Yahoo, Google, and the local search

14 Apr
2007

It has spread to every nook on the internet – Google picked up Doubleclick for a sweet $3.1 billion

With it, Google gains access to some big-name clients of DC – brand managers for major companies that have a lot of money. PPC is just a facet of internet advertising – there is also banner advertising (which Google has a small share of, and DC a large share of), CPA (which Google is expanding into, and DC has the highest quality network for), and email (which I don’t think Google is going into any time soon).

Anyway, the story goes that Google beat out Microsoft (again). And by beating out Microsoft, they also beat out Yahoo (after all, all three are going after the same – internet advertising).

Yahoo is looking especially vulnerable. Since picking up Flickr (which I still argue was mostly for guaranteed ad-inventory), and Delicious/MyBlogLog (both for user behaviour/tracking), they’ve been relatively silent. There was suppoused to be a deal for Facebook, but that has not produced anything.

If there is one product that I think Yahoo is pushing ahead of Google is local. Local is more than just local search though – it is about a presence in the local area. And while I argue Yahoo! Local is superior to Google Maps, Yahoo has really pushed ahead of Google with key partnerships with newspapers, the latest being with McClatchy.

So while Yahoo continues to sustain PR black-eyes, what can it do?

Buy up companies in the emerging local market.

With that in mind, and a way to get a leg-up on Google (for once), Yahoo could go and buy out (for relatively cheap) both Local.com and Yelp.

Local.com keeps making noises about how much traffic it pushes (roughly 11 million unique visitors a month). They claim $35 RPM (revenue per 1000 pageviews), and ~$90 per 1000 daily visitors. While their CPM doesn’t compare to Google’s, it has gone up significantly, and by utilizing Panama, it should be able to make even more. As Google and Yahoo jostle for the local market, Local.com and its 11 million unique visitors a month make perfect sense. There are some other things to consider (eg Local.com heavily invests in PPC), but a great domain with steady traffic could be a good call. And local.com needs money – it just received $8 million in funding.

The other site would be Yelp, which simply fits into Yahoo’s strategy of user-generated content: Jumpcut, Flickr, Upcoming.org, and Del.icio.us. User generated, active participation, without too much butting in by Yahoo (though I am sure quite a few Flickr fans would disagree). They would get their hands on some of the most loyal visitors in the local area (you don’t drop 400 reviews on a site and then just get up and leave). Yelp struggles with their ad-sales, but few sites get as much attention as they do (especially considering how much real traffic they do get). But that attention has helped them skyrocket, with Hitwise reporting that Yelp’s traffic has increased 91% in just six months.

Get the top independent local search site, and the top local review site – I do wonder what the valuation would come out to, but I am sure Yahoo has enough cash to scoop them both up.

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