As with many online, user-generated content websites, Yelp has encountered issues with monetization and establishing steady revenue streams. I think Yelp needs to think seriously about a freemium model to start gaining revenue from its users. They are the benefactors from the reviews so it only makes sense to charge them a small monthly/yearly fee to review the content. The biggest negative is the fact that these users have gotten used to this being a free service, so there will be some backlash from the consumers and that should be accounted for. For that reason, Yelp should adopt a freemium model that balances some free content with some premium content under it's paid subscription model.
Additionally, there are some necessary actions that the company should take immediately to fend off its competition (CitySearch, Yahoo Local, Google HotPot, etc) and to continue to differentiate itself. Some considerations include:
- Integration with social networks, namely Facebook and Twitter
- Added focus on national account sales, in addition to local advertisement sales
- Reconsider CPM advertising model vs CPC model
- Targeted marketing campaigns in major markets
- Increase local Community Manager presence to drive traffic and user reviews to the site
In mid-January 2011, Yelp just recently announced added functionality that allows users to "check in" at establishments to compete with the likes of FourSquare and Gowalla via its iPhone app, this is an excellent step in the right direction.
I think integration with other social networks is essential although I do think the "checking in" thing is being a bit overplayed as tons of firms are offering this functionality now.
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