Google (NSDQ: GOOG) may be about to make its biggest play for local business ad dollars yet. TechCrunch‘s Michael Arrington says the company is in late-stage talks to buy business reviews site Yelp; he puts the price at upwards of $500 million. That would be a solid premium to the $200 million valuation Yelp got when it last raised funds in February 2008 (Although Rafat thinks the price seems low, considering some other recent valuations startups have fetched). To date, Yelp has raised $31 million in funding.
By adding Yelp to its portfolio, Google would be able to significantly bolster its efforts to win over ad dollars in the local space. The company has made a number of moves lately in the market: In September, it rolled out ‘Place Pages,’ webpages that aggregate info about a specific place–from reviews, to images and videos–that users can access from Google Maps. Earlier this month, Google also sent barcodes to 100,000 of the most popular local businesses on its search engine so that they could put the barcodes up in their window and have customers scan them to get to their Place Page. Google would easily be able to substitute that initiative with direct links to Yelp.
Arrington says the deal is “80 percent likely.” Of course, it’s also possible that someone is leaking the deal right now in an attempt to fetch a higher price. One possible purchaser would be Yahoo (NSDQ: YHOO), which could use Yelp to bolster its own local initiatives, which lately have included user-generated bulletin boards for specific neighborhoods. Microsoft (NSDQ: MSFT) too has made a big deal of its local pages in Bing, which include a “scorecard” for specific businesses, featuring reviews aggregated from different sites. IAC (NSDQ: IACI), which owns Yelp-rival Citysearch (which has been lagging significantly in growth lately) also has the cash, although CEO Barry Diller has said the company does not anticipate making any “big acquisitions.” Even Facebook — with its stated emphasis to get people to “share” and the appeal of local ad dollars — may be interested.