An owner of one of the nine small companies suing Yelp for extortion shared some of her story with the Washington Post:
It didn’t take long for Julie Liu — late 20s, smartphone-addicted, constant Googler — to get hooked on the online review site Yelp. Where to eat Friday night? Read some reviews by random anonymous diners. Oh, that looks good. Book a table online, show up, eat.
But after Liu and her sister opened Scion restaurant in Dupont Circle, they saw Yelp from a different angle. Liu said Yelp’s salespeople phoned repeatedly, telling her that if she advertised on the site, negative reviews would move lower on Scion’s page and positive reviews would move up.
Liu decided to fight back, joining nine other businesses this month in a class-action lawsuit against Yelp alleging similar tactics — claims that Yelp executives deny. “Yelp does not manipulate content on behalf of advertisers or penalise those who don’t advertise,” a spokesman said.
Now, let’s try to square that with what Yelp CEO Jeremy Stoppelman is saying.
Last week, Jeremy gave an interview to the New York Times in which he explained the following benefits that Yelp advertisers get:
A. The primary thing our advertisers are purchasing is actually advertising. Depending on what your price level is, you get a certain number of impressions of those ads, both at the top of search and on related business pages. So if you’re an Italian restaurant you might show up on a pizza restaurant page or another Italian restaurant page. Beyond that, there are also a couple of enhancements that happen on your business page. You’re buying out that ad inventory that would otherwise be on your page. You get a slide show so the photos on your page are a little bigger and rotate. You also get to highlight one review, which is clearly marked as your favourite. That’s it…
And now let’s take a look at Yelp. Below is a section of a page for a coffee shop in New York. The page contains sections called “Review Highlights” and “All Reviews.” The coffee shop does NOT appear to be a Yelp advertiser. So this is what a Yelp company page looks like when a company is not an advertiser.
And now let’s look at the page of a company that IS a Yelp advertiser. The advertiser’s “favourite” review is at the top. It is a very long, articulate, edited, and highly detailed five-star review–the sort of review that a PR firm would produce. The review completely dominates the advertiser’s page, shoving all other reviews so far below the fold that a reader has to scroll way down to find them.
(That’s only about half the review, by the way. As you can see here, it goes on and on.
So what can we conclude?
We can conclude that all parties are technically correct.
The Yelp salespeople who told the small-business owner that, by becoming an advertiser, she would be able to cause positive reviews to move up the page and negative reviews to move down the page were right.
The potential Yelp advertiser was probably also justified in feeling bullied by this: If Yelp’s salespeople are selling Yelp ads by repeatedly pointing this feature out, it’s no wonder that some potential customers feel like they’re being extorted.
Meanwhile, CEO Jeremy Stoppelman was right that what the advertiser gets to do is to highlight one review as a “favourite.” But as the example above shows, this is a much more powerful benefit than he makes it sound like it is.
Bottom line: Companies that choose to pay Yelp have a lot of control over the appearance of their pages. Specifically, they can commission long, detailed, five-star reviews that shove other reviews way below the fold. Basically, they can buy a long text-based ad that looks like an objective review and is only marked as one of their “favourite reviews.”
So is it extortion?
We doubt it.
But it’s more than just advertising.
It’s potentially powerful and misleading advertising, because it carries the appearance of being an objective review. Which, in some cases, it almost certainly isn’t.