Yelp's First Daily Deal Beats Groupon

by: yipit on September 1, 2010
27 Comments

Yesterday, Yelp ran its first daily deal in San Fancisco and it killed.

Yelp’s first deal was for a massage in San Francisco which are relatively common in the daily deal space– a $110 massage for $49 from the well-reviewed Psoas Massage + Bodywork. (It’s not linked from their home page but you can do a google site search for them).

How did it do? Really, really well. Yelp sold 1,616 deals at $49, or a total of $79,184.

How does that compare to Groupon? Groupon sold three deals in San Francisco yesterday. None of them sold more than Yelp’s in terms of revenue or quantity. In fact, Yelp’s one massage deal brought in more revenue than all three Groupon deals combined. (Groupon’s three deals brought in a total of $67,398 compared to Yelp’s $79,184).

Assuming Yelp pockets 30% (compared to Groupon’s 50%), the company took home $23.8K in a single day. That’s the monthly equivalent of 79 hard-earned small business advertisers on Yelp’s current advertising product.

Yelp’s 2010 annual revenue is estimated at $50 million. If Yelp runs a daily deal across its major markets and gets a grand total of 10 times what they got in San Francisco yesterday, that’s the equivalent of $71.4 million of additional revenue. I don’t have an account on second market; but, if I did, I would be buying Yelp stock right now.

As when we first reported that Yelp was testing daily deals, we believed they had all the components to be a winner in the space. It should also be a wake-up call for other media companies with an audience and authority to step up. (See our analysis on how media companies should offer daily deals.)

Yelp may have finally found its killer revenue stream. What local sleeping giant will wake up next?

(Lastly, we do note that it’s possible Yelp took a lower commission on their first deal to draw interest from a great small business. Regardless, that doesn’t changes the view that Yelp has a clear winner on its hand.)

http://hapnin.com/users/2 theschnaz

Buying local coupons from local sites makes sense to me. So many groupon clones offer no value, expect their deals. No one wants to sign up for 10 deal lists in their city; which is why Yipit is needed.nnWhen I’m on Yelp and looking for something to do, that’s a a great time to offer me a coupon.nnMore local services, that have value w/o coupons, are likely to start selling coupons soon. (If they haven’t already.)nnIt will be harder and harder to start a groupon clone as the competition between companies will increase and the attention per customer is reduced.nnCoupons will be an attractive revenue stream if your service can still offer value w/o them.
http://musarocks.com/users/1 theschnaz

Buying local coupons from local sites makes sense to me. So many groupon clones offer no value, expect their deals. No one wants to sign up for 10 deal lists in their city; which is why Yipit is needed.

When I’m on Yelp and looking for something to do, that’s a a great time to offer me a coupon.

More local services, that have value w/o coupons, are likely to start selling coupons soon. (If they haven’t already.)

It will be harder and harder to start a groupon clone as the competition between companies will increase and the attention per customer is reduced.

Coupons will be an attractive revenue stream if your service can still offer value w/o them.

http://viniciusvacanti.com Vinicius Vacanti

Agree on all points. Especially the one about Yipit being needed

http://musarocks.com/users/1 theschnaz

Ha. Allow me expand on that comment…

I look at Yipit emails and see all sorts of funky daily deal providers. As a user, I’m thinking, who the hell are these coupon sites? I don’t care, that’s your job. I just care about the deals.

How would these sites get my attention, when so many other clones are trying as well?

Now take a site that has value w/o coupons (Yelp or Hapnin.) These sites don’t need to fight for my attention, I’m already there… and that’s the time to offer a coupon!
http://musarocks.com/users/1 theschnaz

Ha. Allow me expand on that comment…

I look at Yipit emails and see all sorts of funky daily deal providers. As a user, I’m thinking, who the hell are these coupon sites? I don’t care, that’s your job. I just care about the deals.

How would these sites get my attention, when so many other clones are trying as well?

Now take a site that has value w/o coupons (Yelp or Hapnin.) These sites don’t need to fight for my attention, I’m already there… and that’s the time to offer a coupon!

http://musarocks.com/users/1 theschnaz

Buying local coupons from local sites makes sense to me. So many groupon clones offer no value, expect their deals. No one wants to sign up for 10 deal lists in their city; which is why Yipit is needed.

When I’m on Yelp and looking for something to do, that’s a a great time to offer me a coupon.

More local services, that have value w/o coupons, are likely to start selling coupons soon. (If they haven’t already.)

It will be harder and harder to start a groupon clone as the competition between companies will increase and the attention per customer is reduced.

Coupons will be an attractive revenue stream if your service can still offer value w/o them.
http://viniciusvacanti.com Vinicius Vacanti

Agree on all points. Especially the one about Yipit being needed
http://hapnin.com/users/2 theschnaz

Ha. Allow me expand on that comment…nnI look at Yipit emails and see all sorts of funky daily deal providers. As a user, I’m thinking, who the hell are these coupon sites? I don’t care, that’s your job. I just care about the deals.nnHow would these sites get my attention, when so many other clones are trying as well?nnNow take a site that has value w/o coupons (Yelp or Hapnin.) These sites don’t need to fight for my attention, I’m already there… and that’s the time to offer a coupon!
http://www.samianrosen.com/ Samuel Ian Rosen

Vin, I agree that Yelp did a phenomenal job and we’re going to see every media outlet with their own daily deal, but comparing deal providers to one another is inherently fallacious. It’s not an apples to apples comparison because there’s variance in the perceived value of the deal (maybe the spa place on Yelp is the best in SF and Groupon’s deals were just so-so that day). Unless Yelp and Groupon do the same deal with the same vendor on the same day, I don’t think it’s a fair comparison. Ok… Yelp beat out Groupon in sales for ONE day in ONE city…but it’s not a fair comparison unless they’re selling the same deal.
http://www.samianrosen.com/ Samuel Ian Rosen

Vin, I agree that Yelp did a phenomenal job and we’re going to see every media outlet with their own daily deal, but comparing deal providers to one another is inherently fallacious. It’s not an apples to apples comparison because there’s variance in the perceived value of the deal (maybe the spa place on Yelp is the best in SF and Groupon’s deals were just so-so that day). Unless Yelp and Groupon do the same deal with the same vendor on the same day, I don’t think it’s a fair comparison. Ok… Yelp beat out Groupon in sales for ONE day in ONE city…but it’s not a fair comparison unless they’re selling the same deal.
http://www.samianrosen.com/ Samuel Ian Rosen

Vin, I agree that Yelp did a phenomenal job and we’re going to see every media outlet with their own daily deal, but comparing deal providers to one another is inherently fallacious. It’s not an apples to apples comparison because there’s variance in the perceived value of the deal (maybe the spa place on Yelp is the best in SF and Groupon’s deals were just so-so that day). Unless Yelp and Groupon do the same deal with the same vendor on the same day, I don’t think it’s a fair comparison. Ok… Yelp beat out Groupon in sales for ONE day in ONE city…but it’s not a fair comparison unless they’re selling the same deal.

http://viniciusvacanti.com Vinicius Vacanti

Agree with you. It’s just a comparison for one day. They may not beat them everyday, but it clearly shows that media companies have a big opportunity.

http://www.samianrosen.com/ Samuel Ian Rosen

oh absolutely — we’re on the same page, and i think there’s a convergence between media / commerce. We definitely saw it with Jack Threads / Thrillist. My prediction: the media companies start buying up the little guys (e.g. scoop street) rather than starting it themselves.

http://viniciusvacanti.com Vinicius Vacanti

Agree with you. That was one the options I suggested on how media companies should enter the space.
http://viniciusvacanti.com Vinicius Vacanti

Agree with you. That was one the options I suggested on how media companies should enter the space.

http://viniciusvacanti.com Vinicius Vacanti

Agree with you. It’s just a comparison for one day. They may not beat them everyday, but it clearly shows that media companies have a big opportunity.
http://www.samianrosen.com/ Samuel Ian Rosen

oh absolutely — we’re on the same page, and i think there’s a convergence between media / commerce. We definitely saw it with Jack Threads / Thrillist. My prediction: the media companies start buying up the little guys (e.g. scoop street) rather than starting it themselves.
http://viniciusvacanti.com Vinicius Vacanti

Agree with you. That was one the options I suggested on how media companies should enter the space.
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http://pulse.yahoo.com/_TQ22CJMH5EQYAHAYIYAH6FIKLM Erap

If you want to see other deal sites all listed in one website, try and visit GroupBuyUnited.com!
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http://grouponclone.contussupport.com Groupon Clone

Yelp groupon….best way to experience your city deal without paying full price.
http://grouponclone.contussupport.com Groupon Clone

Yelp groupon….best way to experience your city deal without paying full price.
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Yelp's First Daily Deal Beats Groupon

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