Online auction giant eBay has acquired location-based smartphone app maker Where for $135 million via its PayPal division.

Where combines there two location based smartphone services, which allows them deliver local advertising, deals, and offers to customers anywhere in the US. Currently, Where is used by more than 120,000 retailers.

It’s been reported that PayPal will incorporate Where into its own mobile service, which will allow users to take advantage of local deals.

Senior director of global communications, Amanda Pires, recently blogged, “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. As a first step, we plan to integrate PayPal into the Where mobile app to make it even easier for PayPal customers to take advantage of the local deals.”

With the acquisition of Where, will we soon see eBay competing with the likes of LivingSocial and Groupon for local advertisers?

Advertising Age had an interesting story last week brought to my attention by a colleague, where a Procter & Gamble exec speculates that social media is already changing the world of market research. It’s an interesting story, mostly because of who is quoted. When a company with the marketing chops of P&G says something, you’ve got news. But the news is actually much bigger than what you are reading in Ad Age.

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