Google Offers Has Groupon Running for the Hills

by    |   28th Jun 11 3:10 am   |   4
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Google Offers Google Offers Has Groupon Running for the Hills Is Google Offers a Groupon killer? A few months after Groupon spurned Google’s $6 billion takeover offer, Google is poised to make a big splash in the daily deals pre-paid coupon business. Google Offers, the search engine giant’s answer to Groupon, the king of the growing plethora of deal of the day services, is making headway after less than a month of beta testing in Portland, Oregon. Soon, Google Offers will expand to New York City and San Francisco. Groupon must be looking over its shoulder right about now. Google is playing for keeps. It’s seriously undercutting Groupon by offering merchants better and faster payment terms. And that’s not all. Google plans to further up the ante by dazzling merchants with its massive global platform of Internet-based products, services and lucrative advertising technologies. Combined with Google Wallet, Google Offers would soon provide merchants and consumers with a convenient, virtual one-stop-shopping service for the sale and distribution of deals and offers that could dwarf Groupon.

Will Google Offers Land the Fatal Blow?

Not only does Google plan to seamlessly integrate Google Offers with its new Google Wallet mobile payments service, the company also has an advantage over Groupon in its ability to saturate the market. Google Offers can promote its daily deals using display ads splashed all over the Internet, by way of AdWords, AdSense and Google Places. Google certainly has the power, the talent, the vision and the means to trounce Groupon, as well as Groupon’s nearest competitor LivingSocial. But will Google be able to keep its focus and go in for the kill? Google has a history of acquiring promising startups and launching bold new ventures, only to allow them to wither on the vine. Just recently, Google relegated Google Health and Google PowerMeter to the trash heap because the projects got lost in the company’s maze of products and services. Google, has at times, proved to be long on ideas and short on execution. However, Google Offers may be the exception, because the business model of Google Wallet relies on Google Offers to succeed.

Google Offers is the Monetization Agent for Google Wallet

Google has every incentive to invest the massive human and monetary resources needed to make Google Offers a success. The company’s recent beta launch of Google Wallet, a mobile payments service based on NFC technology that turns smartphones into a virtual wallet, depends on offers and deals to monetize the service. Instead of charging merchants to use the Google Wallet service, Google is banking on turning a profit from targeted mobile offers, coupons and customer loyalty promotions. For now, Google Offers operates much like Groupon, by emailing the daily deal to subscribers. But that’s just the beginning. Soon, Google Offers will become integrated with the search engine giant’s numerous marketing channels. And the deal of the day service would fuel Google’s entry into the emerging mobile payments market. Once Google Offers and Google Wallet become officially merged within an Android NFC-capable smartphone, all bets are off. Consumers would be able to conveniently redeem offers and make mobile point of sale purchases with a single tap of their Android-based smartphones. Groupon would be crushed.

Groupon Remains on Top, at Least for Now

For now, Google Offers is in beta, and Groupon still leads the pre-paid online coupon business. Groupon boasts 35 million registered users and has an impressive global reach. The Chicago-based company operates in 150 markets in North America and about 100 markets across Europe and Asia. Moreover, Groupon just filed for an IPO with the stated goal of raising $750 million. Based on the staggering success of LinkedIn’s recent IPO, in which its shares doubled on the first day of trading. Groupon is expected to raise closer to $3 billion. Still, for all of its success and phenomenal growth, Groupon has failed to turn a profit. Last year, the Internet daily deal company took in $713 million, but it lost more than $450 million. Google by comparison, posted $8.51 billion in net income for 2010.

However, Groupon is only three-years old and has the potential to become a major online player with a healthy balance sheet to match. Groupon is relying on its popular brand and global reach to continue to dominate the online daily deals market. But Google has brand recognition and a global platform that far surpasses Groupon.

Douglas Idugboe, Digital and New Media Marketing Strategist. Founder and Chief Editor of Smedio! A Canadian Bestselling Author, Marketing Strategist, Speaker and Trainer, Who Loves Technology
  • http://twitter.com/Matt_scherer MattScherer

    I truly liked your article, but I think you’re missing a point.  Credit cards charge what is known as “basis points” for their services.  As a business guy, I charge my client’s credit cards for services.  My sales guy promised me that the processing service would charge two basis points.  However, during the first month, the fee was three basis points.  When I called my customer service department, they told me that I was paying for those airline miles for some of my clients.    When I first heard about the Google Wallet, I researched this for myself and other clients.  When I contacted Google’s processing partners, they would not release their fees.  I’m betting that merchants will probably pay three to four basis points for each transaction.

    • http://smedio.com Douglas Idugboe

      It’s a great point you’ve brought up @twitter-14075664:disqus . Credit card service charges is one of those evils one would have to deal with in business. The great thing about the current business environment is, the consumer is bombarded with alternatives and options. For you to successfully compete in a competitive environment you must bring something special to the table in the form of value, volume, or something gives you a competitive advantage.

      With that said, it comes down to what payment processor would charge and the overall impart on the bottom-line. Either way, you’ve got choices.  

  • http://twitter.com/LuisEscoffie Luis Escoffié

    I think, both companies will have their own market, and their own goals, i don’t think google will kill groupon at least for now, but if Groupon doesn’t have the vision to concrete and enhance their marketing strategy they will surely be dead not by google but by any other competitor. I think, then can cohabitate the same space and market. But both companies have their differences in the strategy.

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    Written simply and tastefully. It’s pleasant to read. Thank u.