Yelp has bought European competitor Qype for $50 million. Qype was founded in roughly 2006 in Germany but the UK is probably its strongest market. In the past the site has sometimes been described by North Americans as the “European Yelp.”
As Yelp entered Europe and developed greater brand strength Qype began to stall. Yelp CEO Jeremy Stoppelman said in a blog post, announcing the acquisition, that Qype has “more than two million reviews of local businesses” and 15 million monthly uniques. But that number is down from 2010, when the site reported 17 million uniques.
Yelp wants to accelerate in Europe; Qype’s growth story is probably over. Therein lies the logic behind the acquisition. (Yelp will be speaking at the upcoming Local Social Summit in London; a small number of tickets are left.)
Foursquare has over the past year moved away from being a “social networking” site to becoming a local search utility. Over time, if it doesn’t get acquired, Foursquare may have the brand strength and reach to be an effective challenger to Yelp. Right now, however, it has become a global-local game of Google vs. Yelp among consumers (putting aside important verticals such as TripAdvisor or OpenTable).
Online yellow pages traffic is basically flat with some exceptions in individual markets. Bing sees lots of traffic as a search engine but the company now has a content deal with Yelp. Apple’s maps and local search deal with Yelp has also given the company a big boost and more visibility.
As we just learned this week Yahoo says it’s not going to invest in local (though it wants to compete in mobile search). And although what actually happens with Yahoo and local remains to be seen, absent some new deal or source of vitality the site will continue to fade as an important local search destination and traffic source for marketers.
Facebook has yet to really make any kind of credible move in local for consumers or advertisers. Twitter will do more with SMBs (and by extension local) over time but right now not much is going on there.
Of course Google unsuccessfully tried to buy Yelp before the latter went public, resulting in Google’s later acquisition of Zagat. Yelp has had its share of troubles with SMB advertisers (see: class action lawsuits) but overall the site continues to grow and be a major local search staple for consumers — resulting in gaming efforts by frustrated SMBs.
In the confusing and complex “local search ecosystem,” local marketers and business owners want to focus on fewer rather than more sites and channels. Unless the direction of the market changes, for more and more of them it will be: Google, Yelp and Facebook. Where local is concerned everybody else becomes part of “other.”
Do you disagree? If so, why?
October 24th, 2012 at 8:01 pm
Depends how you define local. If it’s local restaurants then yes. if you broaden local to include accountants, architects, interior designers, realtors, etc. then no. Neither Google nor Yelp do a good job helping me find a great accountant or architect. Eg: http://goo.gl/9ilBK
October 24th, 2012 at 8:18 pm
Not a question of who actually does the best job . . . but it’s about consumer mindshare/brand awareness. That’s my point.
October 24th, 2012 at 8:41 pm
Aren’t brand and performance two sides of the same coin? Yelp does the best job with restaurant reviews and therefore is the best known consumer brand for restaurant reviews.
My point is that neither Google nor Yelp have good consumer mindshare/brand awareness wrt local service providers beyond restaurants. Since nobody yet dominates there is an untapped local opportunity for either of the above or someone new to establish themselves the brand leader.
October 24th, 2012 at 9:16 pm
I would say not just restaurant reviews re Yelp. Usage is broader than that. However there is an opportunity with “less sexy” service verticals. But that’s been true for some time and its hard to find category winners
October 25th, 2012 at 3:14 am
Yelp have done a phenomenal job over recent years.
After Google decided against buying them, it didn’t look like Yelp would have much of a future.
October 25th, 2012 at 6:47 am
I agree that it’s already too complicated and that all small businesses probably long for the days when it was “just buy the biggest YP ad you can afford” and that was 75% of the marketing plan… So yes, less is more.
I also agree with Malcolm that there are so many areas that are underserved-from poor knowledge, uptake, investment on the smb side and horrid service on the few “big data” providers side. Tough when things are changing this fast. While some are deciding whether the ROI is there – their business crumbles under them.
Opportunities abound – even for experts to further specialize into these under-served market niches… processing… Great article Greg.
October 25th, 2012 at 5:44 pm
Yahoo buying Stamped today is an interesting development and apropos to this discussion. Could give them a local/social/mobile play in local restaurant/store discovery that could challenge Google and Yelp if developed properly.
October 25th, 2012 at 6:04 pm
I too see Google and Yelp as the current local powerhouses but I’m not counting out moves by Apple or Facebook in the next couple years. However, Yelp hasn’t gained my overall search confidence yet for a couple reasons. 1) As far as restaurant search goes I recently started checking OpenTable in addition to Yelp after reading Matt McGee’s article about them having more restaurant reviews. 2) I’ve never looked for anything else other than restaurants on Yelp. Google has that covered for me. In summary, Google is my primary search source and all other sites (including Yelp) are still used as supporting sources. From a marketing standpoint I try be involved in all of them for their unique benefits and audiences.
October 25th, 2012 at 6:54 pm
Malcolm: Looks like it’s an “acqu-hire” and that Stamped will probably go away ultimately. We’ll see.
October 25th, 2012 at 6:57 pm
Mike:
Yes, there is lots of opportunity in “vertical” areas to beat Yelp and Google. Apple is relying on Yelp and Facebook will probably do something in local but hasn’t really yet done that much. Facebook is a kind of sleeping giant here. Sandberg gets it. Execution and priorities are the questions with Facebook. For example Q&A could have been great for them. They failed to properly develop and position it and recently killed it.
In terms of “horizontal” local search players, however, there really aren’t any others to challenge Google and Yelp right now.
October 25th, 2012 at 7:00 pm
I’m still constantly amazed at how few people know what Yelp is. With Locable we talk with publishers and business owners from all around the county and not only are local businesses unfamiliar with Yelp but some 30-40% of publishers (in the media business) are not familiar with Yelp.
Clearly Yelp has built a great brand and has tremendous recognition in major metros particularly with nightlife and dining but it seems to have trouble crossing the chasm – at least in mindshare.
October 25th, 2012 at 7:05 pm
Brian:
Given what you said who does have mind share beyond Google then?
October 25th, 2012 at 7:15 pm
Google is definitely in the driver’s seat from a pure brand awareness perspective though it seems they struggle with “relevance” – at the perceptual level. As if the web/real-world bridge hasn’t been built yet.
I’m clearly biased, we’re building our business around established local publications that have readers, relationships and relevance in their community. We partner to build out the digital component while extending what they’ve already built.
We’re not exactly competing with Google and Yelp but at the same time we are in terms of becoming a local resource online. They both have an issue with SMB acquisition, we don’t have the same challenges.
My guess is that the landscape will remain surprisingly fragmented – at least by geography – for years (I saw a business plan this week from 1998 which stated “finding local information online is still difficult” – sounds familiar) yet I think a companies will embrace coop-etition more to share data via api’s etc in attempt to see all ships rise with the tide.
October 25th, 2012 at 8:07 pm
When discussing dominance, you also have to consider desktop vs. mobile. Google might dominate restaurant searches on the desktop, alongside Yelp, but not so much on the iPhone segment of mobile where it’s now either the Yelp app or the Yelp data embedded in the iOS Map app.
October 25th, 2012 at 11:22 pm
I’m no Google partisan but Google Maps is the top local search app according to Q1 2012 comScore data and the top travel app according to Q2 Nielsen data. So Google is there in the app world in the form of maps.
But that will change obviously now with Apple Maps, unless or until Google releases its own native iOS mapping app.
October 26th, 2012 at 3:28 am
Who else agrees that Desktop search and traffic is disappearing quickly.
In 3-5 years all significant traffic will come from mobile and tablets. Given this its hard to see that any local player will dominate unless they have native integration with Android or IOS.
October 26th, 2012 at 3:42 am
I wouldn’t say desktop search is “disappearing,” but it has flattened. Volume-wise it’s quite a bit larger still than mobile but ultimately mobile (apps + mobile web) will outpace it.
October 26th, 2012 at 5:31 pm
I just checked some analytics of organic traffic sources for our small marketing firm:
Google 94%
Yahoo 4%
Bing <1%
So if Yahoo is about to head south for the winter, then it's all Google, all the time, in every way.
November 4th, 2012 at 5:41 pm
Hi Greg,
While I agree with you that today it’s a Google-Yelp competition for local search, I believe that the evolution of local search will continue in a direction of increased fragmentation towards the vertical markets.
Sites such as Angies list, Healthgrades.com, WebMD.com, Tripadvisor.com, opentable are becoming increasingly important to consumers looking for specific information and reviews/recommendations in choosing a service provider.
I personally use, tripadvisor or booking.com for hotels, Yelp and opentable for restaurants, angies list for contractors and the aroundme app (localeze based) for the closest “whatever” when I’m out on the road. Google stays on my desktop for the most part. Like most, I look at reviews if I don’t have a personal recommendation and sometimes even if I do.
BTW, how can Yahoo claim they are more interested in Mobile than Local?? Is that even possible? I don’t believe it is.
Thanks for another great article!!
November 4th, 2012 at 6:33 pm
Brian: I agree that key vertical players will continue to be important and that’s where the opportunity appears to reside in the market at the moment. Apps in particular disintermediate Google on mobile devices if the UX and brand are strong enough (e.g., TripAdvisor, OpenTable, Kayak, etc.).