Last week Yahoo announced their Yelp review partnership with a great deal of fanfare and bravado. Putting on a happy face is standard fare in these sorts of situations and Yahoo is no exception. The press ate it up and we saw headlines like: Yahoo-Yelp Partnership Another Bold Move for Marissa Mayer
I see it as part of a larger trend where companies like Yahoo have essentially finally realized the futility of their local effort and have exited what was traditionally the local search space. It has become a two part world: Google and everyone else. Most of the “everybody but Google” (EBG) crowd finally recognize that they can’t individually compete (or even survive) head on with Google in this space. Now they are starting to protect what small part of the market they have left with these sorts of sharing deals while they figure out how to compete going forward.
The reality is that these sharing deals could have been made from a position of greater strength several years ago and would have freed precious capital and development energy. At the time of the Bing search takeover at Yahoo, I suggested that Bing should consolidate their local search as well to attempt to achieve some scale. It obviously didn’t happen. A number of years ago I was involved in an effort to get these other players like Citysearch to participate cooperatively to gain economies. It wasn’t going to happen even if they had to cut off their noses to spite their faces.
The original model behind local search was that each directory site would allow for an SMB to claim their listing, contribute some current information to the local search results. This would form the basis of a relationship between the SMB and the directory leading to future sales opportunity.
Turned out that it was expensive for the directories to manage this process. More importantly it was difficult to gain any ongoing relationship with the SMB in a way that secured enough (or any) revenue to cover those costs. Companies often leveraged these businesses listings in SMB antagonistic ways to garner some profit. Or resorted to strong arm sales tactics. A few figured out a niche from which to eek out enough income to stay in the listing game.
But competing for every small business listing on a world wide (or even country wide) scale against Google has become a non starter for most of them.
Last year Marissa Mayer, in recognition of this fact, noted: “I really do love [local], but it requires a deep investment, a lot of energy and time to build terrific listings. We already have some products in this area. They’re good at the moment, but it’s hard to take that next step. We don’t expect to make changes in the short term. It’s not an area where we’re going to make significant investments right now.”
In this new realty of the EBG world, listing management is often being outsourced to Yext (Yahoo, Mapquest, Local.com) and review content is being outsourced to Yelp (Bing, Apple, Yahoo).