Hospitality

Yelp Faces a Local Advertising Challenge

Image Credit: Eaters Collective on Unsplash

Online reviews are commonplace nowadays, and they can make or break a business. One of the more popular independent review sites, Yelp, has had its fair share of challenges over the past several years as companies like Google, Facebook, etc. have further developed their own review-sharing platforms/tools, and as some advertisers left the site.  

Unsurprisingly, Yelp’s Q4 2018 earnings call began with a focus on increasing advertising revenue – specifically calling out its mission to “connect people with great local businesses” as well as focusing on their main traffic driver – restaurants.

While the majority of U.S. adults don’t use online review services in general, the story has changed over the course of the last few years. “Never” responses steeply declined since 2017 – dropping from 72% to 60% today. The biggest increase in usage is in the “Once a month” category (from 19% in 2017 to 25% in 2019).

Prior to Yelp’s Q1 2019 earnings call on May 9th, CivicScience surveyed nearly 2,000 U.S. adults to identify where Yelp fits in among online review sites and how the company’s previously mentioned initiatives may pan out.

In terms of Yelp’s specific reputation among consumers, it seems relatively favorable. One-quarter of the population has a positive association with the online review site. Women are more likely to be Yelp fans compared to men.

Local and Restaurant Focuses

Local business is the main focus for Yelp, but is that same enthusiasm reflected in their customer base? Unfortunately for Yelp, their users are actually the least likely to say shopping local is “very/somewhat” important compared to intenders, those who haven’t used it and aren’t interested, and even those who aren’t familiar with the company.

However, restaurants are Yelp’s highest traffic category and as stated at the end of 2018, the company’s goal is to become the “go-to app for diners and the best-in-class partner to restaurants.” On the upside, when looking at Yelp users’ opinions on local and independent restaurants, a different picture emerges:

44% of Yelp users frequent independent/local eateries.

Local Advertising

But it’s not all good news for Yelp. While the focus on driving traffic to local business and restaurants may make sense, advertising will need to play a role in leading and influencing customers. While Yelp is “elevating” its focus on local advertising, at the end of 2018, only 3% of the United States’ 20 million local businesses used paid advertising through Yelp. That’s a steep hill to climb – especially considering the following stats:

Only 1/3 of Yelp fans say online advertising (in general) guides decisions.

When looking at favorability among business owners- more than 1/4 have a negative opinion of Yelp.

Google is arguably one of Yelp’s largest competitors, if not its largest. With Google’s focus on increasing local search advertising on Google Maps, the folks at Yelp certainly have their work cut out for them – especially considering how strong Google Maps’ favorability is. The majority of those who use and like Yelp and those who have used it and dislike it are Google Maps users.

In addition to tracking brand favorability and usage for Yelp, we’ll continue to study how successful Yelp will be in their local advertising and restaurant focuses.

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