Yelp’s Latest Moves – Industry Expansion, Local Commerce & Direct Transactional Revenue

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Yelp Gets Closer to Revenue Estimation

It started with the Yelp Revenue Estimator Calculator, which was a very flawed tool to estimate revenue generated from Yelp as we have documented before. By some estimations, it was overcounting revenue by at least 6x, although they validated it with Boston Consulting.


Yelp Ads for Transaction Tracking

Yelp naturally wants to make sure traffic never leaves its site. That’s why you don’t see links to a local business’ Facebook, Twitter or other social media feeds. But now, Yelp is opening the door by allowing businesses to promote a transaction such as buying tickets. It’s called the “Call to Action” feature and can point to most anything. In the Yelp advertising page they specifically call out: “Schedule Appointment,” “Get Quote,” or “Print Coupon”, but it could link anywhere.


Will Yelp Offer Local Commerce Directly? The Market is Huge.

So what’s the next step? As I look around at all the services trying to categorize products (like Goodser), or help local businesses provide pre-purchases of products online (Groupon, ScoutMob’s Shoppe, Zaarly, etc.), it seems like Yelp could close the loop here. It’s already tried in the pre-paid deal space, but it was a weak attempt that was hidden from view.

But to get there, Yelp has to enable features that are available for all and settle for a piece of transactions on a pay for performance basis. Otherwise, it can never get the mass market acceptance that’s needed for consumers to think about using them for transactions.


Coupons and promotions will dominate local advertising according to Borrell, there is still room for Yelp to command market share in the business, but it needs to expand out to get close to the transaction. It seems like it’s already eying the space. And with the Yelp app gaining in mobile traction and 88% of local ads to be delivered to a mobile device by 2016 (Borrell), Yelp seems to have a lot of the pieces.

Yelp CEO Jeremy Stoppelman Says Yes to Local Commerce

The strategic move to local commerce is more than assumption. At the Le Web conference, CEO Jeremy Stoppelman made it explicit when asked by interviewer Loic Le Meur whether the next logical step for the company could be to start actually selling products.

“I think that is an interesting direction, and it’s one we’ve got a toe in the water, but I see a lot of potential, and that is, we have all these people that are essentially shopping online for something offline, and so why not offer those consumers a way to close the transaction? We already do that with OpenTable Top Tables, so you can book your reservation from your iPhone or your Android device.”

“This is an area that we’re interested in,” he continued on saying that the way to think about it is “Yelp as a platform.”

“We’re aggregating all these consumers. They’re doing their shopping today, and the problem is that they’re just not closing their transaction. And so you can imagine that you might be able to plug in services like OpenTable for all sorts of verticals, and that could be a really interesting business for us.”

So there you have it. Get ready for Yelp in direct local commerce.