Google tipped for aggregated deals play in Europe

Google is expected to follow up its move into the daily deals space in the US with an aggregated deals model in Europe.

This week the search giant started placing a ‘Google Offer’ deal on its homepage in the US, the first time it has ever used its famously clutter-free homepage for advertising.

The search engine said it does occasionally use its homepage to point users to important information, but a recent link to an 80% off offer for the American Museum of Natural History was a departure. Previous links have promoted tools such as the search engine’s crisis centres for the New Zealand Christchurch and Japanese earthquakes.

The move is being seen as Google’s response to rapidly growing daily deal or flash sale sites such as Groupon. It comes as rival Facebook closes its local deals service and business listings brand Yelp scales its version back.

Glen Drury, European senior vice president of Travelzoo Local Deals, said: “In Europe I don’t necessarily think we’ll see Google doing the same thing.

“My understanding is that they are planning to aggregate the deals that are on offer, which is an approach that is more close to their business model.

“Google is a machine, an algorithm, they prefer to interact via machine than via a person, and that’s right because that makes it scalable.

“I do not necessarily have a great insight into why Google want to do this [in the US] except that everyone is struggling to get small businesses to advertise online.

“Google possibly perceives Groupon as having all these local relationships and they want to move their business local.”

Glen Drury will be discussing the Local Deals model in a Digital Breakdown session at this year’s Travolution Summit. See the full agenda and book tickets on the Travolution Summit website.

Although the Groupon model has its critics, it is expected to establish itself long-term in the online distribution mix in some form.

Mike Ford, managing director of hotel channel management specialist SiteMinder, said small independent businesses were using deals sites while larger groups remained resistant.

“There is a place for them, but what’s going to happen is supply pressures are going to push commissions down.

“Hotels will meet them somewhere in the middle, but in very low demand periods there is definitely a win-win because hotels sometimes need to offload inventory just to keep things going.”

Ford said one of the issues group deals sites may have to address in the future is allowing online fulfilment, and SiteMinder is talking to them about integrating its online booking engine.

Drury said the future of deals sites depends on bringing greater sophistication to how they get quality deals to the right demographic.

Travelzoo Local Deals has sold its one millionth voucher after entering the US last August and the UK in December, and claims to have a more valuable database than mere bargain hunters.

Drury said one of its most successful deals to date was for a spa treatment for the Radisson Blue at Stansted, which was sent to a limited database of 10,000 people and resulted in 300 voucher sales.

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