Google Buys Zagat: Reviews Platform is the Focus

Google’s march into local reached another milestone today with the acquisition of Zagat, a major, international provider of high end restaurant and lifestyle reviews in 100+ cities.

Zagat remains a major player in a reviews space it pioneered in 1979. In addition to hosting its patented “30 point” reviews from some 350,000 “surveyors.” Zagat has a print, pocket-sized restaurant directory product that is often sold as a sponsored corporate giveaway. Online, it provides “Zagat Exclusives” deals using the Reach Deals platform, and also, widely integrates its reviews with key players for more traffic, including UrbanSpoon, OpenTable and New York Magazine.

While Zagat is protective of its premium firewall, a February relaunch included more free content. The company also has very active smartphone apps. In 2009, the company also started expanding its platform to medical reviews via Wellpoint/Anthem Insurance; part of a broader licensing effort that also included Priceline, Diageo liquor…and Google.

In truth, however, the closely held, 110 employee company was slow to react to the Web, and has basically underperformed, opening doors for companies such as Yelp and UrbanSpoon to gain a foothold, especially among younger audiences and with more mainstream restaurants. Zagat had tried and failed to sell itself for $200 million in early 2008, but apparently did not find real interest at that price point.

Google’s failed effort to acquire Yelp in 2009, in fact, probably set the Zagat acquisition in play – as did the retirement age of founders Tim and Nina Zagat. We believe Google will focus on the reviews platform, and the archive of reviews, and probably de-emphasize the premium products.

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