Yelp Inc. is an American publicly-traded company that operates a social networking and review website (Yelp.com). Founded in 2004 by two former PayPal employees, Jeremy Stoppelman and Russel Simmons, the company has its headquarters in San Francisco, California. Jeremy Stoppelman is Yelp’s current CEO.
Yelp aggregates and posts user-submitted reviews about local businesses and provide a business directory and other information about those businesses. On December 31, 2021, Yelp had 244 million cumulative reviews and 5.8 million active business listings on its website. The company operates in more than 35 countries globally and is available in 42 languages.
Before filing for an Initial Public Offering (IPO) in 2011, Google and Yahoo! each offered to acquire Yelp for $500 million and $1 billion, respectively. Yelp turned both offers down after qualms about ceding control to either company. It went public in 2012 with an IPO that valued the company at more than $900 million. As of July 2022, the company had a market capitalization of $1.974 billion.
Despite having a relatively strong market presence, Yelp faces stiff competition from new and established companies and user-generated review sites not affiliated with any particular brand. This Yelp competitors analysis will examine some of Yelp’s main competitors and offer insights into the competitive landscape of the user-generated review and business directory industry.
Bottom Line Up Front
Yelp develops, hosts, and markets the Yelp.com website and mobile app, which publishes crowd-sourced reviews about local businesses. It competes in a diversified industry with players from the technology, media, and marketing sectors. However, it stands out as a company with strong brand recognition, high customer loyalty, and a large user base.
Top 5 Yelp Competitors
Yelp Business Model and Financial Overview
When starting a small business of any kind, getting your name out there and attracting customers isn’t an easy task. Advertising is expensive, and small businesses often don’t have the budget for traditional marketing campaigns. Yelp identified this problem and sought to provide a solution that’d be beneficial for both businesses and consumers.
The Yelp business model is based on a two-sided platform connecting businesses with customers and vice versa. Essentially, businesses create Yelp listings, including the business name, address, hours of operation, type of business, and contact information. Customers can then find businesses that meet their needs and read reviews from other customers to help them make informed decisions.
Yelp’s diversified revenue model includes advertising, transaction, and other revenue streams. Advertising is the primary source of Yelp’s revenue, accounting for about 96% of the company’s total revenue in 2020. Yelp’s advertising includes CPC advertising and multi-location ad products.
It also offers consumer-facing transaction products that enable businesses to sell directly to consumers through the Yelp platform. Through partnerships with third-party services, mostly GrubHub, Yelp generates revenue from transaction-based fees. Other sources of revenue for Yelp include subscription fees for business owners, licensing arrangements, and other miscellaneous revenue.
Yelps 2021 revenue reached a new high of $1.03 billion, up from $872.9 million in 2020. Yelp’s net income was $40 million in 2021, compared to a net loss of $19.4 million in 2020. The Covid-19 pandemic significantly impacted Yelp’s financials in 2020, as social distancing measures decreased foot traffic and business advertising spending.
However, the company saw a rebound in 2021 as businesses reopened and advertising spending increased. The company forecasts continued growth in 2022, with net revenue ranging from $1.16 billion to $1.18 billion. We expect Yelp’s advertising revenue to grow as businesses increase spending on marketing and advertising.
Yelp Competitor Analysis
Yelp competes in a crowded industry with players from various sectors, including search engines, social media platforms, business directories, and user-generated review sites. While Yelp has a strong market presence, its competitors significantly threaten its growth.
Below is a detailed analysis of some of Yelp’s main competitors.
1. Google Search
Google is the world’s largest and most popular search engine, handling over 5.6 billion daily searches. Owned by Alphabet Inc., Google also offers various other services, including Gmail, YouTube, and Google Maps. Google Search is a natural starting point for many consumers looking for local businesses. While Yelp strongly focuses on local businesses, Google’s search algorithm offers results for both local and global businesses.
It’s not surprising, then, that Google is one of Yelp’s biggest competitors. In addition to being a major player in the search engine market, Google offers its business directory and review platform, Google My Business (GMB). The platform enables businesses to create free listings, including the business name, address, phone number, hours of operation, type of business, and photos.
After the failed Yelp acquisition attempt by Google in 2009, the two companies have been locked in a competitive battle. In 2015, Yelp filed an antitrust lawsuit against Google, alleging that the company was manipulating search results to prioritize its products. If this were the case, it’d have given Google an unfair advantage over Yelp and other competitors.
Still, Yelp has maintained its market share, partly due to its focus on local businesses. While Google is the clear leader in the search engine market, Yelp is the go-to platform for consumers looking for local business information and reviews. However, Google’s solid financials and competitive advantages pose a major threat to Yelp’s long-term growth.
In 2021, Alphabet’s revenue amounted to $257.637 billion, up from $182.52 billion in 2020. Google accounted for 82% of Alphabet’s total revenue in 2021, mainly through advertising. Alphabet’s net income was $76.03 billion in 2021, representing an 88.81% increase from 2020. The company’s strong financials give it the resources to invest in new products and features that could threaten Yelp’s market share.
2. Facebook Recommendations
According to Statista, Facebook accounted for 73.72% of all social media site visits in the United States in May 2022. Another study by Statcounter in June 2022 reveals that Facebook holds the largest market share in the global social media market, with a 75.27% share. The company had about 2.93 billion monthly active users (MAUs) worldwide as of April 2022.
These stats are a clear indication of Facebook’s immense popularity. The social media platform isn’t only a great way to stay connected with friends and family and an important marketing tool for businesses. In addition to enabling businesses to create free pages, Facebook offers paid advertising services.
Facebook’s Recommendations feature allows users to ask for recommendations and read reviews from other users. The feature is similar to Yelp’s but integrated into the main Facebook platform. While Yelp has a dedicated website and app, Facebook Recommendations is just one of the many features offered on the Facebook platform.
Facebook is more enticing for businesses because it has a larger user base. The platform also offers paid advertising services to help businesses reach a wider audience. As a result, Facebook is a strong competitor for Yelp, especially when it comes to attracting business advertisers. Compared to Yelp’s 5.8 million business listings, Facebook has over 60 million business pages. The number of businesses on the platform gives Facebook a competitive advantage over Yelp.
In 2021, Meta, Formerly Facebook, Inc., had a revenue of $117.929 billion, up from $85.965 billion in 2020. The company’s net income was $39.37 billion in 2021, representing a 57.67% increase from the previous year. Perhaps Yelp’s competitive advantage over Facebook is its focus on local businesses.
Like Google, Microsoft’s Bing is a search engine that offers a business directory and review platform, Bing Places for Business. The platform enables businesses to create free listings, including the business name, address, phone number, hours of operation, type of business, and photos.
Bing has been trying to gain market share in the search engine market but has had little success. In December 2021, Statista reported that Bing held a 7% market share in the global search engine market against Google’s 85.55%. Despite its small market share against Google, we can’t underestimate the competitive threat Bing poses to Yelp.
Besides operating as a search engine, Bing is also integrated into Microsoft’s other products and services. For example, users can search for businesses directly from the Microsoft Outlook app. Integrating Bing into Microsoft’s products and services gives the company an advantage over Yelp.
For a while, Bing partnered with Yelp and was the sole provider of Yelp’s business listings and reviews. The partnership ended in 2021, and Bing started using Facebook as its primary source of business information. While Yelp and Bing are no longer partners, the search engine is still a major competitor for Yelp.
Bing enjoys the strong financial position of its parent company, Microsoft. In its 2021 fiscal year, Microsoft had revenue of $168 billion, representing an 18% increase from the previous year. The company’s net income was $61.271 billion in 2021, up 38% from 2020. With its deep pockets, Microsoft can continue to invest in Bing and support its growth.
TripAdvisor Inc., is an American company that operates one of the world’s largest travel websites. Its headquarters is in Newton, Massachusetts, with operations spread across the globe. The company trades publicly on the NASDAQ Stock Exchange under the “TRIP” ticker.”
Founded by Stephen Kaufer, Langley Steinert, and several others, TripAdvisor was launched in February 2000 as a home-based startup. The company has since grown to become one of the largest travel websites in the world, present in 43 countries and 22 languages.
TripAdvisor competes with Yelp in the online review and business listing space. The company operates a platform where businesses can create free listings and manage their online reputation. Customers can also use the platform to write reviews, upload photos, and check prices. It also offers hotel and restaurant reservations, lodging, booking, and other travel-related services.
TripAdvisor is a major competitor for Yelp, especially in the travel and hospitality industry. It has more than 490 million monthly active users and approximately one billion reviews and opinions of hotels, restaurants, attractions, and other vacation destinations.
In 2021, the company had $902 million in revenue, representing a 49% increase from 2020. Unfortunately, the company was unprofitable and had a net loss of $148 million in 2021. While these financials may not be as impressive as Yelp’s, TripAdvisor is still a major competitor in the online review and business listing space.
Zagat is a popular American dining guide founded by Nina and Tim Zagat in 1979. The company has its headquarters in New York City, with operations across the United States. In 2011, Google acquired Zagat for $151 million and integrated it into its Google Maps product. Later in 2018, Google sold Zagat to The Infatuation, a restaurant review website.
Zagat competes with Yelp in the online restaurant review space as one of the oldest and most famous dining guides in the United States. The company offers customers a platform to find restaurants, write reviews, and share their dining experiences. Zagat also provides businesses with a listing service where they can manage their online reputation.
While Zagat was once a major player in the restaurant review space, it has since lost ground to Yelp and other newer competitors. The company no longer has the dominant market share it once did. Besides, Zagat’s sale to The Infatuation signals that Google never saw the company as a strategic asset. As The Infatuation attempts to revitalize the brand, it faces an uphill battle against Yelp and other newer competitors.
For Zagat to compete with Yelp, it’ll need to invest in marketing and product development to regain its position as a premier restaurant review guide. It recently relaunched as a digital-first platform and is now available on iOS and Android devices. The company also focuses on expanding into new markets such as Canada and the United Kingdom.
Yelp SWOT Analysis
Below is our SWOT analysis of Yelp:
- Leading player in the online review space with a dominant market share
- A comprehensive platform that offers businesses a listing service and customers a way to find restaurants write reviews, and make reservations
- Substantial brand equity and reputation
- Robust financial performance with $1.03 billion in revenue and $40 million in net income in 2021
- It has a solid competitive moat in the form of its network effects
- Highly susceptible to Google’s algorithm changes which can impact traffic and visibility
- Reliance on small businesses for revenue which are especially vulnerable during economic downturns
- Some concerns about the quality and authenticity of reviews
- Alleged unfair business practices such as extorting businesses for advertising
- Continued growth in the online review market, which is being driven by the shift to mobile and e-commerce
- Expansion into new geographies and industries such as healthcare Partnerships and acquisitions to consolidate the market
- Yelp can leverage its brand equity to enter new businesses such as food delivery
- Intense competition from Google, Facebook, and other review sites
- The rise of fake reviews and astroturfing
- Changes in consumer behavior, such as the shift to private groups and messaging apps
- Economic downturns can lead to a decline in advertising spend
Yelp Competitor Analysis (FAQs)
Question: Who are the top two competitors of Yelp?
Answer: The two top competitors of Yelp are Google and Facebook. Both companies offer customers a way to find businesses, write reviews, and share their experiences. While Yelp has a dominant market share in the online review space, Google and Facebook pose a significant threat due to their size and resources. Other top competitors include Bing, Trip Advisor, and Zagat.
Question: Are Google reviews better than Yelp?
Answer: Google has better reviews than Yelp because its algorithms are more accurate and up-to-date. Additionally, Google offers a more user-friendly interface that’s easier to navigate. However, Yelp has a larger database of businesses, which can be helpful for users who are looking for specific types of businesses.
Question: What’s Yelp’s competitive advantage?
Answer: Yelp’s competitive advantage lies in its user-generated content. The company has built a large community of users who contribute reviews, photos, and other business information. This content is then used to provide valuable insights to Yelp’s users. Additionally, Yelp has developed strong relationships with businesses, which gives it access to exclusive deals and promotions.
Yelp stands out as one of the most popular online review platforms. The company has a large user base and offers valuable insights to users through its user-generated content. It competes in a market full of big players like Google, Bing, Facebook, and other review sites like Trip Advisor and Zagat.
While business reviews may not be the only focus for these companies, Yelp’s dedication to this niche gives it an edge. The company’s financials are strong, with revenue and user growth consistently outpacing competitors. However, it needs to improve its mobile app and expand its international presence to maintain its competitive advantage.
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