Google’s rumored $500 million offer to buy Yelp, a site offering consumer reviews, drives home my longstanding belief that the major portals — Google, Microsoft and Yahoo — are becoming the national networks in search of local affiliates like an NBC, CBS, ABC and Fox.
But while the deal apparently fell through over the weekend, I don’t think this it would have been a game changer because Yelp misses a key element: Local salespeople, or at least trusted ones. Just Google “Yelp salespeople” and you’ll understand the stickiness of this situation.
Our conference in February features an entire afternoon exploring these evolving portal-local media relationships. “Partnering with the Portals” features key executives from Google, Microsoft and Yahoo! who are in charge of developing relationships with local media.
Fastest Growing Local Online Advertising Companies of 2009
Yelp is indeed a marketplace force. Its numbers weren’t previously made public until last week’s speculation of it being a $50 million company in 2009. While its estimated growth rate — if true — would put Yelp in the Top 5 fastest-growing local online advertising companies in 2009 at 66% growth (see chart), it still doesn’t make our list of the largest. Craigslist, for instance, has twice the revenues as Yelp. With a Google deal for Yelp, that might change.
However, I view very few things as “game changers,” and despite its potential magnitude I don’t think this would have made the list. Google has had a tough time making itself look local. Acquiring Yelp would have tied together two very important ends: Google and individual consumers. Real people.
But what they’re missing is an army of real salespeople. Local advertising is sold, not bought, which is to say that SMBs really do need a local sales force to hold their hands. They may go online after midnight and buy AdWords with credit cards, but eventually stop buying because they don’t have enough time to manage the account or understand whether it’s actually working.
It takes a local sales force, and it will take a different type of partnership for Google to really become a local advertising powerhouse. It’ll need to acquire a company with a fairly large local and reputable sales force.
In the scheme of things, it’s still a drop in the bucket. The total is less than 3% of all locally spent online advertising. If we estimated it for individual local markets (we usually don’t do that until an advertising segment reaches $1 billion), it would equate to a few hundred thousand dollars or less in most markets.