, but because it’s served up to me on a plate and it’s a great deal, i think to myself “can i afford it?”, not “do i need it?” and there’s a big difference. At that stage i’ve taken the bait and it now comes down to cash or credit and how badly i want it. Do i want it so badly i want to put it on a credit card? Possibly, although it’s highly unlikely because i don’t buy stuff i can’t afford. I know i’m in the minority though. I am irish after all, we’re now all expected to have debt under our mattresses, just like we’re all expected to drink guinness, play the fiddle and live in a thatched cottage ;-)

Anyway, overlooking the fact that businesses flog crap at prices they should be sold for anyway, i can see the value and power of these type of sites and why Google would be so interested in groupon…

Local, social advertising.

I might be wrong, but i’d imagine google want to create a world where the butcher, baker & candlestick maker can advertise (using adwords) to a targetted group of people in a wider geographical location than old school offline advertising would allow for. I’d imagine google also want to help businesses lure people (local and not so local) in through social networks with exclusive offers & discounts.

Google don’t have a facebook, but if they had a groupon they would have a ready made social deals website which would compliment adsense nicely. These ‘deal’ websites generate buzz and that’s something google can’t do with adsense. Adsense ads aren’t something i’d send to friends & family, but a groupon ad might be. That’s what makes groupon valuable. The social, buzz aspect of it. People buy in flocks as well as recommend in flocks. ‘Keeping up with the jonses’ syndrome…

You buy a new car, i do too. You go on holiday, i do too. You get in to debt, we all get in to debt. Sure what can possibly go wrong if we’re all in the same boat? That’s the power groups have… they have huge influence over how members behave, what they buy & what their attitudes are…

Keep the change

It’s incredible how aggressive Google can be though these days… it’s almost quite literally a case of “buy anything which shows promise before it gets too big and can attack us”. That’s the way i see it. Perhaps they’re angry about not getting in to the social network scene and see Facebook as the one that got away… i’d love to fast forward 20 years and see what state Google will be in. One part of me says they can’t die because they’re constantly expanding and innovating… the other part tells me that if they keep growing and growing and snapping up anything that moves, they’ll eventually lose their competitive edge and will start to roll down hill.

 

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