Even for a company the size of Google™, the attempted $550 million purchase of Yelp is serious. Yelp is a leading online directory and review site for small businesses. In fact, it looks like the transaction fell to pieces because Yelp wanted an even higher valuation—or is gunning for an IPO.
Google saw this company as an excellent way to break into the red-hot local online marketplace, which is likely to generate substantial revenues. Actually, this was not the only big event this week in the space. ReachLocal, which provides online marketing services for small businesses, filed for a public offering.
In other words, local online advertising is hitting critical mass. And, as a result, it should be a priority for your business. Taking a look at the ReachLocal prospectus, I spotted some interesting tidbits on the market:
- Local advertising for small and medium-sized businesses (SMBs) is about $60.5 billion (according to Borrell Associates).
- SMBs spend only 11% of their advertising budgets online (Borrell Associates).
- 50% of weekly media consumption is done via the Internet (Forrester Research).
- Consumers used online sources for 64% of local business searches (TMP Directional Marketing and comScore).
- 62% of consumers read consumer-written product reviews on the Internet, and 82% of these consumers say their purchase decisions were directly influenced by the reviews (Deloitte).
Tom Taulli is an expert on small business and is the author of several books, including The Complete M&A Handbook (Random House, Inc.). In addition to his writing, Taulli has appeared on high-profile television venues such as CNN, CNBC, and Bloomberg TV, and has been quoted in various print media sources such as The Wall Street Journal, USA Today, and The LA Times. Visit his blog at www.taulli.com.