Google Buys DailyDeal in Daily Deals ‘Arms Race’


Google has bought DailyDeal, a Berlin, Germany-based daily deals website for between $150 million and $200 million. This is the third acquisition within a two-month span aimed at strengthening Google’s own daily deals offering, Google Offers.

“What began as a two-person startup less than two years ago has transformed into a trusted platform to connect businesses with consumers,” the Daily Deal team announced on their website. “By combining our expertise with the Offers team at Google, we hope to expand our efforts to provide even greater deals to consumers.”

This is Google’s 21st acquisition of 2011. For full list of 2011 acquisitions, see the bottom of the post.

Essentially, DailyDeal is a German clone of Groupon, offering digital coupons for local restaurants, travel, entertainment, and retail. DailyDeal was on track to earn €40 million (about $54 million) this year. Launched in December 2009, DailyDeal also operates in Austria and Switzerland and previously announced plans to expand to Scandinavia, Belgium, the Netherlands, and Luxembourg,” The Next Web reported.

Google Offers is only available in the U.S., and TNW believes this signals Google’s intention to expand to Europe to compete with Groupon internationally, as DailyDeal “already has an established presence and is said to be outperforming Groupon and LivingSocial.”

“As more and more people go online to find the latest, most relevant deals, we’re exploring new ways to help consumers get the best local deals out there,” a Google spokesperson said in a statement. “The DailyDeal team has an incredible track record in this space, and we look forward to working with them.”

Despite a 9 percent revenue growth in the North American daily deals market, Google Offers has struggled early, with revenue declining 23 percent in August. Groupon, meanwhile, grew its market share to 53 percent.

In the U.S., the daily deals space is becoming a bit of an “arms race,” as the Wall Street Journal phrased it. Nearly one-third (170 of 530) of all daily deal sites have either closed or been sold.

“…the cost of acquiring subscribers who redeem a daily deal has skyrocketed during the past two years, said executives at daily-deal websites. While snagging early adopters who were curious about daily deals initially required little marketing, it now takes more spending to get to remaining consumers and to cut through the noise created by so many competitors,” the WSJ reported.

Spending by U.S. consumers on deals is forecast by BIA/Kelsey to generate $2 billion this year and $4.2 billion by 2015.

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