Google has confirmed that it is preparing a service called “Google Offers,” designed to compete with the popular social buying site Groupon.

Google has told Search Engine Land:

Google is communicating with small businesses to enlist their support and participation in a test of a pre-paid offers/vouchers program. This initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with customers in new ways. We do not have more details to share at this time, but will keep you posted.

Mashable broke the news on the coming launch, after receiving some promotional collateral for Google Offers that presents a very Groupon-like daily deal offering (the image below comes from those materials; the logo above spotted via Sean McCann). Talk of such a program has been out there since last year, when an article surfaced in Mobile Marketer magazine. (Update: I was informed that the “Google Offers” mentioned that article is not the same as the Google Offers discussed in this article.)

Here’s an example of how the offers may be presented:

[Editor note: Our original story linked to a Google Offers marketing document that Mashable had uploaded to Scribd. That document has since been removed from Scribd, prompting us to make an edit at this point in the original article.]

Google Wanted Groupon

Toward the end of last year, Google and Groupon discussed a nearly $6 billion acquisition. That ultimately didn’t happen allegedly because Google was unwilling to pay a massive kill fee should the US oppose the deal. Groupon is now planning to go public this year at a proposed valuation of $15 billion.

Can Google Offers Succeed?

There are three keys to success in this daily deals space: consumer reach, local sales outreach and content. Self service may work over time but is not a viable way to acquire deals/content in the near term. To that end Google has about 300 sales reps in Mountain View selling Boost and Tags. This would presumably be another product to sell to small businesses.

Google has massive reach with many of its products but it would need to acquire email addresses (via an opt-in sign up) before it could build distribution. It could do that via Google Maps presumably. Groupon, as the largest of the many daily deal competitors, has 50 million email subscribers around the world.

Google flubbed its opportunity with coupons a few years ago. This appears to be a more focused effort to crack the market and could represent both a successful consumer offering and a new local business revenue stream. A shrewd maneuver by Google would be to take less than the traditional 50 percent commission that Groupon takes off the price of the deal.

One should not assume, however, that because Google is launching this that it’s a “Groupon killer.” It won’t be. It could flop if Google fails to execute. If very successful it would live side-by-side with Groupon and LivingSocial and some of the traditional media versions of daily deals. It could also accelerate consolidation and/or failures in the daily deals space where there are well over 100 companies today.

Imagine, however, from a local business standpoint all the telephone calls coming in from online marketing firms and specially the myriad daily deal purveyors — Oy!

There’s more at Techmeme.

Postscript, January 21, 2011: Despite reports to the contrary, Google says its new Offers product is not currently live: “The new offers program that includes “pre-paid/vouchers” is not live.”

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