Thursday, May 7, 2015

Yelp Needs Help

Yelp, the local business review company, is not growing as fast as investors and analysts think it should.  As a user generated site of reviews on everything from restaurants to hotels to business services (even services like Photo Booth rentals for events), Yelp offers great search and recommendation for finding what you want near where you are.  But the challenge they face is how to better monetize such a service of loyal users and contributors. 

The Wall Street Journal is reporting that Yelp "is working with investment bankers and has been in touch with potential buyers in recent weeks, some of the people said."  And although traffic to the site is positive, growth may have plateaued.  Still, the company has aggregated a large database of businesses and reviews and has been a useful resource to many, including myself.  As a search engine, it is localized and relevant, and as a recommendation engine, it provides a wide array of reviews, from positive to downright snarky.  Content is king in this regard and they continue to nurture more reviews. 

Perhaps, Yelp needs a partner that can provide them with a larger array of complementary services.  I could see Yahoo and AOL as possible fits, although Google might like to get a hold of them as well. TripAdvisor might also see a strategic fit as well.  With a more strategic partner, Yelp could potentially expand into video content that augments the value of each of the businesses being reviewed.  Currently, Yelp uses photos that are uploaded.  But videos, could open up windows with additional advertising opportunities.  Videos might also encourage more time spent on the site.  In addition, a strategic partner would help drive more efficiencies to both lower costs as well as keep users engaged on more pages across the site. 

Whether Yelp decides to keep going independently or seek a merger to expand remains to be seen.  For now, Yelp has created a must have resource for finding places to eat, shop, and buy. I hope they only continue to grow.