Google to acquire reviews site Yelp for over $500 million: report

After having made a number of acquisitions this quarter, Internet giant, Google is reportedly in talks to acquire the US start up business ratings and reviews site Yelp for over $500 million.

Based in San Francisco, Yelp is a privately held company founded in 2004 by two PayPal veterans, Jeremy Stoppelman and Russel Simmons, to help people find great local businesses like dentists, hair stylists and mechanic.

Businesses can setup a free account on Yelp to post offers, photos and messages for customers and anyone can review and rate the business. As of November 2009, Yelp had more than 26 million people visitors and Yelpers have written over 8 million local reviews with over 85 per cent of them rating a business 3 stars or higher.

The Yelp sites have listings for businesses throughout the US and Canada and the review site makes money by selling ads to local businesses. Businesses can post their advertisements like slide shows of photographs, which appear on top of search results and on the profile pages of competitors for $300 to $1,000 a month.

According to commentators, Yelp offers better local search advertising than Google Local. According to the research firm Experian Hitwise, with Google already directing about 54 per cent of Yelp's upstream traffic, the visits to the US review site rose 52 per cent last week, compared with the same week last year.

By acquiring the five-year old start up review site, Google will enhance its Place Pages site and its core search advertising business, which has slowed in recent years although the market for local online advertising is expected to surge from $2.1 billion in 2004 to $14.2 billion this year, according to research firm Borrell Associates.