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As Others Scale Back, Google Ramps Deals Program
Facebook and Yelp have both recently expressed doubts about the daily deals phenomenon, with Yelp explicitly raising questions about the sustainability of the large margins that companies such as Groupon and LivingSocial have generally enjoyed. Both sites will continue to offer deals of various kinds, but have scaled back their efforts.
But what about late-entrant Google? Does Facebook’s decision not to continue distributing daily deals, after only four months, foreshadow a similar decision from Google in the future? After all, it takes a considerable local sales effort to generate the necessary deals “inventory” to make the model work for consumers.
Offer on the Homepage
In contrast to recent decisions by others, it would appear that Google is quite committed to daily deals — at least for the time being. The company recently bought deals and coupons aggregator The Dealmap and yesterday promoted Google Offers on its homepage. The promotion was called a “first” by Reuters; however Google has from time to time used its homepage to promote products and services (e.g., Android phones).
Nonetheless the presence of the promotion on Google’s homepage — for discount admission to New York’s Museum of National History, probably only seen by people in New York — was significant. It appears to signal the company’s effort to generate more momentum for its Offers product.
Google is also preparing to roll out Offers to many more cities across the US.
While Google missed an early opportunity to be the go to coupons destination online it could become one of the major providers in a new “deals” market worth at least $3 billion this year in the US, according to projections from Opus Research.
A Larger Vision for Deals
Yet Google’s Offers vision is likely much larger than the current version of daily deals. It seeks to develop Offer Ads and tie deals and discounts to Google Wallet and check-ins at offline stores. There’s a much larger canvass and opportunity here.
To date deals have mostly been about email marketing; however they’re rapidly evolving and moving into other areas, mobile in particular. I met yesterday with the CEO of “deal exchange” Wantsa, David Strebinger, whose vision for deals is radically different than the current email-based daily deal product. Strebinger sees deals essentially as incentives for consumers to take various sorts of actions and as ad inventory that can appear in search, mobile, display and on directory sites. In other words, deals is an all-purpose local advertising product that can be distributed in myriad ways.
To the extent that Google shares this vision, and there are reasons to believe that it does, the company may well be in a strong position to benefit from what could become a primary form of local advertising in the future.