The Decline of Yelp Deals

By: Chris Crum - September 2, 2011

As discussed in a previous article, Yelp is cutting back on its Deals positions, which is interesting considering that it comes at a time when Facebook is pulling the plug on its deals product (though it will still have check-in deals).

This all appears to be happening at a good time for Groupon, as its traffic has been down, according to Hitwise.

Yelp reportedly cut half of its deals staff (15 positions) after launching Yelp Deals just last year. Yipit is sharing some data about the performance of the service, which lends a little more context to Yelp’s decision.

“While Yelp’s daily deal segment got off to a strong start, things have been getting worse ever since. But, in August, things got dramatically worse as revenue declined 52%,” Yipit’s Vinicius Vacanti says.

“Over the last 6 months, Yelp has been generating less and less revenue per deal as competition in the space heated up,” Vacanti adds. “In February, they were generating $19K of revenue per deal. By May, they were down to $7K of revenue per deal.”

Yipit looks at Yelp Deals

Yipit looks at Yelp Deals

Yipit looks at Yelp Deals

For more analysis on the state of the Deals space, read our interview with Yuupon CEO Mary Song here.

Chris Crum

About the Author

Chris CrumChris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.

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  • Anya

    Not sure how businesses can afford to run these deals on Yelp and Groupon.

    • Adsense Publisher

      I agree, first the business has to give a discount, and then these services take a percentage of the gross revenue. So if a business sells something for 50% off, how do they expect to then pay a commission to Yelp or Groupon? Raise the base price I would think. Imagine if that was true for a lot of items sold on Yelp or Groupon? I wonder if it is.