Why Google Acquiring Yelp Returns Dollars

Google already bought up several companies this quarter, but reportedly is in negotiations to acquire one more. The speculative price for San Francisco-based Yelp: $500 million. Industry ad and marketing executives could not seem more pleased.

Yelp offers better local search advertising opportunities, compared with Google Local, according to some experts. The company has reported more than 26 million unique visitors in November 2009, and about 8 million total reviews on the site. But a quick visit to Compete to check the stats, and the unique visitors on Yelp.com jump to nearly 28 million. The top referral sites are Google, Yahoo, Facebook, Bing and AOL.

Google already sends bunches of traffic to Yelp. About 54% of Yelp's upstream traffic came from Google last week, according to Experian Hitwise. The research firm says U.S. site visits to Yelp.com rose 52% last week, compared with the same week in the prior year.

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"Despite having millions of AdWords advertisers, a new Local Business Center and ad product being launched nationally soon, Google still doesn't have a perfect offering for small businesses that serves both the business and the consumer well," says Kevin Lee, Didit CEO. "Yelp has developed a community of reviewers and propelled itself ahead of Citysearch as the place for local business reviews and information."

Although businesses can target specific locations with AdWords, Yelp users are arguably even more closely targeted to a specific location and need. And while Google already uses ratings and reviews in local search, this data would make sorting local business results much more accurate, says Adam Bunn, head of SEO at Greenlight, London.

"Having direct control over ad space, rather than say selling AdSense to Yelp means that Google can take the whole profit of every click rather than just a cut," Bunn says. "This makes a lot of sense, considering the growing use of mobile local search."

Similar to the way YouTube videos have been integrated into search engine results pages, Google will do something similar with Yelp, according to Bunn. If Google acquired Yelp, it would become a stand-alone site that Google will encourage people to continue using as much as possible to increase the data stream coming into the site. AdWords advertising on Yelp could become a separate offering to the rest of the content network.

Google is a great search tool, but when conducting a local search, consumers need more information other than the basic listings. Location is just one piece. Business hours of operation and description are others.

Google tried to compete with Google Place Pages, simple business profiles embedded a few clicks deep in Google Maps. Meanwhile, as Google struggled to improve local listings, Yelp became the trusted brand, according to Yodle CEO Court Cunningham.

Cunningham says Google became serious about local search in the past six months. "They introduced Local Listing, Place Pages, and barcodes for Favorite Places," he says. "They clearly want to own that local consumer experience."

2 comments about "Why Google Acquiring Yelp Returns Dollars".
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  1. Jonathan Hutter from Northern Light Health, December 21, 2009 at 4:11 p.m.

    Incredible how quickly stories get out of date. No slight on anyone, just an amazing series of developments.

  2. Jerry Foster from Energraphics, December 22, 2009 at 3:13 a.m.

    But we still don't know who interfered with the Yelp deal. That said, when this comment is being read tomorrow morning, everyone will already know.

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