Yahoo Partnering with Yelp to Bolster Local Search Results

Andrew Klips  |

Shares of online-review website Yelp (YELP) are printing record highs on Monday after an unnamed person who attended a Yahoo (YHOO) employee meeting on Friday told the Wall Street Journal that Yahoo chief executive Marissa Mayer unveiled a plan to incorporate Yelp data into its search engine results.

Details of the new pact have not been disclosed and neither company has publicly commented on the matter. The 30,000-foot view is that Yelp’s local listings and reviews will be part of search results and should be available in the next few weeks.

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Sunnyvale, California-based Yahoo currently is in third place amongst leading search engines with about 11 percent of the market. That’s about half of the market capture it had five years ago. Microsoft’s (MSFT) Bing commands about 18 percent and search giant Google (GOOG) rules the roost with a 67-percent market share. A bigger player in the search space in years gone by, the move is part of an overhaul project being led by Mayer to try and set the search features apart and snag a greater portion of the market again. It’s not real clear how much it will differentiate Yahoo from its peers because Yelp has content agreements already in place with Apple (AAPL) and Microsoft. Microsoft said last week that it has inked a new partnership with seminal mobile app maker Foursquare to better target advertising on Bing.

Yelp had previously worked with Google to incorporate its local search results, but the partnership never really got off the ground. In 2011, Google bought Yelp rival Zagat for $125 million to try and bolster relevant local content on restaurants for its users.

When Mayer was head of search at Google, she was active in the company's efforts to acquire Yelp for $500 million in 2009 when Yelp was still a private company.  Since going public in March 2012, Yelp’s market capitalization has mushroomed to $6.6 billion.

Sales from search advertisements comprise about 33 percent of Yahoo revenue and rose 8 percent to $461 million in the fourth quarter of 2013. Yahoo concedes part of its ad revenue to Microsoft through a 10-year deal (signed in 2010), which gives Microsoft 12 percent of revenue generated through search ads on Yahoo. In 2015, either company can opt out of the agreement. According to reports, Yahoo is not very pleased with the results of the deal to date.

All of these search companies are looking for ways to efficiently target users on the go and give advertisers the best of location-based technologies to get ads in front of potential consumers that are in the neighborhood. Given the hundreds of apps in the space and the intermixing of technologies amongst companies, the battle for consumer attention is fierce, to say the least.

Shares of Yahoo are up about 1 percent in Monday action at $37.56. Shares of Yelp hit a new record high of $96.96 first thing this morning, but have slipped back some to $92.23 for gains of 3.2 percent on the day so far.

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