A Cry for Yelp from Google?

Google is in talks to acquire review site Yelp, as originally reported by TechCrunch and later confirmed by The New York Times.

TechCrunch pegged the deal cost as at least $500 million, with the Times saying that figure was too low.

Yelp was founded in 2004 by PayPal veterans Jeremy Stoppelman and Russel Simmons, the Times reported, and TechCrunch added that the company’s 2009 revenues will total some $30 million, and Yelp expects that to increase to about $50 million in 2010.

Greenlight head of search-engine optimization Adam Bunn offered his take on the potential acquisition:

Yelp contains hundreds of thousands of reviews on local businesses and services, covering hundreds of towns and cities and pretty much every vertical you can imagine, and boasts over a quarter of a million users across the United Kingdom, United States and Canada.

These kind of deals give search engines direct access to structured data, allowing them to reliably and accurately incorporate that data into their search results without the need to go through the usual crawling and indexing process, and increasingly offer functionality directly to users rather than simply sending them to another site.

This is one of the strategies that Microsoft had chosen for Bing, and the main reason why it took so long for Bing to launch properly in the United Kingdom; identifying potential content or functionality partners relevant to that market, negotiating with them and then integrating their data takes time. But it’s worth it; Bing, for example, offers some compelling functionality integrated directly into its results, like restaurant booking courtesy of TopTable. And once up and running, the costs for the search engine are marginal compared to the cost of crawling.

A potential acquisition of Yelp by Google could be seen as a reaction to Microsoft’s strategy. And let’s not forget the huge potential for Google to sell targeted ads across a local network that it controls directly.