EBay (s ebay) is buying location-based service and ad network WHERE in a deal that gives it added ability to drive more local and offline commerce. The company said the pick-up will add important talent and technology to eBay and PayPal as those businesses aim to become more local and relevant to users. And it builds off eBay and PayPal’s growing focus on mobile, which is driving a lot of the growth in local commerce.
Where is a good acquisition for eBay, which will now have to show it won’t screw up this purchase like it did with StumbleUpon or Skype. The Boston-based location company offers mobile apps that help people discover local places to go nearby and provides deals on local products and services. The company also runs a fast-growing ad network that only serves up localized mobile ads. And it recently bought LocalGinger, a daily deals group buying site that it converted into a product called WhereBuys.
“Local commerce companies like Where are blurring the lines between in-store and online shopping. By giving people hyper-local, relevant retailer information and deals on their mobile phones, we see a huge opportunity for local merchants to reach more buyers, and for consumers to get more choice and value when they shop,” wrote Amanda Pires, PayPal’s senior director of global communications, brand, experiential marketing, in a blog post.
The terms of the deal weren’t disclosed, but eBay said it expects the acquisition to close by the end of this quarter. Pires said the first step will be to integrate PayPal into the WHERE app so users can pay for local offers. But eBay and PayPal see much more opportunity in expanding into local deals. The company paid $75 million for Milo, a local shopping engine that provides real-time, nearby store inventory and pricing.
“Since we don’t compete with our merchants, we are in a unique position to partner with retailers of all sizes and help people shop and pay anytime, anywhere and in any way they want,” Pires wrote.
I’ve talked to WHERE on a few occasions. and they have some great ideas about tapping the local market and using data to improve its performance. They’re seeing great results on their location-based ads, which leverage the company’s sophisticated location-targeting technology. About 120,000 advertisers, mostly local retailers and merchants, are using the network to help drive local traffic into their stores. The company employs a big data team of 12 people, including 8 Ph.D.s, who help tune the company’s location-based ads and also help provide relevant local recommendations for its mobile apps, which have about 4 million active users.
The WHERE pick-up is also about the company’s intellectual property, including a pivotal patent it was awarded late last year on serving up local coupons and offers through geo-fencing. WHERE CEO Walter Doyle called it the “mother of all geo-fencing patents,” at the time, in part because it can conceivably cover any type of local alerts and tailored information based on a person’s movements. Though WHERE executives said the patent was more defensive, it could certainly prove valuable to eBay as it looks to get more local.
This is the second purchase of a location-based service this week, after Groupon bought Pelago, maker of Whrrl. It shows bigger commerce companies are looking to get more hyper-local and mobile and compete for the marketing budgets of merchants. It also raises the question of what other location-based services may be next. It’s hard competing against Foursquare, and increasingly Facebook, as WHERE and Whrrl found out, but the work these location companies is interesting and perhaps more importantly, the data they’re gathering, is very valuable. I wouldn’t be surprised to see more location-based companies get acquired.