San Francisco — Barely days after Facebook revealed that it was shutting down its Deals service after just four months, but global search engine behemoth Google, on the other hand, who attempted to acquire Groupon for $6 billion appears to be pushing its Google Offers product even harder. The company in a surprising move over the weekend, has taken the rare step of advertising its new “daily deals” service on its widely viewed homepage, in the latest sign that the run-away early success of market leader Groupon is putting pressure on rivals to respond.
Google rarely uses its prized home page to promote services that it considers strategically important to its wider business, such as the Chrome browser and Nexus smartphone, which runs its Android operating system. But, with competition jumping on from many copy-cats around the world, this is the first time Google Offers has popped up on the main page, and may signal an escalation of competition with Groupon — which has filed for an IPO sources say could happen as soon as next month.
Google Offers, which was unleashed in beta in April in Portland, New York City, and San Francisco, allows users to get daily deals from businesses and service providers in and around their area. The company hopes to imitate the same success Groupon has had in the daily deals market. It plans to roll the service out to more than 30 additional cities including Atlanta, Chicago, L.A., and Miami in the coming months.
The duo are contending for advertising dollars from local businesses, such as restaurants and retail stores.
A short promotional message beneath Google’s sparse home page — a prized portal into a plethora of services from email to maps — offered visitors $25 tickets to New York’s American Museum of Natural History for the discounted price of $5.
This deal will probably not be the last, and Offers will likely begin to appear in other places; Stephanie Tilenius, vice president of Google Commerce, mentioned at a conference last month that there will be more “density” to Google Offers, meaning it could be integrated with Google + and mobile commerce apps like Google Wallet and Google Shopper soon.
“Yesterday we provided a link on our homepage in New York City to a Google Offer for the American Museum of Natural History,” a Google spokesperson said in a statement.
“We periodically insert a link on the Google homepage that suggests users to significant information, whether it be about a related cause, a new product or an offer. We believe that users can certainly benefit from learning about great deals from local organizations,” a Google spokeswoman said in a statement emailed to Reuters.
Addressing its main search page to promote the service is “a statement of seriousness and purpose around Offers,” said Greg Sterling, a US online commerce analyst. The advertising tactic was also a sign that Google was not about to retreat from the daily deals market as Facebook had, he added.
Jeremy Stoppelman, Yelp’s chief executive, said his company’s partial retreat came after it had “heard consistently from certain categories of businesses – very popular ones, I’m afraid — that daily deals are uneconomic for them, which does raise questions around the sustainability of ’50 per cent off’ daily deals for these types of businesses”.
Sterling added that with an estimated 600-700 companies around the world trying to emulate Groupon’s success, the daily deals market has become too crowded, with the risk that both consumers and local merchants will become confused by the many rival services.
With Google receiving million of search hits on any given day, Google Offers is certainly going to get some chunk out of that and might become one of the fierce competitors of Groupon.