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With so much hype around the Possible Google Groupon deal I felt it worth mentioning a few other internet properties in that space.  As indicated in this Practical eCommerce article there are several other players, Dealpop, Offerpop, Facebook and Wildfire along with others will compete hard for those dollars creating a new landscape for local advertisers to tap but further commoditizing the industry.  As the competition increases advertisers will pay less to issue coupons.  In addition, Google will integrate Groupon into its mobile “Places” application but there too it will face competition from other mobile apps such as Where.com.

Although Goog jumped on the announcement, from an internet M&A standpoint, I believe Google’s valuation of Groupon is way off course.  Is there anything from a technology standpoint that Groupon is doing that is proprietary?  What about from a competitive standpoint, perhaps?  Granted Groupon is the 800 pound Gorilla in the space but I don’t think this is the same as was the case with the YouTube acquisition.  YouTube caters to the consumer marketplace and drives revenues via advertising on the site itself.  It was going to be difficult to match YouTube’s reach given they were entrenched with users.  Groupon caters to local vendors in select cities, collecting a percentage of the revenues from a local vendor campaign.  Those Vendors will certainly be cost conscious and shop their options [whereas a consumer of free videos is lured simply by the availability of content].  While the actual numbers behind Groupon seem to be a moving target it seems that the deal is likely to surpass even the Doubleclick deal Google did a few years back.  Perhaps these are deals just to milk and eliminate competition.

It will be interesting to see how this plays out as I wonder if this would be Google’s Skype.