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Are Yelp Sponsored LIstings a Good Deal?

Yelp Ssponsorship Program ReviewI recently spoke with the owner of a nearby Italian restaurant about some options available to her to promote her business online. She expressed a lot of interest about the possibilities, but like many small business owners, she was pretty consumed with the day-to-day demands of running her business. Her head waiter has been away from work for a while, so she barely had a free minute to really think about the information I had provided to her. What she did express was her exasperation with all the phone calls she has been receiving from companies such as Google, Groupon, and Yelp with offers to better promote her business online.

Being a savvy businesswoman and having been in business for many years, she knew her numbers. She knew them well enough to know that any deal she offered through Groupon was going to lose her money – both in the short term as well as in the longer term. Losing money in the short term for business owners is the model that Groupon operates on, however, the touted benefit is that by offering these very attractive deals, businesses will bring in lots of new customers who will then come back again to purchase products and services at non-discounted prices. The reality for many businesses, and for this particular restaurant owner as well, is that customers coming in for these “Deal of the Day” offers, are rarely ever seen again.

Some deal.

Groupon may work for certain types of businesses, but for the owner of this small Italian restaurant with a lot of loyal patrons, many of whom are senior citizens, it’s just not in line with what has made this dining spot so successful over the years. Loyalty is everything in her case and Groupon just wasn’t delivering it for her. What got my attention though was the offer of a sponsored listing from Yelp. I was certainly aware of the power and sway of their online ratings and reviews – particularly with respect to restaurants, however, I really didn’t know much about their sponsored listings. On the surface they sounded appealing, but I knew that I needed to investigate further. That’s where the power of the Internet really shines: the ability to find information on almost any topic. Though it requires spending the time to sift through a lot of biased viewpoints and in many cases, just plain wrong information, it can truly be a very informative endeavor if undertaken rationally.

The top results in Google search are for Yelp Sponsored Listings are from Yelp.com, which makes sense, but for a little less biased result, I found this great post on the pitfalls of using Yelp on Raymond Fong’s blog. I don’t know anything about Raymond, but his review of Yelp’s Sponsorship Program is very thorough and most importantly is based on the actual experience of one of his clients. Whether or not Raymond was biased against Yelp prior to his client signing up for their sponsored listings (he advised him not to), the actual experience gained is what makes his review so useful.

Just some highlights from Raymond’s post:

  • The Yelp Sponsorship Program allows you to add a slideshow to your claimed listing, highlight your favorite customer reviews about your business, and displays ads for your business on your competitors Yelp business pages. As Raymond goes on to point out, the highlighted customer reviews are displayed right alongside a bar chart of the overall types of ratings your business has received on Yelp. So, if you’re hoping to hide any low ratings, then think again.
  • From an Internet marketing perspective, the presence of “leakage” is pointed out. This is the opportunity to draw visitors off your page via numerous and distracting links placed on your page. Definitely not a good thing if your goal is to get visitors to your landing page to take some form of desired action such as learning about your business and either giving you a call or making plans to come in. Even worse, is if you’re paying for the privilege of having distracting outbound links place on your “Money Page”. Just basic Internet marketing 101, which Yelp is banking most small business owners are blissfully unaware of.
  • And perhaps worst of all, the pricing model for Sponsored Listings is “Cost Per Thousand” (CPM) impressions. For the uninitiated, and I would hazard a guess that this includes the vast majority of small business owners, this is a paid online advertising model where the advertiser is charged a fixed amount for every 1000 times his ad appears regardless of whether or not anyone seeing the ad bothers to click through on it or not. Now, for advertisers who have a firm grasp on what their numbers are in terms of conversion rate and average sale price AND are receiving a favorable CPM, then this model can be quite lucrative. It does require meticulous tracking however, which apparently Yelp does not provide. What’s most appalling, is that according to Fong’s estimates, Yelp charges a CPM between $100 to $200! Sorry, but that’s just insane. One of my core skills is paid online advertising with an emphasis on PPC. I know from my own experience that with these price points and inability to optimize as well as track a sponsored listing, that Yelp is taking full advantage of uninformed small business owners.

I encourage anyone who is at all curious about Yelp’s offerings to take the time to read Raymond’s post. Armed with this knowledge, I will advise the owner of the previously mentioned Italian restaurant to invest the modest budget that she does have for online marketing into the things that she can have direct control over such as her currently unclaimed Google Places Page, making her business Website more user and search engine friendly, and consider some modest social media campaigns to broaden her patron base to include a younger clientele. And if at some point, she wishes to take a more aggressive online advertising approach, then I would recommend a small Google AdWords/AdWords Express PPC campaign as certainly worth testing for highly-target local search terms. I have a hunch that her effective “Cost Per Click” (CPC) would work out to substantially less than the $10 CPC being offered to her by Yelp’s Sponsorship Program.


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