When small businesses think of Yelp, they think of reputation management on the web. Furthermore, they often tend to think about all the ways in which Yelp could ruin their businesses, or at least hurt them substantially. Essentially, Yelp has become a cause for worry with many small business owners, as most consumers only care to review a business if they have a particularly bad experience with it. And when they do, it is posted for the world to see.
Well, yes Yelp can potentially hurt a business’s reputation with online consumers, but there are ways that the company helps small businesses, according to a recent study from the Boston Consulting Group that polled 4,800 small businesses, which Yelp funded.
While economists have long studied the positive impact Yelp has on small businesses, the BCG study is particularly noteworthy because it’s the first to survey business owners directly across a wide range of categories.
Contrary to the relatively common belief that Yelp more often hurts businesses than it does help them, the study found that on average, Yelp rakes in upwards of $8,000 in business to those companies that have profiles on the site. Also, businesses that advertise on the site gained $23,000 in business. Compared to how much these companies spent on average for advertising, that is an average $18,800 in ROI.
While the study reports that there is somewhere around 23 million small businesses in the U.S. alone, it seems that most small businesses have not even started adopting the more popular digital forms of marketing that are sweeping the nation. In fact, for all the small businesses surveyed, only about 3 percent of their marketing budgets were put into digital marketing campaigns. This is shown quite clearly through Yelp, for example. Although there are all of these small businesses being run in the U.S. and Yelp is bringing quite impressive benefits to small businesses using it for bringing in business, only 11 percent of the businesses polled in the study have created and used profiles on the social review website.
Now for those businesses that do benefit from Yelp, these benefits come in a few shapes and sizes, depending on the type of small business at hand. Small businesses in the category of say Arts and Entertainment will see a majority of their business gain from advertising on the site, while as we have seen in the past, small businesses that fall into the Food category will gain more business from the actual use of a Yelp account and profile. While most small businesses tend to take their digital advertising dollars elsewhere, like to search marketing platforms, the benefits seen from Yelp can be quite impressive.
Earlier in the month, I reported Yelp’s new mobile offerings which came in the form of display ads in the company’s mobile app. With these numbers, Yelp’s own reputation as an advertising destination may be improving soon.
Bottom line: there’s a lot of upside here for small businesses who claim their free account, and even more for those who advertise.