Google May Be In Talks to Buy Yelp

Google is reportedly in talks to acquire Yelp, an online hub for consumer reviews of local businesses, for around $500 million.

Talks of the deal were first reported on the tech blog TechCrunch Thursday evening.

If the rumors are to be believed, the deal would be the latest vote of the confidence for the opportunities to be found in catering to local businesses.

Like its rival Citysearch, Yelp makes its money selling advertising and sponsorships to local merchants, running the gamut from restaurants to auto mechanics.

Market research firm Borrell Associates recently projected the market for local online ad spending to increase 5 percent next year to $14.9 billion. That forecast comes as other sectors of the advertising economy are expected to remain flat or decline.

The opportunity is not lost on the heavy hitters on the Web. Speaking recently at an investor conference, Yahoo CEO Carol Bartz talked up her company’s efforts to spread into local markets. Through partnerships with AT&T and several hundred newspapers, Yahoo has amassed a sales team of some 13,000 locally focused representatives to sell ads on its Web properties, and Bartz said she’d like to drill down even deeper.

“I would like to get hyper-local,” she said.

Earlier this month, AOL CEO Tim Armstrong outlined a strategy for the newly independent firm that includes leadership in the local ad market.

Microsoft also made local content a prominent component of its Bing search engine.

For Google (NASDAQ: GOOG), which earns some 97 percent of its revenue through advertising, the acquisition of Yelp would build on its previous forays in the local market. The search giant invites businesses to create listings on its Local Business Center.

Google has been expanding those profiles to allow merchants to upload photos and coupons, and has integrated the listings with its mapping service. The company has also been adding features to its Places pages, listings of local businesses that include reviews aggregated from sites around the Web.

A Google spokesman declined to comment on the Yelp talks, telling in an e-mail, “We’re always talking to various companies about various things, but we don’t comment on rumor or speculation.”

Yelp did not immediately respond to a request for comment.

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