It’s still a rumor so take everything I’m about to say in that context. (Though it’s being confirmed by Claire Miller at NYT; “more than $500M”.) However if Google does succeed in acquiring Yelp, it will be a huge deal for everyone the local space. Earthquake was the metaphor I used in my post at Search Engine Land last night.
In many of its markets Yelp is the strongest online local brand next to Craigslist. And among younger users it’s a far stronger brand than yellow pages or newspapers. Yelp also operates a telephone sales force. This would give Google the basis of an active outreach effort to the local market.
This is a cultural shift for Google and a major competitive change potentially in the local segment.
If Google does buy Yelp it will have much less “need” for its current roster of reseller partners, with limited exceptions perhaps. The combined consumer pull of Google + Yelp in the local space would present an almost insurmountable challenge to many local publishers. Their “feet on the street” advantage would also be diminished.
But my sense is that a Yelp acquisition would also open up opportunities for others. This is not to say that Yelp would lose vitality or momentum (although it could). It could be come the “YouTube of local.” But my intuition tells me that it would create an opening for others with interesting new approaches to the market.
Twitter and its open API and developer community represents a challenge to Yelp, as does Facebook (which I believe will acquire FourSquare). FourSquare may be a threat to Yelp in a very limited way but it is not a mainstream service — absent some dramatic changes and shifts.
Forced by the rise of Facebook in mobile, Loopt is trying to become a version of Yelp now. And AlikeList, which just launched, has great potential.
Yelpers will initially be quite upset about their site and community being absorbed by Google; however they’ll get over it just like YouTube users did. But in the process the Yelp brand identity will lose some of its edge, which is what will partly create the opening for others.
Mobile, where Yelp is also strong, is of course creating opportunity for companies in the local space that aren’t incumbents on the PC.
It’s premature to congratulate anyone at Yelp unless or until this rumor is confirmed. But if so, it caps a great success story: part luck, part experimentation, part great execution. I’ve watched it from the very beginning (when I was skeptical).
At one point a few years ago CEO Jeremy Stoppelman told me that Yelp was working to figure out “the formula” around entering new cities. When he used that phrase (assuming my memory is correct) I thought to myself: “formula, what formula could there be?”
But their execution has proven that there was one and that it has been working very well. Stay tuned.
Update: David Mihm reports that a stat mentioned last week by Yelp COO Geoff Donaker is that Yelp has 200 salespeople. Google will likely boost that and use it to sell Local Listing Ads as well as Yelp. It could also use the team (over time) to expose Google Apps and other services (e.g., Voice) to SMBs. It’s not just about ads for Google.
Even if people defect and leave Yelp, I believe Google will be using telephone sales going forward. Reach, Yodle and other independing local sales channels will need to broaden and reposition if what I’m saying comes true.