What Does Google See in Yelp?

What's a 5-year-old company made up of user-generated rants and raves about local businesses worth? About $500 million, if the rumors about Google's acquisition talks with Yelp.com are to be believed.

First reported by TechCrunch's Michael Arrington, the deal reportedly has Google buying the site, which claims to have eight million reviews written by international users (per its About section). It makes sense what Google would see in Yelp: By integrating this content into Google Maps or into its new Android Phones, Google could super-serve on a local level, offering incredibly specific data about neighborhoods, businesses, dentists, or anything else that Yelp users weigh in on.

"Local" has been one of this year's big media buzzwords, with AOL, the Huffington Post, the New York Times, and others jumping on the bandwagon. In June, AOL bought Patch Media, a local news and information site started by Tim Armstrong (AOL's CEO) for about $10 million, according to All Things Digital's BoomTown blogger, Kara Swisher. In December, CNN invested $7 million in Outside.In, a local news aggregator according to paidContent's Joseph Tartakoff.

But it's not just owning all those searches for the best Vietnamese sandwiches in Queens that Google probably sees in Yelp: There's the site's traffic. Arrington cites Comscore worldwide traffic for Yelp at "nearly 9 million monthly unique visitors." That's a lot of real estate for ads—and very easily targeted since people are using the service to search for goods and services.

According to the New York Times' Claire Cain Miller, Yelp is the brainchild of Jeremy Stoppelman and Russel Simmons, formerly of PayPal.

Miller also notes, "Yelp makes money selling sponsorships to these businesses. For $300 to $1,000 a month, their ads appear on top of search results and on the profile pages of competitors, and businesses can post slide shows of photographs and prevent competitors from advertising on their page."

This may be why the company has a section on its site called Myths About Yelp that spells out its somewhat open-ended editorial/advertising policy: "Advertisers on Yelp pay for…well, ads. These orange-background, clearly labeled Sponsored Results appear in various places on the site including in a single spot at the top of search…. Along with their ads, advertisers also get to add a photo slide show to their business page, and they get to promote one favorite review at the top of their business page under the header."

The deal is still in the rumor phase. Look for updates as details emerge.