It’s About the Local SEARCH, Dude!
By now, you’ve likely heard that Google bought the restaurant surveyors at the Zagat Guides. 30 years in the business of primarily rating restaurants, some 30,000 locations in 100 cities worldwide, with something like 300,000 survey participants.
______________________________________________________________
Photo:Tim and Nina Zagat by Michael Falco, New York Times
___________________________________________________________
Zagat (pronounced to rhyme with “the cat”) has been on the market for a while. Equity firm General Atlantic bought 1/3 of the company in 2000 for around $30 million, then the company was for sale in 2008 for $200 million, but it sold to Google for $125 million week before last.
So, why, Google, and why now? After all, while Zagat had worked to expand into the digital space with smartphone and PDA apps, the maroon printed guides were still primarily the workhorse.
Two years ago, Google tried, and failed, to buy Yelp, an online competitor to Zagat, for a reported $500 million. Google recently had to remove edited portions of reviews on Google Places from both TripAdvisor and Yelp when those two complained. The FTC is currently conducting a broader competitive business practices investigation into Google, but has not charged them with any wrongdoing at this point. Google has denied any anticompetitive practices.
For Zagat, their growth had been limited by having their online content primarily housed behind a firewall, while they did relaunch in February with more free content, their search results paled compared to those of Yelp.
Bottom line, Google was done borrowing content, especially from the likes of Yelp.
With 20% of all searches, according to Google, coming for local businesses- and the stated goal of driving more ad revenue related to those local searches- it was simply time to have content Google could call its own.
So where could this have the most impact, with the most speed? As Groupon stumbles, the daily deal market could have a spot open up. Expansion of the Zagat model to other businesses, adding maps and ratings, makes perfect sense. You can easily imagine the Google Maps user now finding places to stay and eat, validated by the Zagat rating system.
Said Marissa Mayer, Google’s VP of local, maps, and location services, “Zagat will be a cornerstone of our local offering.”
Cornerstone, and MAJOR building block.
_____________________________________________________________________
