Google acquired the popular restaurant-rating service Zagat on Thursday as part of its mission to stake a bigger foothold in the local content sphere.
Marisa Mayer (pictured left), vice president of Local, Maps and Location Services, announced the move in a blog post, writing that “Zagat will be a cornerstone of our local offering." She said Zagat will enable "people everywhere to find extraordinary (and ordinary) experiences around the corner and around the world.”
Most people are familiar with Zagat from its popular guidebooks, which rank restaurants by their food, decor and service, and also categorize them by cuisine, region and other criteria.
The rankings are based on user reviews, which has made Zagat popular with consumers but less so with diehard foodies.
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In combining Zagat’s ratings with its maps and search functions, Google can try to lure customers away from the Yelps and Foursquares of the world.
Yelp specializes in user reviews of everything from bars and restaurants to barbers while Foursquare is used more as a social networking site, permitting users to "check-in" wherever they are.
From enabling user reviews to its "Places" app, Google has tried to do both. It even tried to buy Yelp in 2009, but the deal collapsed when Yelp walked away, sparking rumors that the company would try to partner with another service or file for an IPO.
Google's acquisition of Zagat is the latest sign that the it is not satisfied with its current place in the industry, and that it senses an opening.
"With Zagat, we gain a world-class team that has more experience in consumer based-surveys, recommendations and reviews than anyone else in the industry," Mayer wrote.
Though Zagat is best known for its restaurant-related books, it has both expanded into guides on subjects such as nightlife and travel and also pushed into the digital sphere with mobile apps (and a website, of course).
That is where the real value of this deal rests for Google, which just last month purchased Motorola for $12.5 billion — its largest acquisition to date.
The Motorola deal, which awarded Google the hardware to pair with its Android software, was seen as reinforcing the company's commitment to mobile — already an important field, but one that has far more potential for growth and profit. Combining local content with search and maps enhances the possibilities for location-based advertising, which is key for Google.
"[Mobile] will become the dominant advertising vehicle," Roger Entner, founder of Recon Analytics said at the time of the Google-Motorla deal. "It will be bigger than desktop, especially when you look at this on a global scale where you can have mobile advertising for people who don’t have a computer."
The terms of the Zagat deal are as of yet unknown.
Larry Dignan of ZD Net reckoned the cost of the deal "probably didn’t amount to any material sum for Google" and asked three crucial questions: will Google keep Zagat’s pay wall? (Which seems unlikely). Will Google maintain Zagat’s guide publishing business? And in the bigger picture, is the Zagat purchase the beginning of a series of content moves for Google?
"Google’s timing is notable," said Dignan, given the struggles of both AOL and Yahoo of late. Both AOL and Yahoo are building out content to differentiate themselves from Google. Now the search giant enters the content game via Zagat."