12/21 Update: It was announced yesterday (12/20) that Yelp walked away from the $550 million dollar deal with Google.
Yesterday evening, Michael Arrington from TechCrunch reported that Google was in advanced talks to acquire Yelp for at least $500 million dollars. It seems like a big business move, even for Google, so let’s try to break it down. Why does this potential purchase matter?
For Google, the benefit of the acquisition would be ad revenue. If this deal is confirmed, Google will inherit Yelp’s extensive network of local ad-buying businesses. They’ll also be able to take Yelp’s 8 million+ user reviews and integrate them into Google’s Place Pages – which will give Google even more opportunity for ad revenue with keyword searches.
For Yelp, a buyout from Google means that direct links to Yelp listings will show up in Google’s search results. These are not just links to Yelp’s search results page, but links taking you directly to the Yelp page for say, Bi-Rite Creamery. Oh, and of course, there’s the money. Yelp is reporting $30 million in revenue this year, but rumor has it that Google will purchase the company for half a billion dollars.
For local businesses, the acquisition is important because with Google’s backing, Yelp reviews will have the potential to reach much larger audiences. If your business isn’t already on Yelp, what are you waiting for? You can use your Yelp listing to serve as the landing page for your company if you don’t have the budget to build your own personal website. Customer reviews have always been a popular social activity on the Internet, and Yelp has fostered an intimate community of reviewers who could be spreading the news about your business for you.
For social media users, the acquisition ties together the two popular trends of location-based social networking and mobile devices. Consumers could use their mobile phones to locate information through Google about nearby businesses on Yelp. Now armed with a large arsenal of local content, Google could push for more advanced mobile apps that allow users to instantly connect with others in local spaces – much like Foursquare.
With this move, Google is illustrating their play for acquiring community-based websites, and trying to magnify their presence in social networking. It’ll be interesting to see if this deal pulls through. I’ll definitely be on the lookout for confirmation.
Tags: ad revenue, Google, social networking
Gotta love this title: "Android Is As Open As The Clenched Fist I’d Like To Punch The Carriers With" -
Susan, you may not be aware of this, but I found my favorite sandwich spot in Palo Alto using Yelp. I hadn’t heard of this place in the 4-5 years I had been in the area, but LOCAL social media helped me learn about it. I’m pleased that Google is focusing on the local. As a human being, I value face-to-face human interaction most, and when local social media communities aid people in bringing online conversations into real world interactions, this yields powerful social capital. The big honking social media sites like Twitter can be great for sharing ideas, but we shouldn’t forget about the local, human element.
David, it warms my heart to know that Yelp has been there for your all your local sandwich needs.
My business isn’t on Yelp because they charge you $400 either a month or a year (I can’t remember which) to “manage your listings,” which means you can delete or push down negative posts, highlight positive posts to be featured at the top, etc. Yelp has been involved in a lot of controversial practices, like highlighting negative reviews (which could very well be from competitors) to pressure business owners into buying into their subscription account management service, not to mention the bribery for good reviews.
For a small business starting out like mine, starting a web site for $10 a year is a much more feasible solution. Startups like San Francisco’s Thumbtack.com are offering local reviews, info, and direct selling via online orders for free to business owners, a much more attractive offering for business owners and consumers who want to know they’re getting legit info.
I realize Yelp has garnered significant clout over the past few years, but I’m hoping any potential Google acquisition will bring a shred of moral fiber to Yelp.
Ali,
Thanks for the comment. Yes, Yelp has come under fire recently for controversial practices, but I still see the value in a small business having a presence on Yelp because it keeps a business visible to so many eyeballs. A lot of businesses don’t pay to be on Yelp – it’s the reviewer generated content that keeps the conversation going. Also, for a person picking a place to eat, reading a fellow customer’s review of a restaurant may be more influential than a visit to the restaurant’s personal website. It definitely is unfair that Yelp is engaging in questionable tactics but in the end, I feel Yelp’s 26 million monthly visitors are too powerful of a group to exclude yourself from.
- Susan
wow, can someone say monopoly! they also just took over doubleclick.net
atleast there will always be microsoft to not make it a real monopoly
A good read, definitely worth a cut and paste. Thanks!