Holy Crap: Yelp Finally Has a Business Plan (Hint: It Involves Google)?
Very early on in the youth of my Twitter days - having lived through dot com's full-on fluff heyday here in San Francisco in the late 90s - I worried that they could easily end up obsolete without a business plan. I saw it happen to Yelp (you know... start with an idea, throw in a clever .com, get some capital and boom, blow up if you don't fall into the startup trap) as their window of opportunity came and went. Maybe I was just jaded. When the big G is breathing down your neck, you might not be so worthless after all.
Google's low-cost online ads have singlehandedly revolutionized the way big brands spread marketing messages across the Web. But the company has had a harder time luring ad dollars from local businesses and mom-and-pop shops.
The search giant is in talks to pay more than $500 million to buy Yelp, an online community for local business reviews, a person familiar with the matter said on Dec. 18. Google's (GOOG) interest in the five-year-old startup underscores the value of local advertising online, a multibillion-dollar business it has so far struggled to enter. Analysts say acquiring Yelp could step up growth in Google's core search advertising business, which has slowed in recent years, as well as in such other areas as mobile services. Representatives of Google and Yelp declined to comment on the talks.
While they were slow to move ad spending online, local advertisers have stormed the Web in recent years. As a whole, the market for local online advertising is expected to surge to $14.2 billion this year, from $2.1 billion in 2004, according to research firm Borrell Associates. Increasingly, local shops are shifting spending from big phone books such as the Yellow Pages and other print media to the Web sites of local newspapers and such directory sites as Yelp and InterActiveCorp (IACI)-owned CitySearch, says local media analyst Gordon Borrell. With consumers so attuned to the convenience of the Internet, "Why do you need the phone book any more?" he asks.
Search advertising? What about Google's inevitable Droid World Order plan?
$500 million to inject a shot of ad-drenched adrenaline into Google's weak "review" results and give the next phase of Android a much needed mobile kick in the ass?
Take it, Jeremy. Everyone knows Yelp isn't worth what it used to be.