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Businesses Continue To Bash Yelp As Investor Bets It’ll Be Dead In 2 Years

It hasn’t been a great week of PR for Yelp. While the company made its own news by expanding into Brazil, much of the media coverage has been about businesses bashing the company and its alleged...
Businesses Continue To Bash Yelp As Investor Bets It’ll Be Dead In 2 Years
Written by Chris Crum
  • It hasn’t been a great week of PR for Yelp. While the company made its own news by expanding into Brazil, much of the media coverage has been about businesses bashing the company and its alleged practices and even included an angel investor betting $5,000 that Yelp will be out of business in two years based on a “flawed” business model. And that made Fast Company. Ouch.

    Will Yelp survive? Are its opponents off base? Is Yelp being misrepresented in the media? Or are these concerns and complaints valid? Share your thoughts.

    For the duration of 2013, Yelp has been taking the Yelp Town Hall tour around to various cities around the nation. After a number of them, the company took to its blog to discuss what happens at them.

    In April, Darnell from Yelp’s Business Outreach team wrote, “In the last four months, we visited nine major metros, from Honolulu to Philadelphia, with hundreds of local businesses participating in our interactive workshops designed to answer the burning question, ‘What do I need to know to thrive in the world of online reviews?’ Each event includes a live discussion with business owners who successfully use Yelp to market themselves, Yelp Elites (who are some of the most prolific reviewers in their local community) and members of Yelp’s Business Outreach team. Our goal is to create an open forum in each city we visit where business owners can network and learn directly from their peers.”

    “According to attendees we surveyed, we’re achieving our goal with 72% of respondents saying they learned 1-3 new skills to manage their business listing and reputation on Yelp,” he added. “Beyond that, we asked what were the most useful takeaways from the events. 46% of attendees surveyed said that the tips on responding to negative reviews were useful, while 41% said that the discussion around Yelp’s automated review filter was useful.”

    But from the sound of it, the events haven’t all been quite so rosy.

    This week, Yelp held one of the events in Los Angeles, and according a report from the LA Times, business owners had a lot of outrage to share with the company. Here’s an excerpt:

    Many slammed the company for allowing reviewers to post inflammatory comments — one restaurant manager said she cried for three days after a Yelper wrote that her restaurant was filled with Nazis. Others said they had been subjected to aggressive advertising calls from Yelp.

    Vintage clothing shop owner Reiko Roberts said the advertising pressure amounted to extortion. She said that when she declined to buy ads, “the lower reviews go to the top and the higher reviews go to the bottom.”

    This “extortion” claim has been a recurring theme throughout media coverage of Yelp and business owner opinion. A few months back, it got so bad that the company had to take to its blog to refute such accusations, but it didn’t do a lot to make such talk go away. A lot of businesses don’t seem to be buying it. The subject even came up on a recent episode of The People’s Court.

    Judge Milian’s repsonse was, “Wow! I don’t know if what you’re saying is accurate or not, but if it is, it’s pretty outrageous,” later adding that she was “horrified.”

    The LA Times report even quotes one business owner, who said that advertising on Yelp had helped his business, but still said we was skeptical of Yelp’s stance that advertising has no affect on review placement. It’s interesting that even business owners finding success on Yelp are saying such things.

    CEO Jeremy Stoppelman actually talked about this briefly in an interview with AdWeek earlier this week. He brought it up when asked about his worst decision of the past decade.

    “Early on, we analyzed data and looked for suspicious review patterns in order to filter out [phony] reviews,” he said. “That just fueled a lot of conspiracy theories like, ‘Oh, you’re selling advertising and my reviews disappeared so therefore if I would have paid you, you would have [kept] my reviews up. But now they’re gone.’ We ultimately compromised by setting aside the filtered reviews in an area that’s visible on the site. In retrospect, we should’ve been more willing to compromise [earlier] on that with hopes that more people would understand what we are trying to do.”

    Stoppelman also defended Yelp on Charlie Rose, saying this about its rating system: “”I find it accurate. If you go and find, say, a four-and-a-half star business in New York [City] that has 70-plus reviews, you’re pretty much guaranteed a good experience.”

    Last week, the company expanded its consumer alerts, designed to let people know about fake user reviews, openly talking about users’ ability to trust the reviews they see on sites.

    Even since then, Yelp has launched the ability for users to leave reviews from their mobile devices, which is sure to greatly increase the frequency of reviews, as people (particularly those who have negative experiences) can easily whip out their phone while still at a business’ location, with their thoughts fresh in their minds, and leave a review.

    “We’ve had it out to [a limited number of] hard-core users for a couple weeks, and the data back so far has been pretty sweet,” Stoppelman told AdWeek, when asked about mobile reviews contributing to a spike in Yelp activity.

    Whatever your feeling of Yelp and its reviews, you can expect that a lot more of them will be pouring in.

    This week, Peter Shankman, a well-known angel investor put out a public Facebook post (which he also promoted) making a bet that Yelp will be out of business in two years. If he loses, he’ll put five grand towards charity.

    He went on to tell Fast Company, “it’ll die very, very hard. If both Facebook and Google both let me type in ‘Italian Food’ and the first thing I see are three reviews from people I trust, why the f*** would I use Yelp?”

    Yelp certainly has some ideas beyond reviews from strangers. The company has been adding ecommerce and business transaction features, and we expect there are more to come.

    Despite all the negative publicity the company has had to deal with, it seems to be in pretty good shape, and Shankman might find himself paying up in a couple years. Yelp beat Wall Street expectations with its quarterly earnings, announcing that reviews were up 41% year-over-year, and average monthly visitors were up 38%. Active local business accounts grew 62%. Oh, and revenue was up 69%.

    Do you think Yelp is in any danger of not being around in two years? Let us know in the comments.

    Image: Yelp

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