Zagat is Google’s great equalizer against Yelp. Google has now demonstrated why it paid $151 million for Zagat last September by including Zagat, which formerly cost $4.95 a month (or $24.95 per year), as part of its new rollout of Google+ Local. The newly branded service replaces Google Places.

As a result of the integration, which will also feed into Google search results and maps, Google+ users will now be able to see reviews from their friends (and “acquaintances”) when they are looking up local information

While Zagat is known mostly for its 30-point restaurant reviews — more nuanced (and time consuming) than Yelp’s five-star system — it now uses the same 30-point platform for 13 categories. More than 100 cities are currently served by Zagat. Outside the restaurant space, Zagat had previously licensed its system to companies such as Anthem Blue Cross for medical reviews.

At ILM West last December, Head of Local Consumer Marketing Jeff Aguero said “the local experience is mostly disconnected. It is not consistent across user experience,” whether people are engaged in researching, finding, experiencing, reviewing or sharing. Google’s goals are ultimately to “get more local searches, more customers, more reviews, better content, higher engagement and more businesses online.”

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Google’s march into local reached another milestone today with the acquisition of Zagat, a major international provider of high-end restaurant and lifestyle reviews in 100-plus cities.

Zagat remains a major player in a reviews space it pioneered in 1979. In addition to hosting its patented “30 point” reviews from some 350,000 “surveyors,” Zagat has a print, pocket-sized restaurant directory product that is often sold as a sponsored corporate giveaway. Online, it provides “Zagat Exclusives” deals using the Reach Deals platform and also widely integrates its reviews with key players for more traffic, including Urbanspoon, OpenTable and New York Magazine.

While Zagat is protective of its premium firewall, a February relaunch included more free content. The company also has very active smartphone apps. In 2009 the company also started expanding its platform to medical reviews via WellPoint/Anthem Insurance, part of a broader licensing effort that also included Priceline, Diageo liquor…and Google.

In truth, however, the closely held, 110-employee company was slow to react to the Web, and has basically underperformed, opening doors for companies such as Yelp and Urbanspoon to gain a foothold, especially among younger audiences and with more mainstream restaurants. Zagat had tried and failed to sell itself for $200 million in early 2008, but apparently did not find real interest at that price point.

Google’s failed effort to acquire Yelp in 2009, in fact, probably set the Zagat acquisition in play — as did the retirement age of founders Tim and Nina Zagat. We believe Google will focus on the reviews platform, and the archive of reviews, and probably de-emphasize the premium products.

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With destination sites, white-label providers and aggregators all crowding into the deal-a-day space, the struggle to differentiate and scale is complex. DealOn, which operates its own group buying sites in 16 markets and also offers white-label branding, thinks it has uncovered two ways to rise above the noise: verticalization and an offer network.

CEO Rich Razgaitis told BIA/Kelsey that DealOn has developed an early “lock” in restaurants, one of the most popular deal verticals. As Zagat’s white-label solution, DealOn powers deal sourcing and post-transaction processing for Zagat Exclusives (heady savings on premium, Zagat-rated local restaurants) while also integrating these offers on its own sites. A similar partnership with Nation’s Restaurant News gives the 70,000 restaurant SMBs represented by the portal access to DealOn’s suite of services. DealOn isn’t alone in the restaurant realm, however, with OpenTable having hatched a successful deals platform. Food-and-drink heavy reviews sites such as Yelp must also be contended with.

Once deals are developed, they can be fed across DealOn’s OfferEx network. This exchange relies on an open API to connect deal suppliers with resellers and distributors. Providers achieve greater reach on their deals, while publishers with existing content management systems can integrate deals that fit their markets and audience demographics. Razgaitis noted that this could be most appealing to publishers that “want the ability to sell into the system [and capture consumer on their sites], but not be limited by it.” Tippr and Local Offer Network are also players in deal distribution.

To date, more than 20 partners are integrating deals through OfferEx. Most offers are supplied by DealOn, but the company is hoping to enlist more outside deal sites.

DealOn has a feet-on-the-street sales force totaling 20 (an average of one per market), backed by telesales. The company believes that personal sales are critical at this still-early stage in order to better educate SMBs on the value of participating. Down the road, however, Razgaitis envisions a self-service marketplace where merchants can self-select creative, geography and timing and then serve up their deals for distribution across the network.

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