Google Buying Groupon: Will They, Won't They, Should They

Rumors abound that Google is looking to buy Groupon - the online e-commerce coupon/discount purchase company - for anywhere from $2.5 to $6 billion. Why would Google be looking to acquire this property and is it a good fit are questions that have yet to be answered by the companies involved - though there are many speculations by others.

Wired Magazine wrote: "Silicon Valley acquisition rumors serve a number of purposes. Potential acquirers use them to negotiate through the press. Investment banks frequently plant them to put pressure on negotiating parties. And startups often float them to prompt bidding wars -- or just to draw attention to themselves."

"Google's reported acquisition of Groupon for $2.5 billion gives the search giant a weapon with which to bash Facebook's nascent "Deals" function for advertisers. Google and Facebook are increasingly circling each other like giants for control of the web," CBS MarketWatch noted and pointed out that Groupon is reporting income of about $50 million a month - though has a limited innovation factor as it relies on a large salesforce procuring more offers.

The space does have some competitors and for the billions of dollars of the possible offer, one would think Google could create its own clone. AOL reports there is a large number of companies jumping in to this business right now as well.

We will have to wait and see how it all plays out.

About the author

Frank Watson has been involved with the Web since it started. For the past five years, he headed SEM for FXCM -- at one time one of the top 25 spenders with AdWords. He has worked with most of the major analytics companies and pioneered the ability to tie online marketing with offline conversion.

He has now started his own marketing agency, Kangamurra Media. This new venture will keep him busy when he is not editing the Search Engine Watch forums, blogging at a number of authoritative sites, and developing some interesting online community sites.

He was one of the first 100 AdWords Professionals, a Yahoo and Overture Ambassador, and a member or mod of many of the industry forums. He is also on the Click Quality Council and has worked hard to diminish click fraud.