Industry: Google Coupons Validate, Create Opportunities

A number of people wrote in to tell us that Google's entry in the local coupon space is validation of the segment and will help drive coupon traffic. But it doesn't mean that Google unilaterally wins the game.

Premier Guide CEO Malcolm Lewis, for instance, says that "just because someone starts their search on Google doesn't mean the search should end there too. Create the definitive collection of information about a local business and Google will send the traffic your way.

"If local media companies truly want to compete with Google etc. then they need to make a concerted effort to become a go-to site for local business content," adds Lewis. "This means going deep for local businesses: creating and managing rich information about service details, products, brands, business hours, credentials, etc. It also means driving user-generated content like ratings and reviews. And it of course includes coupons. It's not hard to create your own coupons (high margin) or simply distribute Valpak's inventory (instant inventory, lower margin) like Google is doing."

Merchant Circle CEO Ben Smith notes that Google has quietly been picking up reviews and coupons for a few months. "Our merchants certainly love it when their coupons get picked up this way by Google and other properties," he says. Smith goes on to note that he is totally bullish on the prospects of working with Google and with the coupon companies. "Estimates are that ValPak has around 176K merchants who advertise with them," he says.

"Our belief has long been that you have to be pushing to 1,2,5M merchants to really change the local game. ValPak is one approach to helping Google achieve that and frankly may be more successful than the prior efforts with the YellowPage sales forces."

ZiXXo CEO Mike Hogan, who is directly threatened by Google’s reach into coupons, wrote in to say that small businesses are selling themselves short if they only reach Google Maps. (Hogan also commented directly to The Kelsey Blog , see "comments"). "What Google does is it adds coupons to maps, Google maps. ZiXXo provides a syndication platform for adding coupons to everything: online newspapers, yellow pages, local search, maps, blogs, you name it."

Local Matters CEO Perry Evans wrote in to note that Google’s coupon deal isn’t doomsday, but it is a great wake up call. "Regarding this as a possible major threat to newspapers highlights the paranoia forming amongst the newspaper publishers who have reason to fear every new thing given their tough uphill business reinvention battle. However, every local media publisher has to learn how to 1) evolve into serious differentiated SEO/SEM participation, and 2) build differentiation and value into their own destination properties."

The venture capital community also weighs in. Clint Chao, general partner of Formative Ventures, notes: "The Google-ValPak deal is good validation that there's lots to do to help local merchants. However, this deal still requires the local merchants to promote themselves online (is a bakery in Piedmont, CA, or a painter in Winchester, MA, going to do this?) so that people will find them in the first place. … I am not sure it solves the real problem (and opportunity, which is why we're real interested in this space)."