Yahoo, Yelp and the Fight for Local Search

According to comScore’s U.S. search engine share report, Google maintains a very healthy advantage over Yahoo and Microsoft (Google 67.6%, Microsoft 18.3% and Yahoo 10.4%).  This is for overall search market share, but the story changes for local search.  While Google is a major player in local search, it does not dominate.  Local search is far more fragmented with strong, relevant players in the game.

  • Google Places
  • Yelp
  • Yahoo Local
  • Internet Yellow Pages
  • Foursquare

One of these players is Yelp, a local review and listings portal with approximately 120 million monthly unique visitors and 53 million local reviews.  It’s no wonder Yahoo’s Marissa Mayer wants to tap into this invaluable trove of data for Yahoo’s own search results.  In February 2014, Yahoo announced Yelp’s local business listings and reviews will soon appear in Yahoo’s search results (Bing and Yelp had a similar deal in 2012, but it’s believed Yahoo will have a much deeper integration with Yelp’s index).

It’s worth mentioning that Marissa has had her eye on Yelp for a while and one of its biggest advocates when Google tried buying Yelp in 2009 (at the time, Marissa was head of Google Search and User Experience).  Google ended up buying Zagat in 2011 (mostly for content), but Yelp is leaps and bounds past Zagat in terms of listings and reviews.

While the specifics of the deal are still unclear, how does Yahoo benefit from this partnership?  For one, Yahoo gains credible customer reviews and listings for local searches.  Increasing and improving organic search traffic could mean additional paid search revenue, which is a search engine’s bread and butter.  Over 95% of Google’s revenue comes from paid ads, if Yahoo can siphon some local search traffic from Google, it can mean big money.

Another component to this deal is the mobile aspect of local searches.  Marissa is not shy in stating where Yahoo’s ambition is with regards to Mobile.  In a recent interview at the World Economic Forum, Marissa stated “2014 will be the tipping point for the evolution of the internet” and “when you look at mobile, when you look at the bandwidth, when you look at the Internet of things, it’s going to change everyone’s daily routines really fundamentally”.  The Yahoo-Yelp deal, not only solidifies Yahoo’s local search results, but also plays into mobile, as most local searches will occur over mobile.  According to eMarketer, local mobile searches (expected to be 85.9 billion) are projected to exceed desktop searches (currently 84 billion) for the first time in 2015.

During a Goldman Sachs Technology Conference on February 11 2014, Marissa stated “we’re long on search and search is curiosity that will never be done”.  Marissa is looking to differentiate Yahoo Search from Google Search via local.  If Marissa can successfully integrate Yahoo and Yelp search results, and turn Yahoo into THE local search portal, she can quickly make Yahoo a force in local once again.  All in all, this is a big strategic move for Yahoo and can only better the user experience and hopefully the bottom line at Yahoo.

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