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Yelp 'pay to play' pitch makes shops scream for help

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Deep Fried

Last summer, when we dropped in on our anonymous restaurant owner across the Bay from San Francisco - we'll call him Deep Fried - he was complaining that two Yelpers had bad-mouthed his restaurant because he charged them a dollar for an extra bowl of soup.

Between them, the couple had ordered a single dinner that included a single soup, and when they asked for a second bowl, Deep Fried put an extra buck on the bill. For this - and other reasons that clearly show they're unfamiliar with the sort of cuisine they're reviewing - the couple gave the restaurant a rating of 1 out of 5.

On the whole, Deep Fried's Yelp reviews were very good. His average rating was a 4.5. But he had trouble attracting customers, and he was worried the soup complaint and other less-than-flattering reviews were bringing down his business. After all, he's serving the Bay Area, where Yelp has an almost cultish appeal among young foodies.

Then, several weeks after the soup review, we overheard Deep Fried telling a customer that Yelp had recently called him, asking if he'd like to advertise on the site. Yelp, he said, had offered to push all those bad reviews to the bottom of his page.

Google It's Not

On the surface, Yelp's business model works a little like Google's. Businesses pay for sponsored links that pop to the top of the page when users perform certain searches. For instance, you could pay Yelp to give your restaurant star billing when users search for Mexican joints in San Francisco's Mission District.

Yes, Google makes ridiculous amounts of money with a similar business model. But Yelp faces a problem the Mountain View outfit doesn't.

At Google, advertisers fork over money only when searchers actually click on their sponsored links and visit their websites. But Yelp sponsored links aren't tied to independent sites. They're tied to other Yelp pages. Advertisers can't track hits on their own.

According to another Bay Area restaurant owner - we'll call him Over It - Yelp has tried something akin to Google's per-click model. As recently as 2006, the company said it would give him sponsored link status if he paid just a few cents each time someone visited his Yelp page. But he didn't accept the offer. It just didn't make sense.

"How do I know there's isn't someone in Yelp's offices clicking away on my page?" he asked us.

Yelp confirms that it once charged advertisers on a per-visit basis, much like Citysearch does. "We've tried a bunch of different things," Stoppelman told us. "We started with pay-per-call, where we focused on businesses that took a bunch of phone calls. And then we moved to a program that Citysearch has offered for a number of years."

But the company ditched this model too. "For some local businesses, the [pay-per-visit model] was a little bit hard to understand," Stoppelman said. Sales reps are now urging Deep Fried and other business owners to pay by the month or by the year. And in some cases, they're offering to suppress content.

On multiple occasions last summer, a sales rep told Deep Fried that $6,000 a year would get him more than just sponsored link status: Yelp would also shift his bad reviews.

Russel Simmons

Yelp CTO Russel Simmons

At around the same time, Louis Kow, the owner of Noodle Theory in Oakland, received much the same offer. For $500 to $1,000 a month, Yelp said it would drive between 10,000 and 50,000 people to his page. Plus, it offered to suppress bad reviews. "They offered to have the best review on top, for a certain rate, and the bad reviews would be last," Kow told us.

Yelp acknowledges that it allows advertisers to move a single review to the top of their pages, but, again, it denies moving bad reviews to the bottom. Kow insists, however, that a Yelp sales rep offered to move bad reviews on two separate occasions.

When we asked Kow how Yelp proposed to drive traffic to his page - and how he could trust their traffic numbers - he said that this was never discussed. But he was obviously skeptical of the company's claims. Whether it charges per click or by the month, Yelp doesn't have the leverage that Google has.

Months after we spoke to Deep Fried and Louis Kow, three other Bay Area businesses told us they received much the same pitch, including Kellinger, Seaton, and a San Francisco business owner who - like Deep Fried - requested anonymity. "My livelihood is at stake," she said.

The smart choice: opportunity from uncertainty

Next page: The Denial

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