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Yelp Discusses Its Local Ad Sales Efforts

Yelp released its financials for Q4 on Monday. With the company’s everlasting battle to debunk “conspiracy theories” about its business practices back in recent headlines, we checked...
Yelp Discusses Its Local Ad Sales Efforts
Written by Chris Crum
  • Yelp released its financials for Q4 on Monday. With the company’s everlasting battle to debunk “conspiracy theories” about its business practices back in recent headlines, we checked in with what the company had to say on its earnings conference call.

    Has Yelp sufficiently put this issue to rest in your opinion? Share your thoughts in the comments.

    The subject actually didn’t come up during the call – even in the Q&A portion. This is perhaps an indication that the company has convinced this particular audience of its defense or that this audience isn’t particularly interested in the narrative.

    The subject of Yelp’s sales efforts of course was very much a part of the conversation, so for those who are interested in the aforementioned battle might be interested in what the company did say.

    First, let’s rewind a bit. For years, Yelp has been accused by business owners of burying positive reviews when these owners decline to pay for advertising. Yelp has always denied anything of the sort, pointing to to studies, failed lawsuits, and an FTC investigation, but the accusations and suspicions have failed to ever subside.

    Yelp itself brought the subject up on its corporate blog last week pointing to what it said was the first example of “real reporting” on it, which the company says debunks the “extortion conspiracy”. What they didn’t mention is that this sole example of “real reporting” came from a source who leads strategy for an organization whose board includes the guy who leads sales at Yelp. They also apparently don’t consider an upcoming feature-length documentary full of third-party interviews an example of real reporting.

    So back to the earnings call. Again, none of this was addressed, but CEO Jeremy Stoppelman noted that Yelp’s revenue will be driven by its local advertising business over the next few years and that the company has broken past the 100,000 local advertising account milestone. He talked about how Yelp sees its Transactions business as an increasingly important component in the company’s over all business, but noted that “for the foreseeable future, we see local advertising as the core.”

    According to COO Geoff Donaker, Yelp saw 45% year-on-year growth of its sales force.

    Stoppelman said on the call, “As I think about the year ahead and the large opportunity in front of us, our three priorities are to continue to build our core local advertising business, increase awareness and engagement and grow transactions. The vast majority of local business owners continue to advertise in traditional offline channels. BIA/Kelsey projects that the Yellow Pages industry will generate roughly $7 billion in 2016. Even though according to a 2015 BrightLocal study, more than 90% of consumers read online reviews when looking for a great local business. Migrating these offline marketing budgets online continues to represent a huge market opportunity for us.”

    “As business owners evaluate their marketing options, many are coming to appreciate the value of Yelp advertising,” he continued. “For example, KinderCare Education, a childcare provider with over 1,000 locations across the country, have been a Yelp advertiser for 2 years but stopped in 2013. Based on a decline in the quality of their lead shortly thereafter, so they recently resumed advertising on Yelp to tap into our purchase-oriented consumer traffic. We are pleased to see KinderCare return to Yelp and this experience underscores the importance of communicating ROI to business owners.”

    Later in the call, CFO Rob Krolik, who announced his resignation, said, “So in terms of 2016 guidance in active local accounts and what that means, just as a reminder, our sales folks are compensated on revenue, not specifically on account growth. So while obviously, it’s important, more important is the advertising revenue that we are generating from each client.”

    “I think what I hear from our sales team is that Google and Facebook do come up, but in general, when they hear Google and Facebook from a local advertiser, that’s a really good sign,” he added. “That means that the local advertisers who has already started to shift online and it’s a great opportunity for us to talk with them about Yelp advertising as well and we are very confident with the ROI that we offer the typical advertiser. More often frankly, we are dealing with prospects who don’t advertise online at all yet and that’s a more difficult conversation, because you are trying to get somebody effectively out of print and online, which is happening over time, but is a more gradual process.”

    If you want to read what some business owners have recently said about about their experiences with Yelp advertising and sales calls, you can check out the comments on our article from last week for some of the latest.

    All Yelp quotes are via Seeking Alpha’s transcript of the conference call.

    Have you advertised with Yelp or discussed it with its sales team? What was your experience like? Discuss.

    Image via Yelp (Flickr)

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