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How Could Yelp Lose Money?

Discussion in 'BlackHat Lounge' started by bluehat23, Mar 3, 2012.

  1. bluehat23

    bluehat23 Registered Member

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    Its a text based site where people provide all the content for them. yet they lost $17 million last year on $83 revenue...
    where are the costs..

    their hosting costs cant be much, the sites pretty simple.

    everybody who goes there is looking to buy something.. i dont get it

    they spend "70% on sales and marketing" does that mean ad sales guys who cant sell?
     
    Last edited: Mar 3, 2012
  2. steelballs

    steelballs BANNED BANNED

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    They followed the US Government Business Model which has lost over $15 Trillion!

    This happens when people do not know what they are doing so you need to dig deeper into what is going on at YELP!
     
  3. Nigel Farage

    Nigel Farage BANNED BANNED

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    Yelp is consistantly one of the best backlinks I get for my local clients. I rank it in the "top 5" of local SEO backlinks. I would assume all that SEO costs money, and I wonder how they get it.

    How does a large effort like Yelp do SEO? Are they buying .edu and .gov backlinks on BHW, like everyone else?
     
  4. artizhay

    artizhay BANNED BANNED

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    Well when you say their hosting can't be much, are you saying that in comparison to your own hosting costs or as a percentage of their revenue? Despite the site being "simple," the main factor here is they have to support the millions of visitors which does add up to very high hosting costs, though overall not a very significant percentage of revenue.

    As far as everyone going there looking to buy something, the people are looking to buy something from local businesses, not from Yelp. Though Yelp could monetize this by offering some sort of business service where it allows businesses to sell directly from Yelp for a monthly fee or a percentage of revenue, though this somewhat parallels daily deals which Yelp has already dropped out of.

    All I could find about their actual operating costs is that "critics have questioned Yelp's high operating costs," which I would too. If the 70% of revenue going towards advertising is accurate, I must say that I don't think I've ever seen a Yelp ad...
     
  5. BlackHades

    BlackHades Newbie

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    They're probably growth focused right now. Trying to get the site as big and popular as possible before trying to turn a profit. Same route as facebook or youtube.
     
  6. honzarox

    honzarox Junior Member

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    The site did not get to where it is by just building it and people providing their information for free. I assume they have a very large salesforce for every city they are in [so pretty much every larger city].

    They are Headquartered in 3 cities: NY, San Fran and Phoenix. Doing a google search, I got around 800+ employees. Its a very big company. They need people reviewing the listings, trying to get ads, advertising etc.

    Their online Ad system doest seem to be very profitable. When u search for a listing, you get Deals and other lisitngs near by, but those are not ads. So, I think the real question is, if you put your info there for Free, their ads [compared to FB, Google etc.] are almost non existent. How do they MAKE money?
    They should sell like the first position in the "Listings near by" via an ad system. I think they are big enough so that people would not run away...
     
  7. bobbylove321

    bobbylove321 BANNED BANNED

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    Yelp is essentially an extortion site based on a scam, which is why it will fail in the long-run.

    If you do not pay them, often times they give you bad reviews for your business.

    There are many business owners that have been contacted to "pay up" or else receive bad reviews.

    So I would not be surprised if they have a lot of lawsuits on their hands.
     
  8. ryanjm

    ryanjm Junior Member

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    ^^^This. It makes sense that they want to dominate the "business review" category and make sure that they have as much exposure and market saturation as possible. Once that happens, and people are used to checking their site for reviews of businesses, they won't need to advertise as much and can start to rake in the profits.
     
  9. bluehat23

    bluehat23 Registered Member

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    yellow pages makes money..

    whats the difference?

    they could sell template micro sites like YP

    they could help people build sms lists

    they could have click to call for cell phones.

    they could white label food delivery services..

    or partner with them..

    people order through yelp and they get a percentage

    theres things

    deals are promoted on the merchants page and in the "deals" section

    not email or sms

    its stupid.

    exactly

    iits shitty salespeople

    they should just do adsense
     
    Last edited: Mar 3, 2012
  10. dryheat360

    dryheat360 Regular Member

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  11. lablinks

    lablinks Senior Member

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    I have first hand experience with them, their staff literally sucks. Their business model is ripping people off, that's why they don't get shit.

    I had to cancel agreements for several businesses that got sucked into advertising with Yelp. The return for all of them was a big fat ZERO. They aren't willing to work with people or negotiate or do anything to bring something to the table. The bottom line, it provides no real value for advertisers & that's why they loose money.
     
  12. Nigel Farage

    Nigel Farage BANNED BANNED

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    Whatever Yelp may be doing, I think it is a bad idea to assume that all these "named sources" that are "on the record" are telling the truth. If, for example, a business owner lacks a certain level of sophistication and doesn't understand what IP Addresses are, and that some of them are static, and they post several "fluffy" reviews for their business, Yelp (and any other site) could tell that these reviews have all come from the same IP, and then legitimately reject them.

    It's natural for a business to want to "fluff-up" their reviews, and it's also natural to act as if they had nothing to do with their creation; safe in the false belief that no one can know that multiple reviews were all done by the same IP Address, probably the same person, and also probably by someone directly connected to the Local Business, such as the owner.

    And when their fake, spammed reviews are deleted, attention is redirected away from the dishonesty of the business owner, and becomes instead some kind of massive extortion attempt by Yelp. When trying to decide which scenario is more likely, I'm inclined to believe "A", that the business has been cooking the reviews, and then expects Yelp to fix their problem (for free) when someone posts an honestly negative review.