In an interview last fall, Yelp COO Geoff Donaker was asked if he considered Groupon and Foursquare to be competition. His reply: Yelp competes with everybody and nobody.
That is a tricky, but true statement which sums up one of the many reasons Yelp has become so successful and why their road to the future is likely to be difficult.
Business is built off of relationships. Be they with clients, prospects, partners, or competitors, these are the things that will make or break you.
When you compete with everyone and no one, and your lines are muddled, you can be sure that one of your "sometimes competitors" is bound to draw a line in the sand at some point. That seems to be exactly what Google has just done as last week they issued an ultimatum: free content or no search indexing.
Many years ago Google had a friendlier tone with Yelp, which at the time benefitted both companies nicely. Google paid Yelp in order to use their customer reviews on its map listings.
Apparently, despite the paycheck and the traffic, Yelp was unhappy with the ways in which Google promoted its own pages instead of pushing users more fervently to theirs so they backed out of the agreement.
As Yelp (and local search in general) continued to grow, Google drooled over their user-generated content by late 2009 was in discussions to purchase Yelp for a rumored $550 million. Yelp may have walked away from that deal but Google's appetite was not satiated.
In early 2010, the big G changed their policies and aggressively started going out and spidering sources (including Yelp) that they didn't have partner agreements with and using their content in their search listings and then Google Places, Google Place Search, and now on a directly competing Places iPhone app.
This isn't lost on Yelp's CEO Jeremy Stoppelman:
"We are unhappy with the way Google uses our users' review on its Places page. However, there is no solution to the problem... Google's position is that we can take ourselves out of its search index if we don't want them to use our reviews on Places.... But that is not an option for us, and other sites like us -- such as TripAdvisor -- as we get a large volume of our traffic via Google search...We just don't get any value out of our reviews appearing on Google places and haven't been given an option other than to remove ourselves from search, how to improve this situation."
I wouldn't call Google the clear winner on this just yet. We've all seen them try and fail on different products in the past (e.g., Google Wave).
But it's quite a conundrum and although possibly on a grander scale, one that gets played out in business with the search engines all the time. Although I can't give Yelp any advice on their situation, as search marketers we can definitely learn from this.
Look at your sites and ask yourself if you're reliant on any one source for your traffic or leads. Your business relationships are your portfolio and any investor that's been around will tell you that diversification is key.
In the local search game this has always held true, but it's becoming more and more prevalent as instant search results are personalized, localized, and jam-packed with rich content pulled from a variety of sources.
You need to be where your customers are and they are everywhere. Yelp has been learning this lesson the hard way so you don't need to.
Meet Your Favorite Search Engine Watch Contributors
Many of SEW's leading expert contributors will be at ClickZ Live, the new online and digital marketing event kicking off in New York (March 31-April 3). Hear from the likes of: Thom Craver, Josh Braaten, Lisa Barone, Simon Heseltine, Josh McCoy, Lisa Raehsler, Greg Jarboe, Dan Cristo, Joseph Kerschbaum, John Gagnon, Eric Enge and more!