Google Inc. bought restaurant-review company Zagat Survey LLC, thrusting the Internet giant into the new roles of content creator and print publisher as it seeks to attract more advertising dollars from local businesses.
Google didn't disclose the price it paid for New York-based Zagat, whose pocket-sized maroon books rate restaurants, hotels and other local attractions with the help of 350,000 contributors world-wide. Zagat, whose online presence is relatively small, has been called "the gastronomic bible."
The deal comes at a time when Google—and its ambitions to capture more local-business ads—are under scrutiny by federal antitrust authorities, who are looking into allegations that the company undermines online-review sites such as Yelp.com by directing its search-engine users to specialized Google Places pages that provide information and reviews on local businesses.
Google has denied any anticompetitive practices and has repeatedly said it creates its services to benefit users, rather than other websites. A Yelp Inc. spokeswoman declined to comment Thursday.
In an interview, Marissa Mayer, a Google vice president, and Zagat co-founders Nina and Tim Zagat said they planned to continue publishing the Zagat books for now and that the company's reviews from more than 100 countries would be integrated with the business-listing sites Google Maps and Google Places.
Google has said more than 20% of all searches on its site are related to local businesses.
The acquisition fits squarely into one of Google's top priorities under Chief Executive Larry Page: providing people with information about local businesses, including ratings and reviews.
Google, based in Mountain View, Calif., is trying to make money by getting local businesses to spend money on Web ads—its main source of revenue—or offer special discounts to Google's users via Google Offers, among other things. The company tried to buy Yelp in 2009, but the deal fell through, people familiar with the matter have said.
Though Google has been on an acquisition spree, picking up many small technology and online-advertising companies over the years, it rarely has purchased other well-known consumer brands, let alone companies that publish their own content. Last month it agreed to buy cellphone maker Motorola Mobility Holdings Inc. for $12.5 billion, and in 2006 it paid $1.65 billion for the YouTube website, the top brand in online video.
Earlier this year it bought Next New Networks, which produced online video content for YouTube, but the company's employees were brought in mainly to guide aspiring YouTube content creators.
In recent weeks, Google has expressed interest in buying video site Hulu LLC, which would include rights to television and movie content, people familiar with the matter have said.
"Consumers care about reviews and reviews influence purchasing," so Google "wants to be the marketplace" of reviews, said Greg Sterling, senior analyst at Opus Research, an Internet market-research firm.
The Zagat acquisition also helps fill a gap in Google's business listings, Mr. Sterling said. On Google Places pages, Google recently removed snippets of reviews that were taken from other websites like Yelp and TripAdvisor after those sites alleged Google was "stealing" their reviews. The Federal Trade Commission, which is conducting a broad antitrust probe of Google but hasn't accused it of any wrongdoing, had been looking at that issue, among others, people familiar with the matter have said.
Though Google has been increasingly successful in getting its own users to post local-business reviews, the removal of the outside reviews left its business listings with less information.
Mr. and Mrs. Zagat, who started their company in 1979, will be joining Google and said they expected to remain at the company for a period of years. The couple had looked to sell the business in 2008 but gave up after five months, citing the fragile economy. Ms. Mayer said she began speaking to them about an acquisition in March of this year.
When asked whether Google would use Zagat's famous 30-point rating scale on its own Web pages, Ms. Mayer implied it would, saying the rating system "works, people understand it, and it's one of the things that's attractive" about Zagat.
Copyright 1999–2011 Zagat Survey, LLC.
With the deal, Google picks up Zagat's 120 New York-based employees and could benefit from its relationship with hundreds of thousands of reviewers, who fill out surveys for the company in exchange for free Zagat books or subscriptions to reviews on its website. Google could also leverage the direct relationships Zagat has with thousands of local businesses.
Zagat's publishing arm is relatively large; the company has said its New York City guide to restaurants sells more than 600,000 copies a year. Its website, which gets a small amount of traffic compared with Yelp and others rivals, has a partnership with OpenTable.com to help visitors make restaurants reservations.
Ms. Mayer said that partnership "is a healthy one and one we're interested in continuing." Still,OpenTable Inc.'s shares were down 8.3% at $57.50 Thursday in 4 p.m. trading on the Nasdaq Stock Market.
Private-equity firm General Atlantic, an investor in Zagat, said in a statement that it was "pleased" with its involvement in Zagat. A spokesman said the firm views Zagat as "having been a good investment," but declined to comment on the purchase price.
Zagat previously said it was valued at $125 million in an investment round in 2000.
COMMENTARY: The first Zagat guide was published in 1979 based on Zagat's core belief – that the shared opinions of thousands of avid consumers with real experiences are inherently more accurate than the opinions of just one or two critics. This New York City Restaurants guide was an instant success and quickly became "The gastronomic bible" (Wall Street Journal) and a #1 bestseller in the travel category.
Today, Zagat has expanded to cover over 100 countries worldwide and a range of leisure activities including dining, travel, nightlife, shopping, golf, movies and music. Zagat represents a vast community with over 350,000 consumers participating in our surveys each year.
In each Zagat guide you'll find:
- Reviews – a concise establishment description distilled from the latest survey results and packed with witty surveyor quotes.
- Ratings – based on our signature 30-point scale, ratings are given for several distinct qualities within each category (e.g., restaurants receive ratings for Food, Decor, Service and Cost).
- Indices and lists – establishments are categorized by a wide range of useful criteria (e.g., location, cuisine, best buys, top Italian) enabling users to search efficiently and make smart decisions.
I think Zagat will certainly improve Google Places and allow restaurants to offer deals.
Courtesy of an article dated September 9, 2011 appearing in The Wall Street Journal
When will Google release an update to 2010 for 2011 or any partial summaries for 2012?
:
ZAGAT SURVEY SUMMARY
2010 U.S. & International Airlines Survey
http://www.zagat.com/sites/default/files/20101129_airlines.pdf
Posted by: Jaison John | 02/08/2012 at 03:42 PM