Wednesday, July 29, 2015

Yelp Needs Help

As far as the stock market is concerned, Yelp is the sound a dog makes.  Earnings don't look so good and the stock price is falling drastically.  But the problem isn't that consumers aren't using the service or that revenue is falling, the opposite is true; the problem is that they are not growing fast enough.  

I am an active user of Yelp.  I use it for restaurant suggestions, I use it for hotels.  I even just looked at online reviews on Yelp for local car dealers.  It is a useful and practical service.  But I can see on the business side, the difficulty they must have in growing revenue.  As it's main charm is social media, users posting personal reviews, companies with great reviews don't need to advertise on it as social media is providing a credible ad message without them paying for it.  And a company with bad reviews may simply want to not advertise on a site that is badmouthing it.  Rather, they can just respond to specific reviews.  So the old adage, 'why buy the cow if the milk is free', seems to come into play with Yelp.

It may be that the future success of Yelp comes from synergy it can create by merging with another entity.  Could Google, Facebook, or Twitter be interested in joining forces with yelp/  It seems that a partner is needed if Yelp is to have future financial success.  For now, I will continue to use Yelp; I love it and appreciate getting important feedback and reviews
on different businesses.

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