Heather Hurmiz MKTG 476

1. Heather Hurmiz
MKTG 476

2. What is Yelp?
 Yelp is an American Company website that serves as an
online Urban city guide and helps people find popular
places to eat, shop, drink, relax, etc. Yelp is based on the
opinions of a community of locals and people who have
experienced the place of interest before.
 If one has a good or bad experience at a restaurant for
example, they will “Yelp” their opinion for the public to
read.
 Yelp is a form of “Word of Mouth” marketing.
 Yelp’s Mission Statement: “To Connect People With Local
Businesses”

3. Here’s a Sample…

4. Yelp History
 Yelp was founded in October 2004 by Russel Simmons
and Jeremy Stoppelman to help people find great local
businesses such as dentists, mechanics, hairstylists,
etc.
 In 2008, Yelp grew internationally into countries like
Canada, United Kingdom in 2009, France and Spain in
2010, and Australia in 2011

5. Eco-System In Which the
Organization Operates…

6. Decentralized Organization
 Decentralization is a type or organizational structure in
which daily operations and decision-making
responsibilities are not made by one central figure, but
is empowered by different levels of management.
 There is much decentralization in a network of services
within a company like Yelp. When it comes to
innovation and new business ideas, which Yelp does
much often, this comes from bottom up organization
and different crowds within the company, rather than a
specific member. Yelp innovates and makes its
website better year after year.

7. Decentralization Examples
 Yelp user’s can upload pictures of businesses, foods
they ate at a local restaurant, etc.
 User’s can provide tips to other visitors of the business
 Users of course can write reviews and owners of the
business can reply to the reviews to better their
business.
 User’s can rate businesses based on their experiences.

8. Key Competitors & Partners
1. FourSquare which is a “Check In” application where one would
“check in” to any restaurant or business and allows you to write a
tip or review about the business. It became a competitor to Yelp
in 2009. In 2010, Yelp introduced the “Check In” feature to keep
up with competition.
2. Tripadvisor is also a competitor to Yelp. Tripadvisor serves as a
travel guide. It’s big when it comes to writing reviews about
hotels, restaurants and vacation spots around the world.
3. Groupon: Groupon is a deal-of-the-day recommendation service
for consumers. It became a competitor to Yelp once Yelp started
to offer coupons and promotions.
 Yelp is partnered with OpenTable which allows you to make
restaurant reservations online, and now you may make a
reservation through Yelp.

9. Customer Base
 Yelp’s main customer base would be all “Yelpers” so let me
first start off by defining what a “Yelper” is.
 A “Yelper” is one that usually trusts other people’s opinions
about a local business or restaurant before experimenting it
themselves. This means that the “Yelper” will go on
www.yelp.com, type in the restaurants name for example and
read what people have to say about the restaurant and check
its star rating out of 5.
 In other words, Yelp’s main customer base would be every
consumer and local business. Yelp does not have a main
customer base, they simply try to connect people to local
businesses around the world who take “word of mouth”
opinions into consideration.

10. Stakeholders
 Important stakeholders to Yelp is anyone who affects or
can be affected by the organizations actions. The main
stakeholders include:
 Businesses
 Employees
 Shareholders
 Customers
 Community

11. Decentralization in Eco-
System
 With the use of a decentralized organization like Yelp, it allows
the business to collaborate, coordinate, and compete in the eco-
system
 Decentralization allows for smooth collaboration between
employers, managers, customers, partners, shareholders, and
the community which leads to organized set of outcomes.
Outcomes such as innovations and improvements within the
company.
 Decentralization allows an organization to be easily coordinated
where knowledge, ideas, and information flows from the bottom
to the top of management.
 A decentralized organization leads to better services which is key
when it comes to competitors in the ecosystem.

12. Yelp’s platform
 Yelp’s platform and constant innovation is the
companies key asset. With Yelp’s IOS app (huge
asset), it allows one to search a list of popular places
nearby. This update provides local businesses with
even more reason to maintain a presence on the Yelp
platform.
 Yelp says that nearly half of all searches on its platform
come from the mobile app because consumers now
want to discover new places while they are out and
about.

13. Yelp Funding
 Funding: For Yelp to first get established, it funded
millions of dollars from venture capital agencies.
 In 2005, $5 million was raised from Bessemer Venture
Partners to expand into New York City, Chicago, and
Boston.
 In 2006, another $10 million was raised with Benchmark
Capital.
 In 2008 $15 million was raised with DAG Ventures
 In 2010, Yelp raised $100 million in venture capital from
Elevation Partners to fund an increase in sales staff.

14. How Did Yelp Make Money?
 Yelp generates almost all of its revenue from
advertising-90% of it’s revenue is from both local and
brand advertising.
 Local advertising makes up 77% of its revenue which is
from businesses that want to be featured on Yelp such as
restaurants and clothing stores.
 Brand advertising makes up the rest of the 13% and
brand advertising is display and text ads on Yelp.com
which gets lots of traffic from search engines.
Yelp is currently not profitable, but they believe they will
sustain future profitability.

15. Here’s What the Advertising
Looks Like…

16. Crowdsourcing
 Crowdsourcing is the process of getting work or
funding online, from a crowd of people.
 Crowdsourcing is done on Yelp where Yelp has people
writing reviews on businesses.
 Yelp involves crowdsourcing through a commons-
based production where people donate their time and
effort to provide their opinions of their experiences to
locals and businesses.

17. Yelp and Ratings
 Yelp delivers highly relevant ratings to businesses. It
allows one to rate a business based on their personal
experience. Each paid business listing result contains a
filtered 5-point rating, filtered reviews from other site
visitors, and details such as the business address,
hours, accessibility, and parking and phone number.
 Critics of Yelp may say that Yelp hurts local businesses
because one may only Yelp if they had a bad
experience, or competitors may create fake negative
reviews

18. Effect of Ratings on
Customer Decisions
 In 2012, a study was done by students from University
of California which studied 300 restaurant reservations
and cross referenced them with Yelp Reviews. The
studied found that:
 A half star rating increase from 3.5 to 4 caused an
increase from 30% to 49%, in the sellout rate for 7pm
bookings.
 This study showed what a huge impact just a half star
rating had on a business

19. Yelp’s Revenue Model
 2011 Yelp Revenue Breakdown
• Yelp needs to invest in an
enormous sales force to
generate revenue from
local advertising.
• Yelp also generates profits
through open sourcing as
shown as “other services”
from the customers that
go online on Yelp, use deals
offered and by “Checking in”

20. Intellectual Property &
Ownership
 The intellectual property that comes within Yelp is the
knowledge of the customers that put in their time and
effort to write reviews about a business.
 Once one writes a review on www.yelp.com about a
specific experience they had at a local business, they
capture ownership of the review. Managers of the
business may reply back to the review whether it was
good or bad in order to better their business.