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13/09/2011 by
4721 views

Why Google Buys Gastronomic Bible Zagat?

Google and Facebook keep striving for world domination. Google now buys gastronomic bible Zagat, the review company that rates restaurants, stores, hotels and more by surveying consumers.

Google announced in a blog post that it will “collaborate with Zagat to bring the power of Google search and Google Maps to their products and users, and to bring their innovation, trust and wealth of experience to Google users.”

But would Google be fully open about the intensions it has with Zagat? Google has always claimed that it is not a media company. And will not be.

But with i.e. the YouTube acquisition (2006), the Motorola and Zagat acquisition (2011) and the hunger to buy Hulu, who will buy that “not a media company” story any longer?

Where there’s smoke, there’s fire.

Google didn’t disclose the price it paid for New York-based Zagat But from our Silicon Valley network we heard that the amount should be in the regions of $125 Million.

Zagat wanted to sell in 2008 for a reported $200 million. It took itself off the block when it couldn’t get an offer.

Consumer review sites seems to be extra interesting in several ways, but what would the most powerful media company in the world (Google) want with a 30 year-old company, perhaps best known for publishing maroon restaurant guides printed on dead trees (Zagat)?

1. Social media seem to have added velocity to consumer reviews sites.
2. Social networks fuel trusted ratings and matching of like-minded people.
3. Review sites like Zagat might help Google in the battle for advanced social search.
4. Zagat might enhance Google’s local business and mobile strategy (Tap & Pay).
5. Zagat with 350,000 worldwide contributors will bring relationships and relevant content.
6. Zagat might add value to Google’s GEO location products like Google Maps and Places.

Zagat which has a relatively small online presence (reach) could have a highly engaged triple play audience, existing of: A. a powerful base of contributors (350,000).

B. Zagat has also built a well-known trusted brand, with a very loyal base of consumers that certainly fuels advocacy and growth. Zagat could be called the gastronomic bible.

Next Zagat has a very strong offline presence, just take a close look at when driving a NYC taxi or look at the Zagat rating sign you will find in many NYC restaurant windows.

In the “old days” consumers might have liked the reviews on Trip Advisor a lot. Nowadays, the value of a review by an unknown person cannot live up to the expectations consumers have when a place is recommended by their like-minded peers.

Other players that will be might be acquired next could be Citysearch and Yelp.

Or start-up Gekko, a Facebook App that recommends hotels, clubs and restaurants fueled by a smart matchmaking engine that includes the opinions of like-minded peers.

Personally I would put my money on the Gekko’s of this world. Why? Because I do not see long term strategic value in companies that present 500-1500 reviews per hotel or restaurant, since most people will only read 5-15 reviews anyway.

Next I do think that consumers will be eager to switch from quantitative reviews (500-1500) towards qualitative reviews (5 best places recommended by trusted and matching peers) with the speed of light.

Less could be more. Especially when consumers can chose between reviews from people they don’t know at all compared to reviews from people that are trusted like-minded friends.

So social search and matching engines and companies might disrupt the field of: gaming, music, jobs, hotels, clubs and restaurants.

Some examples?
The Job Industry: Would consumers rather find 30,000 jobs or would also like to find the 5 jobs at companies that are matching their DNA best?

The Music Industry: Would consumers rather only have access to 100,000 random music tracks or also would like to see the 22 tracks that are recommended by their favorite musicians and most-matching peers?

Tell us how you see the Zagat fit in Google. Or how you see the future of review sites: Is relevant less, really more?

Source: Huffington Post and Business Insider.