All the info you need to understand advertising on Yelp and its potential for your business.
Growing up, many of us may have used a Yellow Pages directory to find a local business. Back in those days, the most successful businesses in the YP either had a household name or their business name started with the letter “A” thereby ensuring their listing would appear toward the beginning of the book. Technology has turned that search process on its head. Consumers increasingly perform searches using services that are enhanced with rich data like GPS and user-created content like Star-Ratings and Reviews written by our friends and peers.
Yelp is probably the best known of these services. In recent years, Yelp has become one of the most widely used business-review services; it’s only natural to wonder if you should be advertising on it.
So, you probably have questions:
- How does advertising on Yelp work exactly?
- How do you get good reviews? How do you avoid bad ones?
- Do prospective clients even use Yelp to find businesses like mine?
I wrote this article to attempt to answer these basic questions and more in order to help business owners and marketing managers make good decisions regarding initiating a Yelp campaign. I don’t cover everything Yelp offers; specific business-case questions should be directed at a Yelp employee. What I do is lay out relevant details of Yelp’s ecosystem along with tricks and advice that I think you’ll find helpful. At the end, you should be able to describe Yelp and Yelp Ads to the less Social Media savvy and maybe even make a pitch for funding to get your company to try it out.
What is Yelp?
Yelp was founded in 2004 to help people find great local businesses. Members of the Yelp service (“Yelpers”) create reviews of company products and services, which results in a star-rating for the business thereby helping others also using the Yelp service to make spending decisions. Yelp uses automated software to recommend the most helpful and reliable reviews for the Yelp community. The software looks at dozens of different signals, including various measures of quality, reliability, and activity on Yelp. The process has nothing to do with whether a business advertises on Yelp or not. Learn more here.
Yelp has done studies focused on how people use their service and the effect that Yelpers have on a company’s bottom line. They have found that 4 / 5 users visit the site when they are preparing to spend money. 55% of Yelp users take action with a local business (call, visit or purchase) frequently or every time they visit the site. 90% of those people take action within a week. The demographic of Yelp users is highly desirable as well. Yelp users are educated and affluent; the bulk of the demographic trending towards 25-34 year-old high wage earners with a grad school degree. See the Nielson Study Infographic here. See a Boston Consulting Group survey results summary by Yelp here.
Now, if you’re like me, you read the two paragraphs above and immediately thought “Well, anyone can commission a study that shows they’re wonderful”…unsurprising really given that Yelp has a vested interest in demonstrating how great they are in order to secure my advertising dollars. As with most hype, I take Yelp’s numbers with a grain of salt. But anecdotally, I can tell you that most people I know with an iPhone (myself included), use Yelp regularly to do quick hyperlocal searches (for restaurants most often), but also for other services like dry cleaners, insurance, flowers, etc. (Note: “Hyperlocal” is a relatively new term which refers to a blending of mobile data and GPS technology which allows you to receive search results including distance to the target.). And if my friends and I have never been to a particular shop before, we may spend time looking at any Reviews left on that business’ page. Sometimes the review is negative and may save us an unpleasant experience. And sometimes it is positive and calls out some new product we need to try or advises us on the best person to deal with once at that business establishment. Either way, I feel that Yelp accomplishes its core mission of helping people I know find great local businesses..
So let’s assume that by now you know what Yelp is all about. You’ve used the service to search for a business, and now you’re wondering “How can I get my business to show up on the first page of results?”
Yelp Result / Review basics
As stated above, Yelp uses a very complex algorithm to decide how to sort businesses for display. Some have accused the service of abuses designed to get companies to pay them advertising dollars. I’ve read stories of Yelp employees hiding good positive reviews from a non-advertising business’ page, not hiding bad, supposedly fake reviews, not showing a business’ response to a bad review, etc etc. While I was not involved in creating Yelp’s program, I can make educated guesses as to how it works and my conclusion is that it isn’t perfect and they are likely engaged in improving it on a quarterly basis. That being said, absent any FBI investigation or class-action lawsuit we will assume that their computer program works in the most fair way possible. Which brings us to a couple key facts regarding Results and Ads in general:
- You cannot buy the #1 – #10 spots that show up when people search for local businesses like yours. These are called “organic” search results and they are generated by the Yelp algorithm.
- You cannot change or reorder reviews which are left on your page.
- You can respond to reviews as the business owner either publicly on your page or privately by messaging the reviewer.
- If you advertise, your Ad shows up above all other results, and also on competitor’s pages.
Yelp Ad Programs
The service has two main programs under which a business can advertise. Both programs have the same ad placement locations (above all other results and also on competitors’ pages, as well as leaving your own page without advertising by competitors. Yelp keeps an ongoing count of how many advertising opportunities it has on its site by calculating inventory amounts according to the search terms you specify and the zip code the search is done in. These inventory “slots” are available for purchase either exclusively (impressions) or non-exclusively (Cost-Per-Click), and there are upsides and downsides to each method of advertising.
Typically, those with larger advertising budgets go with Impressions because A) It’s guaranteed advertising B) No limit on the number of new clients that will be passed to your page. The downside to Impressions is an ad shown twice to the same user counts as two Impressions and you may blow through your entire budget quickly without anyone actually clicking through to your page. On the other hand, Cost-Per-Click or CPC works on a bid system where the highest bidder will get more Impressions and therefore more chances at getting a new client’s business. You are billed when the prospect actually clicks on your ad, not by the Impression. Of course, there’s no guarantee that this person that viewed your page will actually become a new client, so it’s possible you may blow though your entire CPC budget and never see a single conversion. With both methods, it’s important to know what a new client is worth to you because you will be paying a varying price to obtain that client. Also of note, with both programs the maximum advertising radius for a business is 20mi out. I feel that may be too far, but Yelp probably does this so that they can have more inventory available. Just something to be aware of. And now, here are some more important details about each program for your quick consumption:
- Impressions Ad Program
Advertising Radius: 20mi.
Cost: Varies depending on number of impressions
Recommended budget: $550/mo for 1,200 impressions. Yelp estimates 2% click-thrus = 24 Clicks
Includes Video production, video hosting, picture slideshow, competitors ad removal, tracking and Account Manager.
Using this program, you are “reserving” those slots for your advertising.
- Cost-Per-Click Ad Program
Month-by-Month (12-month term usually)
Advertising Radius: 20mi.
Cost: $200/mo ($50/mo + Ad Budget)
Recommended bid: $8.00 / Click
Recommended budget $150/mo = 18 Clicks
You only pay for actual clicks on your ad
No guarantee as to # of impressions despite it being in Yelp’s best interest to max out your monthly advertising budget. Their ad display algorithm will increase your exposure as you win bids for clicks, but you’re constantly competing with other local companies for the available “opportunities” in the Yelp inventory.
Includes picture slideshow, competitor ad removal, Call-To-Action button and Account Manager. Video Hosting optional ($50/mo)
Note: Some businesses have had success negotiating to run a 3 or 6 month CPC campaign instead of agreeing to a 12-month term.
Note: If you want deeper tracking of your campaign, Yelp offers a service called Telemetrics (phone call analysis). For a fee, they will setup a phone number for you to use on your page with a local number. That number, when called by a prospect, routes through Yelp to your office and allows Yelp to offer you call tracking metrics such as # of calls, call duration, etc so you can see how well your employees are handling the fruits of your Yelp labors.
For the business without a Yelp presence already:
At this point you may be considering a campaign. Not so fast. Do you even have a page setup? And before you write Yelp a check, you must first determine whether Yelp will be of value to your organization.
Ask yourself these questions:
- How much am I willing to spend to aquire a client?
Only YOU know how much money a new client is worth to your business, and subsequently you know how much you can spend on your marketing in order to aquire that client. Make sure the expense makes sense.
- Am I able to provide quality service to my clients consistently?
This may seem like a no-brainer, but unhappy clients drive the majority of new sign-ups on Yelp. Reviews by angry users will make you look bad and ruin your rating, making any advertising you do on Yelp afterward less effective.
- Does my business need to have good reviews first?
Before you advertise on a recommendation-driven service, you need to have (good) recommendations or risk your advertising being ineffective. You will need to locate current or past clients of yours who are A) Yelp Users and B) Satisfied, who you will then lobby to produce a review for your business. Locating them can be challenging, which is why I’ve created an article to guide you in mining your client database for existing Yelp users.
Before you advertise…you will need to do some work. You need to setup your Yelp page, figure out how you’ll track the prospects coming from Yelp, post a “Find us on Yelp” sign in your office (portrait, landscape), plan out messaging to your existing clients that encourages them to leave reviews (and push that message periodically so that you don’t end up with only a couple stale old reviews), and figure out where your business currently ranks in the organic search results so that you can measure the bump that advertising on Yelp gives you.
A word of warning
Not all Yelp reviews are created equal. Many is the business which tried to boost their company’s reputation by having friends and family sign up for new Yelp accounts and provide the business a positive review. Yelp has an algorithm for that. They won’t even show up on the page, let alone count for anything. You may do more harm than good…at the very least you will waste your time/effort. Yelp users are organized into “classes” depending on how much content they’re created and how often they review, etc. These content creators thrive on sharing their opinions and experiences. They are encouraged to create content by Yelp through a reward system that offers such things as badges attached to your Yelp profile and special, “Yelp Elite”-only events held periodically to name a few. These hardcore members are the ones you need to connect with if you hope to boost your search results ranking. More information about finding Yelp users can be found in this article I created especially for business owners and IT professionals.
Note: I do not work for Yelp and I do not hold any position in Yelp.
Thanks for this very informative article, Mitch!
Pure brilliance. I don’t think people realize how valuable and needle in the haystack this post is. THIS IS NOT NORMAL STUFF!!!
the maximum target radius is 20 miles, but is there a minimum range? what if I only want a 10 mile radius? or 5?
Ask Yelp and let me know!!