2 possible fates for Yelp

Now that we know the review site can make money in mobile, there are two ways this story could play out -- and both are winners.

By Jim Cramer Aug 1, 2013 9:27AM

thestreet logoThe Yelp Inc. logo in the window of a restaurant in New York on March 1, 2012 (© Scott Eells/Bloomberg via Getty Images)Who has mastered mobile? Who can make money in mobile advertising and not be crushed by programmatic brutalization?


Facebook (FB) can, and now we discover that Yelp (YELP) can, too. In fact, Yelp is thriving, with second-quarter sales up 69% on special initiatives that actually make mobile much better than any other device for the review-and-spend chain.


OK, review-and-spend is my term, but that's what you do on Yelp. You go, you find out what people say, you read the ads and you go spend money at that advertiser. From the looks of things, with huge retention and 62% growth expected, the site's a winner for both advertisers and for Yelp.


Not only that, but Yelp's introducing a "nearby" function that allows people to assess where to go on the fly in a way that sounds eerily like Facebook's graphical initiative where you can tap into what individuals you know like about certain places and things.


Mobile, social and cloud are the holy trinity of tech. Only a handful of companies have offerings that address the trinity, the foremost of which is Salesforce.com (CRM), which is a Yelp partner helping to organize the 100 million visitors to the site.  


This Yelp story's pretty amazing. It started with two employees at 2004 and an office in San Francisco to sell its service to small- and medium-size businesses in the area. It then rolled out to Chicago and then went national and is now international. It was a considered rollout, five new cities in the second year, then seven and they are now in 90 cities and 19 countries around the world. The combination of having fresh reviews -- 30 million to date -- and the sales force to hit up these companies that are being reviewed is a virtuous circle that works incredibly well. The reviewers create the content, not Yelp, and the advertisers pay Yelp to follow up on the leads.

Yelp's winning in several ways. First, as more and more reviewers come on it becomes incredibly important for the company being reviewed to have a presence on Yelp. Second, it is an easy sales call for Yelp and one that many advertising candidates feel they now have to do, no different from the first-generation product that Yelp improves on so markedly, the Yellow Pages. Finally, Yelp has morphed into the mobile Yellow Pages, something that represents a spectacular Web and mobile innovation, kind of the poster boy for this activity because, alas, think of it, can you imagine carrying around the old Yellow Pages? Can you imagine how targeted this advertising method is vs. placing an ad in the Yellow Pages because you are mining the traffic you already know is coming to your company.


This is a remarkably powerful and robust concept and it is working well even as small business, the lifeblood of hiring in this country, responsible for more than 60% of the jobs created, remains in the doldrums. If you get new business formation, Yelp should be able to leverage its model to huge success and profitability. It is still losing money with a penny-per-share loss in last night's quarter because of its aggressive expansion, although losing much less than the 4-cent loss analysts expected.


But here's my question about Yelp. It has a partnership with Apple (AAPL) that works. Apple needs a better social and mobile strategy. It would cost Apple a pittance to buy Yelp. It's a less-than-$3 billion company and it would be the platform Apple needs to protect its flank from Facebook and Google (GOOG). That's why I wonder if Yelp will ever get a chance to show profitability. It simply must be bought by a company that needs this Yellow Pages of the Future and Apple makes the most sense.


Two ways to win: oxygenated growth or takeover. That's the Yelp story after this remarkably robust quarter.





Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and is long FB and AAPL.



More from TheStreet.com

Aug 1, 2013 9:55AM
One thing I've never understood - how can a "review" website be taken as being impartial and fair if they accept money from advertisers who are also subjects of reviews?  From their standpoint, I completely understand why they do it, adding another monetization model and revenue stream.  But as a consumer, why should I trust something like "Angie's List" when they accept advertising money in exchange for "page 1" listings?

And, like NTU points out, fake reviews are rampant.  Some can be spotted easily, others no one ever knows about.  Bottom line, if I want a recommendation for a contractor or a hotel or whatever, I'm much more likely to ask someone I know.
Aug 1, 2013 9:49AM
All sounds like a good idea until firms catch on and start the self aggrandizing like the rest.  I admit right now Yelp is one of the best, but I certainly couldn't rely on that position to last forever.  The exact nature of the benefit is what these same companies will bastardize in time.  Everyone wants a good review so in time firms will just pay folks to post supportive reviews and then the whole thing gets compromised. 
Aug 1, 2013 3:38PM

Well, well, well...I see the "Fast and the Furriest" dialogue popped up after I left...

Nice to know everyone is in good spirits, alive and doing great.

Some name changing, other oldies showed up and even Fatty Cakes..


We don't think Fatty has gotten any new cars, he's just posing them differently...

Popping the hoods or trunks...Forward/backward displays..

As a LEETLE Yallow man, he probably has a couple of Banzai Trees, he stages them next to.

Or moves them around in his Ken and Barbie Garage.

Sometimes I just think he hangs around Tourist sites or Motels, offering to take pictures and then sneaks in a couple of their cars for his picture book...Ha, Ha.* (courtesy of Nelson/the Simpsons)

Aug 1, 2013 9:59AM

who?  yelp?  is that a site i should visit?  i still don't understand why.  i specifically avoid ads


"You go, you find out what people say, you read the ads and you go spend money at that advertiser"

Aug 1, 2013 11:46AM
And James "hindsight" Cramer strikes again !!
Aug 1, 2013 10:20AM
I can't see a lot of excitement in todays start.  Most likely end up in the red like yesterday.  Seems a bit tippy.  Remember all those weeks and months of being flat and everyone was hoping for volitility.  Well here we are.  VOLITILITY. You read the tea leaves.  I'm still not totally buying in to this 2 trillion a year debted economy as being a winner.  Not one mention of a jobs creation program out of DC because they don't want one.   And the free money for the vested class.  This will not turn out well.  Only the time frame is in question.
Aug 1, 2013 1:17PM
THERE he is.....Whewww, I was worried, you all have a nice day.
Aug 1, 2013 4:09PM

Here's the Straight Skinny, CGT1.....What really happens today or tomorrow doesn't really matter.

End of week, Friday's close and maybe end of this next month, may have more bearing.


Markets and Indices can be down in actual numbers or percentages for the week..

But if FMV on anyone's portfolio is on an upside trajectory, is pretty much what counts.

And all that can depend on investments in the right Sectors or Equities. 

Aug 1, 2013 10:11AM
Was anyone surprised that Bernanke couldn't do much to salvage July, so he printed up and pumped it out of the starting gate on crap Kool Aid news this morning. New "unemployment filings" lowest in 5.5 years. Has it been THAT long since we had career jobs that paid family-sustaining wages and were in control of our banks and financial system? 4 out of 5 adults in America are living in poverty, 1 in 6 are reliant on food stamps and 83% want to flush our entire government out. WHY do they want to flush a government out and not destroy the tens of thousands of business platforms blockading jobs, robbing our future and forcing us into indentured slavery? Because THEY are our government. Congress is a group of deadbeats on salary plus perks, the President is a Twitter and the Supreme Court never had America's interests in mind the same day Dubya installed John Roberts (a genuine GOP creeper) as Chief Injustice. PLEASE... may a random meteor force us into another Ice Age and save the Earth from the inevitable World War were are heading for.
Aug 1, 2013 1:15PM
Hey Re Tog -- 

My understanding is his business had a banner week and he sold 14 old Thor comics and a pair of uncle jimmy's old skivvies on eBay last week so he treated himself to his dream vacation .......a 3 day trip on the NY subways with a 6 pack of coke and a bag of doritos.....

All while wearing a dress, stockings and a pair of shiny read cfmps .....

I am sure (s)he will return soon !!
Aug 1, 2013 1:15PM

Classic...I have moved on, only go to Websites I trust and matter-of-factly, don't really care about Ben that much, as long as he keeps up the good work or doesn't destroy us..

I like and respect him a lot more then Mr. Greenjeans....Sorry if you want to keep pressing on this, it means nothing to me at this time....You can try Regal or somebody else...Peace.


Yelp by today's standard may be of value....When Miss Lilly was in the biz, we only covered about 5-7 Counties and had enough business for our size, although we shipped sometimes out of State and or purchase raw materials......Many of her larger customers, were 1-2 year Contracts and within those County areas....Something like Yelp back then was not useful for us.

IT IS TIME TO GO GOLFING...Casino last night took most of my money, and I have about enough for 1 beer and 9 holes.....Ciao. 

Aug 1, 2013 12:04PM

Yelp kind of reminds me of the Chamber of Commerce or the Better Business Bureau...


You pay your dues or subscribe and you get decent reviews or good ratings..

Unless you really blow it in service or products that you might provide..

Advertising in the Yellows or other sources, can get expensive..

But was part of the Business, that we had to allocate monies to...Just another cost factor.

Word of mouth, was probably the best attribute unless you needed more customers.

And a "spotless reputation" is what brings them to your door.

Yelp just kind of spreads you out to a lot more Venues in this fast paced world.

Aug 1, 2013 12:15PM

Veritas...We all or a few have wondered what has happened to your Buddy, ABS ??


Did you or was it Regal that possibly met him someplace, and had "a come to Jesus" ?


I don't think Doda or LOM have run him off yet...

Aug 1, 2013 11:49AM

Next Time...Some of the excitement generated today is, The S&P "breaks" through 1700, I guess first time ever !!...I thought we may have reached that plateau once before?

The jobs report or U/E reports...All just Job stuff to me...It was good.

And Bernanke, wasn't going to do or change anything drastically yet...

All good news for an Investor in a Recovering Economy...Is/was for us.


As far as Volatility the VIX indicator has been dropping for about 6 weeks into the 12's.

Back near the end of June it was close to the 19's... June was a rough month, because nothing really blew up in our faces in May. Traders were pissed, about maybe "walking away in May." My guess.


We have had an uptrend "Worldwide in Indices and Bourses" for what looks like about 6 weeks...

Granted, that is a fairly long stretch and to expect a mini-correction in the next week or two is not "un-expected"

In that same time frame there has been a FMV increase over the last 5-6 weeks in our overalls.

We are not ecstatic, but satisfied that this upward trend is still in-place.

And placing dividends in cash, along with culling portions of high flyers or non-performers into a buying fund....In case of a mini correction or a good dip, which I'm expecting over the next few weeks.

Aug 1, 2013 4:04PM
Sweet way to end the day, this one for the good guys nicely...New record for the Dow and the S&P...Good to see this since interest rates keep creeping up...Now, tomorrow will be a critical day and to be honest, it could go either way; a good report may trigger a sell off, a bad one may keep the rally going, notice we say may. We shall find out in the morning.
Aug 1, 2013 12:59PM

Yup Auto parts, I thought took it in the wrong places a while, maybe it was Chain shops...

But all those "new cars" will need fixing down the road or routine work, recalls etc.


We have had positions in Ford(F) for sometime...So the numbers are appreciated.

F has been very good for us..

And I think this latest upsurge is "pent-up" demand, along with people getting new or better jobs.

Housing and Autos have always had some strange ties..

If you move into a new neighborhood, you want to park a nice ride in the driveway to keep up with Jones' down the street or next door.

Aug 1, 2013 1:47PM
We are not up 140 anymore but we've been hanging around in the 115-120 point range....At about 1245 hrs we had some selling not surprisingly....Beware, over 2 hours still to go and manipulators we doubt will sit with their thumbs up their behind so, act accordingly....More after the close.
Aug 1, 2013 1:07PM

Trust me ,it would take a LOT more than an African Queen , A pretend person , a lover of others money to harm me. In fact , all three broke, douche bags would be on their knees kissing my a$$.

Not on vacation , just SOOOOOOOOOOOO bored dealing with simpletons , cretins and beggars.

My crap has a higher IQ and net worth than most of these lefty douche bags on here.


Aug 1, 2013 11:43AM
More nonsense from nostre**** cramer .......if there was a Yelp Review of him it would be littered with hundred of comments .....the good ones from his friends and family and the bad ones from his "customers" .......nobody controls who posts what !! 

He should have talked to business owners who have basically been blackmailed by yelp sales people to get unfair bad reviews pushed down the review list.

Still not posting any results on your AA portfolio eh cramer ? Must be real proud of them !!
Aug 1, 2013 10:51AM
Yes, up 140 points, everything looks wonderful....Not exactly, scumbags haven't gone away; remember yesterday, reminded us of a day long sucker's rally so, be cautious, we are up about 130 now but the important thing is were we close...More later.
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