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Mobile Device Usage & Local Search Help Yelp's Revenue Growth

Yelp may have run into trouble with a lawsuit and allegations about fake reviews last year, but judging by the fourth quarter results it revealed yesterday, they have very little to worry about. Acquiring net revenue of $233m over the course of the year, Yelp achieved a 69% growth year on year. It also significantly strengthened its asset base, with its stock of reviews growing by 47% over the same period to 53 million.

What has powered this growth? That’s where things get interesting. Yelp has been particularly successful in making the transition to mobile, with a third of its fourth quarter reviews being made using mobile devices; however, most important of course is how users are employing mobile devices to read reviews.

Yelp’s local focus in combination with ease of use on mobile devices makes it a natural tool for local search and users appear to be eager to make use of this; something which is likely to signal Yelp’s continued growth as the mobile market grows over the course of this year. The transition to mobile has, essentially increased the value of its existing assets by making it useful to customers on the move, whether they are seeking to buy specific items or just looking for somewhere to go for lunch.

The shift to mobile also has another advantage for businesses - it means that customers can write reviews while they’re still on the premises or just after they leave, making a more immediate connection between the customer experience and review content. This decreases the risk of inaccuracies finding their way into reviews, and it also means that as long as the customer experience isn’t terrible, there’s a higher chance of getting positive reviews, as customers are more likely to feel well disposed to people they have just met. It means more reviews are being posted overall, which is particularly useful for young companies trying to get their Yelp pages started.

“2013 was an outstanding year for Yelp,” said its CEO, Jeremy Stoppelman. “We enhanced the mobile experience, brought on thousands of new local business customers and completed the integration of Qype, which accelerated our European expansion. Looking to 2014, we will continue our geographic expansion, add new products and programs for our community of writers and find even more ways to drive value to business owners.”

Those business users have now increased in number to around 67,000, while Yelp receives 120 million unique visitors per month. The convenient availability of local search on mobile devices to read business reviews is growing in popularity every day. As a result Yelp looks set to get stronger.

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