Everyone remembers Google’s loss on Groupon, but before that they couldn’t seal the deal with Yelp either. Fast forward a few years, and Google has a Groupon competitor under way, but no product to pose a significant challenge to Yelp. Since it seems like most of the product team power has been dedicated to Google+ (and they even missed a few things there), rather than trying to catch up solely through their own branded local ratings Google acquired the 32-year-old, consumer-driven restaurant review company Zagat. {Google Blog}

In the official announcement, Google’s Marissa Mayer (who heads Google Local products) says

“Moving forward, Zagat will be a cornerstone of our local offering—delighting people with their impressive array of reviews, ratings and insights, while enabling people everywhere to find extraordinary (and ordinary) experiences around the corner and around the world…

Their surveys may be one of the earliest forms of UGC (user-generated content)—gathering restaurant recommendations from friends, computing and distributing ratings before the Internet as we know it today even existed. Their iconic pocket-sized guides with paragraphs summarizing and “snippeting” sentiment were “mobile” before “mobile” involved electronics.”

It’s an acquisition that also officially puts Google in the content business. The tie-in with local products is obvious, but until now Google has largely relied on other websites – including Yelp – to fill its review section. We have to wonder if the acquisition means that Yelp, and other sites who previously provided reviews to supplement the ones written directly through Google, will see their search traffic squeezed and pushed through to Zagat. It’s not that Zagat’s content is bad: they actually have a very well respected brand as far as restaurant reviews go, but would they be the best choice in every case? Yelp hasn’t been around as long as Zagat has, but what they may lack in perceived quality, they more than make up for in quantity.

According to Google AdPlanner, Zagat.com had 830,000 visitors in July, compared to Yelp’s 38 million.

That’s a very significant difference, and while the Zagat reviews may help fill in some of the blank reviews in Google’s local listings, they won’t cover nearly as many as Yelp can. It may also explain why Google was able to get Zagat for less than $66 million {TechCrunch}, but not Yelp for $500 million.

While fewer reviews doesn’t necessarily correlate to quality, in some cases reading reviews from 100 people might give a better indication of the quality of a restaurant or hotel than a score based on reviews of 3 people. Would Google push the 3-person review because they own the content?

The Like.com/Boutiques.com acquisition/failure proves that Google doesn’t necessarily do their content acquisitions any favors, but we have a feeling this may be different. Zagat is already being integrated into other Google products in a way that Boutiques wasn’t, and this is an attempt to compete with a defined competitor.

The best review of a successful acquisition will require a bit of time though, so we’ll keep an eye out to see what direction it takes.

After months of speculation as to who might acquire the 15-year-old luxury shoe and accessory label, Jimmy Choo has been acquired by Labelux for £500 million (approximately $806 million at current exchange rates). {M&A Deals}

Labelux is a privately held Austrian luxury goods company that includes Bally, Derek Lam and Solange Azagury-Partridge in its portfolio. In March of last year CEO Reinhard Mieck hinted at the possibility of an acquisition, though he didn’t name any brands specifically. “If we find something which fits fantastically, plus would be available, we might even acquire this year but we are definitely not in a hurry,” he said at the time. “We look at the long term potential of brands rather than short-term profitability.” {BusinessWeek}

Though other suitors reportedly included luxury behemoths like LVMH, it seems like Labelux’s approach may have been a better fit for Jimmy Choo.

With £150 million in 2010 sales (approximately $241.5 million at current exchange rates) the label isn’t exactly an emerging brand, but Labelux sees an opportunity for even stronger growth.

“Jimmy Choo is an outstanding brand with enormous growth potential and the ability to deliver material growth synergies across our group,” Mieck said.

Labelux is the third company to hold a majority stake in the label, which was launched in 1996. Phoenix Equity Partners first acquired a 51% stake in 2001 for £9 million, which it later sold for £35 million to Lion Capital. Lion Capital also purchased shares from Jimmy Choo’s management for £110 million in total, and later sold their shares to TowerBrook Capital for £185 million.

The latest sale is by far the brand’s largest, and gives TowerBrook the biggest return of any investor so far. Tamara Mellon, who co-founded the company, has maintained a 17% ownership stake in the company and will continue in her position of creative director. Jimmy Choo CEO Joshua Schulman will also remain in place in his existing role.

The deal is expected to close in June 2011, and may give Jimmy Choo the resources to make a long desired push into the growing Asian luxury market.

While Gilt and Groupon may be top of mind in their categories, here’s another reminder that some very profitable things are happening with brands who have marketshare, even if they don’t lead in mindshare: Hautelook, the flash sales site which launched in December 2007, was just acuiqred by Nordstrom for $270 million. {TechCrunch}

This is mostly a stock deal – $180 million in Nordstrom stock, with a $90 million potential earn-out over the next three years. It’s a smart move for Nordstrom though, and one that we suggested more department stores look into on a guest post at the Business of Fashion last year.

Well, not specifically an acquisition, but certainly a focus on developing the type of online sales websites that are popular with wealthy online shoppers. In this case, an acquisition is likely a better choice than being trying to develop a competing online presence around Nordstrom Rack. Neiman Marcus recently took that route with it’s Last Call brand, but  other department stores like Saks and Barneys continue to keep their discount brands limited to suburban outlets.

While there are sure signs that the luxury market is coming back, the revival is coming from younger, less wealthy shoppers who may be introduced to luxury brands through sites like Hautelook or Gilt that offer items at lower prices. The flash sale sites have often said that consumers introduced to brands through their sites often go on to make additional brand purchases after the sale ends.

For department stores looking to grow revenues, it increasingly just makes good business sense to throw out old thinking that bargain shoppers aren’t as valuable as those who buy at full price. By developing or acquiring online properties that capture a significant part of that audience, they’ll likely find themselves increasing sales at every place in the shopping cycle.

Which stores and websites are we likely to see on future acquisition or partnership press releases? Gilt Group is valued somewhere between $400 million and $500 million making it a more likely candidate for an IPO, RueLaLa was already acquired by GSI commerce for $350 million, which leaves Ideeli and Beyond the Rack as the next largest and most likely targets.

As far as retailers, Saks, Barneys or Macy’s (who owns Bloomingdale’s) are most likely. Macy’s has the money and the traffic to try to develop their own presence, so we’ll take them out of the potential buyer pool; Saks cut a lot of underperforming stores and has decided not to open many more, so developing their own online property is probably not going to happen, but acquiring an already successful one could make sense; finally there’s Barneys, which has had several well publicized staff changes aimed at increasing sales, and online sales have been designated an area of particular importance.

Wow. There’s an announcement that takes the wind out of Super Bowl ad sails.

AOL (we’re back to all caps now, apparently) will pay $300 million in cash for the site, with the remaining $15 million paid in stock. Considering AOL’s current market cap is $2.34 billion, that represents almost 13% of the companies total value meaning that AOL is betting big on the Huffington Post. Let’s have a quick look at what everyone’s getting in this deal:

• The Huffington Post launched in 2005, primarily focused on politics. Today, they cover 22 news categories, not including local editions.
• To date, the company has raised $37 million, and started with $2 million. {CrunchBase}
• Quantcast puts the Huffington Post at 30.5 million people per month in the US, with an additional 9 million readers outside the US
• In total, that’s about $8 for each HuffPo reader
• The Huffington Post is estimated to have had $31 million in revenue last year, and is on track to do $60 million this year, nearly all of it from advertising

Under the deal, all of AOL’s content properties will now fall under a newly created Huffington Post Media Group, which Arianna Huffington will lead as president and editor in chief. That includes TechCrunch and Engadget (who’ve been butting editorial heads lately) and Stylelist among others.

More important, it really emphasizes AOL CEO Tim Armstrong’s goal of making AOL a content driven media business that’s less dependent on revenue from dial-up customers. In a memo to AOL employees, Armstrong notes:

“The Huffington Post is core to our strategy and our 80:80:80 focus – 80% of domestic spending is done by women, 80% of commerce happens locally and 80% of considered purchases are driven by influencers. The influencer part of the strategy is important and will be potent.”

If that’s true, we’ll take this opportunity to double down on our previous bets for the next networks likely to be attractive acquistion targets: Mashable, Sugar, Inc. and Gawker Media. Out of those 3, Sugar, Inc. seems to be wearing the biggest bullseye. The company is almost all women’s media (check), they recently acquired local deals site FreshGuide (check) and visual shopping search engine ShopStyle not only does well on its own, but also powers product searches and editorials on sites like Style.com, that are popular with influential people.

Considering that both the TechCrunch and Huffington Post deals were rumored to have happened within a matter of months (the latter being finalized when Huffington and Armstrong were in Dallas for the Super Bowl), it may just be a matter of the right introduction.

With revenue estimates between $350-500 million per year, that makes the $5 to $6 billion estimates more likely than earlier reports of $2.5 billion. For context, in April of this year, Groupon was valued at $1.35 billion during an investment round. It’s hard for most entrepreneurs to wrap their head around that many zeros, and even for Google, this would be a big buy – it’s biggest ever, in fact. Still, judging by previous purchases, it’s not an unfair price. Consider that YouTube, which Google purchased for $1.65 billion, lost money on hosting costs for many years. While video advertisements are starting to pay off, it took a while. Google’s other big acquisition was DoubleClick, the ad serving company that powers advertising for a signifcant number of ad agencies, large brand advertisers and major publishers. Combined with AdSense, it gave Google the largest online advertising trafficking company and they got that for a mere $3.1 billion. {TechCrunch}

So what makes Groupon worth so much more? For starters, the company has shown potential for bringing in as much as $11 million in one day. That happened during a national promotion with the Gap, which may not be representative of daily income on smaller local deals, but is a good indication of the potential. Estimating an average daily revenue rate of $5 million and stagnant growth, Google would earn their investment back in roughly 3 years. Considering the $130 million investment in April looks poised to give investors a pretty serious return in just over 6 months, it may not even take that long. Groupon’s growth in short periods of time is nothing short of amazing.

Second, Groupon is one of the few companies with serious traction in the online to offline small business market. It’s estimated thatsmall business represent $100 billion in revenue, but centralizing their offerings and scaling them has proved difficult for many startups. There’s Yelp, but that deal fell apart, and Google was only offering $500 million for the popular directory. Marissa Mayer, a highly visible VP at Google recently left her role heading Search for one heading Location and Local Services. Having taken video and display, Google is obviously betting on local offerings as the next advertising market to conquer.

Finally, after Groupon’s own acquisition spree of copycat sites in Europe and South America that had started finding their own audiences, it’s probably a cheaper and safer bet for Google to buy their way into the local deal market than to try going after it on their own. While Google is a behemoth, Google Video never overtook YouTube, Froogle never overtook other shopping engines and Google Base never displaced Craigslist. When it comes to verticals, Google’s products don’t have the best track record when a competitor with a solid community is the opponent.

Playdom, the company behind Sorority Life, Social City and Treetopia among many others, was officially acquired today by Disney for $563.2 million, with the potential for another $200 million based on performance. {Mashable} Though that might sound like a lot of real money for virtual goods, the company raised $33 million just a month ago at a valuation of $345 million. {TechCrunch}

“We see strong growth potential in bringing together Playdomâ€s talented team and capabilities with our great creative properties, people and world-renowned brands like Disney, ABC, ESPN and Marvel.” – Robert A. Iger, President and CEO, The Walt Disney Company.

While MySpace is the network that no one remembers now, it was actually key to the company’s success. After failing on Facebook on their first go-round, Playdom built a user base on MySpace, then came back to Facebook to pick up 37 million active users – putting it squarely in line with top social game developers like Zynga. {GamesBeat}

Well played!