I promised I wouldn’t write about Yelp anymore… but they *are* getting sued again.

Another Class Action Lawsuit for Yelp!

Enjoy the TechCrunch article… and always, always, always enjoy the commentary.  I find it interesting if not hilarious.  If it isn’t hilarious enough for you, check out the comment section of this blog post, where it basically proves Facebook users are clueless (or 4chan had a blast acting like a mischievous army, once again).

Yelp seems to be taking this situation seriously though; umm….enough to post a Craigslist ad for legal counsel.  I would imagine there are better ways to hire lawyers than CL, but hey, just says a lot about the management that got them into this mess.

But these cries of extortion… once again… are more about bad management than out and out unethical behaviour.  There is no way these suits will be able to prove the “WE WILL DELETE A REVIEW FOR YOU” concept, because I don’t think it has ever happened; if it has, I doubt anyone has gotten a record of it as fact.  Someone would have proof by now… a recorded call, etc.  Admittedly, these guys at Yelp are from Paypal, and they know not to be sending privy or damaging info across email, etc…. but I still doubt something like that is going on.  It’s more likely confusion on the level of businesses not getting what is happening with the algorithm, as well as the dubious (but not out and out unethical) “move the best review to the top” program, that seems to confuse a lot of people.  This is more about business owner’s lack of understanding about social media, and Yelp’s apparent incapacity to clarify just how their algorithm works.

Using the algorithm as an excuse is not a wise move – blaming the foundation of their business opens them up to scrutiny.  By blaming the process of your sorting model, there will be more curiosity as to how it works.  Until people can trust that algorithm without question, their entire model will be extremely unstable.  Regardless of proprietary, privileged information, it jeopardizes their ability to be viable and dealt with as ethical business people.  Of course, the bungled Google deal and whatever really happened there (it’s all speculation) might offer a small window into their world.  Theories abound that Yelp was lying to Google, leaking information, and fabricating higher offers from unnamed suitors.  Yelp walking on this deal doesn’t make as much sense as Google calling their bluff, but logic doesn’t always figure into business dealings.  All in all… Google knows how to negotiate, and they were “rattled” by Yelp’s lack of transparency…. seemingly a theme for Yelp.

All they need to do is be open about their algorithm, and it will bolster and gel their business model.  I am sure there would be growing pains with being that open, but it would pave the way to have a stronger, vetted business that actually has trust from other people.  Until then, their algorithm nonsense will be the blood in the water that keeps the sharks (lawyers & lawsuits) coming back…

As the solution to their issues seem obvious, it starts to beg the question whether Yelp really has something to hide.  Without being conspiratorial, it isn’t that much of a logical leap that they are concerned about *something* – whether there are significant flaws in the algorithm, or they have work arounds that allow you to disregard specific aspects of it.  Frankly I don’t like conspiracy theories; people are typically not intelligent enough to orchestrate massive lies involving endless people that agree to keep secrets without being morally challenged.  Our government can’t, big businesses can’t…. why should a web 2.0 startup be able to get this far?  If moralistic heart strings being tugged isn’t enough, money talks… and one of the employees would have blown the whistle for their future book deal and fame, at this point.

However, if they ever get caught jockeying reviews under the guise of their algorithmic mistakes, Yelp will be *decimated*…. but I can’t imagine that ever happening.  What might happen is that serious flaws in the algorithm get noted, and short term it will seriously hurt them.  Depending on how they handle this fictional problem, it won’t likely be a Yelp killer.  However, watching Toyota deal with public fallout, it never ceases to amaze me how business’ often choose to ignore history and good sense.  What’s more, Yelp is a leader in flipping the marketing model and giving consumers a voice, taking a business’ ability to control damage with PR and spin.  Yelp is acting exactly like the companies that they are helping expose… you can’t be secretive, you can’t market your mistakes away…. if any business should understand this, it’s Yelp.  If you aren’t ethical, or don’t operate with the best of intentions… the public has ways of exposing that.  It’s humorous, and possibly ironic, that Yelp is caught in a trap of their own making.

I love seeing unethical people getting brought down, but I just don’t see this as mitigated behavior so much as foolish bungling, something I touched on before in this article.

People who don’t understand what Yelp is offering endlessly cry about the review site’s shifty ways… but Yelp’s program for advertising isn’t that nebulous.  The $300, $500, $1000 plans get you “impressions”…. those lightly highlighted/colored ads at the top of searches on yelp.  You also get a “slideshow” style picture gallery which is pretty meaningless, and you get to pick your favorite review to automatically appear at the top.  It says, “this is the company’s favorite review” and it’s fairly obvious when people are sponsors.  Most of the worthwhile aspects of managing the business owners accounts on yelp have nothing to do with their advertising options, by the way.  It is a valuable tool and can help you listen, learn and grow…. but you don’t need to pay yelp for any real reason.  For most businesses I doubt it makes sense at all; I don’t get it for a flower shop or bakery, etc…. there is no return on investment, so those constant calls they must be getting are annoying, to be sure.  But I still don’t think there is some devious plot going on…. I have spoken to at least 5 different account managers in different markets who try to get me to advertise, and none have pulled any unethical behavior beyond being ENDLESSLY annoying.

I still prefer google adwords, but if you are already doing those it might not be a bad idea, depending on your business.  Think about it from a hotel’s perspective – If I choose to pay $1000 a month from our marketing budget (which has moved online from print media), that means I get something like 4800 impressions (aka a banner ad that a consumer may or may not see due to “banner blindness”… I mean, I don’t see those ads at all, frankly).  If our average daily rate is $500, that means I literally have to pluck one person for two nights out of the 4800 impressions to cover the cost of advertising with yelp.  It actually is sort of a slam dunk, in that sense.

I just can’t convince old school marketers who are scared of losing the message, and not controlling the brand, due to sites like this.  What’s more, Yelp is only successful in SF Bay and a couple other markets.. barely.  Boston, LA, Chicago, NY seem to be okay… but even social media savvy Portland and Seattle aren’t that strong a market at all.

Look at open table reviews vs. yelp reviews in other markets…. opentable reviews which are verified and confirmed from a reservation are much more common than yelp reviews outside of the SF market.  One of our fine dining restaurants in the Portland area has 2 reviews on yelp, and over 200 on open table.  That speaks volumes.

But in the end…. it’s all bad press, and it douses their equity every time this happens.  I can’t help but wonder why they allow this to continue unabated?

Social media is supposed to be about transparency and Yelp is failing at that…. massively.  Everyone thinks Yelp is some immutable, immovable behemoth, but people moved from Myspace to Facebook in less than a couple months.  Youtube is less than 5 years old, and Facebook is less than 3 1/2 years old..  Yelp needs to recognize that their high horse isn’t that high.  The basic upshot is that this is all very young.  I think it’s interesting tho… all of it… which is why I am rambling here to all of you.  This will all be sorted out within a couple years, I am sure.

Do you guys think this is more about confusion from the companies themselves, or do you really think yelp is committing some expertly maintained conspiracy?  What are your thoughts on the future of online reviewing?