Yelp Revenue Jumps On National Performance Ads, Transactions
Yelp has had a ‘message a business’ function through its Request-A-Quote service for years. But with 4.5 million consumer inquiries during Q4, it’s becoming a significant revenue driver.
Yelp’s year-plus turnaround continued into Q4, as the local guide is less reliant on local dollars as national, self-serve performance based revenue experienced double-digit gains alongside growth of its “transactional” businesses like Eat24, YelpNow, SeatMe, and Request-A-Quote.
During Yelp’s earning conference call with analysts, CEO and founder Jeremy Stoppelman called all these efforts around driving more dollars from mobile and app platforms as early innings.
Yelp Gains As Location-Based Marketing Gains
In particular, Stoppelman sought to position Yelp squarely in the middle of the rise of location-based marketing and advertising, citing BIA/Kelsey’s recent five-year forecast calling for local ad dollars to reach $172.2 billion by 2020.
“We now have client partners serving our large and growing base of local SMB advertisers, helping them get better results,” Stoppelman told analysts. “To provide large and medium-sized advertisers with greater access to Yelp ads, we’ve started to work with select agencies and resellers. Lastly, we are piloting new products for national and multi-location advertisers to improve their ad targeting.”
It’s Not Just Reviews
While Yelp has been working strenuously to become known for more than its reviews, the major push around “transactional” services like the Seamless/GrubHub rival Eat24, which it purchased exactly two years ago has become much more important in rounding out its overall marketing profile.
And the numbers during the quarter suggests that strategy, along with a move away from display advertising and into performance-based units like self-serve cost-per-click, is working.
- Among the revenue highlights from Yelp’s Q4:
- Yelp’s total revenue grew 27 percent year-to-year in the fourth quarter to $195 million
- Yelp’s core local SMB revenue grew roughly 30 percent year-over-year.
- National revenue growth ended Q4 in the “high 30 percent range”
- Self-serve revenue doubled versus the fourth quarter of 2015.
- The number of Yelp Eat24 orders, Yelp Platform transactions and Yelp Reservations bookings grew 40 percent in 2016 and transactions per user increased by more than one-third.
“Transaction revenue was $16.6 million in the fourth quarter, bringing the total to $62 million for the year and 9 percent of total company revenue for both periods,” noted Yelp CFO Lanny Baker. “Transaction revenue grew 19 percent year-to-year in the fourth quarter, which was slower than in recent quarters.”
Order volume at Eat24, which grew 20 percent year-to-year in the fourth quarter, which Baker said was lower due to recent “marketing plan” changes. Those changes were still taking place in Q4 through the current Q1 period, he warned.
Among the transaction services, the Request-A-Quote feature, which has been around for years, has really started to come into its own in the past 12 months. It was previously known simply as “message a business” that allowed Yelp users to ask for a price of services before making a purchase. But it got the full revamp this in the spring of 2016.
Tools like Request-A-Quote as well as recently celebrated integrations such as its work with mobile platform Nowait, are making the difference in expanding the company’s revenue stream following the year of shifting marketing emphasis from desktop to mobile through 2015.
“With the integration of Nowait, we also added the ability for consumers to remotely join waitlists at approximately 3,600 restaurants,” Stoppelman said. “We were particularly excited to facilitate more than 4.5 million consumer inquiries through Request-A-Quote in its first full year.”
An ad campaign also helped propel Yelp into the top 30 in the Apple App Store in 2016, with app unique devices up 25 percent and page use per user growing approximately 20 percent compared to 2015, Stoppelman added.
Focus On In-App Messaging
The primary goals Stoppelman outlined for this year involve driving usage and engagement. To do so, Yelp will invest heavily in product and performance advertising.
“Coming into the year, we’ve started allocating a greater proportion of our advertising budget to direct marketing with the objectives of increasing app usage, spurring transaction volumes and attracting new business customers to Yelp,” Stoppelman said. “With mobile users already generating the majority of new content and ad clicks, driving mobile activity should also increase the value of Yelp to consumers and businesses.”
Expect a significant effort on focusing on in-app messaging to connect consumers and local businesses. Yelp is also adding refined search options — such as the ones it offered during the brief Pokémon Go craze last summer — and adding social features that promote more content sharing.
When asked about marketers’ and consumers’ current interest in the variety of voice-activated searches — which tends to be closely linked to local consumer spending — and digital assistants like Apple’s Siri and Amazon’s Alexa, Stoppelman said that Yelp would naturally benefit. But at the moment, there was no formal plan to integrate with digital assistants.
“We do find it to be a compelling way to interact potentially with Yelp content,” Stoppelman said of voice-activated digital assistants and search.
“Right now the usage on mobile’s a little bit limited, but it is baked into things like Siri. And so if you ask Siri for anything having to do with local, certainly domestically, you’re very likely to get a Yelp answer.
“Also, Amazon has a big hit on its hand with their Alexa — and they chose Yelp content to respond to all the local queries to come in,” Stoppelman added. “So we feel good about our initial position there. We’re obviously very interested in the space and we’ll continue to see where we can play roles. But for right now for all of the obvious places where our content should show up, it is showing up.”