Yelp Gets a Boost
Yelp! has announced that it got $15 million in a fourth round of funding led by DAG and existing investors.
The company also sent some growth metrics:
October ’07 — 5M Unique Visitors
December ’07 — 6M UVs
January ’08 — 7M UVs
February ’08 — Numbers aren’t in yet but there were 8.3M UVs in the past 30 days.Total number of reviews posted to the site = 2.3M.
It took 2 years and 3 months to reach 1M reviews (May 2007).
In the past 8 months an additional 1.3 million reviews were posted.
In its short history, Yelp has become something of a model for how to build a local review site and has become a clear favorite of the twenty- and thirty-something urban “foodie.” Its success has also spawned a number of similar models in Europe, such as Qype, Welovelocal and TouchLocal.
The challenge for Yelp will be to replicate itself in new cities, broaden (and deepen) its base of users, and spread its ad support beyond restaurants and bars into the services arena — something it says it has been having success with.
It’s clearly strongest in hometown San Francisco, and it has good traction in New York. It also sells ads in Los Angeles, Chicago, Seattle and San Diego.
So –what will it do with its new money? We’d guess it is likely to be used to expand to new markets, add new verticals, make minor acquisitions and do more marketing. The company has certianly used some interesting marketing tactics to seed reviews in San Francisco such as providing “People on Yelp Love Us” stickers for businesses to put in their windows, or lobbying the SF City Hall to establish a “Yelp Day” in the city (there has also been a small but interesting Yelp backlash as there is with any social phenomenon). Expect more of this kind of marketing in new markets.
To help this growth in New York, the company is also in the process of opening an office there. I plan to talk to Yelp CEO Jeremy Stoppleman later this week to dig deeper.
A good question to ask Jeremy would be how many of their visitors come from the search engines versus how many come direct to the site. If you look at their “most prolific in the last month” report they only have 20 – 100 or so active members writing reviews in most major cities http://www.yelp.com/browse/people/reviews?term=monthly(except San Fran and a couple of the largest cities where they have over 500). So even though the traffic numbers seem large the actual members who contribute reviews on a regular basis is very small. My estimate (based on their report) is that they have around 2500 – 7500 active members writing reviews every month out of their 7 million uniques. Thats a very small percentage and leaves me to believe most of the traffic is coming from the search engines.
I run a similar local search company (albeit much smaller) and can attest to the difficulty of engaging traffic that comes from the search engines. There are many local search and IYP sites that get millions even 10’s of million of visitors from the search engines every month. The true tests of local search sites traffic is how many organic (or direct) visitors it has every month.
I think Yelp has done the best job to date on building a social local search. Yelp now has one serious problem, given they’ve raised $30 million in VC can they really attain the value needed to earn the Venture Capital investors a 10x return? That type of price tag eliminates a lot of potential suiters and narrows their exit options.
I’m a little late to this, but regarding Jon’s comment, am curious why it matters where the traffic comes from as long as they find value in site/content, and consume ads?