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.
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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.
%Gallery-152794%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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