Hyperlocal M&A Heats Up — Here’s What 4 Big Acquirers Are Looking For
Just six weeks into 2013, we’ve already seen a spike in hyperlocal industry acquisitions (not to mention well-founded rumors). A constricted Series A funding market is pushing many start-ups toward the exit, and 2013 could see a handful of established companies look to mergers and acquisitions in order to jump-start their existing hyperlocal strategies — or to help them build new initiatives altogether.
There are quite a few major tech and media companies with an interest in hyperlocal, either with an eye toward bolstering their current stable of offerings or to opening up new local markets. Here’s a quick look at four major players who may currently be in the hunt for locally focused acquisitions and what each might be looking for.
- Recent hyperlocal acquisitions: Stamped (December 2012), Alike (February 2013)
- Target focus: Local discovery, content personalization
Just slightly more than six months into Marissa Mayer’s tenure as CEO of Yahoo, the company has already made two talent-focused acquisitions in the local space. In a push to refine itself as a mobile powerhouse, the company snapped up a pair of local discovery companies in Stamped (Mayer’s first acquisition) and Alike, acquired earlier this week.
Mayer has already made it clear that the company does not plan to make a full-scale push into local. During an earnings call in October, Mayer headed off the idea of expanding the company’s existing local products, saying that local is “probably not an area where we’re going to invest heavily moving forward.”
Building tent-pole local products is expensive and difficult, and Mayer understands the terrain better than most. But that doesn’t mean that elements endemic to building a local service (namely, personalization and context-driven content) haven’t stuck with her since heading up Google’s local division — or that they won’t be essential parts of the puzzle as Yahoo mounts a mobile offensive.
“With the web becoming so vast, there’s so much content and there’s so much social context, and now with mobile, there’s so much location context and activity context,” Mayer said in an interview at the World Economic Forum in Davos earlier this month. Yahoo’s role is to provide “a feed of information that is ordered,” she said. “The web is ordered for you and is also on your mobile phone.”
What Yahoo needs is better ways to present and order content, according to Mayer. Companies that understand the dynamics of leveraging “location context” — essentially, where you and your friends work, live, and play — in informing how information and content are presented should be squarely within Yahoo’s sights. That means local recommendation and discovery applications as well as local content discovery plays like Spun (which launched late last year as a news-personalization app connecting content to locations).
- Recent hyperlocal acquisitions: Glancee (May 2012), Gowalla (December 2011)
- Target focus: Local recommendations and discovery
After 18 months of doing little to nothing in local, Facebook has finally made a splash. The social network launched a new local discovery feature called Nearby in December, then introduced locally powerful Graph Search last month. The two are deeply tied together; one can imagine Nearby functioning as the local interface for Graph Search. And the moves suggest that the social network is gearing up for a full-fledged push into local discovery sometime soon.
The groundwork for much of Facebook’s work in local discovery was laid by M&A. In 2011, the company gobbled up the struggling check-in service Gowalla while it was on its last legs and had the company’s founder join the team that went on to develop the Nearby feature. Six months later, Facebook bought ambient location app Glancee in another move to strengthen its local discovery product.
So what’s next? Maybe Foursquare. Yes, it’s a long shot. But given that investors have reportedly cooled on the check-in pioneer, the price could be within reach. And in many ways, it’s a great fit. Facebook has mounds of location content and activity on its platform but struggles to make that information consumable. Foursquare, on the other hand, has developed a phenomenal local social search and discovery service in Explore but lacks the user engagement to drive the engine forward.
- Recent hyperlocal acquisitions: Glassmap (January 2013), Savored (September 2012), Breadcrumb (May 2012)
- Target focus: SMB customer relationship management, omni-channel commerce
Corporate development at Groupon may be busiest job in hyperlocal. Since the beginning of 2010, the daily deals giant has snapped up 25 companies, making it one of the most active acquirers in local. That has continued in the past couple of months with the acquisitions of a toolbar plug-in in MashLogic and a real-time location technology firm in Glassmap.
But it’s Andrew Mason’s on-again, off-again affair with the idea of creating an operating system for local commerce that will likely drive the company’s acquisition strategy this year. The company has already launched an online calendar system, a loyalty program, a mobile payments product, and a point-of-sale system with Breadcrumb, which Groupon acquired last year.
The next step in Groupon’s M&A strategy should focus on either expanding that product or beginning the process of bridging its local solutions with its e-commerce efforts. We’ve seen some high-profile start-ups like Nomi attack the omni-channel commerce opportunity recently, and Groupon needs to start connecting the dots on its local commerce and goods operations before investors start realize how little synergy exists between the two businesses.
- Recent hyperlocal acquisitions: C3 Technologies (August 2011), Poly9 (July 2010), Placebase (September 2009)
- Target focus: Mapping, local data
Five months after releasing its bug-ridden mapping application (and apologizing for it), Apple has yet to find a solution to its maps problem. The release of Google Maps on iOS relieved some of the pressure on the iPhone maker, but the entire debacle remains a stain of the company’s largely flawless record.
Last month, rumors swirled that Apple was in talks to buy Waze for a reported $500 million. The deal reportedly fell through, but it’s clear that buying Waze would have been a major mistake for Apple. Just as integrating Foursquare data (or acquiring Foursquare, for that matter) will not stop Apple Maps from directing Australians to the middle of the bush, snapping up Waze would do little to solve Apple’s deep data problem.
As Apple CEO Tim Cook explained during a keynote at the Goldman Sachs investor conference earlier this week, Apple’s acquisition strategy is about finding great talent and putting it to work on existing priorities (like Apple Maps). Building maps takes a deep knowledge stack, and while a product acquisition would help in the short run, Apple would more likely look for teams with proven expertise (rather than existing products) to improve its maps application over the long term.
Steven Jacobs is Street Fight’s deputy editor.