Zagat: Down But Not Out?
This week, Google announced that it had sold its Zagat guide business, for which it paid a stunning $151 million in 2011, for “an undisclosed amount” to a company you’ve likely never heard of, The Infatuation.
It’s an ignominious development for the former household name brand, and true pioneer in the data business. Well before the Internet, Zagat had blazed new trails in the area of user-generated content and consumer reviews. Tim and Nina Zagat, the founders, proved to be creative and talented marketers and self-promoters. For many years, the name Zagat was synonymous with restaurant ratings in the United States.
But the Zagat empire was print-based. Moreover, the Zagat business model depended in large part on selling bulk orders to companies with their names and logos on the covers, to be given away as gifts. That made it difficult for Zagat to economically expand its coverage beyond the largest cities, so it never became a truly national data provider. And its attempts to expand into other segments of the hospitality industry where more competition existed, fell flat. But the Zagat brand transcended all these shortcomings.
And it is the brand that Google apparently paid so much to acquire. Everything about the Zagat business was at odds with the Google model and ethos. I trashed the deal at the time.
The irony is that Google couldn’t even find an effective way to leverage the Zagat brand. Fortunately, the $151 million purchase price is a rounding error for Google.
What’s the future of Zagat? I do believe the brand still has some life, and could be resuscitated. There’s a role for well-curated, tightly edited slightly snarky, user-generated content that helps you decide where to eat – especially when coupled with a restaurant booking engine. That’s why I would have been much more excited if Zagat had been acquired by, say, OpenTable.
This article is adapted from the InfoCommerce Blog