First, Google tries to buy Groupon for the tidy sum of 6 billion dollars. Groupon says no because all the buzz they are getting is driving up their eventual IPO value to the 15 billion dollar range. So, Google does the next best thing – they launch a competing service:

As the old Jim Croce song said:...You don’t tug on superman’s cape… and you don’t mess around with Google.

The explosiveness of services like Groupon, Living Social and their ilk are really no surprise. We’ve been clipping coupons for years. Proctor & Gamble made an industry of it. As with most things social media marketing related these new services have taken an analog concept and put it on steroids.

There are two challenges looming.

For Groupon, they now have a serious competitor in their space. A competitor with instant brand recognition and a distribution channel rivaled only by Facebook (who could end up doing this, too.) Groupon’s unbridled growth has been fueled by our passion for a deal and the viral nature of the Internet. This will come down to a content war – which service will consistently offer the most attractive deals. From a consumer’s perspective this has the potential to be a huge win.

Which brings up the second challenge.

How will this play out on the business side of the equation. As I wrote here, what is good for the consumer is not necessarily good for your business. Deep discounts do not necessarily build brand loyalty or repeat customers.

Google could change all of that by offering to let businesses to keep a higher percentage of the purchase price. This is a brand extension for Google. For Groupon – its their core business.

In the short-term – we win because there will likely be more, better and bigger deals coming our way. In the long-term, Google Offers and Groupon (and everyone else) are not the decision makers. These services survive if the business community sees the value and reaps tangible, sustainable rewards.

Still, it will be fun to watch this battle unfold.

Your thoughts?

Author: Steve Allan, Social Media Specialist, SMThree