tuesday, 14 august of 2012

With Frommer´s, Google taps gurus

Google + Frommer's

With Frommer's, Google taps gurus

Google Inc. for years swore it wasn't interested in creating content, choosing instead to point people to information on the Web. Google also championed the vox populi, letting crowd-sourced opinions bubble to the top when users search for answers online.

Slowly, though, the experts have been moving up in Google's eyes, and its business.

On Monday, Google said it is acquiring the Frommer's travel-guide business in a bid to attract more advertising dollars tied to online-travel bookings and local-business information. Google is buying Frommer's from publisher John Wiley & Sons Inc.

Google paid around $25 million for Frommer's, according to a person briefed on the deal, which hasn't yet closed. But the deal is more significant for its strategy than its price tag.

By owning Frommer's travel-guide content and showing it in search results, Google could sell travel-related ads against it and provide more tools for people to book travel arrangements.

The Frommer's deal follows Google's 2011 acquisition of Zagat Survey, whose reviews and ratings of millions of businesses have since been incorporated into Google+ local-business listings. Google said Monday that the Frommer's brand would be melded with the Zagat brand. Frommer's data about local businesses around the world could boost the Google+ business listings—where both Zagat ratings and individual customer reviews are displayed—and Google Maps.

With Zagat and Frommer's, Google is betting it can become a trusted guide for travel and local-business information by using expert ratings and aggregating online comments from thousands of customers, the way Yelp.com and TripAdvisor.com do.

Frommer's is more evidence that Google has grown fonder of professionally produced content. There are other examples: It recently took an equity stake in Machinima Inc., which creates video content mainly for Google's YouTube video site.

A Google spokeswoman declined to comment.

In addition, Google is investing more than $350 million to help create and market professional-grade videos for YouTube, located on special "channels," as the site upgrades its offerings from the simple user-generated videos of its roots.

A separate content effort, though—Google's Knol online encyclopedia, which took contributions from experts—wound down this year as Google CEO Larry Page killed off some underperforming services.

In addition to owning content, Google also is trying to become "vertically integrated" in terms of mobile devices. Google's strategy for years was to allow manufacturers to use its free Android operating software, helping them compete with Apple Inc. gadgets and ensuring that its search engine would be built into the devices. But Google recently bought handset maker Motorola Mobility and has embarked on an effort to build its own mobile devices.

The Frommer's deal could put Google at odds with other website publishers. In recent years, Google has expanded its array of services that seek to directly answer users' queries, departing from its original strategy of sending them quickly to the most relevant site. For example, people who search for local-business information now often see links to Google+ business listings—and Zagat ratings—in the search-engine results above other sites like Yelp.

Google—and its ambitions to capture more online ads related to travel and local-business information—are under scrutiny by antitrust authorities, who are looking into allegations that the company directs its search-engine users to its Google+ business listings, undermining travel and online-review sites such as TripAdvisor and Yelp. The Frommer's deal is too small to trigger an automatic review by antitrust authorities.

Google has denied any anticompetitive practices and has repeatedly said it creates its services to benefit users, rather than other websites. Some U.S. courts have agreed with Google's assertion that its search-engine results are a kind of opinion that is protected by free-speech rights.

Stephen Kaufer, the CEO of TripAdvisor Inc., said Monday, "It is puzzling to us that Google is going backwards to the opinion of one—a writer—when TripAdvisor is proof that travelers like the wisdom of crowds" and their social-network friends.

Mr. Kaufer, who has spoken out about Google's practice of pointing users to Google-owned sites, added: "I absolutely worry that Google will preference Frommer's content above organic search results to the detriment of the users' experience and the enrichment of Google."

Yelp Inc. declined to comment.

TripAdvisor shares fell 4.6% in Monday trading; Yelp's stock dropped 7.7%.

Google in 2010 made its first big foray into the travel industry by acquiring flight-data company ITA Software, which powers the flight-booking tools of numerous websites.

Last year Google launched its own flight-booking service.

Google generates about $2 billion to $3 billion per year from selling travel-related ads on its search engine and hotel- and flight-booking service, with travel sites Expedia Inc. and Priceline Inc. being among the top advertisers, according to Herman Leung, a stock analyst at Susquehanna International Group LLP.

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.

Google said Monday it hasn't yet decided whether the Frommer's guidebooks will continue to be published in print or whether they will eventually migrate entirely to online.

"Our commitment is to keep things as they are today and once we combine operations, we'll know better what the future looks like," said Bernardo Hernandez, a director of product management within Google's Zagat unit.

"Consumers need fresh, accurate information," Mr. Hernandez said. "When you add information you can trust to phone numbers and addresses as part of the Google search experience, it enables users to convert their intentions into actions," meaning to book travel online.

Wiley, which has owned Frommer's since 2001, said it intended to sell the brand in March as it no longer aligned with its long-term strategies. Frommer's dates back to 1957, when Arthur Frommer, founder of the Frommer's series, published "Europe on Five Dollars a Day."

Bill Newlin, publisher of Avalon Travel, an imprint of the Perseus Books Group that publishes travel expert Rick Steves and the Moon branded guides, said he wasn't worried about Frommer's titles getting an unfair advantage in Web search.

"There's only one way to spell Rick Steves," he said.

(Published by WSJ - August 14, 2012)

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