Google Wants to Gulp Yelp, as Part of a $1.5 Billion Shopping Spree
The most recent: The company is in talks to purchase local review site Yelp, at a price that reportedly could top $500 million.
If the deal does go through, Google will have snapped up seven companies since August, for what I estimate is a total of $1.5 billion. That’s about what it dropped in one fell swoop on YouTube, more than three years ago.
Yelp is being repped by George Boutros from Credit Suisse First Boston, a source familiar with the negotiations tells me. The talks were first reported by TechCrunch.
When Google (GOOG) buys a company, it generally wants its technology and the people behind it and is less interested in the existing business itself or the audience it has accumulated.
Interesting to see if this is the case with Yelp, whose main asset appears to be a dedicated community of users who chatter about restaurants, stores, etc., and have churned out some eight million reviews in 30 cities.
Those reviews help draw local advertisers, and that’s a market that Google, along with everyone else on the Web, has been trying to crack for years, with limited success.
The major problem seems to be that local merchants are still most comfortable buying ads in venues they already understand, like Yellow Pages directories. And they like to buy them from humans–not from the self-serve platforms that Web players would like them to use.
I don’t know if Yelp has cracked the code here, either. But perhaps Google thinks the data Yelp generates is valuable enough to justify a big buy.
Of course, Facebook and Microsoft (MSFT) are intensely interested in local advertising too, so they are logical bidders as well.
And normally, you’d include Yahoo (YHOO) in this list, but with a couple of exceptions, the Carol Bartz era has been about selling, not buying. Maybe that will change now that the company has a new M&A boss.
By the way: If Google does get Yelp, bear in mind that the deal will almost certainly generate some kind of regulatory review, as the company’s AdMob already has.