Post image for Google raises bid for Groupon

Google raises bid for Groupon

by Kelly MacNeil on December 1, 2010

Google is currently in talks with coupon start-up Groupon for its biggest ever bid of almost $6 billion, a move that would fortify the web giant's strength in online advertising.

According to unnamed sources, Google offered Groupon $5.3 billion for the site and $700 million in bonuses. An agreement is likely to take place this week, a deal which would rank as Google's largest-ever acquisition, reports the New York Times. Those involved with the talks have declined to comment.

Google's investors are concerned about the high purchase as well as the potential return on the investment, though Groupon's attractive daily coupon discounts for local restaurants and businesses have proved to be a major hit among consumers, with an estimated annual revenue of more than $500 million, according to the news source.

Groupon sends daily offers of deeply discounted products and services that are only valid if a certain number of subscribers purchase them up front, which gets many people calling on their family and friends. According to the Los Angeles Times, Groupon gets roughly half the profits on each deal.

According to research from advertising firm Borrell Associates, local online advertising should grow as much as 18 percent this year, reports the news source.

The company is also lucrative to the web giant due to its wealth of consumer knowledge and the presence it has created for itself on social networking sites, which should help it compete with Facebook's coupon initiative, according to the LA Times.

Search Engine Land editor Danny Sullivan told the New York Times that the move was largely "defensive" to prevent Facebook from "enhancing its formidable position in social networking."

Google has been attempting to tap the local advertising market for years with its mapping system, encouraging local businesses to post information and customer reviews, reports USA Today.

{ 1 comment }

Nick December 1, 2010 at 3:09 pm

$6 Billion dollars – That is certainly a lot of money for a company that pushes coupons. Does anyone else see the irony here?

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