January 29, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant
Google’s attempt to localize its search engine took a knock last month when a $550 million deal to buy Yelp.com fell apart. A source close to the negotiations told ZippyCart that Yelp wanted more cash. Google was constrained by its wariness of Yelp’s business model—where anonymous reviewers heavily influence click through rates for businesses that may (or may not) advertise on the site. Post-break up, both companies have moved ahead with plans to expand their share of the local search market.
Yelp has secured new funding from Elevation Partners. The deep-pocketed private equity firm is scarfing up $25 million worth of Yelp’s Series E preferred stock. According to the press release, the cash infusion is set to soar by some $100 million “through a planned purchase of shares from vested employees and other eligible shareholders. The details of the offer to purchase are expected to be announced to qualified participants in the near future.” (You can almost hear the employees yelping from here.)
Meanwhile, Google has ditched user-generated local info in favor of core functionality. Earlier this month, Google introduced “Near Me Now” searching for iPhone and Android users. Smart phone users activate a “Local” button by entering an address or clicking on “Use current location.” The search engine then lists results by proximity. It’s an extremely useful, virtually unknown service. And the fact that a lackluster paid app called “Near Me Now” lives in the Apple iTunes store bodes badly for Google’s marketing efforts for a product by the same name. Similar to this is the “Around Me” app which came into the spotlight when the iPhone initially launched. This app provides direct competition to Google’s “Near me Now.”
Saying that, Google knows its searching business’ bread is buttered on both sides. To make advertisers more attractive to local surfers, they’ve added “click to call” to Google AdWords. “Your location-specific business phone number will display alongside your destination url in ads that appear on high-end mobile devices,” the company notified its customers. “Users will be able to click-to-call your business just as easily as they click to visit your website. You’ll be charged for clicks to call, same as you are for clicks to visit your website.”
AT&T has also joined the battle for local buyers’ loyalty. In addition to local searches and reviews on YP.com (purchased and refreshed last year), the telecoms giant’s alpha-testing Buzz.com. According to VentureBeat.com, the Yelp – Twitter – Yellow Pages hybrid focuses exclusively on “local business love.” Users can ‘”favorite” a business and leave short comments, “but there’s no place for negative reviews.”
While the jury is out on the value of independent local reviews, the competition for local search is becoming increasingly crowded. Google, Yahoo, Yelp, ATT&T and a host of smaller startups (e.g., foursquare.com and webnabit.com) are duking it out for the eyeballs of local customers seeking local businesses, and vice versa. It remains to be seen if a single player can achieve and maintain market dominance, or if the local search segment will grow even more fragmented. Either way, Internet entrepreneurs are clearly convinced that shoppers will think local, and search local too.
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