Yelp is an online platform that provides user-generated reviews and ratings for businesses, primarily restaurants and local services. Founded in 2004, Yelp enables users to share their experiences, opinions, and feedback about companies, helping others make informed decisions. It has evolved into a popular review platform covering various industries, offering insights into customer satisfaction, service quality, and overall reputation. Yelp’s influence has significantly impacted businesses, as positive reviews can boost their visibility and customer base, while negative feedback can prompt improvements. The platform’s user-driven nature and broad reach have established it as a prominent source for local business recommendations.
If you visit Yelp’s website or use the mobile app, you’ll realize it is completely free.
So, how does Yelp Make Money?
This article aims to reveal all the revenue sources of Yelp for a better understanding.
Before we begin, here is a brief overview of Yelp!
Jeremy Stoppelman and Russel Simmons | |
350 Mission Street, San Francisco, California, U.S | |
Global | |
Local search, business ratings, and reviews, online food delivery, local homeowner services | |
US$1.1 billion | |
4000+ | |
Yelp |
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What Yelp Provides To Its Users?
Here are five things that Yelp will provide you as a user.
Business Reviews and Ratings
Yelp offers a platform for users to read and contribute reviews and ratings about various businesses, helping them make informed decisions based on the experiences of others.
Search and Discovery
Users can search for specific businesses, services, or products, and discover new places based on location, category, and user preferences.
Photos and Insights
Yelp includes photos of businesses, menus, and products, allowing users to visually assess the offerings before visiting. Users can also gain insights into the overall atmosphere and ambiance of the place.
User Interaction
Users can engage with the platform by posting reviews, photos, and tips, as well as interacting with other users’ content through comments and votes.
Personalization
Yelp’s algorithms recommend businesses based on users’ previous searches, reviews, and preferences, creating a personalized experience tailored to individual interests and preferences.
How Does Yelp Make Money?
I am hoping you understood what Yelp provides to you as a user. Now, how does Yelp is providing all this for free? Let’s understand everything in detail.
Yelp makes money from three major revenue sources
- Advertising
- Premium Profiles
- Transactions
- Other Services
Yelp’s Advertising Business Model
Yelp offers an array of advertising solutions, both free and paid, catering to businesses of all scales. These offerings facilitate precise search-oriented advertising campaigns aimed at extensive local demographics. Yelp’s revenue generation primarily hinges on its business listing and advertising offerings, encompassing revenue streams from partner-sold advertisements, categorized under advertising revenue.
These are the two parts in the advertising model of Yelp
CPC Search Advertising
CPC stands for cost-per-click. This implies that whenever a user clicks on an advertisement, the company that is running the advertising will pay Yelp a certain amount.
It is performance-based advertising, enabling local businesses to feature as sponsored search results on our platform. These advertisements appear on the listing pages of associated businesses, often suggested as “additional businesses.”
Multi-location Ad Products
Yelp provides a diverse range of advertising options tailored for multi-location advertisers. These offerings include Showcase Ads, which spotlight exclusive localized promotions in pertinent search results, and Seasonal Spotlight Ads, designed to emphasize special offerings and promotions aligned with holidays or seasonal occasions. Yelp would charge certain amounts depending on the format and placement of advertisements by the brands.
Yelp’s Premium Profiles Business Model
Yelp provides a few premium profiles for users and businesses that also contribute to its revenue.
Branded Profile
Businesses opt for the branded profile program to secure premium features that elevate their business listings. These features hold particular relevance for these businesses, allowing them to curate their preferred videos and images for an impactful slideshow feature, or simply update their listing information effectively.
Enhanced Profile
The core objective of this product is to eliminate the appearance of ads from other businesses on the business listing pages of enhanced profile customers. This ensures a focused and distraction-free experience for users exploring these listings.
Yelp Verified License
Offered as a paid upgrade, the Yelp Verified License is denoted by a badge on the business listing page. It’s exclusively available to licensed advertisers within the local or home services category. The license serves to validate Yelp’s verification of the business’s trade license, enhancing the business’s credibility and visibility. This distinction not only affirms the business’s licensing but also aids in attracting a greater customer base to its platform.
Yelp’s Transaction Revenue
Yelp generates revenue through commissions on transactions facilitated for its partners. The company’s earnings are driven by several key avenues, including Yelp Deals, gift certificates, Eat24’s collaboration with Grubhub, and its own platform.
Yelp Deals encompass discounted prepaid vouchers that consumers can redeem at local businesses. Whenever a voucher is utilized, Yelp receives a portion of the transaction. A similar revenue mechanism applies to gift certificates, often utilized as gifts rather than personal purchases.
Furthermore, Yelp acts as an intermediary in transactions conducted within the Yelp Platform, contributing to its revenue stream. Through various partnerships, customers can seamlessly make purchases and payments within the Yelp app or website, enhancing user convenience and providing Yelp with a share of these transactions. This encompasses in-app purchasing and payments conducted within Yelp’s ecosystem.
Yelp’s Other Services
There are some services as well that Yelp provides. Here are some of them.
Yelp Reservations
Yelp aids diverse establishments, including restaurants and nightlife venues, in leveraging their Yelp business profiles to offer online reservations. This service is available through a monthly subscription, allowing businesses to seamlessly manage their reservation systems and enhance customer convenience.
Yelp Waitlist
Yelp Waitlist functions as a subscription-based waitlist management solution. It empowers patrons to join waitlists and access estimated wait times, while businesses efficiently manage seating arrangements. Accessible via both in-store kiosks and Yelp’s business listing pages, this service optimizes the waiting experience for customers and enhances seating management for businesses.
Yelp Knowledge
The Yelp Knowledge program grants business owners access to valuable insights from Yelp’s content and historical data. In return for access to this enriched content, Yelp Program Partners charge program fees, ensuring businesses gain valuable information to enhance their operations.
Revenue Distribution Of Yelp In 2022
Advertising | 263.24 | 283.52 | 293.66 | 293.98 |
Premium Profiles
and Transactions Revenue | 3.18 | 3.94 | 3.65 | 3.29 |
Other Services | 10.21 | 11.43 | 11.58 | 11.83 |
Bottom Line
In conclusion, Yelp has emerged as a transformative online platform that influences consumer decisions and empowers businesses to enhance their visibility and reputation. Founded on the premise of user-generated reviews, Yelp has grown into a comprehensive review platform spanning various industries. Its free access to users offers a wealth of information, allowing informed choices based on the experiences of others. Despite its free services, Yelp employs a strategic business model to generate revenue.
Yelp’s revenue is derived from multiple sources, with its advertising model being a cornerstone. Through CPC Search Advertising, businesses pay Yelp for performance-based ads that feature them as sponsored search results. Multi-location Ad Products provide diverse ad options for businesses aiming to showcase special offerings and promotions. Premium Profiles, such as Branded and Enhanced Profiles, offer businesses enhanced features and exclusivity for a fee.
Yelp’s transaction revenue stems from facilitating transactions for partners, encompassing Yelp Deals, gift certificates, Eat24’s collaboration with Grubhub, and its own platform. These commission-based models ensure Yelp earns a share of transactions executed through its platform.
Furthermore, Yelp offers value-added services like Yelp Reservations, Waitlist, and Wi-Fi Marketing, enhancing user experiences while generating additional revenue.
In the competitive landscape of online platforms, Yelp stands out not only as a review source but also as a revenue-generating business with a multifaceted approach. Its diverse revenue streams underscore its adaptability and innovative strategies, making it a pivotal player in the realm of customer reviews and local business recommendations.