Billion Dollar Bully Documentary about Yelp Hits Kickstarter Goal

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Billion Dollar Bully, “documentary on marketing giant Yelp and their $3.6 billion racket against small business owners”, has reached its Kickstarter funding goal of $90,000. To read more about their plans for finishing the film visit their website. You can see the documentary trailer here

The “Yelp is an extortionist” meme is one that continues to dog Yelp and its not clear that it will go away any time soon. One wonders what the exact current basis for it is or if it is just the many hard feelings that have existed over the years projected into the moment.

photo-originalWhat we do know for sure is that in the past Yelp has used incredibly hard sell & deceptive tactics* against relatively unsophisticated SMBs. We also know that there is an intrinsic conflict in their long standing business model of selling very expensive ads against reviews. When you mix the hard, sharp angle sell with the emotion of reviews bad things are bound to happen even if Yelp never actually used review removals as leverage in their relationships.

We may never know, in a legal sense, if Yelp actually did use reviews as a hammer but I suppose it doesn’t matter. Yelp’s hard driving approach to the SMB market has come home to roost and until such time as they change their business model, not just their sales practices*, this attitude in the market place is likely to persist.

*To either Yelp’s or the salesman’s credit, in my most recent sales experience last month, the pitch and the process were both more honest and less pushy.

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21 thoughts on “Billion Dollar Bully Documentary about Yelp Hits Kickstarter Goal”

  1. Typo in first line. Says “Billion Dollar Baby” instead of “Bully”. Excellent blog post. Good to see you didn’t take the cliched “Lo, the small business owner!” appeal to emotion so many take on this topic. The free market is great – except when it impacts my bottom line!

    1. @Jesse
      Thanks for the edit and the comment. Bad things happen when you write a blog post on an iPhone and Siri steps in.

      As you know I have no love lost on Yelp. That being said, who knows exactly what goes on in these transactions.

  2. Mike,

    Great post. The main issue for the business owner is the conflict between advertising and reviews – they are not linked by Yelp (or at least they claim they aren’t), but they are intricately linked in the minds of the SMB.

    However, the bigger issue (in my mind anyway) is an article that came out in Seeking Alpha that suggested that Yelp’s annual churn rate is ~75%/yr. So, 3 out of 4 advertisers on Yelp are gone within a year. That requires a very large sales force to keep up with the churn. That also means high need to close deals, which generally leads to questionable sales practices. (I didn’t provide the SA link since you have to register to see articles, but if anybody wants the link I’m happy to provide).

    Your recent “positive” experience notwithstanding, I expect Yelp will need to keep turning up the heat to keep SMBs advertising. This is a vicious cycle that is very hard to get out of.

  3. @Scott
    I agree that Yelp is caught in a bind that leads to churn.

    Ultimately it comes down to value. They are offering high cost impression based advertising with poor ROI in a performance based world. Paying too much and getting too few customers is a formula for churn.

    The way out for them is to scale visitation enough that they can move more towards PPC OR start generating revenue via the booking service. Regardless, I agree with you that they are in a bind and will probably continue with high pressure sales and low value product for some time into the future.

  4. @Mike,

    Yes, value is key. And (stepping on my soapbox), it’s just SO hard to show value with simply advertising. Especially for SMB’s – it’s certainly the most (currently) popular way for them to spend their Marketing dollars, but they are starting to learn that the conversion rate stinks and that engagement is more valuable.

    They can look to alternative revenue sources (such as booking services), but I’d be concerned that their consumer volume is the tail that wags the dog. It’s going to be hard to offer true value to business owners when your primary constituent is the consumer (see: Groupon).

    Of course, the cynical side of me says that this movie just generates even more visibility for Yelp, which I’m guessing they love. I don’t think they care much about what people think – all these lawsuits and other news is just more PR for them.

  5. wow that is a cynical side. I doubt that they like the movie but maybe… they certainly are willing to barge into most any room and take the floor to voice their position… and this might just be another of those opportunities.

  6. Mike:

    Your articles about Yelp have shown your dislike of that company. On the one hand, I can’t argue that. We believe some of our smb’s have been “strong armed by Yelp”. In our cases we saw yelp reviewers of our particular smb’s that we believe were targeted, write reviews of our smb that were quickly and automatically filtered. Yet those reviewers had ALL THEIR OTHER REVIEWS SHOWING.

    Pretty crappy. No, terribly crappy. In some cases later those reviews showed on our site. We believe we were targeted.

    But we can’t prove it. We aren’t going to spend time and money to try and prove it. It would be a waste and the law is against us and in favor of Yelp.

    Meanwhile WE KNOW WE BENEFIT FROM POSITIVE YELP REVIEWS. We poll customers in market research after they purchase. A very significant number of customers turn to reviews. They read yelp reviews, they read Google+ reviews. They tell us.

    So its a mixed bag.

    Now, I believe that google’s many efforts to get smb’s to advertise are really not that different than Yelp’s. Its just more subtle and less obviously offensive. But its clearly a function of controlling the search environment….and its also a function of making ads more prevalent and visible and organic and PAC/MAPs visibility less visible.

    On top of that the relationship of viewing reviews vs advertising in Google is becoming FAR more prevalent.

    You have written about that, even if you haven’t clearly pointed out that aspect.

    What is nicely described as the “Snack Pac” or what I refer to as the Crap Pac or the NO INFORMATION PAC is the move to PAC results with NO VALUABLE INFORMATION available on the first page of google results.

    One sees a group of 3 businesses. There is no link to the website, no phone number to call, no address. There is no visible information.

    What is highly visible???? Google + Reviews

    Meanwhile the “snack pacs” and other methods push a situation wherein if you do click on a business….the most obvious screen controlling information is not the smb’s website but a google information box.

    It purposefully kills traffic to smbs. AND its purposefully non informational. And this from the dominant source of all search to SMB’s. Its the monopoly “Yellow Page” directory of all information….and its purposefully non informational.

    The reason is to starve traffic to web sites and encourage advertising. There is no other reason….other than the designers and planners of pages on Google are incredibly stupid and they don’t want to give consumers the most important information consumers would want.

    What do you think?

    Meanwhile Google sponsors “partners” on the reselling of Google ADS. Some of them are notoriously horrible with a good number of complaints to various consumer organizations on a local level and raising to a federal investigation level. They are crooked. People and smb’s have complained about some of them for years. Google keeps sponsoring them.

    You know who they are.

    Just to add fuel to fire, FB has been cutting organic traffic to Business Pages. Heck, they have announced it.

    Interestingly as they have done that, their revenues have soared. They are also strong arming smbs.

    Now Yelp is a relative ant compared to gigantic Google. A tiny ant.

    I believe there is perspective on all this. Yelp is certainly no saint. They have evidently used strong armed tactics for some period. As you noted at the end of your article they were “nicer to you” in their last most recent call. I noticed a change in the style of their selling efforts some time ago. I suspect they have softened their approach.

    They are not that much different than other entities working to hit smb’s up for advertising. They are infinitely infinitely smaller and less impactful than Google or Facebook.

    They are and have been just far more rough around the edges than Google has been.

    😀 My $0.02 for the day. 😀

  7. @Dave – good points – Yelp is truly not alone in this game, but they have certainly garnered a more “evil” reputation – which as I say above, may actually be purposeful since it generates a lot more news.

    In any case, the one thing all three (Yelp/G/FB) have in common is that they primarily serve the consumer. It’s the eyeballs that make them the most $$$. That generally (and naturally) comes into conflict with serving an SMB. It’s hard to offer a business services that more naturally allows them to engage with consumers since that will make them less likely to pay bigger bucks to advertise to those same consumers.

    Now – with that said – some SMBs complain about FB/Yelp/G but are not willing to spend any (or much) money to create their own online channel to their customers. They can’t have it both ways – if they want more control, they need to pay to establish that channel. If they can’t/won’t, then they have to be willing to put up with how they are positioned by others that are paying.

    Finally, advertising doesn’t establish a channel to customers, it simply helps acquire new ones. SMBs really need to figure out how to *engage* customers which would naturally reduce their dependence on Yelp/G/FB for their “free” engagement.

  8. @Scott
    the one thing all three (Yelp/G/FB) have in common is that they primarily serve the consumer.

    I would amend that to say that they serve themselves by focusing more on the consumer than on the business.

  9. @Dave
    Your articles about Yelp have shown your dislike of that company.

    I don’t like or dislike corporations. They are a piece of paper, a fiction based entity.

    I dislike policies and practices that abuse the SMB and take advantage of them. Or creates abuses of them or leads to them being taken advantage of or in some cases robbed.

    That is just as true of Yelp as Google.

  10. @Mike – fair enough. The main point is that when they think about what features to build and not build (or existing features that they take away/eliminate), they are thinking about their core constituency first and foremost, which is the consumer. The business will never come first and they need to realize that.

  11. Mike: One other thing about the movie and its advertising and it relates to my comments.

    Yelp is not a $3.6 billion dollar company in revenues. Last year they made about $377 MILLION in revenues. Probably mostly advertising.

    Last year Google made $66 BILLION in revenues. The difference in size and impact is extraordinary.

    Of the $66 billion, about $45 billion came from direct advertising; about $13-14 billion came from partner advertising sites (adsense)….and about $6 billion from non advertising sources

    Compare the 2. On a direct advertising basis Google is about 100 times as big as Yelp. On a direct and indirect basis (with partner sites) its more than 150 times bigger than Yelp.

    Google is a giant and Yelp is an ant. Google can also “influence businesses”, in fact far more than Yelp. Their astronomical size and control of the search market enables them to make similar efforts, albeit with more “style”.

  12. @Scott
    Finally, advertising doesn’t establish a channel to customers, it simply helps acquire new ones. SMBs really need to figure out how to *engage* customers which would naturally reduce their dependence on Yelp/G/FB for their “free” engagement.

    This makes all kinds of sense. What do you find are the most productive “channels” for an SMB?

  13. @Mike – it really depends on the business. What shocks me (and is the topic of an upcoming blog post) is how many SMBs pay for advertising, but when that new customer walks in their store (or uses their service) the business owner does not collect ANY information about them! I suggest to SMBs all the time that they do two things with new customers:

    (1) Get all their contact information
    (2) Ask them their “preferred” method of communication

    Then make sure you follow up – add them to your mailing list, send them promos/coupons/specials. Ask for feedback. Ask for referrals. If you’re truly a local business, get involved with local organizations. Co-market with a complementary local business and leverage each others lists. All the standard stuff that you (and many others) talk about all the time. But they need to do it. The cadence and type of channel will differ by business type – a pizza shop can send weekly email specials, whereas a plumber probably should do quarterly updates, at most.

    The shameless plug here is we are working on a SaaS platform that can help SMBs do just that. We realize it’s not trivial to do this and technology can be daunting for SMBs. But if SMBs want to stand out today (and going forward), this will quickly be a “must have” part of their marketing strategy.

    To finally answer your question, I will say that Word of Mouth is by far the most effective marketing strategy that I hear SMBs talk about. Enabling Word of Mouth online is the easiest and most effective channel these SMBs should use to start. And pretty universally effective, regardless of business type.

  14. Good comments from Scott, above. We agree. Best thing that works for us is WOM. It can come in many forms. I know it is what you suggest, also, Mike. It ties into getting great reviews.

    Some more on the future Yelp film. I thought it pretty amazing they raised that money very quickly. It shows how much people hate Yelp. The testimonial from the smb owner that sent them the equivalent of a 1 month charge from yelp for advertising was both funny, and poignant. It personifies how much smb operators hate yelp.

    I don’t look favorably upon them. Years ago they published a review that was planted by a competitor that savaged one of our smbs. No matter what we did, including offering to send them very confidential data, they wouldn’t take it down. We had gotten yahoo to take one down that was virtually identical after a lot of back and forth.

    The nerve of Yelp. While that BS review was showing our traffic from yelp started to increase and their salespeople were bombarding us with calls. Needless to say I was not a happy camper.

    Years passed. The planted review moved to filtered. I never purchased advertising. I was considering it and talked through some structural changes in the program. Then we didn’t buy.

    After that they started messing with our reviews….No new one showed, including those by people whose every other yelp review was showing in every other case.

    Tell me they weren’t strong arming us.

    But by this time, it wasn’t hurting us. I didn’t care.

    On the other hand, if google messes with your info and you stop having visibility you are dead in the water. You are missing from the world’s biggest directory.

    If they aren’t giving customer service, responding to those issues, etc. They are killing your business. It occurs. Its occurred to our smbs.

    So I believe these two entities are more similar than dissimilar. They have too much power.

    BTW, if you are really killing on WOM as Scott has suggested you don’t need these web monsters. Strive for it.

  15. @Mike – our body of work is likely still too small to be conclusive, but we do find email and Facebook are quite common/popular. Some people allow you to text them, which is GOLD if you get permission to do that. We’ll ultimately start testing push notifications on a mobile app – no hard data yet from our customers, but market data shows it’s becoming quite effective and more common. We also think that messaging apps in general will become more popular and effective. Of course, the average age of your customer base skews all of this pretty heavily.

  16. As a consumer I love Yelp, as a business owner and SEO it’s frustrating. She is a cruel mistress and I hate the fact that I love using Yelp’s mobile app. One of my clients just got their first negative review and I walked them through the process of responding and reporting as inappropriate. To their credit the review was placed into the “not recommended” bucket within 72 hours, (the review was false and erroneous). Some of my clients absolutely love Yelp and are happy to pay $800-$900 a month for advertising. If they get a good ROI who am I to judge?

    1. @doug I have yet to see a Yelp campaign that has a better ROI than Facebook or Google. I have in the past searched for examples but none ever surfaced. If that is not the case I too would support the ads but often times SMBs confuse an ad being mentioned as ROI.

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