January 7, 2011 | In: Opinion, Technology

Did Google Secretely Buy Groupon?

I have discussed, just over a month ago, the absurdity of the Google Groupon deal. I argued that it was not only absurd, but also stupid for Google to buy a coupon website for $6 billion.

The potential deal was heavily criticized by Google’s investors and financial editors, and eventually, they made us believe that Groupon, an almost 3 year old website, rejected Google’s $6 billion offer. Hmmm… Almost the same day I started seeing the following ads all over the web:

Groupon 90% off!

Groupon Museum ad: RAWRRRRR! (now who came up with this original idea)

I have also noticed that the number of advertisements for coupon websites has increased dramatically. I can’t really recall seeing a single coupon ad prior to the unsuccessful (?) Google Groupon deal. Now is it that the coupon business has become very lucrative all of a sudden?

Clearly, for this massive campaign, Groupon must be paying a fortune for all the clicks it’s getting, with little ROI, since most of the impressions are on website that have nothing to do with coupons. But how much is Groupon paying? Let’s see…

The cost of a click related to the keyword “coupon” is around $1.5. Assuming that Google delivers 10 billion impressions (the damn ad is literally on every website I’m visiting nowadays) through its content network, with a very pessimistic CTR of 0.4%, then Groupon will be paying Google $60 million/month. I think that’s too much money for mostly untargeted traffic. It looks like Groupon is on the sucker end of this deal. Why would a company forfeit $6 billion to pay $60 million/month. Now I’m sure that Google has a special rate for Groupon (it is a mega advertiser), but what is discount, 20%, 30%, 50%. Even at that, Groupon would be paying at least $30 million, and it remains a mystery how this is better than getting $6 billion.

There is something that we don’t know. Could it be that Google secretly bought (because investors loathed this deal) Groupon and is now trying to promote it like crazy to control the world coupon market?

GOOG dropped to $550 (now trading at $613) on the news of the deal, and then resumed its upward trend after Groupon spurned the offer.

There is something fishy, we will probably know more about this in the next coming months…

2 Responses to Did Google Secretely Buy Groupon?


Investing in Social Networks: Is It a Good Invesment? « Fadi El-Eter

January 22nd, 2011 at 5:24 pm

[…] risk, and it’s definitely not a long term investment. There may be a Groupon IPO (or not, if Google really bought Groupon), a LinkedIn IPO, a Twitter IPO, and a Facebook IPO by the end of the year. But will Groupon, […]


Will Groupon Go Bankrupt? « Fadi El-Eter

April 2nd, 2012 at 5:47 pm

[…] first red alert that the business model was not working) a few months after it started it (remember those ugly banners all over the place that made us think that Google was about to buy – or has already bought – […]

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