The Podiyan

Sunday, December 20, 2009

Yelp and Google? Sure, Local is Everything

Seriously, could there be a better marriage of Web properties than one between Google and Yelp? Google is all about maximizing search value for customers. Yelp is about making sure the stuff you find in your area is actually worth checking out.

Virtually every search engine provider has been talking about—and working on—localization for years. The only barrier has been the fact that some consumers are freaked out by the fact that Websites can figure out where they live based on their IP address. But seriously, wouldn't you rather have pizzeria results from their own area, rather than getting Murray's Home Slice from another state, 200 miles away?

The surge of the smartphone industry has turned the local market into a virtual supernova. Now you search wherever you are. (I use Google Mobile Apps. Microsoft also recently launched Bing for the iPhone.) When you're on an unfamiliar street or traveling in another city, you need local, relevant information fast: Where can I get cheap gas? Who can fix this car and not break my warranty? Where can I get a good vegan meal?

Finding the answer to any of those questions is obviously just step one. Getting qualitative information about whatever you find is, of course, the key. Yelp, in addition to offering a virtual rated Yellow Pages of local businesses for the US, closes that loop. Google would love to have not only the deep local analysis Yelp's audience already provides, but also the engine that manages it.

Perhaps that's why this $30 million (in reported profits) company is actually worth a possible half-billion dollars to Google. You can't put a price on good local information, can you? Yelp has over 20 categories of ratings for thousands of businesses. Some places, like a local hair solon in NYC, have as many as 56 reviews. There are a lot of data points here, folks, and the written reviews are surprisingly rich.

I guess my only question is why Google is possibly looking at buying Yelp instead of building its own local business directory and rating system. Do they think it would cost more than half a billion dollars to do so?

Either way, Yelp or a service like it fits in with Google's mobile plans. No, I'm not among those who believe Google will sell its own phone, but it will definitely continue to have Google-branded phones with carrier partners. And it will continue to make sure that each and every one has the Google search button (real or virtual—always a magnifying glass) and easy access to search results. Combining the localized search with local reviews could propel Android phones past most competitors, including the iPhone, since their results and local information will inevitably be from third parties.

Yelp also handles things like events. I can envision a scenario where you're looking for something to do at night—maybe a show. You search through Google and find local results with Yelp-driven info blended right in, but Google's AdSense also adds deals and other offers for this event and others in your area. Each one also has a little Yelp link so you can decide if you want to take a different deal and watch a show that has 45 reviews and a four-star rating.

With neither Google nor Yelp confirming, it's premature to imagine what the post-acquisition Yelp would look like inside of Google. That said, local and mobile local will remain on the top of Google (and its competitors) priority lists for the foreseeable future. There will be deals—if not this one, then others. You can bet on it.


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