Is “Paid” Yelp a good allocation of marketing dollars? Over the past few weeks, many Gold’s Gym owners have asked for our opinion about the new paid ad offerings and the discount Yelp offers Gold’s franchisees. This presented a good opportunity to reevaluate the Yelp program with a “clean slate”. Many of our Gold’s Gym owner/clients have referred Yelp representatives to their TAG account manager to discuss the paid ad opportunity, which prompted Yelp to request a meeting with TAG management to present the program. After a lengthy meeting with Yelp representatives, followed by independent research and analysis, TAG is prepared to make a recommendation on paid Yelp advertising and the potential for ROI. The recommendation and comments below are more an evaluation of the “paid ads” and not the “enhanced listings”. Paid ads are the more expensive part of the package being promoted to Gold’s Gyms Owners. Gold’s Gym International (according to the Yelp Representatives) has chosen NOT to purchase paid ads for the Corporate Locations, choosing only to purchase “Enhanced Listings”.
The Yelp program offered to Gold’s franchisees is comprised of two parts: 1. Enhanced listings for enhanced customization of Yelp profiles removes paid advertising from owner profiles (so prospects cannot see competitor’s ads on your page) and adds distinctive calls to action such as “get your free pass now” buttons. According to Yelp representatives, enhanced listings are utilized at all Gold’s Gym corporate locations, but they do not utilize the paid search (PPC) ads. Enhanced listings are by far the smaller portion of the cost of the program. A discount on this program is offered to Gold’s Gym franchisees. 2. Paid ads charged each time a Yelp user clicks on a Gold’s text ad– displays text ads for Gold’s Gyms when a Yelp user has expressed an interest in fitness related terms or searches. According to the Yelp representative GGI does not utilize this service for Gold’s Gym corporate locations. There is no discount on paid clicks for Gold’s franchisees. There is no question that Yelp is an extremely popular website with millions of visitors each month. Many customers use Yelp reviews to help them decide on a local business by viewing other consumer reviews. As you are aware, the TAG marketing program for Gold’s Gyms utilizes Yelp’s free programs — such as driving positive reviews using the TAG SocialCloud™ and customizing/optimizing Yelp profiles with pictures and business information – as well as the most complete and up-to-date business information. If you view the specific Yelp profile for your Gold’s location, you will notice up-to-date business information, pictures of the facility and positive reviews that have been driven as a result of the TAG marketing program. These questions can help determine if this is a potentially good investment for your marketing dollars: 1. Does the paid Yelp program offer benefit and the possibility for return on marketing dollars (positive ROI) when compared to simply utilizing the free offerings from Yelp? 2. If it is determined that the Yelp paid program can provide ROI, is the potential ROI better than other paid ad sources online – such as those offered directly thru Google, Facebook, Bing and others? 3. Is Yelp the most effective source to now allocate dollars formerly used for traditional marketing sources to maximize new member revenues — or are the dollars better spent elsewhere online?
Our current recommendation is to “HOLD” and wait for the other Gold’s Gyms that have already signed up for the Yelp program to start reporting results. Paid ads such as this usually yield quick results – Yelp places ads on day one and prospects begin to interact with them immediately. So, in the next 45 to 60 days, Gold’s owners who have agreed to enter a contract with Yelp should begin reporting results that can help us determine if the Yelp program is profitable for Gold’s Gyms. Since Yelp requires a 1 year contract, which can be terminated with a penalty fee, it would only seem to make sense to wait a month or two for others to report results, before jumping into such a long-term commitment. If owners who are testing Yelp report strong results, then TAG management will be happy to advise our Gold’s clients, on an individual basis, taking into account the appropriate package for the market serviced. It is just not clear from our research that the paid offerings from Yelp, above what is already being utilized in the free services, can justify the high cost per visitor Yelp suggests in “average pricing”.
How to determine if any other gyms/health clubs in your community are buying ads from Yelp- try this for yourself When digital marketing advertising opportunities are effective and have been around for years, many top business owners use them and battle for the top ranked spots. Yelp has been around for quite a few years and their sales team does a great job at aggressively marketing. However on our teams’ anecdotal (nonscientific) visits to Yelp.com we found very few gyms actually purchasing the ads Yelp is offering. Conversely if you visit Google.com and type in “gyms in my city” (i.e. gyms in Douglasville GA, etc.) you will see the many of the small yellow “ad” tabs in the top section and right hand column. On both Google and Yelp the small yellow “Ad” tab denotes at paid advertisement. To determine if any of your competitors are purchasing ads from Yelp simply visit yelp.com and in the top search area type in “gyms” or “health clubs” and your city. You should visit that main search page, then your Gold’s Profile and a few of your competitors. If you see none of the small yellow “ad” tabs in the main (center) column just above all listings that could indicate no other gyms are purchasing these ads from Yelp. IMPORTANT NOTE- when searching Yelp.com also remember if you see advertisements just below the words “ads by Google” these are NOT Yelp ads and they are actually being served from the Google Network, possibly at a substantially lower price than the “average pricing” Yelp has quoted. That is another reason we suggest using ad spend on Google before Yelp. Our visits to the Yelp.com site noted “ads by Google” on most pages, even directly next to the ads by Yelp we believe at a much higher price. Your account manager at TAG will be happy to walk you thru the process of viewing Yelp ads in your local area to see if there is any competition for them.
What are the most effective forms of Paid Advertising Online using specific data from Gold’s Gym Campaigns, and how should you now allocate funds formerly used for sources like direct mail? 1. Google AdWords PPC- Google is the main driver of traffic to Yelp and most other websites around the world. If you can reach many of the same targeted visitors cheaper via Google, that seems to be the prudent play. 2. Facebook Offers- TAG has had great success lately in generating trial members for Gold’s Gyms using Facebook offers. 3. Bing/Yahoo ads
Our recommendation to “wait” before entering a long term agreement with Yelp for results of others utilizing Yelp’s pay- per-click ads is based on the following: 1. Extremely expensive “average” cost per visitor (click) as quoted by Yelp, when compared to the cost per click possible on the Google network when targeting only those searching for gyms or health clubs. Our anecdotal research and opinion, from implementing Google paid campaigns for Gold’s and other gyms, suggests that the “average” price per click quoted by Yelp could be 100-400% HIGHER than comparable visitors directly from Google. As an example, one smaller geographic area where Yelp quoted an owner an average cost per visitor of $2.90, TAG has been procuring targeted visitors from Google (searching terms like “gyms near me”) for under $1. Statements made by the CEO and VP of Yelp seem to clearly indicate that “a majority of Yelp Traffic (visitors) come thru Google”. If these statements are accurate and these visitors can be purchased directly from Google at a significant discount, that would seem to be the prudent purchase for Gold’s Owners. 2. It appears (at a glance) very few gyms are purchasing ads from Yelp. In our teams research process we visited Yelp.com as consumers looking for a gym in many locations TAG serves for Gold’s Clients. It was extremely difficult to find any of the yellow “ad” tabs in the main column that denote the text ads being promoted by Yelp. This is anecdotal and we did not do any scientific research here but you are encouraged to visit yelp.com and see if any of your competitors are purchasing these ads. Again since Yelp has been around now for many years if these ads were effective at driving gym memberships it would stand to reason that you would have heard about their success (as a gym owner networking with others) and there would be stiff completion to buy these ads. As an example the competition to purchase ads on Google under keywords like “gyms in my city” or “gyms near me” is robust in all areas we serve, with every major Brand (Gold’s, Anytime, 24Hour, LA Fitness) bidding for top placement in Google paid results. Many of those Google ads also are displayed directly on the pages of yelp.com but charged at Google auction pricing. 3. Yelp displays ads from Google Search Results directly on Yelp.com pages, but those ads are charged the lower Google Price. So this is another reason to purchase from Google first at potentially significant savings. It is very possible (and actually quite likely from our look on yelp.com) that Google Ads will be sitting on the same yelp.com pages as the ads you might purchase from Yelp. 4. Yelp requires a contract commitment of one year. However, it should be mentioned that Yelp will allow a buyout of the contract by paying a penalty. PPC Networks like Google and Facebook require no commitment whatsoever, except perhaps a $25 credit in the account to get ads running. 5. Negative comments from past Gold’s Gym owners who have advertised on Yelp (contact info provided on request). The Yelp representatives who met with TAG were kind enough to provide three references of Gold’s owners who had advertised with them in the past, as requested. Those three references coincidentally happened to be TAG clients. Two reported no ROI (and cancelled contracts at their first opportunity) and the third told us they did not remember advertising with Yelp. A GGFA Director also had very negative comments about the Yelp customer service and said he had to, “e-mail and call thirty times to cancel his contract.” It should be noted however, that Gold’s does now have a dedicated account representative, which could help with customer service issues. Yelp has also reported a long-term advertiser in the Gold’s SOCAL Group (Angel Banos). If you are considering Yelp ads and know the Banos Brothers, you should consider asking their opinion. TAG does not have a working relationship with SOCAL Group and have no comments from them. 6. The gym industry is not well suited to Yelp paid advertising due to the lengthy research process involved in the consumers selection of a new gym/health club. The Yelp representatives suggested that the one of the biggest category of advertisers on Yelp were service contractors, which makes sense. Gyms might not fare as well as other advertisers on Yelp, like restaurants and service contractors, because of the difference in the sales funnel and research process required to acquire a new member/customer. Our research and hands-on experience with marketing of Gold’s locations suggests that Yelp would only be utilized at or near the end of the customer’s decision process. Once a prospective member has seen the web site, read about all the amenities and determined if a specific gym or health club is a good fit, then that person will probably go to Yelp to see if they can gather any further information in the form of reviews. The Yelp enhanced listings are possibly more informative but still do not provide a prospect with enough information about club amenities to make a decision. If individuals are looking for a restaurant, they can view the menu on Yelp and read all the reviews. That may be all that they will need. If another person has a burst pipe or some type of emergency service contractor need, he or she might visit Yelp and read the reviews to make a quick decision. However, joining a gym is a lifestyle choice and prospects know they might spend hours every week at a club. The investigation and research process is more in-depth and that type of traffic will probably originate from Google or another search engine. So again, the question becomes — if the targeted traffic from Google is significantly less expensive, would it be a better alternative for limited marketing budgets? It is true that Yelp plays a role in the gym prospect sales funnel but we believe it comes at the end, after all research using search engines is done and a prospective member knows which club(s) he/she is truly interested in. 7. Spending money with Yelp cannot help eliminate negative reviews. 8. The Yelp cost for the actual visitors lacks transparency when compared to Google. Yelp cannot tell advertisers how much clicks will actually cost and there is no limit on how much can be charged. Advertisers (we believe) cannot set maximum limits on clicks as they can on the Google network and can only find out what they have been charged in retrospect. It should be noted that the Yelp representatives told our team that more functionality, similar to Google, is being constructed. If transparency and control over costs becomes more advantageous to advertisers, TAG will amend this aspect of the recommendation. In addition to the above, there is another question still looming. Is Yelp susceptible to continued traffic degradation since they offer competitive products to Google, but also rely on Google for “a majority” of their web traffic? If so, are you at any risk in a long term agreement with Yelp if traffic declines?
The articles referenced below (Wall Street Journal, Business Insider, etc.) and statements made by Yelp executives in congressional inquiries seem to indicate this is a real potential problem. It has been the opinion of our management team for quite some time that Yelp is being “pushed down the page” by Google. Since both Yelp and Google have a robust online review program for local and small businesses, it would only make sense that Google would prefer interaction on their own reviews over a 3rd party property like Yelp.
Google is hurting Yelp and other location-based recommendation services
Google wields a considerable amount of power over incoming search traffic. Recent changes to Google’s search algorithm appear to have pushed down results from third-party location recommendation services in favor of results from Google-owned services, according to a recent Yelp-commissioned study cited in the report. Read Article
Is Google cheating on search? New study says yesGoogle has “increasingly developed and promoted its own content as an alternative to results from other web sites,” according to the report co-authored by Michael Luca, a Harvard Business School economist, Tim Wu and the Yelp Data Science team. Read Article
Yelp study criticizes Google for ‘degrading’ search results, harming consumersIn 2013, the Federal Trade Commission cleared Google of allegations that it violated antitrust laws by promoting its own offerings — like Google Maps — in the search results. That decision obviously was a big disappointment to Yelp, which was among the companies that had complained about Google’s search results. But the review service didn’t give up its battle with Google after the FTC declined to prosecute. Instead, Yelp continued to criticize Google in Europe, where regulators have alleged that the search company abused its dominant position in the market by favoring its own products and services in the results. Read Article
Yelp seeks buyer amid slow growth, rising costsRead Article
Stoppelman: 75% Of Yelp’s traffic comes from GoogleYelp CEO Jeremy Stoppelman released a statement last night (embedded below) outlining why he believes Google has abused its market dominance in search. He also provided additional details about Yelp’s relationship with Google during a series of questions from the participating senators. One of the themes throughout Stoppelman’s testimony was Google’s mandate that if Yelp wanted its review snippets removed from Google’s place pages, then Google would remove it entirely from its search results as well. This, Stoppelman says, is a false choice, because nobody can afford not to appear in a Google search. Asked how much of an impact being removed from Google would have on Yelp, Stoppelman replied, “about 75% of Yelp’s traffic, overall, is sourced through Google one way or another. About 50% is traffic coming from people who start their search on Google and eventually find their way to Yelp; the other 25% is people qualifying ‘Yelp’ as one of the keywords in their search… If we were not in Google it would be completely devastating.” (Note that this quote was transcribed live, so may be slightly off.) Read Article
Google, Yelp executives spar on traffic stats, Antitrust complaintOverall, Sollitto said Yelp still gets a majority of its traffic from Google. He declined, however, to specify how much. Read Article