This "opportunity" has been very interesting to me in the past few years. Specifically, finding great restaurants and associated nightlife easily has always been a problem. This naturally leads to some sort of web site with a master list of data + reviews. Yelp is this - basically, a toronto.com or martiniboys.com minus the "we moved the magazine online" element and added user generated reviews and facebook-lite. Of course they have now turned into a larger directory - from dentists to religious organizations.
They figured out the Community Manager position - which is highly effective local marketing. This is VSB (very small business) - to get to them, you have to call them. As per the article, many owners in their listings are probably not that web-savvy.
Here comes the "but". I don't believe that the simple rating system is all that effective. Can the average person write an honest review? Can they separate their experience from that night with the places they went? For example, I had a bad experience because I went out with boring friends...but don't admit my friends are boring; so the bar gets 2/5?
The conclusion of the article sums it up well:
Of course, it's easy to see why so many business owners, faced with millions of Yelpers, each capable of ruining or at least damaging a business, choose to look on the bright side. Jane Reddin, who owns a crafts store in Phoenix, complains to me for 10 minutes straight about Yelp, assailing the company's business model, its arrogant salespeople, and the stupidity of the average Yelp reviewer. "They don't know what they're talking about," she says. "It's as if they're complaining that the gazpacho is cold."
She does go on to mention she likes the community aspect of Yelp. Seems like she likes Yelp for other people's businesses, but not for her own..:)
What is also interesting is the sense that something is off in how the owner, Jeremy Stoppelman is portrayed. At least I hope so. Read this quote:
"The most frustrating thing is talking to owners who say, 'Yelp has been great,' and then they think for a minute and remember the one negative review. I understand that people want to be heard, but you're meeting the Yelp founder, and all you want to talk about is a single review that doesn't even matter in the grand scheme of things. I don't understand that."
To a small restaurant in a downtown, competitive area? It does matter. Look at this restaurant, Riva on Yelp. One review, because the reviewer believed that the cook was "PSYCHO" and gave her a bad look.
This is why I don't believe in the ratings model at work here. Their 5 star ratings system is very basic - there is some text when you mouse over, but is that clear enough? What are you actually rating? Compare to a Zagat - where food, decor, price, decor and cost are all rated so you can "slice and dice". Too bad their interface is suh-low.
And finally, here is the negative article on Yelp - claiming sales people are offering to move negative reviews for a monthly fee. Here is Yelp's response.
Yelp is doing a pretty good job - sort of a 1.0 on this. And they will certainly exit for a ton. But there still remains another answer/opportunity/extension here...