Adwords Offer Extensions: Google’s plan to kill Groupon

Google has released a new feature that combines daily deals and offers into its AdWords platform. The feature, which was previously in limited beta, has now rolled out to the general public and could signal a death-knell for Groupon.

The new feature, which comes in the form of an Adwords extension, allows advertisers attach a clickable coupon, rebate, or discount offer to any standard Google Search ad. When you click on the coupon, you’ll be taken to one of two places:

Online Redemption: If the offer or deal is online, clicking on the ad will take you to the offer page, hopefully complete with redemption details, on the business’ website.

In-Store Redemption: If the deal needs to be redeemed in meatspace, then you’ll be taken to a dedicated Google landing page where you can print it out or save it for later.

According to Larry Kim, CTO of Us-based pay-per-click specialist Wordstream, Google’s been fiddling around with this technology for a while now. As he notes, its decision to launch the new product makes sense given the large number of advertisers it has at its disposal.

It also previously signaled its intent to get into the daily deals game when it tried to buy Groupon in 2010 for US$6-billion. When that failed, it launched Google Offers, which also failed.

This time though, it might be different. According to Kim the new Adwords Offer extension signals a real danger to Groupon and other daily deals sites of its kind.

The Wordstream CTO gives three reasons for this line of thinking. The ads, he says are:

1. Way better deal than Groupon who requires 50-90% discounted pricing, then takes 50% of that for themselves.
2. Advertisers can track this. Local businesses can connect the dots between online marketing and in-store purchases. Not possible before.
3. I think they’ll be rolling this out on Google Maps. Local Deals + Google Maps = perfect match!

“It’s clear that Google sees the value of coupons and deals, especially when combined with local searches, which account for roughly one of every four searches conducted on Google,” says Kim. “Offer Extensions are a smart move for Google, but it’ll benefit advertisers even more if they take Google up on the offer”.

Another obvious benefit of the product is that it closes the gap between ads and sales considerably, something that’s always been a problem when it comes to the online ad space.

Which form of the new product (online or offline) you end up using, says Kim, is largely dependent on the size of your business:

Small local businesses often gain the most from in-store purchases. For many businesses, part of their perceived value lies in their accessibility for users. This is especially true of places that provide products or services that don’t work well (or at all) online — think flower boutiques, ice cream parlours, and cafés.

Even larger businesses that are capable of online orders can benefit from consumers taking advantage of in-store deals. A user may find an online deal for Olympia Sports, for example, and use that coupon, have an order delivered, and that’s the end of the line. An in-store offer, on the other hand, prompts a user to find a nearby Olympia Sports. Once a user has visited that physical store and its location, the individual will be more likely to return there in the future for sporting needs that can’t be dealt with online.