Yelp Pushes Through The Controversies With Big Growth And A 5-Star Quarter

    February 7, 2014
    Chris Crum
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Whether you think it’s a great business tool or you think it’s killing your business, Yelp appears to be unstoppable, and continues to grow substantially. This week, the company released its earnings report for the fourth quarter and full year 2013, and revealed that cumulative reviews have grown 47% from the same time the previous year to 53 million, while average unique monthly visitors grew 39% to 120 million. Active local business accounts grew a whopping 69%. That’s not to mention the 72% revenue increase.

Has Yelp been good or bad for your business? Let us know in the comments.

The company performed so well, its stock surged, while other Internet companies like Twitter and LinkedIn saw their shares fall upon earnings releases this week. Barron’s says Yelp had a “five-star Q4”.

The release came just after a widely followed legal battle involving Yelp reviews came to a close. A building contractor sued a Yelp reviewer for defamation after she accused him of damaging her home and stealing from her. Ultimately, a jury decided both parties had defamed each other, and neither was awarded damages. The business owner expressed “shock” at the outcome, while the reviewer considered it a victory for free speech.

Last week, Yelp posted on its blog encouraging users not to be afraid to leave negative reviews, pointing out that these kinds of suits are rare.

“But despite this press hype, it’s important to keep in mind that the First Amendment guarantees the rights of consumers to express their opinion about a business and honestly describe their experience,” wrote Yelp Senior Director of Litigation Aaron Schur. “These strong protections are why these suits are unlikely, especially when a reviewer has thoughtfully shared their views (Yelp provides guidance on how to do this in our Content Guidelines). We find the most useful reviews include a rich narrative, a wealth of detail and perhaps a helpful tip for others who are looking to spend their hard-earned money at that local business.”

He said, “Businesses that try to sue their customers into silence rarely prevail, end up wasting their own time and money and usually bring additional, unwanted attention to the original criticism (a phenomenon known as the Streisand effect). Many states (though, unfortunately not Virginia) have laws designed to further protect consumers from being intimidated or silenced by these types of lawsuits. These Anti-SLAPP laws allow consumers to quickly end meritless lawsuits and require the business to pay the consumer’s legal fees when the business loses.”

Anti-SLAPP law is a focus of new Yelp efforts in Washington. The company hired lobbyist Laurent Crenshaw, who is lobbying for the cause, which would prevent strategic lawsuits against public participation.

This week, Yelp also became part of the Internet Association, also aimed at helping shape Internet policy. It includes Airbnb, Amazon, AOL, eBay, Expedia, Facebook, Gilt, Google, IAC, LinkedIn, Lyft, Monster Worldwide, Netflix, Practice Fusion, Rackspace, reddit,Salesforce.com, SurveyMonkey, TripAdvisor, Twitter, Uber Technologies, Inc., Yahoo!, and Zynga.

“Yelp is a welcome and notable addition to The Internet Association. Yelp is a perfect example of how the Internet has transformed small business for the better and how the Internet provides economic value throughout the economy. Yelp’s listings, ratings and reviews have revolutionized the way consumers find businesses and the way small businesses do operate,” said Michael Beckerman, President and CEO of The Internet Association. “With 85 percent of consumers reading online reviews to find local businesses, Yelp’s online review service brings consumers closer to small businesses and local economies. Having them share their story — and advocating for issues like anti-SLAPP and protecting free speech online — strengthens The Internet Association’s voice as we educate policymakers on the impact of the Internet upon communities worldwide.”

The Virginia case and Yelp-related lawsuits in general were brought up in the Q&A portion of the earnings call, and CEO Jeremy Stoppelman indicated that suits have basically done nothing to hurt its business. He said Yelp continues to see great user engagement, and that the company does everything it can to protect free speech online (the company was recently ordered to identify anonymous reviewers). According to Stoppleman, the number of cases it sees for its site is “extremely rare.”

“They just don’t impact our business,” he said.

Fortune appears to be shining on the company this week. In addition to its own stellar financial performance and subsequent reaction from investors, the EU announced what could be the end of a lengthy antitrust probe into Google’s search business, and the concessions the search giant is making include what could amount to a great deal more traffic for Yelp in Europe.

On some types of search results, like local business queries, Google will highlight three alternative sites to find results at the top of the results page. As you can see below from the example the EU provided, this includes Yelp. That gives the company a great deal more visibility in the search engine. As the company discussed on the earnings call, international expansion – especially in Europe – is one of Yelp’s top priorities.

Yelp in Google

It’s possible that Google is already sending an increasing amount of traffic to Yelp. On the call, one analyst asked about visibility improving in Google search results on mobile. Stoppelman kind of dodged the question, simply saying they’ve had great performance from their mobile website.

He did note that Yelp will likely get into the app indexing so people can access content from the Yelp Android app from mobile search results.

“I think that’s a nice feature,” he said.

“Each year we get closer to achieving our goal of becoming the de facto local search engine for the world, and we expect more progress along this line in 2014,” Stoppelman said earlier in the call. “As smartphone and tablet usage continues to skyrocket, we’ve placed special emphasis on becoming platform agnostic so that consumers can get the same great experience on Yelp on a range of different devices.”

Mobile has indeed become huge for Yelp in recent months, particularly as it has added the ability to review businesses from its apps.

“In the fourth quarter, 1.1 million reviews or 30% of new reviews were posted on mobile,” said Stoppelman.

The company says continuing to build out mobile features is a priority this year, and it’s focused on bringing all functionality from desktop to mobile.

One analyst on the call suggested that Yelp has an issue retaining advertisers, and asked if retention is a priority. COO Geoff Donaker said the repeat rate has been hovering in the same range for quite a while, but considers it a “relatively stable” metric. “Certainly, acquisition is the primary focus of our efforts,” he said, adding that they feel like they’re still getting started.

Last summer, Yelp launched a “call to action” feature for advertisers, aimed at reducing friction in the customer-to-business transaction process. The feature, Yelp says, is driving 40,000 customer leads per week to its advertisers.

Yelp advertising has been something of a hot button issue with businesses accusing Yelp of holding their positive reviews hostage (with ad contracts being the ransom), but Yelp has continued to deny such allegations, shrugging them off as conspiracy theories with no evidence. Still, these stories keep coming back into the spotlight.

Either way, Yelp is only growing rapidly, and its ultimate goal is to be everywhere in the world. It’s certainly continuing to make tremendous strides toward that goal.

For businesses who appreciate what Yelp has to offer them, the company has teamed up with the U.S. Small Business Administration, and will be hosting a series of live events and webinars over the next few months.

Do you appreciate what Yelp does for your business? Let us know in the comments.

Image via Yelp (Flickr)

  • KT

    After spending $2300 on advertising and not 1 call/click or interest I'd say for my experience YELP sucks. I didn't realize I was paying for 600 impressions at a cost of $550/month! During the sign up process they implied these were clicks. Be aware of any company that wants a long term contract. My view – YELP SUCKS!

  • SJackson

    A local butcher store that has been in business here for 40 years had about 20 excellent reviews, because their services and products are A1. Then, a woman with a grudge wrote a very nasty review. She told of going back on three separate occasions and each time, she was sold rotten meat and spent the night spewing from both ends. I brought this to the attention of the manager, who was thunderstruck. He said she had never personally complained or spoken to her.

    I contacted Yelp, pointed out that no one in their right mind would buy, cook and eat such obviously rotten meat and that the review was obviously false. Yelp replied that it was her opinion and that they were going to let it stand. And yet their policy speaks to the rule that you cannot "Violate our Content Guidelines, for example, by writing a fake or defamatory review"

    I was totally unimpressed with the response and told them I would never be using them again, as any negative comment could be suspect and therefore the whole site is rendered useless.

  • http://link2light.com/ Doodled

    Yelp "grows" because it is growing geographically. But in every region it goes into it looses money at the bottom line. So when it runs out of new markets to open in its growth will stop and all that will be left that anyone pays any attention to is the money it is loosing … unless it pulls a rabbit out of the hat Facebook style and figues out how to make a profit.

    However because it is so fundamentally flawed – I never know which reviews to believe so using it is a bit pointless – I'm not optimisitic they will ever find a way to make it viable.

    I expect it will go Twitter like – disengagement will start, investors will start to loose interest … can it get into the black before then … ?

  • http://www.elalmoving.com mike netanel

    Yelp is a Bully !
    Since I refuse to pay for the advertisement to Yelp, They leave the bad reviews visible but all the good, positive 5 stars reviews they are not posting ! And I am talking about REAL, Legit 5 stars reviews from REAL customers. That is blackmailing ! If you will not join our advertisement campaign, your business will get hurt since they will post only the negative reviews. My suggestion is – Do NOT list your business on Yelp at all
    !! This way you could avoid the blackmail.

  • Jacqueline

    Isn’t the practice liable in this case for privacy violations? http://www.forbes.com/sites/kashmirhill/2013/10/24/practice-fusion-reviews-whoops/

  • martinw392

    There is absolutely no way to know that the person reviewing has been to the establishment! just test it on your i phone for yourself,, you can leave a review for anything any time and check in anywhere near your location sitting in your underwear on your couch at home,, yes i speak from personal experience, lol, “sure ill tell em whatever they want to hear” to game their system and its easy to do, I’ve left ridiculous comic reviews just to test this and it actually get posted on yelp!, I’m sure tones of people have created sock puppet fake on line accounts and are allowing them to mature so they can engage in reputation management as soon as they are trusted, The info on yelp is a lot of fluff that’s unverified by any means, sure they want privacy and freedom of speech, so if you are so private how can anyone verify the info on yelp is true? short answer,.. you cant! i don’t care what kind of filter they have, its pretty easy to figure out how to get past it just by watching a few you you tube videos and pretending to be a yelp-er in their community, (you have to hold your nose to do this) if money is on the line you can be dam guaranteed the system is being gamed by a lot of minds weather you choose to believe it of not, its just human nature at work, if you believe what you read on yelp you are being gamed and you are a fool being fooled!