Is Yelp a Waste of Time and Doomed to Failure?

by Tim Hill (aka Doodled)

August 20th 2013
The review site is rotting from within, becoming ever more bogged down in increasingly public rows with both business owners and reviewers.
The review site is rotting from within, becoming ever more bogged down in increasingly public rows with both business owners and reviewers.

Like many in the SEO world I've been watching Yelp's progress over the years. So far it has burnt its way through more than $100 million and is still failing to make any profit. Some even suggest that the current business model makes profit almost impossible.

Although they recently posted 69% growth in revenue most of this seems to be coming from global expansion. They grow larger, but it is the same loss making business simply on a bigger scale, driven on by venture capitalists who hope one day someone will figure out how it could actually turn a profit.

But the review site is also rotting from within, becoming ever more bogged down in increasingly public rows with both business owners and reviewers. So is it a fundamentally flawed idea doomed to ultimate failure?

Customer and Business Scams

If you take a few minutes to look around the web it isn't long before you find hundreds (perhaps thousands) of pages from two groups:

  • Business owners who think Yelp is a scam because reviewers are getting away with murder.
  • Reviewers who think Yelp is a scam because business owners are getting away with murder.

In other words the two groups Yelp relies on, business owners and reviewers, both seem to think (in growing numbers) that the service isn't working for them. Worse still both groups are very vocal that Yelp is biased towards the other!

Yelp's very own review page of itself is a stormy place to start seeing this in action if this is all new to you.

Business owners claim Yelp is a scam

There are no end of accusations from business owners but most are around this:

  • Positive reviews disappear or get filtered after they stop advertising / refuse to advertise with Yelp and negative reviews appear.
  • Reviews disappear or get filtered at random times.
  • Positive reviews from reviewers without a track history, profile details or profile photo get filtered while negative reviews from reviewers with the same weaknesses seem to get published.

And these claims are becoming increasingly heard by the public on mainstream media.

Reviewers claim Yelp is a scam

Now at the other end of the scale reviewers themselves feel they are being treated unfairly and some suggest:

  • Their reviews are often filtered because businesses are paying Yelp to do this, especially as some businesses claim this is what Yelp promises to do if their business starts using paid advertising.
  • Reviews they posted some time ago are mysteriously deleted or filtered, again some believe businesses buy this service from Yelp.
  • Businesses that obviously advertise seem to have better reviews.
  • It's not hard to find people buying and selling positive Yelp reviews which pollutes their work.

The Yelp Conspiracy Theory Gathers Pace

And both sides have plenty of ideas why Yelp is not acting independently. Many reviewers think Yelp is in the pockets of business owners because it is they who pay to advertise and so generate the income for the service.

Many business owners think Yelp is simply acting in its own interests and actively manipulating the reviews in order to blackmail business owners into advertising.

Anger on both sides has lead to Facebook pages such as We hate Yelp and Yelp is a Fraud with their growing fan bases. Sites such as yelp-sucks.com have also sprung up and are gaining an ever larger following.

Most interestingly old articles are still attracting comments. East Bay Express wrote Yelp and the Business of Extortion 2.0 in 2009. So far it has attracted over 300 comments, the latest only a few days ago.

And the stories and comments just continue with Bloomberg Businessweek's recent Why Yelp Will Never Be Rid of Phoney Reviews.

The Fundamental Flaws of Yelp

Yelp, and many other websites like it, have a number of very basic issues which surround the ability to offer a free to review service. Here are a few:

You don't have to go to review

It allows users to review something without ever having to prove they were there or that they bought it. This leaves Yelp having to theorise on what is real and what isn't. Given the number of reviews added each day this is not something humans can do, it must be left to a computer.

That algorithm needs to be constantly updated in the battle against spam and abuse which means reviews that were valid suddenly become filtered and vice versa. For a business owner who sees this within a couple of days of turning down a Yelp sales rep it would indeed look suspicious.

It also means that reviews like “The waiter was fat. What the f**k, this is a vegan restaurant” and “Went to establishment and got turned away cuz I'm a cat” go through and appear (both genuine one star reviews) while better written opinion is filtered out as spam.

Your review doesn't have to add anything

You can affect the star rating of an establishment for the most bizarre reasons and it is unmonitored. One two star review for a restaurant read “Left my number for the waiter but he never called me. What the f**k kind of service is that. Chicken parm was delicious though.”

Another well reported story was the Yelper who gave positive reviews if staff would talk to him for a bit.

It's not your peer group

Leading on from the point above, what is important to the reviewer may not be important to you – such as how long the staff spend talking to you or whether or not you can get a date with one of the waiting staff.

With only one rating available it can be affected by the interior design as much as by the food in any given restaurant. While an individual might give an airline one star for delaying a flight due to technical issues another might give five stars to show respect for their attitude to safety.

So can a review site really succeed with a one size fits all star rating?

The motivation to be negative

It has long been known that unhappy customers are more likely to say so than those who were content, some say seven times more likely. That means a business with one positive review and seven negative one is about evens although the star rating will be skewed and not look like that at all.

Revenge and spite

Give a competitor a chance and more often than not they will run down the competition. Allow them to do it anonymously online and it is too much for too many to resist. Add to that bitter ex-employees, suppliers who have lost contracts, etc. and you start to see how easy it is for an average business to start accumulating non-genuine negative reviews.

Buying and Selling Yelp Reviews

As I've already mentioned the industry of buying and selling reviews on Yelp (and many other review sites) is rife. Once you are a trusted “yelper” you are also suddenly the owner of an asset that people will pay good money … $25+ for a good review.

Some people openly abuse it, others are just drawn in by the easy money. Whatever the motivation it all undermines the trustworthiness of the service as a whole.

The overall mess

According to a story from ABC News around 30% of online reviews could be fake. Which is not really surprising given the above.

What's the alternative to Yelp!

It is of course difficult to say if Yelp has truly become a modern day Mafia style protection racket. Instead of a late night petrol can and match you loose your positive reviews and gain negative ones. Or from a users prospective they see businesses that advertise getting positive reviews while the negative ones get filtered away.

It would be a very clever racket if it was so and many a Godfather will be punching themselves for not having thought of it first.

But conspiracy theory aside can this concept ever really work where reviews are accepted without proof of purchase or visit? Is Yelp just in the firing line because it's so large? If Yelp disappeared who would be next to fall?

Booking.com

This works a little better because you have to have booked and paid for your hotel stay before you can leave a review. You are also able to rate different aspects of your stay and state the kind of person you are (business traveller, young couple, etc.) which helps with peer to peer review searching.

However hotels are a little more straightforward than restaurants or bars or products.

Amazon.com

Amazon makes the effort to flag buyers it knows to be genuine however it is very poor at those who game the system in other ways. For example if an author writes a book and then offers “bonus material” when the buyer leaves a positive review Amazon fails to police this obvious abuse.

Google+ Local and Facebook

These are both perhaps flying under the radar because too many people are mad at Yelp. However should Yelp fall and one or both move into its shoes they currently have no way to control the exact same problems that Yelp currently has.

The upshot

The only real way to create a genuine review website for establishments such as restaurants and bars is to find a way customers can prove they were there. That could be done by receiving some kind of time sensitive code at the establishment that would be accepted on the review site.

For online shops the same system could be instigated.

All you need is $100 million to establish the business! Until then I'm not convinced free to review websites will stand the test of time and I certainly steer my clients away from services like Yelp!

Investing too much time in a service whose future is so unclear reminds me of the many giants who have fallen to internet history. As distrust for 'free to review' websites grow it may reach a critical point where the whole house of cards comes down.