Yelp has taken a counter-intuitive approach by taking a slow and expensive city by city rollout approach – and has apparently succeeded as it attracts 26 million unique visitors per month, up 40 percent from last year, and has planted community managers in 33 cities in the U.S. and abroad.
Moreover, the site has an archive of 8. 5 million reviews about three million businesses, and the brand and its reputation now help to break in a wide number of new markets. The brand is also extended via the “Weekly Yelp” newsletters in every market, TV interviews with community managers, and other sources. BIA/Kelsey estimates that Yelp earned between $35 to $50 million in annual revenue, but the company has comment on the estimate.
Intrviewed by BIA/Kelsey SVP Matt Booth, COO Geoff Donaker said that Yelp’s well syndicated reviews are roughly 29 percent made up of restaurants, while retailers make up about 22 percent. “Then you get into the long tail of everything else…beauty, gyms, and things like that. Night life is small on a review basis.” But the relatively small quantity makes sense, as it does for services as well. “I tend to go to more meals than have root canals,” he observed.
The percentage of revenues from every category roughly follows the number of reviews in every category, he said. “We are not chasing any particular category for reviews.” Donaker noted, however, that it tends to take 18-36 months before “you get enough density for reviews to be useful.”
In terms of organization, Yelp now has 300 employees. Roughly 200 are working with its core constituency of SMBs for account management, ad ops and sales people. “Most of the sales people are inside, and they talk mostly over the phone. Most local advertisers are kind of ready to do businesses over the phone,” said Donaker – although “if they spend six figures, we’ll fly to them.”
Donaker also says that business has “been good. We’ve been profitable in the summer and fall, but we’ll go unprofitable again through next year. We want to expand through next year.
Looking forward, Donaker sees rich opportunity from mobile services, including its “Monocle” augmented realty feature, which allows users to point at a businesses using the compass and camera feature of iPhone. But Donaker said that such a feature is really only useful in a dense urban environment. “You don’t need it when you are on strip like Santa Monica Blvd.,” that is relatively unpopulated, he said.
Donaker also noted with amusement the fuss over Google’s new Favorite Places sticker, which has been distributed to 100,000 businesses and allows mobile users to scan over them and see reviews. Yelp has been distributing decals for several years, but they only go to less than ten percent of highly rated Yelp businesses. “This is a different kind of decal,” he says.
