Wednesday February 11, 2009
But is Yelp also a shakedown racket for merchants? Some restaurant owners say the San Francisco company is unusually aggressive in trying to get businesses to pay hundreds of dollars in monthly "sponsorship" fees to improve their ranking in search results and to move their most positive review to the top of the page.
They also say paying Yelp is often the only way to counter negative
reviews posted by rival eateries -- a common digital-era practice,
business owners say, in the highly competitive restaurant industry.
"We felt like we had no choice," Jamie Inzunza, owner of Mamma’s Brick Oven Pizza in South Pasadena, said of the $350 she pays Yelp every month. "We decided that we had to spend all this money to protect ourselves once the bad reviews started appearing."
Jeremy Stoppelman, Yelp's chief executive, said that with more than 5 million reviews on the site, it's only natural that some businesses would be displeased with what's being written about them. About a third of the reviews are for restaurants.
Stoppelman said Yelp doesn't strong-arm merchants and that the site's sponsorship program -- its main source of revenue -- doesn't offer "pay for play" to advertisers.
"There are a lot of reasons for business owners to spread false rumors about Yelp," he said. "Those that get a bunch of negative reviews suddenly have a bone to pick with us."
Tell that to Tom Mulvihill, owner of Thai Issan restaurant in Cerritos. He received a letter from Yelp last summer informing him that his business had earned a rating of four stars out of five.
"It's official -- people on Yelp love you!" the letter said.
Shortly afterward, Mulvihill said he received a call from a Yelp saleswoman urging him to pay a minimum of $150 a month for sponsorship.
"She said sponsorship would allow us to hide the negative reviews and elevate the positive ones," he recalled.
Mulvihill declined. Three weeks later, he said, his restaurant's rating dropped from four stars to 3 1/2 , where it remains today.
Hardball sales tactics? Maybe. Or maybe, as Stoppelman said, "reviews come and go for businesses all the time."
Also, for every disgruntled business owner out there, there's another who's had a good experience with Yelp.
"It may not work for everyone, but it's working for us," said Carlo Lomeli, owner of Lomeli’s Italian Restaurant in Gardena, which pays $250 monthly for Yelp sponsorship. "My customers are knowledgeable about the site."
But Yelp-savvy customers also mean Yelp-savvy competitors. Inzunza at Mamma's Brick Oven Pizza said she noticed last year that every time a nasty review appeared on the site about her restaurant, a glowing review popped up for a pizza place down the street.
"We decided we had to advertise on Yelp because we wanted to make sure we could play up the good reviews," she said.
Yelp sponsors are able to move their best review to the top of the list. The heading over the sponsored review says this is one of the business' "favorite reviews."
An advertiser's restaurant also may top the search results whenever a Yelp user searches for similar establishments -- that is, someone looking for pizza in South Pasadena would be more likely to see Mamma's Brick Oven Pizza at the top of the page than a non-sponsor restaurant.
Now that her business has received more than 90 reviews, Inzunza said, she no longer feels it necessary to pay for sponsorship. She said she would be canceling as soon as her contract expires.
On the other hand, Joompong Kongchareon, owner of Joom Bangkok Cafe
in Los Angeles, is taking no chances. He said he decided to pay $300 a
month for Yelp sponsorship after a salesperson from the website called
"over and over" shortly after his restaurant opened about a year ago.
"If you don't give them money, maybe they will put a bad review up high," he said. "That would hurt my business. People come to us from Yelp.
My feeling is that Yelp offers an impressive service for both consumers and merchants, but the site could do a better job on the transparency front.
How many users, for example, know what it means when a company is identified as a "Yelp sponsor"? How many people know that a business has to pay to have a "favorite review" topping the list?
Yelp's Stoppelman pointed out that by clicking on a "what's this?" link accompanying a sponsor's "favorite review," users are informed that "Yelp sponsors can highlight one of their favorite reviews at the top of their business page."
He said this language makes clear that money has changed hands.
"Sponsor means advertiser," Stoppelman said. "It's a synonym."
He also repeatedly said that Yelp is merely following in Google's footsteps when it comes to selling placement to advertisers, although he insisted that "Yelp has far more disclosure than Google does."
Maybe it's me, but I find Google's search results to be different from Yelp's user-generated reviews.
Do a Google search for "cellphones" and you'll see highlighted "sponsored links" at the top of the page, as well as sponsored links down the right side, separated by a line from the main search results.
I have no trouble distinguishing between what advertisers have paid for on Google and what's the real deal.
A search for L.A. pizza restaurants on Yelp produces a similarly highlighted sponsored result, but it's lumped in with the unsponsored results.
But the real issue is the reviews. I believe Stoppelman when he says Yelp doesn't punish non-sponsors by moving up negative reviews, despite what some merchants might think.
He said there's a secret algorithm at work, resulting in occasionally scattershot placement of reviews rather than, say, chronological order.
Yet I think sponsorship would be more easily understood by including a prominent link to a page explaining that a sponsor pays Yelp cash every month to be more visible in search results and to move its rosiest review to the top of the heap.
As it stands, Stoppelman said, fewer than 1% of all reviewed businesses on the site are sponsors. But he also acknowledged that privately held Yelp has yet to turn a profit, and that doing so hinges on increasing the number of sponsors.
With a business model like that, why settle for anything less than complete candor?
David Lazarus' column runs Wednesdays and Sundays. Send your tips or feedback to email@example.com.