Google Buys Dealmap; Validation for Aggregators?

Google has acquired Dealmap, a deals aggregator and exchange, and will presumably use it to complement its own sourcing of deals for Google Offers, the daily deal site now in New York, the Bay Area and Portland and coming soon to Austin, Boston, Denver, Seattle and Washington, D.C. Terms were not disclosed.

Dealmap, a 15-person company, was launched 14 months ago at BIA/Kelsey’s Marketplaces conference in San Diego as a spinoff of Center’d, a women-oriented hyperlocal site that had focused on sophisticated mapping and sentiment analysis. Originally launched as FatDoor, it has raised $8.9 million altogether. We estimate that roughly 50 percent, or $4.5 million, has now been spent on developing Dealmap.

Currently, the site aggregates 400,000 deals, from 450 local and daily sources. It claims 2 million users, including 1 million mobile users. It also boasts a large distribution network of 50+ publishers, including such players as Superpages, CityGrid, Local.com, Bing.com, T-mobile.com, MerchantCircle, American Towns, Reqall, Mypoints.com and Topix.com.

Google’s acquisition of Dealmap provides strong additional validation for the aggregator and exchange space, which includes such players as Analog Analytics, Tippr, Yipit, Local Offer Network, Adility, Monster Offers and 8coupons.com. In the wake of this deal, it is hard to recall that it was only a few months ago when the space’s future was questioned by many in the wake of LivingSocial refusing to let its feeds be packaged with other daily deals on a level playing field.

Dealmap, however, has been among those exempted from such bans, presumably because it does more than simply list deals. Since then, we’ve seen new funding coming in. Yipit, for instance, recently raised $6 million.

CEO and Cofounder Jennifer Dulski recently told us it was too easy to think that aggregators weren’t bringing real value to the table. The types of things that Dealmap does are “way more complicated than they’d do on their own,” she said, noting the site’s extensive geocoding and other features. “We are getting comprehensive access to deals from the most number of sources, focusing on high-quality deals, and distributing to as large an audience as we can.”

Will deal commissions continue to flow as deal exchanges become more the norm? Dulski has consistently said that the company hasn’t had trouble collecting commissions for deal referrals. Other sites have hinted at problems getting commissions, especially from the largest players that don’t need as much help. Aside from commissions, revenues also come from display and text advertising.

During a presentation at BIA/Kelsey’s Deals 3D conference in San Francisco last month, VP Dan Visnick noted that aggregators have added value because they provide sourcing for a broad number of categories, rather than simply relying on shopping and dining to carry the day — even though those are the most searched for entities. Aggregators such as The Dealmap bring in hundreds of deals for valuable categories such as hotels, dental and services, he noted.

In the meantime, The Dealmap’s competitors seem to look favorably upon Google’s acquisition — at least, in the short term. “Aggregation thrives on fragmentation. So this is another validation of the aggregation model and the many competitors that it serves. It also throws some water on predictions that the industry will consolidate to the smallest handful of competitors,” says Local Offer Network CEO Dan Hess.