Yelp, the directory website that has emerged as the US leader in local user-generated reviews, is taking its first trip overseas. With the debut of a London directory, the company is hoping to capture the enormous, and potentially lucrative, local advertising market in Europe’s largest city. It won’t be easy, but the opportunity is a big one.
Yelp, which allows users to review any local business – from pubs and corner stores to florists and dentists – faces established competition. Two London companies, TrustedPlaces and TouchLocal, run virtually identical services.
But in London, a city of 8m, Yelp expects there will be ample appetite for the quirky and comprehensive user reviews that have made the website a hit in the US. The company arrives with the advantage of a strong brand, and reports that in December more than 100,000 people from the UK visited the site to research travel plans in the US.
Greg Sterling, an Internet analyst, said these early adopters could help the site gain traction. “People [in the UK] that have used Yelp in doing travel planning are already going to be familiar with it,” he said. “Those people are going to able to jumpstart the adoption and culture of reviews.”
Yelp is not yet profitable, though chief executive Jeremy Stoppelman said an increasing number of local businesses were placing ads on the site. The upwards of 300,000 businesses in London represents a potential goldmine should Yelp’s London page gain traction.
Mr Stoppelman said London was a natural choice for Yelp’s first overseas venture. “It’s one of the great cities in the European world,” he said. “We have to be there.” Mr Stoppelman added that the similar culture and lack of language barrier will make the rollout easier.
Yet accurately categorizing the street names and neighbourhoods of such a large city may prove difficult for San Francisco-based Yelp. “To build a local product you have to really understand the local geography,” said Sokratis Papafloratos, co-founder and chief executive of Trusted Places, which he claims has close to 1m unique visitors per month. “The area codes, the neighbourhoods, the colloquial names present a real challenge.”
Another hurdle may be getting London businesses to buy ads on an unfamiliar website, especially when the directory model already provides businesses with a measure of free exposure. “One of the challenges for Yelp is to sell ads when the business may have a very effective presence on the site already,” Mr Sterling said.
Still, the very fact that Yelp is venturing overseas is a measure of its success in the US. And the fact that the site already has imitators in London suggests the model could catch on. “In the UK the irony is that some of the sites there have modelled themselves on Yelp,” said Mr Sterling. “Now Yelp has come over to compete with them.”