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Pulling a bit more on that thread: Not only would it allow them to decrease the barrier to advertising for small and local businesses, it would even allow them

Pulling a bit more on that thread: Not only would it allow them to decrease the barrier to advertising for small and local businesses, it would even allow them to monetize their search traffic much better than PPC text ads. For example, "Houston Pizza" has an average CPC of around $1.55 according to Google's Keyword Tool. If instead, they are able to sell a Groupon for a $30 pizza at the low price of $15, they are at $7.50 revenue. They've just increased their revenue per search 2-5x, depending on how many ads a person used click on before. This doesn't even take into account the increase in click through rate when you can see a ad that basically says you get half off the pizza you already want. If Google is able to get this kind of increase with just 10% of it's advertising revenue ($15.7 billion from just Adwords on Google websites in 2009 according to http://investor.google.com/financial/tables.html http://investor.google.com/financial/tables.html), this deal would pay for itself in about 19 months. Effectively, they are moving higher in the food chain, similar to what they did in the lending market. Instead of selling ad space, they will be taking a commission on the sales they bring you.

patio11 16y ago
As scary as this thought is: I think that is small potatoes. Google ends the day with an email address of a person known to buy heavily discounted pizza in Houston. I think that fact is worth upwards of $50. They can, in a totally automated, split testable, scales to the moon fashion offer him a customized, personal, expires in 4 hours 60% GroupOn for the next 50% off offer they get. Money. Hats.
- melvinram 16y ago
  I don't think increasing their revenue per search is going to be small potatoes but I agree that getting that email and connecting it with purchase data is going to be hugely valuable. What we're both talking about are just two sides of the same coin. The goal is maximizing the total lifetime value of the customer. One approach is by increasing the revenue per transaction and the second is increasing the number of transactions per customer. (Third would be increasing referrals per customer but that probably won't factor in as much, I suspect.)

patio11 16y ago

As scary as this thought is: I think that is small potatoes. Google ends the day with an email address of a person known to buy heavily discounted pizza in Houston. I think that fact is worth upwards of $50. They can, in a totally automated, split testable, scales to the moon fashion offer him a customized, personal, expires in 4 hours 60% GroupOn for the next 50% off offer they get. Money. Hats.

melvinram 16y ago
I don't think increasing their revenue per search is going to be small potatoes but I agree that getting that email and connecting it with purchase data is going to be hugely valuable. What we're both talking about are just two sides of the same coin. The goal is maximizing the total lifetime value of the customer. One approach is by increasing the revenue per transaction and the second is increasing the number of transactions per customer. (Third would be increasing referrals per customer but that probably won't factor in as much, I suspect.)