Groupon Observation

Last week Google was attempting to purchase Groupon for about $5-6 Billion (Groupon since then has decided to stay independent).  Groupon is a company that is only two years old and carving out new ways to offer local advertising and promotion services. The purchase price for this fledgling company was a number that FAR exceeds the annual profits for the entire printing industry.  Although one has to question whether this could be a good use of funds for Google, or that Andrew Mason, Groupon’s founder, was a fool for not taking the money, we can not ignore the fact that there are new players in the world which was historically dominated by print producers. 

I think there are many who see this adventure in couponing as a “soup de jour” type of service, which will be here and gone tomorrow.  That might be true of Groupon, but given the history of the Web, there are too many folks with deep pockets and extremely creative solutions which can change the face of how business is done.  If Mason’s creation does not become the dominant force, it could be Google, or even Yahoo who become serious players in this space.

Joe Webb had an interesting observation on this topic, “Yet somehow we’re to believe that these digital new media are somehow only mildly effective or generally ineffective or not credible or some other expression of unsatisfactory result.  It looks to me like it’s a great fit in the long-term development on local search and also their (Google’s) ongoing development of AdWords.  In the last four quarters, Google’s annual revenue is about $28 billion. Their annual profit is getting close to $10 billion.” 

That’s some serious money, and there are a varietyof other folks who want to be part of that advertising space.  Yahoo and Microsoft come to mind — just to mention two.

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