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One of the most anticipated IPO in the tech world was decided today, as Groupon Inc raised $700 million after increasing the size of its initial public offering and becoming the largest IPO by an Internet company since Google Inc raised $1.7 billion in 2004. This came after a widely publicized offer by Yahoo for $2 billion which was turned down, followed by Google unsuccessful bid for $6 billion. With the $700 million IPO, Groupon is valued at $13 billion after saying it increased the offering by 5 million shares to 35 million in total and pricing them at $20 each.

Analysts were anticipating that Groupon is valued at $15 to $20 billion, but I greatly question that value, but fell short. Don’t get me wrong, I have friends working there, and have bought from Groupon but I don’t see that model sustaining that $13-15 billion valuation.

Here are my observations:-

• Finite merchants and value.
  I have mentioned before and I will mention again, merchants/stores often don’t benefit from getting on Groupon other than the flash-in-the-pan sales from Groupon. In some cases, it is a disservice to the brand itself. The example I like to bring up is Gap selling on Groupon. Yes, it brought PR to the Gap at a huge cost of negative association as a brand discounter. Gap does not spend millions to have the Material Girl, Madonna promote the billion dollar brand and then be associated with a discounter like Groupon. Thus, there were complaints by companies that appeared on Groupon that the customers that walk through are there for the discounts and never return. There are also a finite number of companies that Groupon is able to approach.Despite Groupon’s eight-percent growth in the last quarter, its local deals revenue fell by three percent. Taking into account the growth in subscribership… It may not be a good sign that its core local deals business is already losing market share.
• Sustainable growth with competition
  Groupon’s business model is no rocket science and the barrier to entry is pretty much non-existence. The two big dogs on the block, Amazon and Google are also in this space. One day before Groupon’s IPO, Google Deals launched with a nationwide REI deal. Groupon’s closest competitor, LivingSocial is owned by Amazon.
  As of September 30, Groupon had 143 million subscribers, but in the third quarter only 30 million of them bought Groupons. Repeat customers increased from the second quarter but only numbered 16 million, according to a regulatory filing with the U.S. Securities and Exchange Commission. Failing to win enough repeat customers along with stiff competition may dampen the rapid growth.Days before the IPO, Groupon cut 10% of its sales force plus half of the copywriters in China.

It would be great to see Groupon fly high, but I just don’t see the machine fueling its growth with this business model.

The Chicago Tribune reported today that Google’s bid for Groupon fell apart when Groupon rejected the internet giant’s offer. Initially, Yahoo tried to buy Groupon at half that amount and failed too. It is said that Groupon might be looking at an IPO in 2011.

Amazon is also looking to buy Groupon’s closest competitor for less than $200 milion.

Groupon’s business model is pretty solid as they keep 50% of the revenue that they generate online. I.e. If they sell a $50 value gift cert at GAP for $25, Groupon would make $12.50 off each the certificate that they sell and GAP gets $12.50.

The bigger question is, what value does that create for merchants other than a potential new customer. In the case of GAP, are they really generating a new customer?

I for one have bought from GAP and am a regular customer. Is it a good deal for me, “Yup” as you get to stretch your dollar further by 100%.

As for GAP, I doubt that they get new customers because at one time or another, one have bought from them.

On the flip side of things, I think it is more of a PR to generate buzz, but at what cost? Brand image – because now GAP is being associated as a discounter? Cash flow – because selling a $50 gift cert for $12.50, or at 75% off.

At the end of the day, it is Groupon and the consumers that are coming out ahead while the merchant is getting short changed.

It was reported earlier that Groupon was in the process of being purchased on 11/20. Yahoo made a bid for $2 billion but it was rejected by the founders of Groupon. Google made a pass at it and it looks like they are close to sealing the deal based on a report by NY Times.com.

It is estimated that the deal would be around $5-$6 billion dollar, and that would be close to twice the amount they paid for their largest acquisition which was $3.1 billion purchase of DoubleClick, the display advertising giant in 2007.

Groupon which focused on local merchants managed to strike it big when signing on Gap, which offered a nationwide deal this summer. “On the day of the Gap promotion, Groupon sold 440,000 units and generated $11 million in revenue. Groupon’s success has helped turn the company into a cash-generating machine, signing up more than 12 million registered users and reaping more than $350 million in estimated annual revenue”, NT Times.

One of the most most successful site that recently hit the net is Groupon and it seems that Google wants a piece of it. Yahoo tried to buy Groupon recently but the bid was rejected by Groupon..

Groupon, based in Chicago, last month raised $25 million from Accel Partners

As of today, Groupon already raised $171 million from investors including Digital Sky Technologies, Accel Partners and New Enterprise Associates, according to techcrunch.com.

It was reported by Bloomberg that the deal will likely go through as Groupon is leaning towards selling.

The Google ToolBar, one of the most widely downloaded toolbar is in the news when it was mentioned in a lawsuit, citing that it violated a users’ privacy rights because its Toolbar software allegedly transmits surfing habits and transmit those activity back to Google without the users’ consent.

The complaint ‘Weber v. Google, 10-05035′, filed on November 5, 2010 in federal court in San Jose, California, claims Google has misled users who download the software, used to search and browse the web, to believe they can disable features that transmit personal data to the company. The case, which seeks class-action, or group, status, was filed on behalf of Jason Weber of Brooklyn, New York.

“With products such as Toolbar, Google acquires a great deal of information about users’ Internet activities, adding to the already substantial information it acquires by providing a search engine, network advertising, and more,” according to the complaint.

Google says its Toolbar can be set up to not share personal information unless used in conjunction with a Google account.

Google ToolBar was relased on Aug 13, 2003 with these basic features.

• Pop-up Blocker: Blocks distracting pop-ups while users surf the web.
• AutoFill: Completes web forms with information that’s saved securely on a user’s own computer.
• BlogThis: Makes posting links to Blogger.com weblogs quick and easy.

With these additional features:

• Google Search: Access Google search from any web page.
  Search Site: Search only the pages of the site being viewed.
  PageRank: See Google’s ranking of any page on the web.
  Highlight: Highlight search terms as they appear on the page – each word in its own color.
  Word Find: Find search terms wherever they appear on the page.

Less than one week ago, Google Inc settled a class action lawsuit for Google Buzz amounting to $8.5 million.

I just got a noticed in my Gmail that Google settled a lawsuit regarding Google Buzz which pertained to user privacy. Google Buzz was sure an expensive application for Google to release. The lawsuit preliminary statement states it all.

1. This is a class action lawsuit, brought by, and on behalf of, a nationwide class of
individuals whose privacy rights were violated by the actions of Google Inc. (“Google”) through
its Buzz program.
2. Google automatically added the Google Buzz service to the accounts of all users of Google’s “Gmail” service.
3. Google Buzz made private data belonging to Gmail users publicly available without the users’ knowledge or authorization. This information included some or all of the following: personal contact information, place of residence, occupation, and a list of the users’ frequent email contacts.
4. Google Buzz searched for and acquired pictures, video, text and other data that
users had posted to websites such as Picasa and YouTube. Buzz automatically sent those posts to the email accounts of the users’ frequent email contacts without the users’ knowledge or authorization.
5. When launching its Buzz service, Google failed to provide users with clear information detailing the nature of the new service, including the automatic application of the
Buzz program and its provisions for default disclosure of personal information and default
sharing of posts previously made to other websites.
6. Google has publicly admitted that its Buzz program presents privacy concerns,
and Google has made several waves of modifications to the program. However, Google’s
modifications do not go far enough to address the problem. Furthermore, Google’s actions have already caused damage because the Buzz program disclosed private user information the moment Google launched the service. The bell of breached privacy cannot be un-rung.
7. Google’s public disclosure of private user data violates users’ rights under the Federal Wiretap Act, the Federal Computer Fraud and Abuse Act, the Federal Stored Communications Act, and California common law.

Here is the email I received:

Subject: Important Information about Google Buzz Class Action Settlement
From: Google Buzz

Content:
Google rarely contacts Gmail users via email, but we are making an exception to let you know that we’ve reached a settlement in a lawsuit regarding Google Buzz (http://buzz.google.com), a service we launched within Gmail in February of this year.

Shortly after its launch, we heard from a number of people who were concerned about privacy. In addition, we were sued by a group of Buzz users and recently reached a settlement in this case.

The settlement acknowledges that we quickly changed the service to address users’ concerns. In addition, Google has committed $8.5 million to an independent fund, most of which will support organizations promoting privacy education and policy on the web. We will also do more to educate people about privacy controls specific to Buzz. The more people know about privacy online, the better their online experience will be.

Just to be clear, this is not a settlement in which people who use Gmail can file to receive compensation. Everyone in the U.S. who uses Gmail is included in the settlement, unless you personally decide to opt out before December 6, 2010. The Court will consider final approval of the agreement on January 31, 2011. This email is a summary of the settlement, and more detailed information and instructions approved by the court, including instructions about how to opt out, object, or comment, are available at http://www.BuzzClassAction.com.

——————————————————————–
This mandatory announcement was sent to all Gmail users in the United States as part of a legal settlement and was authorized by the United States District Court for the Northern District of California.

Google Inc. | 1600 Amphitheatre Parkway | Mountain View, CA 94043

When Google made enhancements to the “Related Search” algorithms back in June 2008, it promised to be faster with better tangible results.

Over the Halloween weekend, Google released an improved version of the ‘Related Search’ functionality without much fanfare. There is little mention in search world other that a thread on webmaster world with 8 posting as of today. Google Extended the ‘Related Search’ results by adding these three categories (Brand, Stores, Type) immediately after the search box.

When I searched for a generic and broad term of “paint”, Google enhanced the related search by serving some of these suggestive brands, stores and types which linked to other search results on Google.
Related searches for paint:
Brands: Behr Benjamin Moore Sherwin-Williams ICI Valspar
Stores: Home Depot Lowe’s Ralph Lauren Walmart Ikea
Types: automotive spray exterior chalkboard car

What does this mean to the consumer?
It definitely help web users if they have the vaguest idea as to what they are looking for and the “brand, stores, types” should help the user with their search experience by slicing the information to small bits and pieces. Note that this only occurs for broad terms such as “paint”, searching for “red paint” does not yield the “brands, stores and types” related search functionality.

What does this mean to the businesses?
In this example, I would be ecstatic if I run Home Depot’s online division. Google picked me as one of the winners when it comes to the word “paint”? If a user would to search for “paint” and click on “Stores: Home Depot”, Google would serve information and deep link to Home Depot’s Paint category page.

What does this mean to Google
It would help the web user with more options as this only works for broad generic keyword searches. At that same time, we can argue that Google is favoring the big retailers and squeezing out the smaller players. Going to the paint example, these companies (Home Depot, Lowe’s, Ralph Lauren, Walmart, Ikea) would be getting much more exposure, but if I worked for Sherwin Williams, I would be wondering, what about us? Don’t we live, breath paint?

Also, most traffic would leave Google once they click on the search results, but with the “Brand, Stores, Type” feature, it would help keep the traffic on Google while improving time spent on site and pages/search queries served for Google.

As a whole, I think this functionality is a big improvement but being a marketer, my question is “How do I get listed as one of the “Stores”? Preferably as the first link.

This functionality is not affected by a web user’s geographic location as I tried a few zip codes but it still served the same results. It is also not affected by a Google Product Feed, nor does it matter if it is an eCommerce website as “Ikea” was listed too and it is not an eCommerce website when searching for “Paint”. Here are some of the other broad terms I search for which had the “Google Related Searches with Brand, Stores, Type”

Search Term: DIGITAL CAMERA
Related searches for digital camera:
Brands: Olympus Canon Sony Nikon Kodak
Stores: Best Buy Amazon Overstock Walmart Circuit City
Types: waterproof slr touch screen underwater compact

Search Term: BLU RAY
Related searches for blu ray:
Brands: Sony Samsung Panasonic Pioneer PlayStation
Stores: Amazon Best Buy Walmart Target Circuit City
Types: netflix laptop network dvd 3d

Every now and then, Google would change their homepage to reflect a certain event or cause. Today, you are able to play Pac Man on Google for free. This it to acknowledge that it is the game’s 30th anniversary.

Hey Web Searchers,

If you’ve visited our homepage today, there’s no doubt that you noticed our Pac Man doodle honoring the game’s 30th anniversary. If you insert the virtual coin, you can begin playing this legendary game or you can wait 10 seconds and it will automatically start. If you’re not a Pac Man fan or want to skip the music and lights, just enter you search query as usual and you’ll be directed to our normal search results page. Other options include:

1. Closing your browser
2. Turning the volume down or off on your computer
3. Playing Pac Man all day long (or at least until you beat your co-workers)

Happy Friday!

~Rubie

Google took a bold step today and is in the process of moving out of China. In the controversial move about over censorship by the Chinese government, Google is currently redirecting all of the traffic from www.google.cn to the HK domain. Other than censorship, Google was hard hit by hackers which they believe that it came from China.

In Hong Kong, Google should technically enjoy less censorship as Hong Kong which is is a special administrative region of China and enjoys more freedom, including an uncensored Internet, than mainland China.

On that note, web users in China are still having their internet searches filtered at a higher level with the Golden Shield Project aka Great Firewall of China.

Unconfirmed reports are saying that Google will exit China by April 10, 2010. I am wondering about how is Google going to make up the est $600 million / year revenue that Google generated in China. Either way, this will absolutely help Baidu defending its marketshare.

Google announced today that they are taking an aggressive move to make reviews more accessible to those brick and mortar stores. Google will allow U.S. consumers to read reviews about local stores on their cell phones when they point and scan the bar codes on those local stores.

Google labeled this initiative as “Favorite Places on Google”, and Google sent out 100,000 bar codes to 100,000 most popular local businesses based on searches. That initiative spanned across 9,000 towns across the 50 states.

Businesses can put the barcode up in their window; searchers can scan it with any camera- and app-enabled phone, then read the reviews and other info on the Place Page, and even get mobile coupons on the spot. The QR codes can be scanned by a variety of mobile phones, including Android-powered phones, the iPhone and BlackBerry devices, provided that the user downloads a barcode-scanning app. Google suggests its own Barcode Scanner app for Android, and the $1.99 QuickMark app (iTunes) for the iPhone, among others. 

Google mentioned that the barcode initiative will be expanded with more bar codes being sent out, but there was no mention of a timeline. If you are keen on getting onboard, you can claim your own barcode via this Google Favorite Places link.