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Unlocking the Power of Yelp: Dominating Local Business Reviews

Yelp: The Online Review Platform Dominating Local Business

In today’s digital age, online reviews play a huge role in the success or failure of local businesses, from cafes and spas to home repair services. Yelp is one online review platform that has successfully tapped into this need for user-generated content.

In this article, we will explore the different aspects of Yelp, from its revenue streams to its accessibility.

Yelp – The Online Review Platform for Local Businesses

Yelp is an online review platform that has been around for over 15 years. Initially, the San Francisco-based company focused on local businesses, and its primary goal was to help people find great places to eat.

Today, Yelp has grown to become a review platform for all sorts of local businesses, from cafes and spas to home repair services. One of Yelp’s distinguishing factors is that it is an aggregator business.

This means that it has created a platform that attracts people who are looking for reviews, as well as local businesses looking to be reviewed. Yelp has succeeded in leveraging this unique business model to collect over 200 million reviews and hold about 70 million visitors on its platform each month.

Yelp Revenue Streams

Yelp’s revenue streams are quite fascinating. The company makes money through various channels.

One of which is targeted advertising. Local businesses pay Yelp to advertise to users who are searching for similar businesses on the platform.

This model has been helpful to Yelp, as it earns the company about three-quarters of its total revenue. Another revenue stream is the commission Yelp charges local businesses.

These are fees charged by Yelp when referrals from the platform lead to sales for these businesses. With this, Yelp makes it easy for local businesses to be active users on the platform, as they have the reward of not only increasing their assets but being charged only after sales have been made.

Lastly, Yelp earns subscription revenue from its local business partners. These are fees that local businesses pay to access features on the platform.

Examples of these features include the ability to respond to customer reviews or to showcase their products and services.

Yelp Overview

Yelp is an excellent platform for businesses because it provides an avenue for businesses to visualize their customers’ experience via their reviews. Not only can businesses engage their customers, but they can also use Yelp as a competitive advantage against their rivals in the same industry.

Yelp has a powerful search filter function that allows users to find exactly what they need within a particular geography, cuisine, ambiance, and price range. The review platform has helped local businesses reach potential customers by functioning as social proof.

This is the phenomenon where people assume the actions of others in an attempt to reflect the socially accepted behavior.

Yelp Accessibility

Yelp’s website is accessible across platforms: desktop, tablet and mobile applications for both iOS and Android devices. The mobile applications are especially helpful, permitting users to search for businesses, mark them as a favorite and plan trips or dates there.

One of the critical differences between the mobile application and desktop platform is that the concentration of Yelp’s mobile users is in real-time search results. This means that users can find recommendations for businesses in their vicinity at any time.


In conclusion, Yelp has become an essential platform for local businesses. The revenue streams, accessibility and overview of the review platform have made it a valuable asset.

With Yelp, local businesses have an opportunity to showcase their products and services and provide a unique customer experience, all while engaging with their customers and building a loyal clientele.

Yelp Founders and the Early Days

Jeremy Stoppelman and Russel Simmons founded Yelp in 2004, after previously working at PayPal. Stoppelman studied computer engineering and worked at with PayPal co-founder Elon Musk before joining the PayPal team.

Simmons, on the other hand, studied online marketing and e-commerce before joining Stoppelman at Both entrepreneurs shared a passion for software engineering and wanted to create a platform that would help people find great local businesses.

Yelp’s founders’ passion for connecting people to local businesses was evident from their college days when they worked on a project aimed at helping people find the best resources and information on campus. After years of working in the tech industry, they realized that there was a need for a centralized platform where people could leave and read reviews of local businesses.

Yelp’s Inception and Early Days

Yelp’s founders drew inspiration for their platform from the Yellow Pages, which were in decline at the time. While Yellow Pages listed businesses, it didn’t provide reviews or customer feedback.

Yelp planned to fill this gap by capturing service reviews and helping consumers make more informed decisions. In the early days, Yelp faced a lack of success.

While managing reviews, Yelp faced criticism from business owners who believed that negative reviews could hurt their business. To combat this, Yelp introduced the Yelp Elite program, rewarding users who left high-quality reviews.

This helped to attract more visitors to the platform. Yelp also faced competition from Google, which was already a dominant force in the search engine industry.

However, Yelp managed to carve out a niche for itself by focusing on user-generated content. Yelp’s community-driven approach allowed the company to differentiate itself from larger search engines.

Yelp’s Growth and Expansion

After several years of continuous growth, Yelp received significant venture funding in 2012 by going public. The company’s IPO raised $107 million and helped finance its international expansion.

Yelp began to acquire other review platforms, such as Qype, and expand its services to include restaurant delivery service Eat24. Yelp’s growth continued, and by 2016, it had over 100 million active monthly users across 32 countries.

Yelp expanded its base of client businesses with its offerings of advertising services, reservation tools, and analytics. The company became a powerhouse in the business sector with the potential to significantly influence consumer spending.

Yelp Controversies

While Yelp’s presence grew, so did criticism of the frequent class-action lawsuits against the company, targeting its review policies and revenue generation. Yelp faced criticism from business owners who accused the platform of removing or hiding positive reviews unless the business paid for advertising services.

The company also faced internal struggles when a former employee, Talia Jane, wrote an open letter on Medium, criticizing Yelp for low wages and the struggle to make ends meet in the Bay Area, where the company’s headquarters are located. Yelp received backlash and was forced to lay off employees amid a pandemic, which led to criticism about prioritizing profit over employee welfare.


In summary, Yelp’s history and growth have been marked by various challenges and controversies over the years. However, Yelp continues to be a leader in the online review industry, and its platform remains a valuable tool for small businesses to attract and retain customers.

Despite legal and employee-related allegations against Yelp, the company remains an essential part of the digital business community, and it has the potential to continue expanding and adapting to changes in the industry.

Yelp Revenue Streams – Advertising

One of the major revenue streams for Yelp is advertising. Yelp offers cost-per-click (CPC) ads allowing businesses to pay for online ad placements.

Yelp allows businesses to choose various spots for ads, from sponsored search results, homepage ads, and the carousel display. To leverage the power of user-generated content, Yelp prompts advertisers to use images and review quotes taken from their Yelp page.

Yelp offers upgraded profiles to businesses, allowing them to have enhanced features such as live website links and more extensive photographs. Yelp’s verification process of these profiles helps vet and authenticate the businesses on its platform, ensuring the qualitatively sound and secure experience for both users and businesses.

Yelp Transactions

Another significant revenue stream for Yelp comes from transactions. Yelp earns a commission on transactions made through the platform, such as through gift certificates offered by local businesses.

Yelp partnerships such as its Eat24 partnership further contributed to transaction earnings opportunities. In the past, Yelp also offered Yelp Deals, which gave customers deals on products from local businesses.

Yelp’s commission revenue from transactions increased its visibility for local business owners and helped it cater to users on its platform. This model of transactions became a significant focus for Yelp as it further cemented its place as a platform that provides value to both businesses and customers.

Yelp Other Services

Yelp offers various services as part of its revenue streams. One of these services includes selling subscriptions to businesses, which give them access to increased exposure and even detailed analytics.

Yelp’s subscription service enables businesses to monitor their online presence and improve their visibility. Yelp also makes money through licensing payments.

It partners with other companies such as Bing, Apple, and Yahoo to provide them with access to Yelp’s consumer reviews and business information. Yelp also launched its Yelp Reservations service, which allows businesses to manage their online booking and reservation system, making Yelp a one-stop-shop for customers.

Yelp’s Yelp Knowledge service offers analytics and reports on customer engagement to businesses, providing them insight into the behavior of clients on the platform.

Yelp Funding

Yelp has undergone several rounds of funding since its inception in 2004. The company initially received venture capital funding and went public in 2012, raising $107 million.

Yelp continued to receive investments periodically for its expansion and acquisition of smaller startup businesses. One significant milestone for Yelp was its acquisition of competitor Qype in 2012, which helped Yelp expand its reach internationally while competing with market leaders like Google.

Yelp’s market cap has continued to increase, making it a major player in the tech industry.

Yelp Financial Performance

Yelp’s financial performance has varied over the years. It has had profitable years and years where it incurred losses.

In its 2020 fiscal year, Yelp’s revenue was $723 million, a decrease from its revenue of $942 million the previous year. Yelp has faced criticism over the years for its revenue generation methods and competition with Google’s search engine.

However, Yelp has remained a significant platform for small businesses, providing them with exposure to a broad audience. Yelp’s focus on user-generated content and connection to businesses and clients continues to be its unique selling point.


In conclusion, Yelp’s revenue streams have been crucial in the platform’s success. Its various revenue models, licensing partnerships, and advertising options have helped the platform grow.

Yelp’s focus on transactions and reservations have helped it provide a more holistic user experience. Despite varying financial performances over the years, Yelp remains a major player in the tech industry, garnering significant funding and a growing market cap.

In conclusion, Yelp has emerged as a dominant online review platform, connecting users with local businesses and shaping consumer behavior. Through its various revenue streams, including advertising, transactions, and other services, Yelp has solidified its position in the tech industry.

The platform’s ability to adapt and innovate has helped it overcome challenges, such as competition and controversies. Yelp’s success highlights the importance of user-generated content and its impact on the local business landscape.

As Yelp continues to evolve, it remains a valuable tool for both businesses and consumers alike, providing a platform for transparency and informed decision-making.

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