Google could boost local/social capabilities with Yelp purchase

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Google could boost local/social capabilities with Yelp purchase

By CAROLINE GABRIEL

Published: 21 December, 2009

Google is on an acquisition spree to boost its web services and content offering, with a sharp focus on the mobile platform. Having recently snapped up AdMob, Teracent and On2 Technologies, it now has its eyes on local business reviews site Yelp, which has been increasingly active in the mobile world recently, since its service integrates logically with the location awareness of a handset. It has a mobile version of its web site and downloadable applications for Android, iPhone, BlackBerry and Palm webOS.

According to The New York Times, Google first held acquisition talks with Yelp several years ago, but these have now got more serious, and could lead to a deal before the holiday. Yelp is said to be asking for at least $500m, according to insiders.

The start-up was founded in 2004 by PayPal veterans Jeremy Stoppelman and Russel Simmons. It offers user reviews and related social commerce tools related to local businesses across north America and the UK, and boasts over 25m users per month and revenues that should exceed $30m this year, based on advertising.

As services that combine social networking with location and context awareness become more and more prominent, the timing is right for both Google - adding more of these capabilities to its apps - but particularly for Yelp, which might be eclipsed by a wave of new start-ups in the year or two ahead, reducing its value. Google has struggled in the important area of local advertising and recommendations, and also in social networking, and in the mobile world is facing rivalry from competitors with stronger local services expertise, such as Nokia. Yelp, and probably other acquisitions, particularly for non-US markets, could change all that

Greg Sterling, an analyst with SearchEngineLand, was quoted by GigaOm saying: "Yelp reportedly has 8.5m reviews. This is a huge amount of content that Google can't generate itself and which it is already leaning on pretty heavily on its Place Pages as part of its increasing focus on local."