Now that Google (Nasdaq: GOOG) and Groupon have all but conceded they're never going to be a couple, the world's leading online advertising platform is cooking up in-house solutions.
In an interview with MediaBistro.com's Donya Blaze, Google exec Marissa Mayer explained how the company is moving on with Groupon-esque initiatives after failing to broker a deal.
"We already have some things that are like this," Mayer explains, singling out coupons and offer-extension ads that allow its advertisers to make offers to its gargantuan user base. "We're looking at how can we take that technology and put it to use -- especially in the location space."
Connecting the dots, it's easy to see where Mayer is going. Let's say that you're on a Google Maps app on your smartphone, trying to find a nearby restaurant. The usual suspects pop up -- but, bamm -- there's a new Thai place a few blocks away that you've never heard about highlighted. The eatery's offering you a 20% discount if you hit it up, through a Google deal.
This can work, but it will never be Groupon.
I'm not sure if the dot-com giants scratching their heads over the success of Groupon, LivingSocial, BuyWithMe, and a growing fleet of clones get the allure of social coupons or why Groupon was able to distance itself from the pack in a hurry.
For starters, let's get into the viral nature of Groupon. Forget the "group buying" mumbo jumbo. Groupon deals aren't activated until a certain numbers of buyers hop on the deal. This is largely a Jedi mind trick, used to get merchants to sign on given the promise of hundreds of new customers while encouraging buyers to spread the word in order to tip the deal toward activation. I've never seen a deal that didn't get tipped.
Groupon's real viral push, beyond the obvious allure of saving some serious money on outings and spa treatments, comes from its financial incentives to members. Refer a friend? Get $10. Talk three friends into buying into the deal? Your voucher is free!
eBay's (Nasdaq: EBAY) PayPal did something similar in its early years, offering $10 -- and later $5 -- bounties for referrals. This was just before eBay acquired the financial payments juggernaut. The incentive's endgame was that sellers encouraged buyers to use PayPal over what was then eBay's own Billpoint platform, hoping to cash in on the referral bonuses.
Groupon is lucky to be living in the Facebook age, where it's just that much easier for deals to go viral.
What will ever be viral about a location-specific deal, beyond the mere existence of the platform itself?
Google is no stranger in creating fiscal incentives to spread the word. Its AdSense program is the undisputed champ for website publishers and bloggers looking to monetize their content, wallpapering cyberspace with "Ads by Google" ad blocks along the way. It may be a bust in social networking -- for now -- but it knows that its Blogger.com platform and YouTube video-sharing service are industry leaders because it spreads the ad-revenue wealth with its more prolific contributors.
In that sense, Google is better positioned to take on Groupon than AOL (NYSE: AOL), with its recently repositioned Wow.com domain for deals, or anything that Yahoo! or Microsoft's Bing may cook up. Even CBS (NYSE: CBS) is offering city-specific deals through CBSLocal.com.
Google is taking too long to get rolling here, and offering location-based deals is an entirely different critter. After all, merchants will never offer the type of 50% discounts available through Groupon on Google Maps. Just as many coupons go unused and rebates go unclaimed, Groupon merchants know that many vouchers will be purchased but not executed before they expire. A merchant through Google's foray -- if it is in fact Google Maps offers -- would also be worried that many existing customers will go for the deal, discounting meals that wouldn't have been paid for otherwise.
Google has to know better. It's smart enough. It has all of the right ingredients in place. What's it waiting for to tip this toward activation?
How do you think Google will tackle the Groupon model? Share your thoughts in the comment box below.
