Yelp: We compete with print -- not Google or Facebook
The business-reviews site thinks Internet businesses may pose a threat to its local advertising business -- in 10 years.
Google, who? Facebook, huh? Yeah, that's right. The Internet behemoths don't pose any threat to business-reviews site Yelp and its still-blossoming local advertising business. Well, that's Yelp's attitude anyhow.
"Today, we're really competing with print, radio, and television," Geoff Donaker, Yelp's chief operating officer, said Tuesday when speaking at the Morgan Stanley Technology, Media, and Telecom conference.
But what about Internet businesses like Google and Facebook? Donaker is sure the pair will compete with Yelp in the local advertising arena eventually -- emphasis on eventually. Yelp will let that battle "play out in a decade or so," he said.
Donaker's stance hinges around this point: A tiny fraction of the 50 million local businesses in the Western world are spending on online advertising. They pay to advertise, he said, but primarily through more traditional mediums such as the Yellow Pages and ValPak.
Yelp counts close to 1 million business accounts, and 40,000 of them purchase ads to get their venues featured in front of consumers searching for dentists, doctors, plumbers, and so forth. Chief Financial Officer Rob Krolik said, however, that Yelp is uniquely positioned to attract tens of millions of local merchant customers. Currently, the conversations the company has with would-be advertising business owners are not about Google at all, he said, but instead about how much they're spending on ValPak coupons.
The we-don't-fear-Google assertions are a bit odd considering Chief Executive Jeremy Stoppleman's well-documented dislike for the search giant, a company he has described as evil. Nor do they match up with Wall Street's beliefs. Investors punished Yelp as soon as Facebook announced Graph Search, a social-network search engine that, in helping people find nearby businesses on Facebook, could eat into Yelp's chunk of the local advertising pie.
But ask Yelp about Graph Search and you'll likely hear a giant yawn, and a small dig.
It's no big surprise that Facebook has gone this route, Donaker said, indicating that Yelp is taking a wait-and-see approach to Facebook's search product. He couldn't help but add that, as it stands, Yelp doesn't receive any "material level of traffic" from the social network.