Yelp & Foursquare: Utility vs. Hipster Chic

I told myself this morning I wasn’t going to write any blog posts to work on a couple of client deliverables. But I can’t resist commenting on a Robert Scoble post: “Foursquare’s Yelp problem.”

Scoble makes a number of points about Yelp and Foursquare and then serves up a set of recommendations to the latter. Here’s what he says about Yelp’s recent adoption of badges:

Yelp has now copied the checkin gesture that Foursquare introduced to us all and also they added badges of their own. I already am the baron of my favorite Mexican restaurant in Half Moon Bay.

This copying behavior demonstrates to me that Yelp is definitely jealous of the attention Foursquare is getting and isn’t able to innovate on its own . . .

Yelp is jealous of Foursquare’s serendipity and gaming. But they haven’t nailed that yet. I think that’s why Foursquare’s CEO, Dennis Crowley, says that Yelp hasn’t copied the right features yet. But he’s gotta be nervous that they’ll figure it out in a couple of more months and totally take away Foursquare’s air supply.

I’m not going to discuss Scoble’s recommendations to Foursquare, which just got some new funding. But I want to offer an alternative analysis.

I don’t think, as Scoble argues, that “Yelp is jealous of Foursquare’s serendipity and gaming.” Yelp was in Foursquare’s position (the cool/hot upstart) for several years. Foursquare has usurped that position and the associated mindshare. Foursquare is the darling of the blognescenti right now.

Yelp is not threatened by geo-social gaming per se. The perceived Foursquare threat to Yelp comes from the possibility that some of Yelp’s top review writers and cool cats might be siphoned off by the newer and shinier service. In other words, the concern is that Foursquare might look like the “hipper” party. I think that’s what Yelp is partly trying to guard against with its recent moves, adopting check-ins and badges, which seek to retain those enamored by Foursquare and its features.

I also don’t think Yelp is “unable to innovate” but I do agree with Scoble that the extent of the imitation is somewhat disappointing.

Yelp is a truly mainstream site today with something around 32 million uniques. Foursquare by comparison is not (perhaps yet), with just over 2 million users:

One paradox at the heart of Foursquare is that the features that have driven success to date are potential barriers to mainstream adoption. Here’s what I wrote several months ago in a client only report on LBS and geo-social games:

Geo-social gaming services must strike a balance between their competitive and utilitarian aspects in order to gain broad appeal. The “Mayor” concept in Foursquare provides a case in point. It generates engagement and fun as participants compete to be the Mayor, the most frequent check-in at popular venues.

While this drives engagement among the most committed users it could discourage casual users from participating. However, Foursquare and its peers need these more casual users in order to go mainstream; they need people to use these apps in the same way people now use Yelp or Citysearch or a directory site – for local recommendations.

You may or may not agree with that perspective. I’ll offer a kind of ironic rejoinder to that view: Yelp, by adopting check-ins and badges, is now exposing a much larger audience to these game concepts and thereby potentially helping to mainstream them. By copying Foursquare, Yelp could be helping the site ultimately by “acculturating” people to LBS gaming.

Yelp and Foursquare share monetization challenges. Yet Yelp now has a very large telephone sales channel that it uses to sell ads. One could argue, however, that well-reviewed SMBs on Yelp don’t need to advertise — a fundamental problem. Yelp has answers for that point of view of course.

For its part, Foursquare has been busy working with traditional media companies (Bravo TV, Conde Nast, etc.) and brands but it faces some obstacles in generating SMB ad dollars.

In the first Foursquare marketer survey (n=125 SMBs currently using Foursquare to promote themselves), which I collaborated on, this was the response to the “would you pay for it?” question:

Only 10.4% said they were willing to pay for services on Foursquare. If push were to come to shove that could change; however the slide above illustrates the resistance to paid Foursquare advertising at the SMB level.

Foursquare is something of an unlikely, or perhaps more accurately, unexpected success. The next-order challenge is to broaden the consumer appeal of the service without diluting it beyond recognition for early users.

Yelp by contrast has “arrived.” Its founders may see a challenge in maintaining its “cool” vs. newer sites like Foursquare. But I would suggest that Yelp now should focus on being a better utility and cityguide for everyone and not worry so much about holding on to its hipster image.

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5 Responses to “Yelp & Foursquare: Utility vs. Hipster Chic”

  1. Yelp & Foursquare: Utility vs. Hipster Chic (Greg Sterling/Screenwerk) « My Blog Says:

    [...] Sterling / Screenwerk: Yelp & Foursquare: Utility vs. Hipster Chic  —  I told myself this morning I wasn’t going to write any blog posts to work [...]

  2. Jonathan Marcus Says:

    “Only 10.4%”? Most freemium businesses would do anything for a conversion rate that high. An optimist would argue that you have just identified Foursquare’s most viable revenue opportunity.

  3. seo tacoma Says:

    Hi there! I just stumbled accross your site and found this article really interesting. As the net continues to grow, and compounding rates, I think most premium sites will be replaced by more agile, open source implmentations that put the USER first.

  4. This week in location: @Foursquare dominates location-based services news, @Gowalla says it’s focused and more. | Wayne Sutton - location-based services, gadgets, marketing, social media, iPhone & iPad Says:

    [...] Yelp & Foursquare: Utility vs. Hipster Chic by @gsterling You may or may not agree with that perspective. I’ll offer a kind of ironic rejoinder to that view: Yelp, by adopting check-ins and badges, is now exposing a much larger audience to these game concepts and thereby potentially helping to mainstream them. By copying Foursquare, Yelp could be helping the site ultimately by “acculturating” people to LBS gaming. [...]

  5. Lodi Says:

    Foursquare is a joke like Farmville – it’s for urban losers. Yelp at least offers general (though limited) value to the public. It’s tiring to hear about the company of the month that is promoted by over vocal backers – how about something innovative? or useful? for Pete’s sake… F Foursquare – let’s see a high profile flameout like Friendster that’d be more exciting at this point.

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