With so much buzz around Groupon denying $6B offer from Google, I feel compelled to put my take on it.
If i were Groupon's CEO, I wouldn't sell it for $6B to Google. The explanation is simple. Groupon is all about connecting online users to physical stores. No one has cracked it like Groupon. It's like PayPal cracking the online payment mechanism(when dozens of PayPal competitors never made it!).
Groupon is all about local unlike Google. An yet untapped market.
With the flourishing of online stores like Amazon, eBay etc, it's been a far greater challenge for brick-n-mortar companies to bring the online users into their physical stores. Groupon solves it pretty easily and that's what it does best. Google has been struggling to get into this market on its own(Google Local) and has failed trying to acquire the promising 'local' business-oriented startups(Yelp for example). Facebook is revealing its own 'Deals' product. Amazon has invested $175M in Groupon competitor. Does it ring a bell?
Google is merely gambling with bombarding ads online; technologically sophisticated though. Facebook gets better as they know the users' interests far better than Google does. But again, this doesn't mean a financial transaction for the businesses, as the users normally only view the Ad and may choose to ignore it. The advertisers(or the businesses) pay for ad conversions or click-thru-rates(references below) and not necessarily a real business. Now, what Groupon offers is real business transactions where Groupon gets paid if the minimum business transaction set by the business owner is met(this is real money!). How does that sound to a business owner? And, the feedback the business owner gets is very direct unlike the very complex analysis of the click-thru-rates and the combinations of ad words posted on Google. Local businesses can better understand simplicity over the techno CTRs. Do you think a local bread store would hire a Google AdWords agency to put an ad? What is the chance of this ad bringing business with a typical 2% CTR for ads?
And, Groupon is building the treasure trove of demographic-specific local needs which is probably an accurate indicator of what really sells in a demographic. So, it gets better at knowing what deals tick. Also,Groupon could make money just selling this data over the years to companies that benefit from it. Does Google have any such stat? NO. Because, Google is an ad-delivery platform and not an ecommerce platform.
One last note. Groupon potentially seems like the darling of ailing businesses and helps them succeed. Ailing businesses could make a turnaround with just one deal! And, these businesses have the best chance of survival only with Groupon.
Personally, I have bought a couple of deals from Groupon ranging from 50-90% off. You can read about the Groupon teardown article from the references and see the margin they make on the deals.
Groupon is all about local unlike Google. An yet untapped market.
With the flourishing of online stores like Amazon, eBay etc, it's been a far greater challenge for brick-n-mortar companies to bring the online users into their physical stores. Groupon solves it pretty easily and that's what it does best. Google has been struggling to get into this market on its own(Google Local) and has failed trying to acquire the promising 'local' business-oriented startups(Yelp for example). Facebook is revealing its own 'Deals' product. Amazon has invested $175M in Groupon competitor. Does it ring a bell?
Google is merely gambling with bombarding ads online; technologically sophisticated though. Facebook gets better as they know the users' interests far better than Google does. But again, this doesn't mean a financial transaction for the businesses, as the users normally only view the Ad and may choose to ignore it. The advertisers(or the businesses) pay for ad conversions or click-thru-rates(references below) and not necessarily a real business. Now, what Groupon offers is real business transactions where Groupon gets paid if the minimum business transaction set by the business owner is met(this is real money!). How does that sound to a business owner? And, the feedback the business owner gets is very direct unlike the very complex analysis of the click-thru-rates and the combinations of ad words posted on Google. Local businesses can better understand simplicity over the techno CTRs. Do you think a local bread store would hire a Google AdWords agency to put an ad? What is the chance of this ad bringing business with a typical 2% CTR for ads?
And, Groupon is building the treasure trove of demographic-specific local needs which is probably an accurate indicator of what really sells in a demographic. So, it gets better at knowing what deals tick. Also,Groupon could make money just selling this data over the years to companies that benefit from it. Does Google have any such stat? NO. Because, Google is an ad-delivery platform and not an ecommerce platform.
One last note. Groupon potentially seems like the darling of ailing businesses and helps them succeed. Ailing businesses could make a turnaround with just one deal! And, these businesses have the best chance of survival only with Groupon.
Personally, I have bought a couple of deals from Groupon ranging from 50-90% off. You can read about the Groupon teardown article from the references and see the margin they make on the deals.
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