I attended the Yelp Tech Talk, organized in partnership with Society of Women Engineers. It was held at Margaret Morrison Room A14 on the evening of 29th September. What appealed to me about the event was the topic on Yelp online advertising and how Yelp optimizes it so that everyone benefits – the advertiser gets a steady stream of customers, customers get to discover great new food, and Yelp earns a cut from the advertising fees. Personally, I have been keeping abreast of the pay per click advertising industry because it is a fascinating field. From advertising optimization to fraud detection to machine learning analytics, there are many domains in advertising which interest me. Hence, I wanted to explore how Yelp does things differently from Google, if they are.
The first half of the talk was more of a pitch to tell students how great Yelp is, and how each Yelp employee can look under the hood and work on a feature based on feedback from customers. They gave the case study of a person asking Yelp why they could not order take-out directly on the Yelp website, when they were already searching for what to eat. Subsequently, he discussed how his team made an API, or an interface, for other companies to integrate their services on the website in a tighter way. For example, OpenTable is able to use this special API link to display the number of free reservations on Yelp, while other on-demand services can choose to provide deliveries for a particular food place.
What I garnered from this segment of the talk is that it does not pay to go all-in to every segment in your market. Rather than creating a whole new subsidiary like Yelp On Tap to provide food delivery or reservations, Yelp chose instead to provide the necessary infrastructure for other companies to more tightly integrate their services on Yelp’s website. This is counterintuitive to many business people – after all, why lead people away from your site when you could be the one profiteering off this new segment? However, I believe Yelp might have reasons for doing this even though it was not discussed. Firstly, they might not have the necessary knowledge to succeed in that niche. OpenTable probably knows how to do it right; why reinvent the wheel and try to compete with them? Secondly, Yelp is a lean company and they might not want to waste resources on things that do not add any innovation to the industry. After all, integrating services is not innovation. Finally, they might be emphasizing Yelp as a platform, much like how Facebook is. When Facebook tightly integrates features like embedded YouTube videos on their site, they are not leading users away; rather, they actually gave more reasons for users to remain on the website since they can watch the video on Facebook. Similarly, Yelp users do not need to navigate to another app to make a reservation – they can do it all from within the app.
The latter part of the talk discusses the Yelp Auto Bid Genius, which is an internal algorithm which determines what ad to show to customers. She demonstrated that the highest paying ad does not necessarily get the top spot – a combination of click through rates as well as bidding rates do. She discussed about Yelp ad formats, including click-to-call where the advertiser pays each time a call is made to the business from Yelp. I was disappointed that she didn’t go in depth in exploring conversion tracking – how effective advertising on Yelp can be when measured quantitatively. Yelp advertising can cost up to $600 for every 1000 times an ad is shown, which makes it insanely expensive. There are many occurrences of competitors viewing a particular ad many times to drain the advertising budget of their opponents. How does the business know that the customer came via an ad on Yelp? Some of the methods off my head include using special coupon codes which can be assigned to the viewer of the ad. However, I was wondering if there is anything Yelp can do to further increase the tracking and engagement of its users. For example, if I view a listing on Yelp and I go to that place to have a meal, paying for it using my Yelp-branded credit card, then Yelp can perhaps give me a 5% loyalty rebate for using Yelp. Although Yelp technically loses money, it will gain a lot of insights into the users and activities of Yelp. Of course, the privacy concerns must be looked into, but as it is, Yelp engagement is practically non-existent. Users only fire up the app or website only when they need to, which can be a good thing too, since this means each visitor on the website is a ready paying customer.
It was an interesting evening to think about advertising on a ‘new’ platform like Yelp. I was previously more acquainted to text ads on Google and those intrusive display banners on the web, but I have gained some appreciation of what it takes to make advertising on Yelp more effective, and the technology to make it work effectively.