Technology acquisitions continue to make headlines in a down economy. With Google, Apple and Microsoft going tit for tat on the acquisition front this year, Yelp could be the next digital property to get scooped up. Google may pay $500 million or more.
According to published reports, Google is in the advanced stages of Yelp acquisition talks. Yelp was founded in 2004 with a mission to help people find local businesses, and the idea caught on. As of November, more than 26 million people had visited Yelp in the past 30 days.
Users, called Yelpers, have written more than eight million local reviews. Business owners can set up free accounts to post offers, photos and messages to customers. Yelp makes money by selling ads to businesses, and some reports suggest Yelp has about $30 million in annual revenues and could see as much as $50 million in 2010.
Yelp’s Familiar Revenue Stream
Greg Sterling, principal analyst at Sterling Market Intelligence, said the Yelp deal makes strategic sense for Google. Google has increasingly focused on providing content and services to local markets, such as on Google Maps. Yelp would sharpen that focus.
“Yelp is very strong. In many markets it’s got the strongest local brand. It also has a very active community,” Sterling said. “Google doesn’t have a social network. I wouldn’t exactly call Yelp a social network, but it has an engaged and active community.”
Yelp also offers Google a wealth of content that it can repurpose, Sterling said, and though $50 million in revenues is not meaningful compared to Google’s overall earnings, the income demonstrates Yelp has a business model that’s working.
Beyond sponsored results, paying advertisers can also promote a favorite review at the top of their Yelp page. And Yelp is mobile. The service is available through the mobile web, or applications for…