Why Seach Giant Google Bought Frommer's Little Travel Guides

Google (GOOG) is beefing up its portfolio.

The leading search engine is acquiring Frommer's travel guide business, giving Google content and a recognized brand.

The deal apparently isn't making a dent in Google's balance sheet. Reports indicate that Google is paying roughly $25 million for Frommers.

Some will argue that Big G doesn't need to make content purchases. Google is a search engine. It makes money by sending folks elsewhere through its industry leading Google AdWords online marketing platform.

However, this purchase of Frommer's and last year's buy of dining critique standout Zagat's paint a different picture of what a company needs to do to make sure that it remains relevant with Internet users.

Content Is King Again

Google sees the appeal of going to a proven information hub for answers these days. Hungry Web-savvy users aren't hitting up Google or even Google Maps to smoke out dining suggestions. They're finding the Web 2.0 approach of Yelp (YELP) far more appetizing. When it comes to travel, why search for fares or travel guides on Google?

The recently public Kayak (KYAK) lets users scour several travel sites at once. If its hotels reviews or destination tips they seek, Trip Advisor (TRIP) has been scratching that itch for years.

Google can't afford to fall behind. With recognized affinity brands Zagat and now Frommer's in its arsenal, the company can populate its website with information people can act on. It can naturally monetize those pages with ads.

Growth has been decelerating at Google. Analysts see earnings climbing 18% higher this year, and inching 16% higher come 2013. This may seem like reasonable growth, but it's a far cry from the company's heady pace in the past.

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Why Seach Giant Google Bought Frommer's Little Travel Guides

User data across more than 60 of Google's services is now integrated, including Search, Gmail, Google Docs, Google Calendar, YouTube, and Google+. The company claims the benefits of this change include:

Increased clarity in privacy policies through consolidation of product-specific privacy policies for each service

Ability to do "cool things" like "provide reminders that you're going to be late for a meeting based on your location, your calendar and an understanding of what the traffic is like that day."

Perhaps, but Google's refusal to let customers opt out makes the user-focused spin questionable.

Google was recently granted a patent for "Advertising Based on Environmental Conditions," which allows smartphones to gather information about the user based on sounds, light, temperature, and air composition and use that information to deliver customized advertisements. According to the official patent application, with this technology, "advertisements for air conditioners can be sent to users located at regions having temperatures above a first threshold, while advertisements for winter overcoats can be sent to users located at regions having temperatures below a second threshold."

As yet, it's unclear if Google has any plans for using this technology, but its increasing interest in data mining suggests that it will take more than privacy concerns to stop it.

Along with WPP (WPPGY), Gannett (GCI), and others, Google recently garnered criticism for exploiting a loophole in Apple's (AAPL) Safari Web browser to track the activities of users who intended to block such attempts. Google responded by saying, "We used known Safari functionality to provide features that signed-in Google users had enabled."

Safari is designed to block most tracking, but allows websites to track users who submit a form. Google used this functionality to make Safari think users submitted forms to Google, even when they didn't.

Last year, Google announced its decision to shut down Google Labs -- the source of some of the company's most popular innovations, including Gmail, Google Maps, Google Docs, and Google Reader.

These innovations not only created excitement for users, they also created enthusiasm among employees as they explored new ideas without feeling pressured to produce predetermined outputs.

Google still allows engineers to spend 20% of their time pursuing projects they are passionate about. But it has delivered not-so-subtle clues that innovations related to Google+ and other data-mining projects are more valued. For example, 25% of employee bonuses in 2011 were tied to the success of Google+.

Google's extensive data-collection practices also put its users at risk of identity theft. As evidenced by the recent security breach against Global Payments (GPN), which affected MasterCard (MA), Visa (V), American Express (AXP), and Discover Financial Services (DFS), among others, phishing tactics have become so sophisticated that they can find success in mining data from the most technologically advanced companies.

The mere collection of such detailed data -- especially when Google integrates data about its users from so many different sources into one data set -- can put users at risk by creating an appealing target for phishing scandals.

While Google's new strategy may promote the company's bottom line in the short-term, company leaders seem to forget that Google grew its customer base by offering cool services, respecting its users, and attracting top-notch employees who are passionate about innovation.

The acquisition of Frommer's isn't going to change that. A reported $25 million purchase may not necessarily move the needle at a $215 billion company. However, at least now Google will be able to take visitors turning to Frommer's for travel research and potentially generate some lead-based revenue. Google's own travel queries will be able to crank out more credible and branded information.

The flight is long, but at least Google knows that it's traveling in the right direction.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Tripadvisor and Google. Motley Fool newsletter services have recommended buying shares of Google and Tripadvisor.

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