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Yelp Takes a Stab At the Deal Space


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Yelp Inc. (YELP) might be losing money right now, but last quarter’s loss was smaller than expected. And losses were actually cut in half from the year before, thanks to increasing strength in local and mobile ad revenue.

According to the CEO of the company, Jeremy Stoppelman, “We have north of 100 million monthly unique visitors, and we’ve got north of 10 million people in our apps every single month – that’s active users. And we have north of 39 million reviews.”

Facebook’s (FB) new feature, Graph Search, might cut into Yelp’s future profits, however. Since it allows people to trawl their network of friends to find everything from restaurants to movie recommendations, users might be less likely to go to Yelp for business reviews.

On the plus side, Yelp is expanding into new territory, by offering ad placements on business’ review pages.

Ultimately, this could be a threat to Groupon’s (GRPN) daily deal space.

You see, Groupon currently swarms your inbox with low-priced deals on activities and dining experiences, in hopes that one of them will interest you enough to make a purchase.

Sure, you can provide it with a detailed profile of the types of deals you’d like to see. But that doesn’t mean you’d be down for that half-price massage every time you get one in your inbox.

For Yelp, the ads will be served to those who are currently looking at reviews of that restaurant or retailer. So they’re people who are already interested at the time – and, in turn, more likely to buy.

As Stoppelman says, “A sushi restaurant can put up a deal, $20 of value for $10. Very simple, they could just do it in their business owner tools on Yelp. And then, at the time that a customer is searching, they’d be able to discover that deal and potentially change their decision because – hey, they can get a discount if they transact right on their Yelp app.”


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Mystic Maggie

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