A Growing Part of Google's Revenues Now Depend on Facebook

Date: Dec 05 2010 03:21:16 Source: Views:
KeyWord: google, facebook, groupon

Google is about to buy Groupon for $6 billion - and that's great news for Facebook.

There are two main reasons.

One is that Groupon - already a huge Facebook advertiser - will now have Google's billions fueling a marketing budget that no longer needs to spend a dime on search ads.

The second reason is that while Groupon isn't as dependent on Facebook for customer-acquisition as Zynga is, it's closer than you might think. From sources familiar with Groupon's business, we understand that much of Groupon's rapid growth has been thanks to the way its subscribers will share coupons through Facebook. Remember, a Groupon discount doesn't go into effect until a threshold of buyers is met.

As Groupon grows, a growing part of Google's revenues will depend on Facebook remaining a very healthy platform. That's new.

Some other ways the Groupon-Google deal effects Facebook:

Groupon solves Google's social problem. It doesn't give Google a consumer-facing social product - but it does give Google huge exposure to group-buying, one of the two inherently social industries making hundreds of millions of dollars off of Facebook's success. (The other industry is social games, where Zynga is a leader.) After buying Groupon, Google will finally be making money in social. (This means it has less reason to dedicate resources to killing Facebook.)

Groupon - Google is great news for the developing SEM-for-Facebook industry. Thanks to Facebook's Ads API - only truly opened wide enough for businesses to depend on this year - marketing firms like Toronto's AdParlor can, with the ability to test thousands of ads at once, reduce the cost of customer-acquisition for Facebook advertisers by 20% to 50%. With Google pouring money in the Facebook ad ecosystem - and potentially driving up prices - that kind of efficiency becomes more important then ever. Expect a flowering in this industry.



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