Yelp COO Geoff Donaker and CFO Robert Krolik spoke yesterday at Morgan Stanley’s Technology, Media & Telecom conference. Their comments reinforced data from their recent 10-K (embedded below) about consumer growth and competition for local ad dollars.
On the market opportunity and competition:
Something like 50 million local businesses in the western world, most of whom advertise in one form or another. And today, only a tiny fraction of that spend has moved online in any form… [who] we’re really competing with, are print businesses, radio businesses and local television. We don’t really run in to the other Internet businesses yet… of course, always get asked about Google and Facebook, and of course, they’re going to be competitive in this marketplace over time as well.
Growth in the market for local advertising is predominately online (similar to e-commerce) but digital channels are still a fraction of their offline competitors. Segments like direct mail still capture the majority of the US market, representing a huge opportunity:
On mobile usage and monetization:
- 46% of Yelp searches done on mobile app
- 28% of unique visitors to mobile web
- 25% of local ads served on mobile devices
Like most major internet brands, it’s unclear when the long-term mobile opportunity will outweigh the short-term downside. Effective mobile ad units are still very much a work-in-progress.
On the home & local category:
- 22% of revenue
- 11% of reviewed businesses
- 4% of reviews
Angie’s List is a major competitor in this segment and Yelp’s data indicates an untapped opportunity. Over the last six months ANGI is up 89.0% compared to YELP at 14.4% and the S&P at 7.3% but there is room for many big companies in this space—including Facebook, Google, Groupon and others, despite Yelp’s comments—as they fight for shifts in local ad spend.
Yelp’s 2012 10-K: