Entries tagged with “business model”.


So apparently this launches at 1:40pm today, and I am REALLY excited.

http://millvalley.patch.com/

It is a REALLY interesting new content distribution model for community / municipal news… sort of like the old neighborhood rag (of which many still exist in paper form, (more…)

How Yelp works… a totally delusional, mindless, idiotic ramble that I choose to pull from the threads *there* to this site *here* for multiple reasons.  If you need to know the reasons, just make up your own… they will suffice.  =)

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Chicago does not click on sponsored biz results… at least… active yelpers that talk.
(http://www.yelp.com/topic/chicago-do-you-click-onto-yelp-s-sponsored-ads)

and albeit not directly about yelp, it has the same model… which ABSOLUTELY no one understands how to convert the traffic into money.

Kelleher from Wired.. his thoughts earlier this year:

http://www.wired.com/techbiz/it/magazine/16-04/bz_socialnetworks

A CNN / Fortune article about Facebook’s Number 2 being “the one” who can make it profitable:

http://money.cnn.com/2008/04/11/technology/facebook_sandberg.fortune/index.htm?postversion=2008041213

while facebook has money problems:

http://www.techcrunch.com/2008/10/31/facebooks-growing-problem/

“facebook headed for financial ruin?
http://www.marketingpilgrim.com/2008/10/facebook-headed-for-financial-ruin.html

a good dollars and sense vs pageviews cut up of the issue:

http://okdork.com/2008/04/02/the-money-problem-with-facebook-myspace-hi5-apps/

And I think the AOL Yahoo thing brought out some interesting comments… especially from Randy Falco
http://gigaom.com/2008/04/10/aols-falco-gets-something-right/

“But despite drawing large, engaged audiences, other social networks have not been able to make the experiences relevant to users and marketers alike.”

And that last link says it very succinctly….

“That right there is the reason I’m hostile to most social networking and social networking-related startups that plan to rely on advertising: They’re depending on marketers to foot the bill while at the same tailoring their content to users that are generally hostile to or uninterested in marketing.”

Agreed on Gil’s facebook suggestion. It is a lot lower, IMHO. Also.. internet users learn to ignore ads immediately, and very few actively click. The return on impressions is pretty bad.

I also have some thoughts about the worth of sponsorship, whether it obviously alters page views, and some ethical concerns in allowing businesses to highlight reviews. Most businesses have absolutely no idea how it works, and are simply scared *not* to participate. Stuff like this (http://www.pressdemocrat.com/article/20081117/NEWS/811170304/1037/NEWS07) (http://www.theregister.co.uk/2008/08/13/yelp_sales_pitch/print.html) keeps popping up. Not that yelp *WILL* alter reviews, but that they mislead confused non tech biz owners into *thinking* they can….. or saying it outright.. is a problem.

I think the SEO stuff was bungled in that they didn’t use any formulaic approach to get organic searches, IE having the name of the reviews be words for indexing, etc. Now with the ad model falling apart, you have small challenges to work through… like the new search box in google, under “yelp”.. it will take away page views in the long run, albeit probably not a huge deal. But SEO is all that matters, and the ad models are falling apart. Google’s grab for page views is understandably greedy, especially in context of the doubeclick purchase. (http://www.emarketer.com/Article.aspx?id=1006157)

on top of that:

“According to a MediaWeek article on Nielsen’s report, advertisers in the financial services category spent 27% less on online display ads in the first half of 2008 as compared to the first half of 2007. This resulted in a 6% overall year-on-year decline in online display ad spending through the first two quarters of 2008.”

People know that CPM doesn’t work, but they desire something they are familiar with, and that can be quantified. What is odd is that there is desire to get ANY quantified number, whether it means anything valuable. Impressions are older than the internet right? It is simply something that was easier to understand than pay per click.

And the highly targeted audience idea is fine on facebook where you build and create ads based off of keywords, but yelps demographic of localized businesses is a bit skewed…. if I type in hotel, the range of types of hotels is massively hit and miss. When Gil says “market” he means city… right Gil? But how many styles and types of hotels are there? That’s a problem.

You see very little in the ROI. Page views do not equal sales, necessarily.

I have been on this site since June of 2006, and I am also a yelper constantly signed in. I have *never* clicked on any ads.

CPM, PPC… fancy graphs do not monetize a website because with no statistical return on revenue, people advert less.

And that is their ad model. I will find some more evidence of this ad model problem… just a sec

How Yelp works some more……. a totally delusional, mindless, idiotic ramble that I choose to pull from the threads *there* to this site *here* for multiple reasons.  If you need to know the reasons, just make up your own… they will suffice.  =)  I just go back to it a lot and my searching here is better than the search function there.

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They make the rounds to venture capitalists (like some people that love yelp and actively participate) and get equity through that. They look for David Cowan and Tim Draper types to flush the yelp account with money…. and yelp uses it as operating funds. Earlier in Feb they got another $15 Million of VC funding from DAG, totaling something like $30Million in four rounds of VC exploration. Revenue is widely state to be less than $10 Million.

the ad model does not bode well for 2.0, as Facebook was massively overvalued and is having money problems
http://www.techcrunch.com/2008/10/31/facebooks-growing-problem/

and Stopplemen has suggested that “But revenue from these sources isn’t enough to make Yelp profitable, Mr. Stoppelman said.” (http://bits.blogs.nytimes.com/2008/05/12/why-yelp-works/)

If Yelp isn’t able to secure VC funding through 2010, the economy is such that it simply will not be there later. Depending on how much money yelp is burning through, I really can understand why their sales people are aggressive….

Unlike linkedin I don’t think this VC funding is going in the bank:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/22/BUAI141O97.DTL

But the problem here is that the ad and business model does not offer enough cash to prop up the coffers enough for it to be profitable. And… yelp is *not* profitable.

YET. maybe. hmmm….Period.

I think the linked comment in this article from 2006 says it best:

http://www.techcrunch.com/2006/10/04/yelp-secures-10-million-more-for-local-reviews/#comment-243531

the end is that there are people out there with a SHIT TON of money looking to fund some ingenious ideas. Those people are not idiots…. and they watch Yelp very, very closely. I am sure it will be fine, but this quote from Jeremy, and actions I have seen in the last couple months, suggest the leadership is not as strong as it should be.
http://venturebeat.com/2006/10/02/silicon-valley-the-industry-of-cool/

“When asked where they want to be in five years, Stoppelman responds: “Sitting on top of a pile of money … [in unison with Simmons] … surrounded by women! Yeah! [high five]“