Why Google Bought Zagat

Google raised eyebrows with news it acquired Zagat, the 32-year-old publisher of more than 100 national and international guides. The publisher is looking a little shopworn around the edges. It could also put to paid the notion that Google isn’t a media company, considering it now owns a publisher of content. It also raises questions about how neutral Google can be when people search for local information, since it would obviously be tempted to steer them to information from Zagat rather than a competitor like Yelp, which Google once tried to buy. Assuming the purchase passes regulatory snuff, it could bolster Google in important ways.

1. Google is a media company. It might continue to quibble with the label, as it has previously. But the logic is wearing thin. Zagat employs editors and creates local content. Full stop. That puts it in competition with other content creators, such as Yelp, which Google’s search algorithms evaluate in deciding ranking. This could open the door to Google making more interesting moves into content creation. One online media veteran called the deal “huge and scary” for that reason.

2. It gives Google access to content that could further use of Google Places, Google Maps and Google Deals. The online giant couldn’t lure Yelp to the altar last year, even for a reported $500 million, and has been cobbling together aggregated content, including Yelp’s, to flesh out Google Places. But as a result of complaints and the threat of legal action, the site recently removed third-party reviews. Zagat provides the site with content that comes complete with a recognizable name and a trusted reputation.

3. Zagat provides Google with an established pathway into small business advertising. And the potential upside is huge. According to Greg Sterling, senior analyst with Opus Financial, in addition to dovetailing very nicely with Google’s redoubled efforts to beef up its daily deals services, offering users original content about local merchants will change the dynamic of local search. Instead of delivering revenue to advertisers and slicing off a small piece for itself, it can own the content at the top of its search results.

4. Zagat ratings will now trump Yelp ratings in a Google search, although that may provide additional fodder for a rumored FTC investigation into whether the company favors its own sites in search results.

5. Google has been both amassing and developing a collection of lifestyle-and travel-related tools that could easily make it the place to go when consumers want to figure out how to get there and what to do once they arrive. In July, the company acquired ITA, the online flight information service, and then launched Hotel Finder, a Google Places plug in that assists consumers in figuring out where to stay. The Zagat acquisition adds restaurant discovery to the list. And, as Zagat expands its coverage to include spas and amusement parks, it’s easy to imagine being able to seamlessly plot a two-week vacation or a three-day business trip without ever clicking away from Google’s ever expanding universe.


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