As far as I know, Frommer’s has not published a guidebook to the Google campus, but Google announced yesterday that it is buying Frommer’s.
Naturally, as with any acquisition, the question du jour is Why?
And the answer, like with most things Google does is: Product.
Unlike Yahoo, Google realized, as I was saying in a Yahoo-related post recently, that Product trumps everything in the “free” Internet business model. Build, and they will come. Once they (web users) come, find out a way to monetize their experience on your website. In Google’s case that monetization is heavily reliant on advertising (95.99% of Google’s Q2 2012 revenue comes from advertising, per Google’s cleanly presented financials).
Travel of course is an important (read: something that people spend a lot of money on) search and research category for people on the Internet.
From the Wall Street Journal article that broke the news (it also pegs the acquisition around $25m), some interesting market sizing data jumps out:
The U.S.-based leisure-travel industry spent $2.56 billion on online advertising last year, up 40.6% from a year earlier, according to research firm eMarketer Inc. Last year U.S.-based travelers spent more than $100 billion to book trips online, a figure that is expected to grow by around 10% annually, eMarketer said.
And when you search for travel to Brazil for example, or say, you want to find spas in the foothills of the Andean mountains, Google not only wants to show you search results, but it also wants to conveniently provide Frommer’s Brazil guides or spa guides. What will that do? It should, or Google hopes, that it creates a compelling user experience that makes you think of researching travel on Google (and not, say, Bing) again and again.
Compelling product / experience = More users and more visits = More advertisements = More revenue.
That same message is delivered better on Google’s philosophy page:
Focus on the user and all else will follow.
Since the beginning, we’ve focused on providing the best user experience possible. Whether we’re designing a new Internet browser or a new tweak to the look of the homepage, we take great care to ensure that they will ultimately serve you (emphasis their’s, not mine), rather than our own internal goal or bottom line.
This will also make Google a more appealing advertising choice for hotels, airlines, tourism ministries and such. When the user searches for a hotel or destination, you would want to advertise on a site that has unbiased, objective and (hopefully) good reviews of your property or destination. Again, that’s what Google hopes I am sure.
So with billions of dollars at stake in this industry, concentration of power in Google’s hands has and is viewed warily (despite Google’s “do no evil” mantra – #6 on the philosophy page – since increasing one’s pricing power and marketshare is not inherently evil of course).
The same Journal article says though that this may not be an issue for the FTC because the deal is too small. Evidently the markets agree. TripAdvisor and Yelp are both down today: -1.67% and -5.90%, respectively (but shouldn’t at least one of them be up, assuming that as a defensive move, Microsoft/Bing swoops in on one of them…or maybe the markets think that Bing will partner with the BBC who owns the Lonely Planet series of travel guides).
It will be interesting to watch how the travel advice and ratings industry changes as a result of this “battle for eyeballs”.