Yahoo to Use Yelp to Improve Local Search

Source: http://www.flickr.com/photos/docwho76/

Yahoo (NASDAQ:YHOO) is reportedly planning to team up with Yelp (NYSE:YELP) to improve its local search results, according to sources who attended a meeting with Yahoo CEO Marissa Mayer on Friday, the Wall Street Journal reports. The collaboration will involve Yahoo using Yelp’s user reviews and local business data in its search results, a feature that the Journal’s sources said will be unveiled in the coming weeks.

Mayer has taken on the task of turning the once-dominant Yahoo around after the company failed to transition to mobile quickly enough. Mayer’s efforts seem to be moving the company in the right direction. Her renewed focus on mobile and bevy of acquisitions have helped Yahoo stock rise more than 78 percent in the course of the past year.

Recent data from Comscore found that Yahoo was the top desktop Web property of the last month of 2013, beating out rivals Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB). Of the 224 million people who accessed the Internet in the U.S. in December, 87.1 percent of them viewed Yahoo at least once. December wasn’t the first time in 2013 that Yahoo topped that list.

In August, Yahoo beat out Google for the top spot in Web traffic for the first time since May 2011. In October, Yahoo did it again, managing to keep the top spot in desktop traffic away from its biggest rival and Mayer’s former employer. All the evidence seems to suggest that Yahoo’s return isn’t just a fad.

The deal with Yelp could be a key aspect of helping Yahoo differentiate itself from Microsoft’s (NASDAQ:MSFT) Bing and Google. Consumers increasingly use search on mobile devices to find out about local businesses and plan activities. The platform with the best local search results will have a powerful tool to encourage people to try it and keep users engaged.

Yahoo currently has a search deal with Microsoft that Yahoo execs have found to be a disappointment, according to the Wall Street Journal. The contract involves Microsoft getting 12 percent of Yahoo’s ad-based search revenue, and Yahoo won’t have a chance to get out of the deal until 2015.

As for Yelp, the local business review site has had difficulty generating revenue, but analysts are optimistic about its future. The company also issued strong guidance for the final quarter of the year in October. Advertisers across a variety of industries have shown interest in purchasing promotions on Yelp as a way to connect with a local audience, and several analysts have raised their price targets on the stock due to the revenue potential from those local advertisements.

Yahoo needs to beef up on ad revenue, as the company’s fourth-quarter results showed that the period’s display revenue fell 6 percent on the year to $553 million, while full-year display revenue fell 9 percent to $1.95 billion. The number of ads sold increased about 3 percent on the year in the fourth-quarter, and the price per ad decreased about 7 percent.

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