Online Advertising is More Than Just Clicks!

By: Rich Ord - February 12, 2012

I noticed a VentureBeat article that makes me shake my head in amazement at the apparent lack of understanding of online advertising. The sensationalistic headline, “Yelp advertising is a rip-off for small advertisers” reveals a simplistic viewpoint on the value of targeted online advertising. Yelp is not ripping off small business advertisers, but in fact is providing a platform that business are benefiting from whether they are paying Yelp for prominent placement or not.

However, my article is not really as much about Yelp as it is about defending online advertising, which the article in question attacks with a vengeance. In essence, the article paints a picture of online advertising where all ads should be sold for 60 cent CPMs regardless of whether they are geo and industry targeted or provide branding with prominent placement. Don’t charge too much or you might be accused of being a “rip off”!

Additionally, the article attacks the very core of online advertising by stating, “”For online advertising, I strongly recommend against commitments and impression-based advertising.” In short, the article advocates that all advertising be priced like Google Adwords and Facebook ads or similar. As marketers know, online advertising is more than just clicks. It’s about reaching your potential customers and pay per click (PPC) advertising isn’t the only way to go about that.

>>> Do you feel that Yelp is a rip off? Do you believe that all online advertising should be cost per click (CPC)? What is your experience with online advertising, good or bad? Comment Here…

Let’s give this article a proper dissection:

1. The article states, “At a time when much online advertising is being sold for 60 cents per thousand impressions (CPMs), Yelp is charging some local advertisers $600 per 1,000 impressions. That’s not a typo. Yelp is charging small businesses 1,000-times the standard online CPM rates for local ads that appear on Yelp.”.

This simply doesn’t make sense to anyone who has experience in online advertising. Sixty cent CPM’s are NOT the standard online rates for local ads. That is a rock bottom rate that large ad sellers charge for non-targeted inventory. To get placement on a premium site that is geo targeted with a very specific industry niche, advertisers will pay substantially more, even a $600 CPM. Sometimes much less, but certainly not a measly 60 cents!

2. The article states, “Now consider the types of local Yelp ads that small businesses buy: In this scenario, the ad goes to the advertiser’s Yelp review page. That’s a page where users are free to leave any kind of review for the business, including ones that trash it. That ad runs about a $600 CPM.”

What about TripAdvisor or Urbanspoon? The concept of reviewing restaurants or other businesses does not make paying for a premium placement a bad decision. Obviously, a business should make sure they are providing a great service and excellent product before advertising. However, it is pretty naive to believe that it’s somehow stupid to pay top dollar for a highly targeted ad spot on Yelp simply out of fear that someone could “trash” your business. As businesses in the service industry know, review sites and apps like Yelp can drive significant new business for free and it seems to me that paying for that top placement might even drive more business.

3. The article states, “It’s common for more targeted inventory, such as the type that Yelp provides, to command higher CPMs. But triple-digit CPMs are extremely unusual.”

At least the article finally acknowledges that targeted ads are worth more than untargeted ads. However, the assumption that it is “extremely unusual” to charge over $100 CPM’s and therefore makes Yelp a rip off is inaccurate. Ad spots are priced based on demand for those spots by advertisers and obviously Yelp has more demand than they can deliver for many of those top spots on review pages. There is good reason for this – businesses want to be the dominant brand in their service category in their locality. To many businesses, that is worth paying a premium and they don’t consider themselves “ripped off”. If you own Rory Lake’s Karaoke Dreams in Chicago, you want to be the featured listing for “Nightlife in Chicago”. Rory is not making that decision because of a high or low CPM, he is spending cash with Yelp because he wants to be the dominant brand in the nightlife category. He wants everybody that uses Yelp to at least consider stopping by Rory Lake’s Karaoke Dreams. All advertising isn’t about the cost, sometimes it’s simply about the exposure, despite the price.

Rory Lake's Karaoke Dreams in Chicago on Yelp

4. The article states, “At the high end, it’s a $600 CPM. At the low end, that’s a still eye-popping $367 CPM — more than 10-times the rate of a Super Bowl ad.”

Is the writer suggesting that no ad should cost more on a CPM basis than Super Bowl ads? Super Bowl ads are by their very nature only loosely targeted, skewing somewhat more male and youthful, but not much more targeted than that. After all, Super Bowl 2012 set a record as the most-watched television show in U.S. history because almost everybody from young kids to Grandma watched it. Again, targeting increases the value for advertisers and thus increases the cost. Yelp is not only targeting by business type, it is also targeting by geo location. This adds significant value over a Super Bowl ad on a CPM basis. Not to mention that with a Super Bowl ad, a business that spends $3.5 million for a 30 second spot deserves a little CPM discount.

5. The article states, “To make matters worse, Yelp requires a 12-month commitment for these rates. Even if Yelp doesn’t deliver your business a single customer, you’re on the hook for $3,600.”

Paying $3,600 to be the top position on a popular site and app like Yelp for your business category and in your locality is a deal if your business needs branding. It’s about being in the right spot at the right time in order to attract customers. As with all advertising, the hope is for all new customers to become regular customers, thus paying for the cost of your Yelp ad. If you’re a donut shop, would you want your competitor’s shop to be at the top of Yelp or would you consider paying to make sure you are? Additionally, advertisers on Yelp are reaching potential customers that have only one reason to use yelp; to purchase a product from them or their competitor. With that in mind, a $3,600 fee to reach real potential customers rather than just Facebook clickers can be a great deal.

6. The article states, “For comparison, Facebook only requires that you set your budget to $1 a day and does not have a commitment. A business could try it for a week, see if it performs and then decide.”

It is very misleading to say Facebook only requires $1 a day, since if that’s your budget you will not even get one single impression of your ad run on Facebook. To be fair, Facebook is a cheaper alternative for advertisers. However, to be fair to Yelp, it is not even remotely comparative. Facebook clicks range from around 50 cents to $3, but the targeting and volume of clicks would not match Yelp’s in my experience. Facebook allows targeting by location and interest. However, the interest is based on people’s selection in their profile or what they have “liked.” It’s not all that scientific because if I “liked” a restaurant on Facebook, it does not mean I would click a different restaurant’s ad in the future. That’s why Facebook ads are not great for micro targeting and Yelp ads most certainly are!

7. The article states, “I cannot think of any scenarios where I would advise businesses to advertise on Yelp at these rates.”

I can think of a very good reason … branding. As a business owner I want my business to be the most noticed in my category and location. I don’t want my competitors to be. I understand as a business owner that many businesses also want to be at the top of Yelp categories, so I am willing to pay a premium for my business to be there instead of theirs.

8. The article states, “For online advertising, I strongly recommend against commitments and impression-based advertising.”

Actually, many businesses desire to effectively reach their targeted potential customers and that Facebook and Google are not always the best way to do this. Really, should all online advertising be cost per click? Advertisers, such as WebProNews or Yelp value their audiences and have limited space in which to allow businesses to also reach their valued audiences. Those targeted audiences are worth way more than 60 cents per thousand impressions or a few cents a click. For a sponsor to lock up ad space for them to reach their potential customers and potentially keep their competitors out of that space requires a “commitment” with the publisher and is worth paying a premium CPM. Just ask the advertisers on Yelp, WebProNews or even VentureBeat.

The article mentioned Super Bowl advertising earlier… exactly how many people clicked those CPM ads?

>> Discuss the article with Rich Ord and other commentors in the comments section….

Rich Ord

About the Author

Rich OrdRich Ord is the CEO and founder of iEntry, Inc. which owns WebProNews, Twellow and many other B2B news sites and email newsletters. Follow Rich on Twitter, Facebook or Google+.

View all posts by Rich Ord
  • Joel Milne

    Thanks for advertising Rocky’s article. I might not have found it without you. I think he makes compelling and factual points about Yelp costs. Of course every story has another side, but your not really telling a pro-Yelp story here, it’s more of a anti-Rocky perspective. Having read both articles, he definitely wins this battle of the minds. Let me ask you this, when is the last time you actually put your own money into Yelp advertising for a business, or spent a similar rate for impressions at another site?

    • Rich Ord

      I don’t think this is an anti-Rocky story as much as a story slamming the concept that all advertising should be pay-per-click.

      As the founder of WebProNews I understand CPM advertising and its value to advertisers. I also have spent thousands advertising on Google, Facebook and other search and social sites. I am not slamming them either; I am simply saying that there is a place for targeted CPM advertising from a market share and branding position and that it is often worth much more than CPC advertising on search/social sites.

      Yelp is a popular site/app used by people that are in the process of deciding where to purchase a product or service. Often they are driving or walking near the stores themselves. All I am saying is that paying for a premium spot to reach those active buyers is a business’ dream. I guess that’s why Yelp is having an IPO.

  • Steven G

    Yelps attraction to businesses is all the bad reviews of those businesses that are unclaimed on Yelp by the business owners. If the business wants to throw up only the good reviews on top they have to pay Yelp for that privilege. I’m all for a one-time listing fee, as that’s what we do on our sites ($5-$12 depending on what is purchased with the listing), but what they are doing is borderline racketeering. I wouldn’t be surprised if some of the reviews are made by sales people who work for Yelp just trying to force a business to pay up every month.

    • Rich Ord

      I understand your frustration, but I can’t believe that Yelp’s amazing success (after all they are in the midst of an IPO) is based on “borderline racketeering”. Isn’t it more likely that Yelp advertising actually works for businesses?

  • Scotch

    Yelp is a rip off Rich! Have you even tried it? My company was buying monthly advertising but we switched to CPC with yelp. Now we get more traffic to our web page and we pay 10% of what we were paying. Yelp is not as targeted as you might think. You cant choose key words just categories where your ads appear. This can be a very broad category, that waters down your target market.
    Do yelp ads work? Yes, is the impressions program a rip off Yes! CPC is the way to go.

    • Rich Ord

      Hi Scotch,

      Thanks for telling me about your experience with Yelp. I haven’t personally tried Yelp, but felt the author of the VentureBeat article went overboard in his negative characterization of CPM advertising in general.

  • Scott Falcone

    Perhaps part of the equation for (potential) advertisers is to also consider some of the sentiments of the community Yelp serves. I found this interesting reading…quite a few unhappy users.

    • Rich Ord

      Thanks Scott for the link. WebProNews will look into Yelp complaints further.

      I have no bias here, just disagree that PPC advertising is the only viable form of online advertising. Branding and reaching your potential customers where they are is valuable and Google and Facebook are not the only way to do market your products.

  • NoVictim

    I would not touch this one with a ten foot pole. YELP is a known extortion scheme whereby businesses who decline to advertise wind up with their positive reviews filtered and their negative reviews made prominent. A cadre of so called elite Yelpers (chronically unemployed losers) are Yelps hired guns who do the dirty work of defaming small businesses for them and shilling for advertisers. Thousands upon thousands of Yelp reviews are actually reviews of big chains like Starbuck and Chipotle rather than being genuine reviews of small businesses who lack advertising and p.r. budgets. If you look at the numbers for this IPO they simply do not add up. After all, how can YELP expect small businesses to advertise with a bulletin board which has already defamed them or threatens to do so? Keep in mind that this MONEY LOSING BUSINESS relies on advertising for over 60% of its revenue! Yelps advertising rates area a complete ripoff. While other online advertisers are charging 60 cents per 1000 impressions, Yelp is charging $600!!! To make matters even worse there are numerous class action lawsuits which have already been filed, one of which has been dismissed but there are many, many others in the works. The nail in the YELP coffin? GOOGLE is a powerful competitor which recently acquired Zagat. The removal of links to Google searches will considerably reduce Yelp traffic.No wonder Jeremy Stoppelman and other top brass absconded with 36M in Series E funding by dumping shares in advance of this sham IPO.

    • Rich Ord

      LIke I told Scott in the comment above, WebProNews is looking into these kinds of accusations and will cover them fairly.

  • AJ

    Yelp is an absolute ripoff. And they play games with reviews. Don’t believe me? Go checkout hypnotic salon in las Vegas. Since rejecting their advertising, All the reviews from October 2011 to January 2012 have been filtered. EVERY SINGLE ONE!!!

    • Rich Ord

      AJ — WebProNews will look into this.

      Rich Ord
      WebProNews Publisher

  • chandra

    Yelp? I was first know about this :D, this article give some experience for me

    thank you

  • David Kyle

    Yelp is a rip off. I’ve been in online marketing 10+ years and Rocky’s article makes perfect sense to me. I’ve experienced many of Yelp’s shady tactics first hand, and agree with the other comments. If you truly understand local internet marketing, you know that adwords and adcenter provide much more bang for the buck compared to Yelp.

    • Rich Ord

      Thanks for commenting David. I take it you have tried Yelp or are you just defending Rocky. My point is that online advertising in general is much more than just about PPC. Businesses need to reach their customers and convince them to buy their products. In my 16 years of experience with online advertising text links work to some extent, but they are lousy at branding. For instance, that’s why Facebook, Google, Microsoft, IBM, Bank of America and many other companies advertise on WebProNews. We have an audience that is targeted toward some of the specific products they are selling.

      • Dexter

        I totally agree with you. Different types of ads serves different needs. I consider CPM branding. Branding needs to be consistent to deliver customers over time. Businesses that want instant results CPM’s may not be a good fit. I do believe branding works best when its targeted by location and niche which is what Yelp does. Now the way they are doing it and the features they offer is another story.

  • dan

    I think almost all the opinions above are wrong. I advertise on yelp and it works. I used it for two years before advertising then added the advertising and leads poured in the door. And the fact that there are supposed profesionals above saying its a rip off, shame on you. To make broad statements like pay per click is better and yelp filters based on advertising! Your idiotic. There is good and bad in any situation. I run a painting company and we use pay per click, yelp, Angie’s list and others and Yelp is our biggest driver of leads. 20% total buisness before advertising and 35% after It is invaluable to us. Yelp filters reviews based on how many other reviews and how many friends you have. Not if you advertise. We had the #1 spot for painting WITHOUT advertising, we added it to get in front of more people in other zipcodes surrounding our market. I am very glad you posted this article and at least brought some truth to the subject.

    • Rich Ord

      Thanks for conveying your positive experience with Yelp Dan.

  • Bev

    “It is very misleading to say Facebook only requires $1 a day, since if that’s your budget you will not even get one single impression of your ad run on Facebook.”

    I am very happy with my Facebook $1 a day budget. Over the last month for example, I have approx. 5000 unique individual views a day and an avg. of 11 clicks per day.

    • Rich Ord

      Hi Bev — You are receiving 11 clicks for $1 a day which is very roughly 10 cents a click. I am surprised that Facebook would deliver you any impressions at that low of a cost. My experiences with Facebook advertising have been a little higher, the lowest bid being around 19 cents a click. Typically we have had to bid around 40 cents a click in order to motivate the Facebook ad algorithm to display our ad much.

      You mention 5,000 unique individuals but only 11 of them a day are coming from Facebook. Why bother with Facebook advertising if that’s all they send you? That’s my point in the article, sites like Facebook are not the one and only place to advertise. You might try finding a site that is targeted to whatever you are selling. It might cost more, but it will likely deliver many times the number of visitors per day and they probably will convert better too!

      • Bev

        That is correct. I have tried a couple of other advertising platforms. They were both more expensive and less conversion then Facebook. I think it may be because I was not able to target as well.

  • Alzeta

    Hi, I have been a webmaster for 10 years and all of the pay per click and impressions is a BIG RIPOFF! There are other effective ways to advertise without breaking the bank. I use mobile marketing, banners and Search engine optimization without hoping for some overcharged clicks and impressions.

  • David Head

    As always these type of sites are in it just fort the money as they all are.Its becoming a bit of an old hat site nowadays.But if it fits your purpose ,why not use it. Most sites are like politicians ,full of poo and a bunch of fibbers.
    Kind Regards

  • Kirk Gillis

    Thank you for pointing out the ridiculous nature of the VentureBeat article. Online advertising is not unlike any other form of advertising when it comes to a pricing strategy. The medium will charge what the market will bear, and what the market will bear depends on the perceived position of the medium in terms of businesses reaching their target audience. It seems that the article was written by an accountant and not a marketer or a business development professional. Lots not forget the value of an online ad, particularly featured listings or banner ads, that in addition to providing click-thru’s also contribute greatly towards awareness and branding.

    • Rich Ord

      Couldn’t agree with you more Kirk!


    • Dexter

      Totally true. He was only looking at the monetary value.

  • Dev

    Not all advertisement company are ripping customers.

    Some are very good, and, their advertisements really bring new clients.

  • KensMobileHotRodRepair

    Really Now? Competition is Good…. “Bashing” is the unfortunate byproduct of a Competitive Environment…. “If you can’t dazzle them with brilliance, baffel’em with B.S.”…… For me it is like this… My Biz is a “On-Site Service”, not a Product, so I feel my needs are completely different than someone that sells from a Catalog online… But I still need to be recognized… I would like to take this opportunity to THANK YELP & THE FREE SERVICES THEY HAVE GIVEN ME!!!!!
    By using ONLY the FREE services offered by YELP, and others I have managed to UP my Exposure such that my “barely making it” On Site Collector Car Service, has turned into a FULL TIME JOB !!!!!
    WITHOUT THEM & others like them, offering upstarts a “limited free service”, I WOULD NOT HAVE HAD THE SUCCESS I HAVE HAD!

    • Rich Ord

      I guess for you Yelp really works! Thanks for commenting Ken.

      Rich Ord

      • KensMobileHotRodRepair

        Yes! Richard, for me Yelp Really Works! & at the risk of sounding like a “paid spokesperson” So does “webpronews”! The insight, comments, industry links, is ALL helpful to me!
        Thank You Rich

  • joe underwood

    Wow! Pretty soon we will be discussing politics and Religion? But I would like to add my $.04 (inflation).

    I am according to the NET a SMB but I am in reality just a SOB (Small Ordinary Business or Small Ordinary Business, just having some FUN!)

    It goes without saying that someone will be paying for something e.g. the consumer really does pay for advertising and it is figured into the price they pay for the product and or service sold to them by the local merchant and or vendor. And the local merchant and or vendor pays in the price of the product received from the distributor and or manufacturer.

    The system in place for years has been that the local merchant and or vendor paid for advertising of their product and or service using several venues e.g., local Newspapers, Radio, TV, Phone, Billboards, Display Yellow Pages, Co-Op, etc. And these Platforms charged for their services and the charges can be discussed as to their worth.

    Our perspective as a SOB, is with the advent of the NET/WWW it now allows the Local Consumer to select a Local Merchant/Vendor thru the use of searching the NET and it is FREE using the Search Engine technique.

    So, if it is FREE for the Local Consumer why can’t the same FREE venue be available to the Local Merchant/Vendor that facilitates the exchange of Product and or Services locally? Answer: Someone has to pay (pretty simple?)!

    The “SOMEONE” is the manufacturer and or distributor. They are the source for the revenue needed to drive the Search Engine(s) and their expenses for providing the Platform.

    There is more to the local exchange of product with the local consumer as evidenced by the SPAM (some of it good) we all receive but in general terms we can forget about Brand recognition in the selling process. The key is how the Local Consumer fills their need and whatever that might be?

    Don’t pay for YELP they have a FREE venue and if you want more of their service then make a decision to pay for it and it is your choice. There are 154 FREE Directory type venues you can choose from that will expose you (with or without your clothes)on the NET.

    Last little thought from the SOB who is spouting all the verbiage, “First page results can be achieved without or with SEO (a choice) but in reality they all offer just a few positions on first page and that is about 20 +/- in Organic positions so if you are the SMB and you have 150 competitors offering the same product and or service absolutely no way any NET GURU can give or guarantee 1st page placement.

    Sorry, one last thought think C2B it is where it all starts.

    joe underwood
    Area Code Shopper

    • Rich Ord

      Some good points there Joe! Thanks…

  • CaptainCyberzone

    The PROBLEM with online advertising, as i see it, is with the “carrier” having the ability and tools to protect the advertiser from morally degenerate competitors, sociopaths and mentally immature fools who will purposely and maliciously click on ads in order waste the budget of the advertiser rendering the ads sub-par in ROI.
    I believe that Google’s new “privacy” policy and appropriate algorithms will help in this area by matching-up one’s ad with the appropriate, legitimate audience that it was intended to reach.
    Go Goo! (Yelping is what puppies do.)

  • Salvatore DAmato

    Yelp is a very clever FRAUD and EXTORTION Scheme and is involved in a Class Action Lawsuit as I write this.

    • Rich Ord

      Salvatore — WebProNews will look into that lawsuit.


  • Darrel Dunson

    No longer use on line ads unless they are pretty much free. Have never used “paid” ads that produced a profit. Have numerous websites, use numerous ads and lead generators. My experience says the less they cost, the more they produce!Just got to find what works and stick to it. Exposure seems to be the key, not ads.Ads do not necessarily mean exposure.

  • Piersol

    Yelp has a proprietary reviews system. They won’t share the standard for filtered reviews. Every positive review above 3 stars are filtered, hidden. 11. 6 three stars an under show. Hateful libelous ones go unfiltered always until I specifically can show terms of service violations. They do remove them. Burden on me to daily monitor. Fair enough. But considering the good one are filtered via there ” algorithm” its extremely ironic.

    Deduction after 18 months:

    It works. We get clients. At one point we had a blog on our site telling people they would get $10 credit for any review on various sites. Soon thereafter we can’t get a quality review to “pass”. We have sense removed that concept from our site. Also we pulled our ppc campaign around same time. So I can’t for certain which pissed them off more but the ratio doesn’t lie. Bad mediocre show, good r filtered.

    I must now crawl back and sign up for a campaign simply to protect my brand. As once they are getting my $, surely they will be more accommodating.

    Yes, I’m supporting the fraud/scheme but my brand is too important and yelpI too big toman pretend yelp doesn’t matter.

    • Piersol

      And I only meant for my experience, not general statement about yelp. Of course many 5 stars do show for others.

      I’m typing via phone, forgive me.

  • Sion Ward

    Nice article, but online Ads can be filtered by ad removal software, what then?

  • Boca Website Designs

    Great information & comments. It is always helpful to hear all the different experiences from Yelp users. Along with feedback about the other similar site based marketing efforts we tend to use.

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  • Graham Howes

    What annoys me about all this cost per click and the humungous expense of online directories is summed up in these article – quite simply both articles beat the drum for why they feel we should be using these services. I have been around for long enough to have wasted money on both these areas of advertising for little result. If I ask any of my Hypnotherapy clients they tell me that they are “savvy” enough to ignore the paid for ads at the top of the pages – for them it is about what google finds that is relevant to their needs. I wa s saddened when google moved away from providing a service that simply found a popular service appropriate to you needs in your area to a model of bribing you to have to resort to paying to be on page one of face constant seo tweaking or worse shelling out vast sums of money to seo professionals. It shouldn’t have to be that way. The moemnt that the facebook and google people decided to turn their services into a cash cow was the moment that hypnotherapists and other small businesses found themselves spending cash they couldn’t afford on advertising they shouldn’t need to do. I am fortunate in that a few people in my industry set up tightly focussed online directories that would be found on page one of google – they do all the hnard work – and charge a minimal amount for doiing so – not the outlandish figures quoted in these articles. Time to rebel folks! Incidentally note that I mention professional tightly focussed directories – and you should see how many members they have and where they rank. In my experience advertising in yell or yelp or whatever is a waste of a lot of money – they are too general – and for me never generated any leads whatsoever. One final word of warning I had a “click marketing” company who guaranteed I would be on page one of google…. offered a trial… then robbed my bank account of a high amount without permission … and produced a crappy product that never produced any leads and never got above page 5 in google. Buyer Beware of such sites. Keep any ads tightly focussed on specialist directories that people might actually look for… if someone seeks a hypnotherapist in ipswich suffolk – they should find me easily and not have to wade through ridicculaous things like one which kept popping up in my area of the UK for a Hypnotherapist in Ipswich Australia….

  • Darryl Manco

    Niche social review sites can be highly effective as a business’s online marketing channel. The key to campaign success is recognizing if the business’s target audience domiciles within the social space, and how the business plans to participate as well as draw in its audience. For online marketing is about how the business can link with the social community, rather than the reverse. Then of course there must be clearly defined goals for the social campaign. For just to pay to obtain premier positioning [say within Yelp or Facebook] in expectation for increased revenue, equates to an incomplete campaign purpose. This postulation holds for search campaigns (Google or Bing) as well. It’s why Google’s AdWords punishes irrelevant campaigns while rewarding relevant ones. Campaign content as well as context must speak to the various target audience segments by subdividing each segment into deferential silos; absent of this, the campaign cost comes across as exploitable. In the end it’s equitable to say that social advertising is not a rip off; however, it’s reasonable to say that most online advertising is untaken blindly, and that blindness is the underlying reason for why the CPM seems unreasonable.

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  • Rory Lake

    I am Rory Lake. This is a bogus article. I HAVE NEVER ADVERTISED ON YELP AND NEVER WILL. I achieved #1 in Nightlife because I deliver a quality product.