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Google Shops for Coupon Companies, but They're No Groupons

Google (GOOG), spurned by coupon site Groupon, is shopping for another match, according to a source who spoke to the New York Post.

Whether the details are accurate or not, the overall idea is reasonable and even predictable. Google badly wants the revenue that a robust coupon business can represent... and all the consumer data and potential for selling additional local ads that comes along with it. But Google still faces the same hurdles it did when it was looking at Groupon, except they'll be even higher this time.

That Google would consider an acquisition is predictable. The company has purchased an average of one company every two weeks. Outside of its work in developing search engine technology, its greatest successes -- AdSense, Android, YouTube, to name a few -â€" started life as independent companies. Some of the acquisitions are intended to obtain the technical talent rather than products or services.

Google the acquirer
Many of Google's in-house ventures have been less than successful, and local coupons are an important direction for the company. It cannot afford to trip with Facebook is on its heels and so well suited as a channel for local marketing. But Google's current prospects aren't exciting. LivingSocial with $20 million in sales is a fraction of Groupon's $500 million annual size -- and it's the second largest coupon site.

Google will have to ramp up whatever seed it purchases. However, coupon marketing that focuses on small businesses requires a lot of hands-on sales. Google's forte is automated ad fulfillment. If it would have been hard-pressed to merely integrate Groupon's corporate culture and sales model. How will it build something comparable from close to scratch? Even trying to copy the Groupon model could be dangerous: Groupon filed a patent application for its approach.


Image: user lusi, site standard license.
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