September 19, 2017

The Hype of Location Based Services (LBS)

Ruud HeinA great article was posted by Ruud Hein about the second coming of LBS (Foursquare, Gowalla, Yelp, ScoutMob, etc.). The underlying message is: don’t get too carried away with the hype, we’ve seen this before. You should read the article for yourself, but one of the striking metrics provided was that 96% of people in the US do not use location based services. This is not to say that there won’t be more adoption, possibly even rapid adoption, but businesses should not get swept away with overly exuberant enthusiasm. They should make sure to closely scrutinize any initiatives they plan on taking and especially consider their own patron-base.

Yelp and Open Table will offer Groupon type service

By any measure, Groupon has been a phenomenal success as a company. So much so that others are following suite – including Yelp and Open Table. This video discusses this as well as the question of the impact of Group Buying on small businesses… specifically, restaurants.

Is group buying going to be the new tech trend like “checking in?” As successful as Groupon is with their extensive email list, what happens if/when Facebook enters the fray?

Class action lawsuit against Yelp

Over the past year or so, there have been a lot of complaints about Yelp using questionable business tactics when soliciting businesses for advertising dollars. It looks like some businesses have decided that these tactics go to far. TechCrunch announced that two law firms – Beck Lee from Miami and The Westin Firm in San Diego have filed a class action lawsuit against Yelp for unfair business practices.

Quick Yelp Overview

For people that don’t know, Yelp is a “local search” site that allows users to review businesses. Kinda like a yellow pages where people post comments on their experiences. Users can search for a business – like an Italian restaurant in Atlanta – find results and see the business’ profile along with all of the reviews that business has received. Each review is tied to a registered user with their picture and a little bit of personal information about them, which gives business owners a way to better understand who the reviewers are. Users of Yelp build credibility in the system through these reviews that are rated by other users as funny, cool, useful, etc.

Why businesses like Yelp

Businesses seem to like Yelp because there are a ton of people using it, it provides them with feedback, but mostly Yelp lets them advertise. In that search for Italian restaurants mentioned above, at the top of the list will appear a restaurant that is paying Yelp for sponsored ads. As a user browses the site, additional sponsored ads appear on the right side of the page. Yelp provides businesses with information on the number of people that visit their Yelp profile which presumably translates into “butts in seats.”

Why businesses don’t like Yelp

The biggest reason businesses don’t like Yelp is because they sometimes get bad reviews and these are visible to anyone that visits the site. One can convincingly argue that people are entitled to their opinion and Yelp is simply providing a venue for those opinions to be expressed so that other people might make better informed decisions.

For a long time, businesses just had to take the negative reviews. Then Yelp allowed businesses to respond directly to a reviewer to try to address complaints in private. This led to some abuses as users posted negative comments in hopes that business owners would bribe them into changing the review. Last summer, however, Yelp started letting business owners respond in public to reviews. This was a little better, but businesses still don’t like negative comments (obviously). Rooz Cafe in Oakland even created a “No Yelper” policies.

Why are businesses accusing Yelp of “Extortion”?

There are a couple of reasons for this. A minor one that is frequently mentioned is that Yelp will show ads from your competitor’s business (who are paying) on your non-paying business’ profile. This practice isn’t that egregious, though and I think is up for debate.

The biggest reason stems from complaints from multiple businesses, the accusation that Yelp offers to squash bad reviews if they pay for ads (see the comments section on the TechCrunch article to get a feel for this). The business story generally goes something like this:

I had some negative reviews on Yelp and was contacted by a Yelp sales person that said if I paid $300 per month for advertising, those reviews would disappear.

That’s what all of the hullabaloo is about … these alleged sales calls.

Is all of this just business owners that are so upset about bad reviews they are making wild accusations or errant sales people within Yelp offering benefits off script? Maybe, but a quick search of Yelp extortion turns up a lot of results, dating back to 2008:

http://www.switched.com/2010/02/25/yelp-embroiled-in-bribery-extortion-and-defamation-dispute/

http://www.eastbayexpress.com/eastbay/yelp-extortion-allegations-stack-up/Content?oid=1176984

http://consumerist.com/2009/03/more-business-owners-accuse-yelp-of-review-extortion.html

http://blogs.sfweekly.com/thesnitch/2008/11/is_yelp_extorting_san_fran_bus.php

http://www.theregister.co.uk/2008/08/13/yelp_sales_pitch/

There is even a website dedicated to the topic:

http://www.yelpscam.com/press.html

Community Question

Yelp tries hard to present itself as a place to get quality reviews – their tagline is “Real People. Real Reviews.” Although, I guess that is still true, even if some of those reviews are removed. But the community question is: If these allegations are true, even if Yelp is not what we might want it to be, are they guilty of extortion?

Let me know what you think and tell me about your experiences with Yelp – good, bad or neutral.

New Facebook email versus Gmail

Apparently I’m over a week late on this, but Facebook has announced they are working on a revamping of their messaging platform to implement a full on email platform that will rival gmail (Yahoo Mail, AOL, etc.). This is to include POP3 and IMAP support (that means you can use it outside of Facebook).

Why is this such big news? In 2009, the time spent on personal email was surpassed by time spent on social media sites. Email is becoming more and more for business purposes while social media is the venue for personal messaging (even business use is shifting to some degree).

Is Facebook up for the challenge? Keep in mind that Google launched their social media platform – Orkut – one month before Facebook saw the light of day. If you’ve never heard of Orkut, it’s because it failed to gain adoption in the U.S… although it is huge in India and Brazil the same way David Hasselhoff is huge in Germany. One of the lessons to be learned is that huge companies – even Google – don’t always win.

But Facebook already has adoption and knows who your friends are. Plus, people are already using it for some messaging needs. It’s a crazy world.

Are you ready to rumble

So here’s the run down:

Google is doing everything including mobile phones and a new Operating System (Chrome) to rival Microsoft, Apple and even Linux. Plus they continue to try to push deeper into local search as evidenced by their failed attempt to buy Yelp.

Apple is trying to do everything, too. Recently, they have been in talks with Microsoft to use Bing as the default iPhone search engine instead of Google (what?!?!?!). To add insult to injury, Apple refused to accept Google’s Voice app into their App Store. All of this, of course, comes after Eric Schmidt (Google’s CEO) resigned his position as a Director at Apple based on a conflict of interest. Oh yeah, Apple also wants to be your cable TV provider.

Microsoft still has huge market share, but seems to be muddling by on its laurels. Although one of the reasons that Google’s $550 million bid for Yelp fell through was that Microsoft counter offered $700 million.

And Facebook continues it’s march to try to dominate how people interact online.

This is going to be a huge battle akin to the battle for delivering data to homes that pitted phone, cable, and satellite providers at odds when they all realized that fundamentally they were trying to do the same thing – deliver information.

Summation

So… how does this affect local organizations trying to reach their target audience and build patron relationships? Dunno, but unfortunately, I think this is going to get more muddled for the foreseeable future. In the meantime, hang in there and good luck trying to figure out where to put your time and money.

Let me know what you think!