Google buys Like.comAugust 20, 2010: 8:36 PM ET
The move would immediately help its product search business.
Like.com announced on its site today that it had agreed to be picked up by Google. The shopping site allows users to search for jewelry, handbags, shoes, and watches. It makes money on affiliate links which are estimated to be as high at 10%.
As Merrill Lynch analyst Justin Post mentioned last month, Google (GOOG) has yet to realize the potential of its market-leading Product Search business. Google's ongoing acquisition of ITA flight tracking software may indicate that Google is ready to play in that market.
Post stated in July,
These changes are transforming Google into a more competitive, closer-to-the-transaction eCommerce platform, with the potential benefit of: 1) bettering traffic share gains and 2) improving conversion rates (up to 30% in some formats), leading to higher CPCs.
I think the ~$100 million+ Like.com pick-up is an even bigger indication that Google wants to be an eCommerce platform. Google won't be a fulfillment house but they'll happily take an affiliate cut of links they send to vendors. And, even if Google casts aside Like.com's affiliate business, Google still stands to make a lot of money advertising against the (30%) higher CPC rates that shopping sites can pull in.
From a technology standpoint, Like.com's image recognition/comparison engine can not only power shopping, it can also help in its Image Search product, which just recently saw a significant update. Google has other experimental products like Goggles that could also benefit from the technology. Part of the Like.com pickup is an older Riya face-searching technology that could add an iPhoto 'Faces' type of feature to Picasa.
On a broader note, are we seeing a new trend here? Google seems to be buying a company a week and announcing the purchase at the end of business on Friday.