Why Groupon Acquired Uptake: Deal Targeting

Groupon confirmed its acquisition of social travel startup Uptake on Tuesday, though the terms were not disclosed. It’s the latest in a spate of Groupon acquisitions in 2012, including the purchase of both Kima Labs and Hyperpublic last week. The Uptake deal would seem on the surface to be closely tied to Groupon’s travel aspirations, including its Groupon Getaways product, and other reports have stated that it’s essentially a talent acquisition. But recent evidence and a source close to the deal who wished to remain anonymous suggests it goes beyond either apparent motivation.

Uptake itself and a few others in the online travel business point out that the startup’s area of expertise lies not only in travel, but also in leveraging what Uptake calls in a blog post announcing the news “the wisdom of crowds” to provide recommendations, much like Yelp or Google Places. The company employs some fairly unique technology to help users tune in to potentially more relevant suggestions taken from their social graph; as per Uptake’s blog post:

While Facebook’s open graph initiative will structure your friends’ future travel history, Uptake was able to determine the past 8+ years of your friends’ travel histories to identify over a thousand destinations your friends have already been – without any additional work required!

Our source suggested that while Groupon no doubt has interest in leveraging the Uptake tech to extend and strengthen its travel offerings, there are also wider implications for how it might be used across Groupon’s products. It’s easy to see that the ability to use data from Facebook about who your friends are, which you interact most with and which are particularly knowledgeable in specific areas, something Uptake has claimed its tech can accomplish, could help Groupon surface more relevant daily deals in general. If you can see that someone enjoys going to wine bars regularly with a circle of friends during weekends in the city based on their Facebook interactions, for instance, then you can make sure that deals surfaced for that individual match those interests, making offers served that much more relevant and therefore likely to succeed more consistently.

At first glance, Groupon’s acquisition of Uptake may seem like a straightforward move to increase its ability to play in the travel space, and reports from other sources suggest it’s mostly about talent acquisition. But our source and Groupon’s post-IPO acquisition history suggest that this buy is yet another way the company is hoping to increase its ability to become a lasting, relevant resource for users instead of just something to take advantage of once every so often when one of its relatively scattershot and untargeted daily deals catches a customer’s eye. And given what Uptake might bring to Groupon, it’s no surprise that we’re also hearing what FareCompare has heard — that the acquisition price is actually north of $30 million, rather than the $10 to $20 million being reported elsewhere.

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