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Google/Yelp Rumors (Yoogle?)

By: 18 December 2009

Rumors continue throughout the morning after last night’s TechCrunch post that Google is in talks to buy Yelp for half a billion dollars. The New York Times has more details and is practically “calling” the deal in the way of election night news desks.

If true, this will be a big deal for the local space, if that’s not an obvious statement. There are lots of implications, which we’ll get into, but for now it’s notable that it is a different kind of acquisition for Google. This is one of the first consumer services Google has acquired with direct relationships to SMB advertisers.

It’s also significant that Yelp has a sales force. COO Geoff Donaker told us at last week’s Interactive Local Media show that 200 of the company’s 300 employees are advertiser facing in some way, including account rep or direct sales positions.

Google has always maintained that it’s not in its strategic interests to  buy or build a direct sales force to access the elusive SMB marketplace at the heart of its “long tail” paid search efforts. That’s kind of true but this deal changes it a bit.  Both companies have meanwhile been pushing hard over the past few years to give SMB advertisers better tools to manage online presence.

Google has also reinvigorated its buying activity lately (AdMob, etc.), seeming to be on a kind of holiday shopping spree. This one isn’t as easy to give a cute name mashup, the way these deals often are (Goelp??). But M&A will continue into 2010; CEO Eric Schmidt has publicly implied as much.

For Yelp, the deal means lots of things including resources for expansion plans, many of which we discussed with Yelp CEO Jeremy Stoppleman a while back. Yelp has received $31 million in funding to date and has a reported $30 million run rate.

Again, lots more to talk about here, which we’ll reserve for the deal’s confirmation. Meanwhile, another possibility: leaked details cause another buyer to step up…



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