Why Google Needs Groupon to Assert its Web 2.0 Dominance

The Web 2.0 community is all a chatter today about a potential/confirmed/not quite confirmed Google and Groupon deal. Let's add to that conversation with some analysis. The big question is: does Google need Groupon? The answer is yes. Yes without question. Groupon, a company that has been called the fastest growing of all time, is a perfect partner for Google. They go together very well. Groupon has already asserted its dominance in the group buying phenomenon. For those that are unacquainted, Groupon is the combo of groups and coupons. The more people that buy, the sweeter the deal. Save big on restaurants, movie tickets, goods, and anything else you can imagine. It's a genius business model and it's worked incredibly well. So well in fact that Groupon has been profitable and a runnaway success almost from birth

Yhaoo missed out

Groupon, a site that was never really meant to be to begin with, has been estimated to be worth about $3 million. This potential Google deal is said to be for $2.5 billion. It's a serious investment, but Google can afford it. Yahoo tried to snag Groupon earlier this year and didn't succeed. Why the deal didn't come to be isn't really clear, but somewhere along the way the negotiation didn't pan out. It's Yahoo's loss and Google's win.

It works

It might seem like a lofty sum to throw at a group buying company, but everything indicates that if the purchase goes through that it would be a well calculated move on Google's part. Google already has its maps and places features. A Groupon tie in would make a lot of sense. Imagine searching for a restaurant and in return seeing an ad that indicates you could save big with a coupon. Who could resist the savings? Keep in mind that many Groupon deals are 30, 40, or 50% off.

A smart acquisition

Google may have the upper hand here. Groupon could benefit greatly by gaining a larger mass appeal with this deal. It didn't seem like Google stole YouTube when it originally purchased it years ago, but now the deal makes a lot of sense. YouTube was able to grow through Google search and by playing nice with the Google name. Groupon could see a similar fate. The Google purchase would only make the Groupon concept more profitable in the long run. It could also put a severe damper on web 2.0 deal competitors such a Tippr and Living Social.

Wait it out

It's not official yet and nobody is calling it as a done deal, however it's safe to say that there's some weight to this rumor. What began as back and forth talks a couple weeks ago has moved into what might be an agreement. Stay tuned on this one.