Groupon explains why Google wants to buy it

Red hot US deals site Groupon, which trades as MyCityDeal in the UK, has been telling the Telegraph why the likes of Google and Yahoo! could end up paying as much as $5bn to acquire it.

UK managing director Chris Muhr said Groupon had something that Google didn’t have and that it was a natural fit with a service like Google’s Ad Words.

“Think about Google Adwords … if they had local business for example. Type in a keyword in Google, say ‘bar’. You find a bar in your area. Google then puts up this kind of bubble box that says this is the business and here is the address.

“But that is it. It does not have direct contact with the business. The business does not come back and say I want to attract customers via that search. Most of the time the customer does not convert from there into an actual customer,” he told the Telegraph.

He went on to defend Groupon’s high profit margins, which see advertisers charged 50%, as he said it was comparable with other forms of online marketing. “We are in that game. We are a marketing tool.”