• by Thom Forbes  @tforbes, June 12, 2013

Google is shelling out $1.1 billion for the traffic app Waze to tap into its crowd-sourced ability to “outsmart traffic together” and identify speed traps on Highway 101, right? Well, yeah. After all, Brian McClendon, Google’s VP Geo, says so in his blog post about the acquisition.

“Imagine if you could see real-time traffic updates from friends and fellow travelers ahead of you, calling out ‘fender bender ... totally stuck in left lane!’ and showing faster routes that others are taking.”

But the deal is really about Waze’s proximity-based advertising capabilities, Tim Peterson observes in Ad Age. 

“Earlier this year the search giant revamped how marketers purchase search ads to base their rates not so much on what device someone is on when they encounter an ad but on where they are and how valuable that is to the marketer,” Peterson writes. “Someone down the block, or driving past the mall, may be more valuable to a brick-and-mortar retailer than someone else miles away on their couch.”

And Waze has been there and done that, too, as Peterson pointed out in Adweek last November when the Israeli company rolled out its U.S.-based ad platform with the insight that “80% of its 30 million users stop for groceries on the way home from work multiple times per month.” A coupon from a supermarket along the way might be just the right incentive for a harried commuter to stop, no?

There are other reasons for Google’s interest, to be sure.

“Waze’s collaborative, user-based approach to mapping represents a real breakthrough for mobile-navigation apps,” writesTime’s Sam Gustin. “Second, the company poses a threat to Google’s own popular Maps product, so this acquisition is smart defensive play. Third, by buying Waze, Google is able to keep it out of the clutches of arch-rivals Apple and Facebook, which both have been circling the company in recent months.”

As it is with real estate, with mobile phones it’s all about location, location, location, the New York Times’ Vindu Goel blogged prior to the deal closing yesterday. “Context is everything -- where you are, what other people have said about where you are, how to get there, what’s interesting to do when you get there,” Forrester Research principal analyst Charles Golvin tells Goel.

Forbes contributor Robert Hof writes that Waze can help Google jump-start social engagement on Goggle+ as opposed to Facebook’s stay-in-touch-with-friends capabilities. “Waze provides Google an example of how to encourage just the right amount of social interaction not for its own sake,” he writes, “but to get useful things done.”

And what’s more useful than buying product? “And let’s not forget the business logic for buying Waze and its social expertise,” Hof continues. “The real reason Facebook is so threatening to Google is that it can use people’s recommendations, implicit or explicit, to provide more effective ways for marketers to reach consumers.”

Waze currently has 47 million user worldwide and has raised $67 million in venture capital, report Reuters’ Alistair Barr and Edwin Chan. It is the “brainchild of Ehud Shabtai, a software engineer with a degree in philosophy and computer science from Tel Aviv University, who hit upon the idea when he realized commercially available GPS software could not reflect real-time conditions speedily enough, or provide certain useful data -- such as speed traps,” they write. 

Shabtai founded Waze with entrepreneurs Uri Levine and Amir Shinar in 2008. CEO Noam Bardin, who is based in Palo Alto, Calif., along with a small staff, “said his company decided to forego the typical initial public offering route for startups, because it wanted to focus on the product,” according to Reuters.

“Nothing practical will change here at Waze. We will maintain our community, brand, service and organization -- the community hierarchy, responsibilities and processes will remain the same,” Bardin wrote to the "Wazer" community. 

The U.S. is Waze’s largest market with 12 million of its 44 million users (as of April) based here, TechCrunch’s Ingrid Lunden reports. 

“Waze expanded its U.S. operations, and its monetization ambitions, by opening an office on Madison Avenue, the heart of the advertising world in New York City, and we’ve seen that members of the team have been visiting New York recently,” Lunden writes. “There is still a lot of development to be done on the advertising front -- and given Google’s pole position in online and mobile advertising, that would give Waze another obvious fit with its new owner.”

A fit, in fact, like a driving glove.