Part I
Situation Analysis for Yelp
This situation analysis is the foundation of a performance-based marketing plan. This
section will provide a summary of revenue growth, market share, competitive
position in the industry landscape and also includes a SWOT analysis of strengths,
weaknesses, opportunities & threats to Yelp’s business.
Yelp’s Current Performance
Net Revenue Increase
Strong Revenue Growth
$300.00
$250.00
$200.00
$150.00
$100.00
$50.00
$0.00
$120
$100
$80
Q3 '13
$60
($m)
$40
$20
$0
M
Q3 '14
• Yelp’s net revenue was $102.5 million in the third quarter of 2014,
a 67% growth over the third quarter of 2013.
• Yelp’s net revenue for the nine months ended September 30, 2014
was $267.6 million, an increase of 65% compared to $162.3 million
in the same period last year.
Market Demand & Growth
International Reviews
International Visitors
8
35
7
30
6
25
5
20
4
M
3
2
10
1
5
0
0
Q3 '13
Q3 '14
-Yelp’s international reviews grew by
97% from Q3 of 2013 to Q3 of 2014
M
15
Q3 '13
Q3 '14
-Yelp saw a 40% increase in unique
international visitors over that same timeframe
Drivers of Revenue
› The industry is highly competitive with low barriers of entry. The industry’s revenue drivers include:
Local Advertising
› 85%
› Local Advertising is the
main driver of revenue.
Brand Advertising
Other
› 10%
› 5%
› Second Largest Driver
of Revenue
› Gift Certificates and
other initiatives.
Industry Attractiveness
High
Segment A: large geographcal and
diverse consumers who use ratings and
reviews sites to search for local
businesses
Profit Potential
Segment C Businesses that are seeking
low-cost, easy to use, and effective
advertising solutions to target a large
number on intent-driven consumers
L
Segment B: Customers who are
new in town or travel-oriented
community
Low
Low
Industry Attractiveness
High
Industry Attractiveness
There are many internet and advertising information providers
in the business review sites industry. The industry has:
• Low Substituting costs.
• Low barriers to exit.
• High industry growth
• Low costs to enter the indusry
Yelp’s margins are much lower than its top competitors.
Competition (2013)
Sales (Millions)
Gross Margin
Market Share
232.988
92.90%
68.50%
2.7
Not Public
Not Public
7.044
Not Public
Not Public
Yahoo! Inc.
4680.38
83.80%
9.80%
Google
59,825
63.40%
67.30%
Yelp Inc
Citysearch
craigslist, Inc.
Comparison between Yelp and its Peer Group
Share Performance Metrics- Yelp
Share Metrics
2013
Potential
Cumulative Reviews
47%
80%
Unique Monthly Visitors
39%
60%
Local Business Accounts
69%
75%
12.6%
36%
Market Share Index
39% Growth of
Monthly
Visitors
47% Growth of
Cumulative Reviews
53% Remaining for
Growth
61% Not
Monthly Visitors
69% Growth of Local
Business Accounts
12.6%
31% Not Local
Business Accounts
21.4%
28.6%
53%
Part II
Marketing Strategy
The marketing strategy section addresses key issues that were discussed in the
situation analysis section. In addition, this section will provide strategies that will
identify market segments and growth opportunities for Yelp, protect their current
position and improve their positioning in the global social review site marketplace.
Strategic Market Plans
Improve Overall Market Share
Grow Small Business Account
Relationships
Geographic expansion & Increased
emphasis on Mobile technology
Market Attractiveness- Huge opportunities here and abroad
Competitive Position- Yelp is one of a few firm’s stealing market
share here in the US
Key Issues Facing Yelp
• Market Competition- Increased competition in the social review site
marketplace. Most notably, Google, Yahoo & Bing
• Market Share- Yelp is focused on growing market share with local
businesses. They currently serve 86,200 local businesses of the 67 Million
local businesses in the US & the other countries they serve
• International Expansion- Yelp is currently selling in just 8 countries and
serves 29 countries across the globe so there is a huge opportunity set
• Shifting Consumer Preferences- During Q3 of 2014, Yelp saw their unique
mobile visitors increase by 46% over Q3 of 2013. This is a trend they want
to continue to stay in front of and develop content that is user friendly on
mobile technology
• Marketing & Sales Communication- Continue to build awareness around
the Yelp brand and continue to build consumer loyalty by rewarding local
businesses & reviewers (Yelpers)
Marketing & Sales Budget
2013 & 2014
Through Q 3
2013
2014
Net Revenue
$162.3m
$267.6m
Marketing &
Sales Expense
$93.123m $147.470m
Marketing &
Sales Expense
as % of
Revenues
57%
Marketing & Sales Budget
$300,000,000.00
$250,000,000.00
$200,000,000.00
55%
Net Revenue
$150,000,000.00
Marketing Sales
$100,000,000.00
$50,000,000.00
$0.00
Q3 2013
Q4 2014
Net Revenues grew by 65% from Q3 of 2013 through Q3 of 2014 while
proportionate dollars spent on Marketing & Sales declined by 2%