WiFi ad network JiWire, which recently acquired NearbyNow, has done a distribution deal with Groupon. The deal is one instance of the much larger “Groupon Everywhere” distribution strategy now being pursued. It includes eBay and other sites — shall we call it “GroupSense”?
It’s a bid for “shelf space” to prevent competitors from gaining comparable scale and distribution. That may be impossible regardless, given that Groupon says it’s signing up 3-4 million consumers — a week. The combination of Groupon’s consumer database and reach and publisher distribution (assuming it continues to grow its network) could prove to be a formidable local advertising combination with implications for Google, Facebook and traditional local media companies.
Reportedly Groupon has 40 million email subscribers globally. The company is currently on a Facebook-like growth trajectory. While it’s possible that someone could still buy the company ($8 billion, $10 billion?) it would appear the only exit now is an IPO given the growth and revenues, now a $2 billion run-rate according to at least one report.
According to Business Insider the $6 billion deal with Google didn’t happen, not because of principle or dreams of an IPO, but because of a failure to agree on a “kill fee” if the Feds scuttled the deal:
This source says the view on Groupon’s board was that a Google-Groupon merger would draw more regulatory scrutiny than any other deal Google has ever done . . .
Google is currently undergoing two anti-trust investigations – one from Europe and another over the ITA deal. Google also went through severe regulatory trauma acquiring DoubleClick and AdMob. Anti-trust heat halted Google’s move to take over Yahoo’s search business.
Because of this view – that Google-Groupon might not be allowed to go through and that it would take months and months to find out the bad news – board members decided they would need a significant break-up fee if they were to accept Google’s offer.
The notion that the deal would have incurred regulatory scrutiny is correct. However it probably wouldn’t have been blocked unless the FTC/DOJ saw Groupon not as a deals platform narrowly but as a local advertising vehicle more broadly, which is what the company aspires to in my opinion. Even in that event it would have been hard to successfully block the deal. So I don’t entirely buy the argument that Groupon was highly concerned about regulators.
But if the kill fee was the true sticking point, it might suggest that Google is no longer as confident about the regulatory success of its M&A deals going forward.
Related: When Groupon Dodged Google
December 9th, 2010 at 3:49 pm
[...] This post was mentioned on Twitter by Greg Sterling, shoppetweets and SMBinfo, UBLorg. UBLorg said: Great Local Post! Groupon Everywhere and the Google Snub – WiFi ad network JiWire, which recently acquired NearbyNow… http://ow.ly/1anmAr [...]
December 9th, 2010 at 4:34 pm
Groupon turns the world into a “Digital Swap Meet”, are these the types of headlines we’re going to start seeing ?
December 10th, 2010 at 1:14 am
[...] Google can sell search, display and mobile ads. But the company may need more SMB-specific products to sell. Groupon would have provided some or most of that: presence, new customers and soon CRM. But the deal didn’t happen. [...]