Here’s What Really Happened to Yelp Deals

by: on September 1, 2011
11 Comments

While Yelp’s daily deal segment got off to a strong start, things have been getting worse ever since. But, in August, things got dramatically worse as revenue declined 52% based on Yipit Data.

So, what happened?

Over the last 6 months, Yelp has been generating less and less revenue per deal as competition in the space heated up.

In February, they were generating $19K of revenue per deal. By May, they were down to $7K of revenue per deal.

To counteract that, they tried arranging for less deals, presumably to focus on quality. They saw revenue per deal bounce back slightly over the next few months but August fell back down despite doing far fewer deals.

So, not surprisingly, Yelp Founder and CEO, said that they were going to start focusing on getting higher quality deals as opposed to more deals by creating a dedicated sales team to focus on just selling daily deals.

They are also focusing on a self-serve option that’s similar to what Groupon tried with Groupon Stores. Those offers won’t get emailed out and will reside on the business’s Yelp page.

We’ll report back what happens to Yelp daily deals in September and October.

Vinicius Vacanti is co-founder and CEO of Yipit, the leading daily deal aggregator. Yipit also offers a data product which provides historical analysis to the Daily Deal Industry.

  • http://www.amid.com/werd/ Rudy Amid

    Yelp “deals” are a joke. I tried to use them at two local restaurants, and both would not accept them.

  • Anonymous

    I just don’t trust Yelp since they sold out to businesses. When they started, it was about giving people a forum to share their opinions and experiences with small businesses with other users. 

    But soon they realized they needed not users, but *customers*. They chose the businesses who were being reviewed.This is fundamentally counterintuitive. The only way a reviews site works is if people trust the reviews aren’t being manipulated. There are many online accounts of Yelp salespeople offering businesses the ability to delete or bury bad reviews, and/or pick and choose the reviews at the top – my trainer was approached with this pitch as well.

    So what we are left with is a whitewashed site where people can share good experiences and recommendations, not honest reviews.

    Yelp would have been MUCH better off keeping the reviews system sacrosanct and untouchable (except where there’s abuse etc). People today are used to trolls and have a high tolerance for griping. TripAdvisor does it really well by allowing businesses to respond to user reviews. That’s fair. I have no clue if Yelp ever did this, because I just don’t go there anymore.

  • http://twitter.com/cilantrosites Cilantro Websites

    So, I’m curious. Are other companies seeing a growth in daily deal revenue? Or is the entire space seeing a decline? 

  • Booooooooo

    Does someone have a similar graph for Groupon?

  • Billyg

    I am one of those small businesses Yelp has tried to extort money from. What I experienced and continue to experience is shocking. Any small busines that chooses Yelp to do a deal with should seriously reconsider. Do Grouon, Where, Living Social, their are many, many good ones. Why would you support a business that extorts money from small business when you have an alternative. Maybe this is percisely why they are not having success. It would be like organized crime extorting protection money from the small neighberhood businesses and than going back and asking them to buy their kids girl scout cookies, or an ad in the football program. 

  • Bnue always

    Copycat and patent troll Martin Tobias…CEO of tippr (he’s an adulterer as well) I hope this will happen to him next. Tippr is no better than the others and the deals suck. Aak Martin about the employee he got pregnant…r they together? Does she work at tippr anymore? Martin Tobias you are an arrogant fuck face with no balls. You are a chicken shit sneaking around with someone wife. Fuck u Martin.

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  • Glenn T

    ANNOUNCEMENT: 

    We have recently implemented a system to outsmart yelp from hiding our filtered reviews:

    Step 1- first of all, if you’re advertising with yelp, we suggest that you stop doing so and shift that money to optimize your own web site instead

    Step 2- Have a graphic designer make a yelp badge that is placed on your web site. It should say “we have …… filtered and unfiltered reviews on yelp”. 

    Step 3- when a visitor clicks on the badge, it will go to another page ON YOUR OWN WEB SITE (instead of going to yelp’s. (why help them get traffic and rank higher anyways)? 

    Step 4- On this page have your graphic designer get a screen capture (picture) of all your filtered and unfiltered reviews and have them pasted together onto one page.

    Now, all your reviews (filtered or not) will be visible to all your web site visitors. 

    5- put a note on the top that says, “for your convenience we have placed all our filtered and unfiltered reviews on one page to see. If you’d like to go to our live yelp page, click here …………”

    Make the whole page clickable to your live yelp page  so no-one will think you’re trying to hide something or trying to be dishonest 

    Advantages of doing this: 

    1- Your visitors will stay on your web site instead of being directed to yelp’s

    2- Your  visitor can’t click on your competitors 

    3- No more being a slave to yelp’s algorithm

    4- Yelp would not benefit from getting traffic from you and higher rankings on google 

    5- This project cost us less than $150 to implement 

    Just be sure to shift that $300 per month on yelp advertising and put it into KEYWORDS that people will search for. 

    Please pass this along 

  • Cedrick Dunn

    We just launched Maps Marketplace and don’t filer reviews.  The whole site is free so there is no kid of scam possible to get people to remove the bad reviews or to even place good reviews.  It’s worth checking out.

  • Longchamp

     that’s similar to what Groupon tried with Groupon Stores. Those offers won’t get emailed out and will reside