For some time, Yelp has had a policy discouraging businesses from soliciting reviews.
Last month, Yelp took this a step further, in an announcement that flat out sought to block businesses from working with reputation management companies (Why Businesses Should Not Work with Review Solicitation Companies).
We are seeing an increase in the number of companies out there that are offering solicitation services to local businesses as a way to artificially inflate their search rankings and online reputations. This might look like surveys they send to customers, or they might be asking for reviews online without a business’s knowledge.
If we have found indicators of extreme efforts to manipulate search results on Yelp by soliciting reviews, a business may receive a Consumer Alert, a program we’ve had in place since 2012. Now, we are also demoting business pages in Yelp search results that show indicators of organized review solicitation through reputation management companies. We are taking this action because promoting biased reviews, or promoting businesses that have artificially inflated their ratings, is misleading for consumers and unfair to businesses that have honestly earned their great reputations while adhering to Yelp’s policies. Businesses will have the opportunity to avoid a search ranking penalty by ceasing any review solicitation and verifying compliance with Yelp’s policies. Read more in the Yelp support center.
Soliciting Reviews Are Bad, Except When Yelp Does It
This is a frustrating development for smaller businesses since Yelp already screens about 25 percent of all reviews and hides them behind a filtered screen. With this new development, they are more vulnerable to one or two cranks whose negative review can severely damage its rating.
Forbes contributor Ryan Erskine disputes the logic behind Yelp’s policy since
the study Yelp uses to defend its policy actually says the exact same thing. According to the study, “self-motivated reviewers are more likely to be dissatisfied” leaving many businesses’ Yelp pages with a misrepresentative collection of poor reviews.
It is also odd given that Yelp itself solicits consumers who check-in through Yelp for reviews. If you are a business where the consumer does not come to you and therefore cannot check-in, Yelp has a special check-in voucher where it still solicits reviews but also gets a 30 percent (30%) cut of the transaction.
Is Yelp Policy Anti-Competitive?
There is a certain anti-competitive concern about this announcement as well. If beleaguered businesses on Yelp cannot seek assistance from reputation management companies, where will they turn? Maybe to Yelp, hoping that advertising with Yelp will improve their standing. For years, Yelp has been dogged by pay-to-play type allegations and it is the subject of an upcoming documentary – Billion Dollar Bully. Such a move by Yelp would seem to be counter to the antitrust laws since it is using its monopoly over its review platform to foreclose competition for services to remedy Yelp reviews.
The move is also puzzling since it comes at a time when Yelp is losing ground in the review business to Google and Facebook. Yelp, which was once a top 30 website, is barely in the top 50 today. Yelp remains dependent on Google for traffic and has complained that Google local search results are pushing Yelp results below the fold and even the third screen in mobile search results.
Yelp’s concerns have not gone unnoticed, as on December 7th Piper Jaffray downgraded Yelp to a price target of $37/share since it “sees Facebook and Google making it difficult for Yelp to grow traffic and user numbers.” Yelp, which had traded at $97.25 on March 2, 2014, closed on December 6th at $41.88.
Is Yelp trying to distinguish itself from its competitors in terms of review reliability or is Yelp simply trying to maximize advertising revenue before it is overtaken by Google and Facebook in the review market?
Forbes contributor Ryan Erskine had the following reaction;
[Yelp’s] fight against soliciting reviews is quite bewildering. Not only is Yelp’s Don’t Ask policy bad for consumers and business owners, but it’s also bad for Yelp.
Ultimately, the decision has to be viewed in context – why now? What would Yelp hope to gain by such a move and the only reasonable answer is advertising revenue. The question remains, however, is it proper to foreclose competition in the process? At the same, the marketplace is wondering if discouraging site traffic will only serve to help competitors Google and Facebook.