Should Yelp Really Be Complaining About Google?By: Chris Crum - July 31, 2014
Yelp has sure done a lot of complaining about Google as the latter faces regulation over allegedly anticompetitive business practices in Europe. When speaking with investors, however, Yelp doesn’t seem too concerned about competing with the search giant internationally. Meanwhile, here in the U.S., Yelp appears to be flourishing in Google results.
Do you think Google is anticompetitive? Is Yelp in particular being treated unfairly? Share your thoughts in the comments.
Yelp reported its earnings for the second quarter on Wednesday, beating Wall Street analysts’ estimates, and turning a profit for the first time since going public in 2012. Things seem to be going pretty well for Yelp. Revenue was up 61% compared to the same period last year, and the future is looking bright. The company raised its outlook for the year, expecting revenue to be up 60% from last year.
“We delivered great results this quarter,” said CEO Jeremy Stoppelman. “Our consistent focus and strong execution across all areas of our business have driven our growth quarter after quarter. We also became profitable for the first time as a public company. While this is an important milestone, we still have a large local opportunity ahead of us.”
The sky is the limit, apparently, though you wouldn’t get that impression from the letter Stoppelman recently sent European Commission chief José Manuel Barroso.
As you may know, Google has been embroiled in a nearly four-year antitrust investigation into its search business at the hands of the commission. Earlier this year, it looked like things were about to be resolved, until (naturally) Google’s competitors complained that the search giant’s proposed concessions didn’t go far enough in making it less anticompetitive. In fact, from competitors’ perspective, they did so little that Yelp decided it couldn’t just stand by as “a concerned observer,” and had to become an official complainant.
“I truly fear the landscape for innovation in Europe is infertile, and this is a direct result of the abuses Google has undertaken with its dominant position,” Stoppelman wrote in the letter. “While I laud the important work of your office and Vice-President Kroes in ensuring Europe is able to tap into the economic opportunity that the Internet industry is unleashing, it is my strong belief that such potential cannot be realized unless every possible step is taken to prevent abuse by dominant firms.”
Google, whether at fault of its own or by the fault of its victims, has indeed hurt some businesses (big and small) with its algorithm changes. The (in)famous Panda update directly impacted parts of Demand Media’s and Yahoo’s businesses, for example. So how have Google’s updates impacted Yelp? Well, again, this was their first profitable quarter as a public company, but Google did come up in the earnings call, highlighting a positive impact on the company in the U.S. and a mildly negative, but apparently quite manageable impact internationally.
CFO Rob Krolik told investors, “International traffic grew over 80% year-over-year to approximately 31 million unique visitors on a monthly average basis. In June, international traffic declined month-over-month due to Google’s algorithmic change in late May. The effect was seen primarily in markets with smaller communities. We believe that by continuing to focus on community growth and high-quality content, our international traffic will increase as we’ve seen in the U.S., where domestic traffic did increase with the algorithmic update.” Emphasis ours.
Okay, so international traffic grew by a whopping 80% year-over-year, and declined by an unspecified amount month-over-month due to a Google algorithm change, but Yelp believes if it focuses on high quality content, it will increase again, like it has here at home.
Stoppelman later said in the Q&A session of the call, “I think obviously, we’ve been competing with Google over many, many years now quite successfully. And we think that by focusing on great content and building, fostering, growing communities continues to be the right strategy. And in fact, where we have the largest communities in the U.S., we’ve seen actually an uptick as a result of the recent Google algorithmic change. They’re constantly making changes and alterations, some of which has been in the media. And most of that really, on a day-to-day basis, doesn’t have a material effect. And so I think fundamentally, we feel that everything is still in good shape. Consumers are flocking to our content. You can see that in our overall traffic growth, and so we’re just going to continue to focus on community building and content quality.” Emphasis ours.
Wow, sounds like things are going pretty well, and that it’s having success competing with the biggest Internet giant there is, while also benefiting greatly from said Internet giant.
Asked about Yelp’s strategy in competing with Priceline, TripAdvisor, and Google internationally, Stoppelman said, “I think fundamentally, we remain focused on fostering growing communities and the content quality as the way to grow and penetrate into these markets, and we continue to see success in growing our communities. And we think ultimately, as we have more and more high-quality content that it’ll be recognized and we’ll become a stronger and stronger brand in the markets that we’re operating in.”
The anticompetitive complaints from Google’s competitors have been mostly related to its vertical search offerings, and this leaked siideshow apparently indicates Yelp’s real points of concerns when it comes to Google’s practices:
Keep in mind, this looks at results in the U.S., where Yelp is flourishing in Google traffic. Danny Sullivan at Search Engine Land does a great job of tearing down the legitimacy of such complaints here, but the point is, Google is pushing its own services (to a much milder extent than Yelp would have us believe) on they’re own site (How dare they!), and Yelp is still doing just fine, with U.S. traffic even growing. And the U.S. is where Google supposedly got off easy in the antitrust department.
And just to highlight how good Yelp actually does have it in Google, take a look at these search results pages, which Mike Blumenthal pointed out in a blog post earlier this week:
Yelp is completely dominating these pages for plumber and nail salon searches to the point where beyond ads from the businesses themselves and actual local results for those businesses, Yelp appears in nearly every page one organic result.
“Yelp is obviously very, very good with their SEO. They apparently have the ability to sculpt their internal link values to highlight what appear to be the most popular local businesses in the Google local results,” writes Blumenthal. “Apparently their ability to do that in their strongest markets is even greater than elsewhere.”
“They reflect on Yelp’s ability to manipulate the search results and reflect poorly on Google’s acceptance of those practices,” he adds. “Yelp, though, needs to be careful of soiling the bed in which they sleep. Although I suppose they could fall back on their all too successful (but BS) cry wolf strategy if Google were to clamp down.”
I don’t know about Yelp, but most businesses would kill for that type of search visibility. Considering that loyal Yelp users are likely to just go to Yelp to find what they want, it’s kind of insane how much Yelp is appearing in Google searches. Can Google’s own reviews compete with Yelp?
Google recently rolled out an algorithm update for local search results, which takes into account more factors like its web algorithm does. This is presumably the update Stoppelman was referring to, which had a positive impact on Yelp. As others have pointed out, it made Yelp show up for searches where it wasn’t before. It would seem that Yelp has never had it so good in Google, at least in the U.S.
So the question is, should Yelp really be complaining about Google? Let us know what you think.
Images via Google