Google Buys Zagat Ratings, Rocks Local
This is huge news for Google (capital “H”) and for local. Google is a content publisher now and the content that Zagat brings arguably closes the gap between Google Places and Yelp. We’ll have to see the implementation.
Zagat’s subscription-based business model has enjoyed some success online but increasingly the company has been overshadowed by competitors like Yelp. Speaking of which, Google recently purged almost all non-Google reviews from Places profile pages after consistent complaints from Yelp and other publishers such as TripAdvisor. Now the company has a huge cache of user reviews to replace those that were “lost” in the move — and otherwise beef up its local content.
Beyond restaurants, Zagat also offers ratings and revenues of entertainment venues, wine and travel. The online version of the site has developed a community as well; so there’s a social networking dimension to this acquisition as well as content that Google is buying.
Zagat co-founders Tim and Nina Zagat said that they “will continue to be active in the business as co-Chairs, however, the merger of our resources, expertise and platforms with those of Google will give us the opportunity to greatly expand.”
There are now several questions that we’ll ask Google about when we speak to them later:
- The majority of Zagat’s business and revenue is still tied up in print publishing and physical books. Will Google continue to publish the books?
- Will Google eliminate the subscription part of Zagat’s site and make it free? If it doesn’t formally eliminate the subscription business it will probably, effectively make all Zagat’s reviews free because it will likely import all those reviews into Places.
- Will Google preserve the Zagat brand and survey? At least in the near term I would assume that it must.
Google said in its blog post that “Zagat will be a cornerstone of our local offering.” Indeed. In the world of local I don’t think one can overstate the significance of this acquisition for Google and the segment as a whole.
Postscript: I spoke with Google’s Marissa Mayer and Tim Zagat. They told me that nothing would change in the near term; Google will continue to publish the guides and maintain the subscription product. I asked if Zagat reviews would be imported into Google Places and Google’s response was non-committal. Of course they will; that’s the point of this transaction: the content.
Tim Zagat made the point that Zagat’s reviews are of higher quality and more trustworthy than other sources out there. These are verified users and edited/curated reviews. The quality (as well as the volume) of the content is clearly one of the most appealing things here for Google.
As I said above, it will be very interesting to see what Google does with the Zagat brand over time.
Postscript II: As Gary Price reminds me Zagat has done some content distribution deals. How will those fare in the future? We won’t know for some time.
Postscript III: Here’s Yelp’s Luther Lowe’s response to the announcement: