Yelp's Monetization Strategy

February 19, 2009

Big fracas in the local social media space today with the publication of a long anti-[praized subtype="small" pid="ef0b9b94446693e82f569cf40375566a" type="badge" dynamic="true"] article, “Yelp and the Business of Extortion 2.0″, in the East Bay Express. Jeremy Stoppelman, Yelp’s CEO, has many issue with the article and answers on the company blog. You can read Greg Sterling’s analysis on the whole situation here.

What I found interesting in the East Bay Express article is the description of the package Yelp is selling to small merchants.  According to an e-mail sales pitch that was forwarded to the journalist, advertisers receive the following:

  1. Advertisers “can highlight a favorite review to appear at the top of the page about their business.”
  2. “They also show up first in search results for similar businesses in their region (for example “coffee” near “Alameda, CA”).”
  3. “Ads for that business appear on the page of local competitors, while competitors’ ads do not appear on their page.”
  4. “Owners can post photo slideshows, add a “personal message” about their business, and have the ability to update info on special offers and events.”
  5. They also can find out how many users visit their web site, update their page, contact Yelpers who’ve reviewed their business, and have access to an account manager who will help “maximize” their experience with Yelp.”

You can see some of that info on the Business Owner section of Yelp.com.

What it means: people often ask me how you can monetize social media in a local search context.  Yelp seems to have found a combo of items that could be attractive to merchants in such a context. Ranking a review, appearing as a “related merchant”, the ability to upload additional content, and some tracking and reporting appears like an interesting social media ad bundle.  Does this package monetize as well as the traditional “advertiser ranking” model we find in many local search sites?  I don’t think so, but it’s the delicate balance between users and advertisers’ needs that Yelp is trying to maintain.  Not easy!

In  a op-ed column titled “While Detroit Slept”  in the New York Times this morning, Thomas Friedman talks about the US auto industry on the eve of a massive government bailout.  He says:

As I think about our bailing out Detroit, I can’t help but reflect on what, in my view, is the most important rule of business in today’s integrated and digitized global market, where knowledge and innovation tools are so widely distributed. It’s this: Whatever can be done, will be done. The only question is will it be done by you or to you. Just don’t think it won’t be done. If you have an idea in Detroit or Tennessee, promise me that you’ll pursue it, because someone in Denmark or Tel Aviv will do so a second later.

What it means: The troubles of the US car industry remind me of the issues facing traditional media today. US car manufacturers have (had?) a very profitable product line (SUVs, trucks), media publishers have a very profitable product line (print, TV, Radio).  Along comes a very disruptive environment created by a perfect storm of elements (credit crunch + high price of gas + lack of innovation in smaller cars & renewable energy technologies) and it creates a death spiral requiring government interventions to save jobs and companies.

Traditional media is also potentially at risk and might be facing that same perfect storm in the near future. Elements like high growth of Internet usage & revenues, slow decline in offline reader/viewership, high level of debt in many media companies, lack of innovation online (in some cases) and a negative perception (TV is dead, Newspapers are dead, Yellow Pages are dead, etc.) introduce challenges, that combined together make it difficult to surmount. I believe media publishers need to work on two fronts to avoid this situation: 1) they need to invest massively in online & mobile, increase innovation, reward risk-taking and allow project failures (but fail quickly if needed). 2) they also need to win the PR/communications war. Media need to embrace the Web, join the online conversations, prop-up successes but admit failures as well. I’m a firm believer in (and a staunch defender of) traditional media but the time for action is now!

In  a op-ed column titled “While Detroit Slept”  in the New York Times this morning, Thomas Friedman talks about the US auto industry on the eve of a massive government bailout.  He says:

As I think about our bailing out Detroit, I can’t help but reflect on what, in my view, is the most important rule of business in today’s integrated and digitized global market, where knowledge and innovation tools are so widely distributed. It’s this: Whatever can be done, will be done. The only question is will it be done by you or to you. Just don’t think it won’t be done. If you have an idea in Detroit or Tennessee, promise me that you’ll pursue it, because someone in Denmark or Tel Aviv will do so a second later.

What it means: The troubles of the US car industry remind me of the issues facing traditional media today. US car manufacturers have (had?) a very profitable product line (SUVs, trucks), media publishers have a very profitable product line (print, TV, Radio).  Along comes a very disruptive environment created by a perfect storm of elements (credit crunch + high price of gas + lack of innovation in smaller cars & renewable energy technologies) and it creates a death spiral requiring government interventions to save jobs and companies.

Traditional media is also potentially at risk and might be facing that same perfect storm in the near future. Elements like high growth of Internet usage & revenues, slow decline in offline reader/viewership, high level of debt in many media companies, lack of innovation online (in some cases) and a negative perception (TV is dead, Newspapers are dead, Yellow Pages are dead, etc.) introduce challenges, that combined together make it difficult to surmount. I believe media publishers need to work on two fronts to avoid this situation: 1) they need to invest massively in online & mobile, increase innovation, reward risk-taking and allow project failures (but fail quickly if needed). 2) they also need to win the PR/communications war. Media need to embrace the Web, join the online conversations, prop-up successes but admit failures as well. I’m a firm believer in (and a staunch defender of) traditional media but the time for action is now!

Robert Scoble is Media

July 14, 2007

I’ve been thinking about Robert Scoble’s post on Facebook since I blogged about it yesterday. In it, he invites people to become “friend” with him on Facebook (and he does it again in his last post yesterday night). Intuitively, I knew he was unto something and I asked the Praized blog readers to do the same thing (you can do it by clicking here).

Now, I’ve been “friends” with Robert ever since I met him at Google Zeitgeist 2005. We were sitting at the same dinner table and had the occasion to exchange a few words (he’s a great guy BTW!). For those who don’t know him, Robert was one of Microsoft’s technical evangelists. He was part of the Channel 9 MSDN Video team, walking around the Microsoft campus and shooting very informal new product videos. He became extremely popular by having a more balanced view about his employer (more balanced than traditional PR people), sometimes congratulating and sometimes criticizing Microsoft. More info can be found on his Wikipedia profile

Since meeting Robert, he’s been part of my LinkedIn network, and recently I added him in my Pownce network. I obviously added Robert to my Facebook network yesterday afternoon after reading his post (and he accepted it quickly).

Now, if you look in his Pownce public feed, you’ll see that Robert has been micro-blogging about stuff he’s doing. He currently has 1253 “friends”, all early adopters as Pownce is still in beta. In Facebook, he now has 2702 “friends”. Yesterday night, I got a message in my Facebook news feed section. Robert had uploaded a video and
I got an alert about it because he’s in my friends list.

It made me wonder: why would Robert Scoble accept “friends” invitation from people he does not know? Why do you want to be connected to people you don’t know and alert them to stuff you’re doing? And then it hit me! Robert Scoble is media. He’s building his own broadcast network. He understands that media is completely fragmented and, by participating in all these new social communication vehicles (blogging, Twitter, Pownce, Facebook), he’s aggregating readers and viewers,
thereby increasing his penetration and his worth as a media. I’m convinced Robert reaches close to 100% of all early adopters in Silicon Valley (and a good chunk in North America). He now has tremendous influence on “influencers”.

Now, I finally understood why I invited people yesterday to connect to me in Facebook. I am media as well. By writing the Praized blog every day since October 2006, I have become media. And if you are media, you want to build up your “circulation” to increase your influence and by extension, your value. But be aware: you have to accept the reciprocal conversations though. Robert Scoble receives updates from 1253 Pownce friends and 2702 Facebook friends. The noise level is very high. This conversation is not unidirectional.

I have seen the future of media and it’s Robert Scoble.

A new TLA is born this morning: FOG, Fear of Google.

Coined by Geoff Ramsey from eMarketer (and reported by Robert Scoble) at the Forbes Internet Leadership Forum in Cancun, it crystallizes the constant fear under which traditional media firms live ever since Google has become an advertising juggernaut.

Scoble reports on three examples he heard this weekend:

  • What will happen when Google’s growth slows down? Will they use their lock on the marketplace to increase prices?
  • The fact that Google is changing the expectations of advertisers, especially in regards to performance-based vs. branding advertising
  • People are starting to cheer for Microsoft to acquire Yahoo, to make sure Google is kept in check.

What it means: take a deep breath… Feeling better now? Now, if you’re Big Media, Google is clearly your frienemy. But that happens a lot online (read about the Google & eBay relationship). To a certain extent, Google is after the same ad dollars as you, but they also offer tremendous opportunities.

1) Google (and other search engines) is the entry door to most of the web’s content. Make sure your content is well-indexed. At the same time, you need to make sure you’re investing in your destination sites to make them as relevant as possible. Aggregate content in your vertical (including competitors!) to make your site the one-stop shop for users. Launch social features and applications to increase your site’s stickiness. You also need to continue investing in your brand(s).

2) SMEs are looking for leads. If you’re managing a sales team that talks with these guys, make sure you offer them search engine advertising as part of your portfolio of products.

“Key to the development of a local online ad market is the identification of the local web, and this offers a remarkable opportunity for those willing to explore this territory today. In the not-too-distant future, everyone will have access to the local web, but this access is unavailable today, because the database hasn’t been created. It exists in bits and pieces, but no technology can replace the human research necessary to build the initial database. This is a task that will pay huge dividends to the one who creates it, market-by-market, and there’s no reason this can’t be done by a local media company.”

“The local web is where the web itself will find its real value propositions, and that’s enough to make a guy want to stick around for awhile.”

Exactly my thoughts!!! Have a nice weekend!

From Terry Heaton’s PoMo Blog, a beautiful article!

Meta-Praized is a collection of links & stories we’ve “dugg” on Digg.com in the last few weeks. By clicking on that link, you can always follow what’s currently on our mind:

  • “Google plans street advertising presence” via Engadget
  • “Google Talk to Interoperate with AIM This Year” via the Google Operating System blog
  • “Microsoft Hits 100 Million IE7 Installs” via BetaNews
  • “Privately, Hollywood admits DRM isn’t about piracy” via Ars Technica
  • “Small Town News Station Heads to YouTube” via SplashCast Media
  • “MTV to buy RateMyProfessors.com” in News.com
  • “Asterisk: The Future of Telephony” via linux.inet.hr
  • “Google (Google Checkout) breaks ceasefire with eBay” via Valleywag
  • “Big Media’s Crush on Social Networking” in the New York Times
  • “Google Inc. is currently in negotiations to purchase Adscape Media (videogame advertising)” in CNN Money
  • “Traffic to newspaper blogs soars” via MarketWatch

Meta-Praized is a collection of links & stories we’ve “dugg” on Digg.com in the last few weeks. By clicking on that link, you can always follow what’s currently on our mind:

  • “Google plans street advertising presence” via Engadget
  • “Google Talk to Interoperate with AIM This Year” via the Google Operating System blog
  • “Microsoft Hits 100 Million IE7 Installs” via BetaNews
  • “Privately, Hollywood admits DRM isn’t about piracy” via Ars Technica
  • “Small Town News Station Heads to YouTube” via SplashCast Media
  • “MTV to buy RateMyProfessors.com” in News.com
  • “Asterisk: The Future of Telephony” via linux.inet.hr
  • “Google (Google Checkout) breaks ceasefire with eBay” via Valleywag
  • “Big Media’s Crush on Social Networking” in the New York Times
  • “Google Inc. is currently in negotiations to purchase Adscape Media (videogame advertising)” in CNN Money
  • “Traffic to newspaper blogs soars” via MarketWatch

Federated Media’s John Batelle has begun a multi-part post on Searchblog on how traditional media companies have come to terms with their maturing, ever-more-profitable interactive business units. The telegraphic summary; dump the seasoned interactive “cowboys” that started these interactive businesses and parachute in the serious revenue posse, senior executives that can turn these businesses around so that they can realize their full revenue potential! They’ve gone from “lab” to just another unit with an aggressive scorecard. No surprise there. Ah, but Batelle’s point is that interactive is not like any other traditional media business, it’s Packaged Goods Media (old media) vs. Conversational Media (interactive). The post is peppered with good insight and real world examples, it’s worth the read. However, the crux is that it is about economics (ad revenue) vs. relevance (interactivity/user content). How much interactivity are these media conglomerates willing to let through the filters, and would they do it all if it’s “at the expense” of advertisers and advertising revenue. We now know that relevance has value with users/ consumers (Web 2.0), the question is, is there enough net margin at the rendez-vous for traditional media companies that potentially have a lot to lose vs. start-ups that have way less to lose…

jpg_magazine_issue_7.jpgAlex Padalka reports on the NewAssignment.net site about the latest issue of JPG Magazine. Issue seven of the magazine relies completely on photos submitted by their online community.

“Instead of starting in print and building a community, you start online. Then when you launch your first copy, you have supporters there,” said Derek Powazek (one of the co-founders). JPG was, in part, an expansion of a working idea called Photo Club – a service that delivered an original photo once a month to subscribers. The Powazeks went online and named their endeavor JPG Magazine, “to honor all the fantastic work being put online that never saw the light of day in print.” They accepted digital submissions from anyone using all the digital tools at their disposal (gmail, flickr, lulu), selected the best and produced six issues over the next two years.”

“Issue seven had more than 1,400 submissions and issue eight has already received over 5,000 submissions. And while editors still have final say, the community now votes on what photos they would like to see in the magazine. Think American Idol for magazines. One thing JPG discovered early on is that while an open submission and voting policy is best for the health of the online community, it requires moderation from an editor to produce the highest quality magazine.”

JPG pays each photographer who gets published $100 and a free year subscription.

Michael Arrington at TechCrunch says: “More print magazines should be doing similar things to embrace an online community instead of just copying their print content to their website. Periodic news magazines have no chance over the long run against their own online competitors. But magazines like JPG Mag, which people want to keep and display over the long run, can be successful. If they come up with the right way to bridge the online and offline worlds.”

What it means: I think the key learning there is the importance of the editor. This is definitely a model that should be embraced by any company operating in both the offline and online space. Do you have content in your online properties that could be valuable offline, in the printed, TV or radio world? Can a local social site become a print directory? Yes, see InsiderPages.com’s efforts. Can a podcast become a radio show? Can something posted on a video site become a TV show?

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