Australia — Yahoo7, the Australasian subsidiary of struggling internet pioneer Yahoo, has snapped up group buying site Spreets.com.au, and its New Zealand operation Spreets.co.nz, which provides economical marketing to small businesses through online coupon deals, for an amount reported to be a cool $40 million, which will see the site shift away from its city-by-city focus to offer more localized offers.
Financial terms of the deal were not disclosed, but the agreement, which includes the site’s New Zealand operations as well, will see the site integrated into the Yahoo!7 Network, in addition to its joint venture partners Yahoo! and the Seven Media Group, including marketing and promotions.
Since Spreets was launched in February 2010, which has a relatively low profile on this side of the Tasman — claims to have 500,000 members across the two countries, with 274,000 vouchers sold since launch.
Spreets is a one of countless sites worldwide trying to cash-in on the group buying craze. It is one of the five biggest sites of its kind, along with Jumponit, LivingSocial, Nine Entertainment Co.-owned Cudo and Scoopon. Spreets has 52 members of staff and said it was planning to add more following the deal.
In a statement released this morning, Yahoo!7 chief executive officer Rohan Lund said “Spreets — is one of a handful of companies supported by local web startup incubator Pollenizer — was the first group buying site in operation in Australia, and had accumulated some 500,000 members over the past year.”
“At its core Spreets is about furnishing insights to deliver the best local deals through an online social experience, and this maps perfectly to the Yahoo!7 Local and Social strategies. The acquisition of Spreets means we can bring the best of Yahoo!7 to grow the business even further.” Lund said the deal was worth about $40 million in a press conference on the subject this morning, although the precise financial terms of the deal were not disclosed.
“After prudently assessing the market, it was clear that Spreets is a market-leader in what is turning out to be a highly competitive and fast growing market. The Spreets management team is Dean McEvoy [pictured above, left] and Justus Hammer [above, right] come with strong expertise and experience in the Australian Group Buying market,” said Lund.
Spreets chief executive McEvoy stated that the group buying pattern had progressed rapidly over the past year — delivering economical marketing to small businesses and addressing what he described as “unmet and growing demand” from consumer for online coupon deals. The executive added that Spreets had delivered over $40 million worth of savings to local consumers in Australia and New Zealand over the past year. And, he said, the acquisition would see Spreets grow further.
“We are proud to be an Australian born company leading the market in this rapidly evolving space,” McEvoy said. “We are thrilled with the acquisition by Yahoo!7 as we see the huge potential that one of Australia’s leading online media companies, which has huge momentum in the market, will bring to the Spreets business.”
Deal sites have been promoted as the next internet gold rush, with small businesses using the power of the crowd to pull in large numbers of customers without using advertising.
Moreover, the sweeping rise of deal sites poses a significant threat to Google and other search engines, which generate millions of dollars on the back of online ads placed by restaurants, entertainment companies and tourist destinations, and other small businesses. Their popularity led Google to offer $US6 billion last month for Chicago-based Groupon, while at the same time Amazon invested $US175 million in LivingSocial, the world’s number two player.
In Australia, Yahoo operates its sites through Yahoo!7, a joint venture between the global company and local television and media group the Seven Network. Yahoo7 possesses 51% of YahooXtra, with Telecom holding the remaining 49%.