Why does Google (GOOG) need to spend $500 million buying Yelp?We just got off the phone with a source familiar with Google’s advertising business, and he gave us four reasons:
- Local search is an adjacent business to search, but Google doesn’t own it.
- Google’s local products are completely tied to Google Maps right now. Yelp’s text reviews give Google an entirely new kind of content to sell to its millions of local advertisers.
- Yelp is a powerful brand its users feel deeply connected to. Google could use a play into local outside of Google.com.
- The killer apps on the mobile Web — a huge focus for Google right now — are often local. Think about UrbanSpoon and Foursquare. Yelp recently told us it already has 1 million iPhone app downloads and was preparing to release an Android app.
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