The Boston Consulting Group, a leading advisor on business strategy, recently surveyed 4,800 business owners to learn the economic impact Yelp has on small businesses. The results are eye opening: small businesses with a free business owner’s account saw an average of $8,000 in annual revenue from Yelp.
Let that sink in for a minute. That’s $8,000 gained just by claiming their free business account on Yelp. Clearly, local businesses are benefiting from a Yelp halo effect that translates into very real profits.
Even more interesting, the survey revealed that Yelp advertisers benefit nearly three times as much, generating average annual revenues from Yelp of more than $23,000.
For certain categories, the returns were even higher. Breaking out the numbers, we saw a number of categories doing exceptionally well advertising to purchase-minded Yelpers:
Home — $54,000*
Automotive — $39,000*
Local services — $36,000*
Hotel and travel — $36,000*
Shopping — $24,000*
Health & Medical — $20,000*
* Average annual revenue from Yelp
Considering that our typical local advertiser spend is $4,200** annually, that’s a pretty good ROI for these savvy businesses.
This isn’t all that surprising given that Yelp helps consumers find a great local business when they are looking to make a purchasing decision. What is surprising is that more businesses aren’t taking advantage (yet) of this opportunity to reach customers.
In a separate survey of 550 small business owners, BCG found that small businesses are only spending three percent of their advertising budget online. Small business advertising dollars are spent mostly on traditional marketing vehicles still, such as Sunday circulars and coupon mailers.
The thing is, that’s not where consumers are searching for businesses. They’re looking online, and they’re there with a mission.
The early adopters (small business owners who have made the investment in online advertising) are getting a significant head start over their competition when it comes to new customer acquisition and deepening relationships with loyal customers. Investing a little time upfront to research and determine which channels work best for a local business is well worth the effort.
While economists have long studied the positive impact Yelp has on small businesses, the BCG study is particularly noteworthy because it’s the first to survey business owners directly across a wide range of categories.
Bottom line: there’s a lot of upside here for small businesses who claim their free account, and even more for those who advertise.
**The typical local ad spend is $350/month or $4,200/year.