BREAKING NEWS – Google Purchases WAZE – Why?

After acquisition talks between Facebook and social driving app Waze broke down last month, Google has snapped up the Israeli startup that has gained popularity by having people crowdsource traffic conditions as they use t

Image representing Google as depicted in Crunc...

Image via CrunchBase

he app to navigate.





A Google spokesperson said Waze will remain a standalone app but declined to disclose the deal’s price. Israeli publication Globes reported on Sunday that Google would pay $1.3 billion for the app, and The New York Times reported on Tuesday its cost was $1.03 billion.

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Like Waze, Google Maps’ mobile apps provide turn-by-turn navigation that takes into account traffic conditions, but Waze sources those signal directly from users who have eyes on the road and may be more reliable. Additionally those users can report whether there’s an accident in the fast lane or a cop on the shoulder as well as communicate with other Waze users on the road (the app features passcode-like safeguards to preclude drivers from interacting).

That data data on where people are in cars is its primary value to Google, which has been making a big push to boost its mobile ad revenue. Earlier this year the search giant revamped how marketers purchase search ads to base their rates not so much on what device someone is on when they encounter an ad but on where they are and how valuable that is to the marketer. Someone down the block, or driving past the mall, may be more valuable to a brick-and-mortar retailer than someone else miles away on their couch.

Waze has made a similar proximity-based pitch to advertisers with the advertising program it rolled out last fall. Brands like Best Buy and Whole Foods have run promotions within the app that pop up while users are setting their routes alerting drivers to a nearby store and dangling a coupon to get them there. Drivers can then click the ad to navigate to that store, letting Waze report back to the advertiser how much foot traffic their ads drove and how many coupons were redeemed.

“The mapping game is won on data,” said BIA/Kelsey senior analyst Michael Boland. “If you can tell based on someone seeing an ad whether they navigated to [an advertiser’s] front door and show those conversion metrics, that’s the holy grail of advertising,”

The Google Maps Android app already shows ads, some even carrying offers (ads within the iOS version are nonexistent), but could benefit from the addition of Waze’s ads. U.S mobile local ad spending is projected to cross $16.8 billion by 2017, including $5.7 billion routing to mobile search, per research firm BIA/Kelsey.

The Google spokesperson said the company had nothing to announce regarding future integrations between Waze and Maps other than what was mentioned in the company blog post and quoted above.

Acquiring Waze may further distance Google’s mobile Maps from its remaining competitors. In the days after Apple bungled its own mobile map app, Waze saw its user base climb by 100,000 new users each day, but Google usurped its popularity when the company finally debuted the iPhone version of Google Maps in December.

Apple’s announcement on Monday of an upcoming desktop version of its maps product suggests the company isn’t yet ceding competition in maps to Google. However, any potential entrants, such as Facebook (which has its Nearby feature), Foursquare (which has made a big to-do about its local search capabilities) and Yelp (which rivals Google and Foursquare in local search), face an even steeper uphill climb.

Maps are only as good as the data underpinning them, and that data must be collected and updated over years to make sure it’s solid. Google Maps has been in market for eight years giving Google a direct firehose to that information). Facebook, Foursquare and Yelp possess some firsthand geolocation data through their respective check-in and local search features, but not at the scale of Google.

They could follow Apple’s example and partner with firms like TomTom to siphon that data, but that second-hand information seems better in a supplementary role. And anyway what if one of those partners gets acquired by a rival? Waze was, after all, one of Apple’s maps partners.


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