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This morning Dan Z tweeted about yet another accusation of Yelp sales people pursuing businesses for ad buys in exchange for pushing bad reviews off the front page. The worst part of the story is that its clear they watch for bad reviews and do hard sells on the affected businesses while they are in distress. I can't believe the review site market leader would be so stupid. At this point, I think their rep is shot, and although their critical mass will carry them for a while, there is a real opportunity for a squeaky clean competitor to build a reputation for honesty and topple them. I hope they do.

MediaPost: A California veterinary center has sued review site Yelp for allegedly promising to bury bad reviews in exchange for purchasing $3,600 worth of advertising on the site. "Yelp frequently exercises its control over the Yelp.com listing application to modify business listing pages to the advantage of businesses that purchase Yelp advertising subscriptions, and the disadvantage of those that decline," Cats and Dogs Animal Hospital owner Gregory Perrault alleges in a complaint (PDF) filed in federal district court in the central district of California. Full Article

Apparently some attorneys are questioning whether or not this violates California's business code. If it doesn't, they need to fix the code. There is no question it will be bad for business.

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I've always liked Yelp but at the same time kinda envied them because I worked for one of their main competitors, InsiderPages and they basically beat us to a pulp. They just knew how to market themselves better and always had a clean image. This doesn't surprise me one bit though cause we used to get people asking us to remove negative reviews from Insider Pages all the time and debated developing some kind of honor system to have businesses defend themselves. I guess Yelp found out how to build a better system by making people an offer they couldn't refuse.
Japan's largest restaurant and food site, gurunavi.co.jp has taken an entirely different approach. Gurunavi is a publicly traded company and has about $2 billion in assets so you know they did something right.

Gurunavi's model is simple- business pay a fee to be posted on the site and for users it's free. What they do differently is that they employ about 300 full-time restaurant consultants who circle neighborhood restaurants and provide free consultation for subscribed business owners.

It doesn't sound special but for a small independent restaurant owner, free expert advice is treasured. Gurunavi also provides free seminars known as Gurunavi University. They are free educational courses for restaurant owners.

Maybe Yelp should look at what they are doing.
See this scathing report from the East Bay Express. It's 6 pages long and catalogs a long list of Yelp offensives.

In some sense, it's not surprising as it's a direct outgrowth of their ad supported business model. They probably make most of their money from the companies they review. They have a huge incentive to reward companies that advertise with them. On the other hand, if these reports are true, what they are doing is incredibly sloppy.

That being said, B2B companies have been doing this for years. This happens with trade magazines and IT analysts all the time. We hear these anecdotes weekly from the companies we cover. See an expose we did on 'awards' that a large analyst firm provides.

It would be great to believe that such bad behavior would lead to these companies defeat but history paints a less optimistic outlook.
@John - I would go further and say they aren't just being sloppy, but it appears they are involved in unethical business practices. Calling a small business in duress after they have a bad review and offering to make it go away for a price sounds like something out of the Godfather. If its true, they are also lying to the public because they have repeatedly claimed their sales reps don't have the ability to reorder reviews. Based on the number of nearly identical stories about these sales calls over the past few years, I find it hard to believe its a conspiracy against Yelp.
I am not saying it's unethical. To the contrary, I think it's obviously unethical.

My point is that unethical behavior is common among companies that are funded by the companies they review/write. Usually these companies are quite careful about the methods they use and they do not use such heavy handed, hollywood style gangster tactics.

I doubt this will stop them or their direct competitors with the same business model. It will likely shift them to using more underhanded tactics that are more difficult to trace/expose.

Daniel Leuck said:
@John - I would go further and say they aren't just being sloppy, but it appears they are involved in unethical business practices.
the internet is not quite a tight knit community so... marketing > reputation... unfortunately
I've always been cautious of referral reviews anyway, but this type of poor business practice will only lead me to Yelp's competitors. Sites that thrive on trust and transparency will have serious problems in retaining people if more stories like this leak out. The problem is that the market is over saturated as it is, so you don't need any help in pushing your site audiences to competitors with bad PR like this.
Yelp has recently changed policies and much as they are easy to dislike, I don't see signs of them going away just yet. They certainly have a "bad boy" reputation on a number of fronts, however being one of the first to let users be in charge of a company's reputation was a daring venture with no prior rules in place. It's a revolutionary concept we've gotten used to in a very short span of time. That they succumbed to pressure to be profitable is understandable, and hopefully the bad press will continue to help them sort things out in a more ethical direction.

And if you like to see their really bad press, Valleywag outs them on a regular basis:
http://valleywag.gawker.com/search/yelp/
Businesses whose product is an online directory which allow ratings naturally have a dilemma when it comes to attracting advertisers. No advertiser is going to want to pay for advertisement on a site which has bad reviews on them.

Yelp is not the BBB... but if they want to be a credible source they will need to be more transparent... and they know this, see a blog from a week ago:
http://officialblog.yelp.com/2010/04/announcing-steps-to-avoid-conf...

Due to an increase in mobile technology, people are not using an iPhone to search Google, they are using apps. Just a few days ago (4/8/10) Steve Jobs said: "When people want to find a place to go to dinner, they're not searching; they're going to Yelp."

Yelp is not going away anytime soon... bad boy or not...
Hi Rob & Rox - My primary issue with them is that they appear to be repeatedly lying to the public. They maintain that their salespeople don't offer to remove or reorder bad reviews, but hundreds (thousands?) of people say that is exactly what they were pitched. Some of them are saying it under oath in court.
Agreed! I don't think either Rob or I are condoning all of their practices, it is more the zen-like approach of looking at what is rather than what we think should be. That single concept is a powerful operator in today's app-driven marketplace and to think that bad behavior has a negative influence on the market without exception, is not (and really - never has been) valid.

There are always companies (and individuals!) who by measure of their pocketbooks, market share, or in this case, user base, are immune to "business as usual" standards and practices. I also often find these exceptions and rule-breakers personally annoying, however I am learning to step back and wonder how they are affecting me, my business, and my clients' businesses, what can I learn from them, what really are the key indicators in play in this specific space, etc. In other words, to explore freedom of opportunity rather than rely on formulas that may no longer be valid if you are cool enough, large enough, rich enough, daring enough, etc. to break the rules.
@Daniel: my primary issue with them is they have taken user-generated content and turned it into a weapon. Really kind of the worst nightmare of Web 2.0.

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