Google’s enhanced local ads put heat on Yelp
We learned in late December that Yelp turned down an acquisition offer from Google reported to be worth $500 million. Yelp then raised $25 million from Elevation Partners, with another $75 million possibly coming down the road.
It may need that money to ward off Google, which is ramping up its local advertising offerings. The new service places Yelp directly in Google’s scope. And I wonder if it won’t lead Yelp to regret not selling when they had the chance.
Google is now testing a paid, enhanced advertising feature that lets small businesses add all sorts of content to the listing people find via Google: coupon, website, photos, videos, menu, reservation, and directions. These will all be available starting for $25 per month via Google’s Local Business Center. Yelp business accounts cost from $300 to $1,000 per month and allow a business to promote themselves via sponsored listings.
Google launched the Local Business Center last year. Basically, it allows a business to “claim” their listing and monitor all sorts of search metrics about how and when people are finding their listing.
The new services, being tested in San Jose and Houston, allows a business to control even more information about their listing. Here’s a screenshot of how it will look in the LBC dashboard:
Yelp will still have the advantage when it comes to its community or reviewers. And Yelp still has one of the best location-based mobile phone apps around.
Still, it will be interesting to see how this affects consumers’ search behavior. If they’re getting so much additional information right in the Google search result, will they still need to click on the Yelp link that probably also showed up? I wonder how much Yelp traffic comes via Google, and how it will affect that.
In any case, it shows Google has big ambitions in the local ad market. We’ll see how disruptive this new service proves to be.
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its nice to see some good news on Google for a change
Good news on Google for a change? There have been loads of good news on Google. It is not like Google isn’t doing well either.
It’s a tough call whether Yelp will regret the decision to refuse Google’s offer. They have a strong brand and are locked into bookmarks and mobile app is awesome, overall they seem to be pretty well entrenched in users mindset. But Google is Google and is the 800 pound gorilla in the online ad game. It would be interesting to better understand Yelp’s long term plans.
Chris: I’m not sure how this puts pressure on Yelp. Companies putting out information about themselves and paid placement is one thing. But community information about a company or product is something else, where people get there by knowing about that destination (e.g., Amazon, Yelp). The content is different, too. A company’s information is useful and, well, informational. But as far as how good the product or service is for a buying decision, I think community trumps company site.
@Art: I agree community could be an advantage. But it doesn’t trump everything. For instance, I find the Yelp community aspect to me a mixed bag. Even when something has oodles of reviews, I can’t help but think: Who are these people? Yes, it’s more perspective than just the company’s site. But how do I know I can trust these people? I ahave to do a lot of work to figure out who are the best reviewers, who do I relate to, etc.
I do like the new “friend” feature Yelp has rolled out. I’m more interested in knowing what I friends think, or people in my trusted network, than I am a bunch of anonymous reviewers.
But again, I wonder for people who find Yelp through Google or search, whether this becomes a reason not to click through one more site.
Chris: Agree about sorting through who the people are on Yelp and Amazon. I’ve just resorted to reading what is being said. I recently had a good Yelp experience looking for recommended parking in San Francisco. I got more information (pricing!) from the reviewers than from the companies. As far as users eventually making it to Yelp, seems Yelp needs to continue to grow awareness, something that even Google and Yahoo believe they need (e.g., Parisian Romance Superbowl spot).