Yelp Business Model and SWOT Analysis – How Does Yelp Make Money?

Yelp is one of the most popular business review websites, but how does it make money? In this article we’ll look at Yelp’s business model and SWOT analysis to answer this question. We’ll also explore how the company has changed over time and how its various strategies have impacted its success. By examining these topics, readers will gain a better understanding of the company’s inner workings and be able to make better decisions when considering whether or not to use Yelp for their own businesses.

Overview Of Yelp

Yelp is an online platform that connects customers with local businesses. It was founded in 2004 and is now headquartered in San Francisco, California. Yelp provides a variety of services, including consumer reviews, business listings, social networking, and event management. The site has become one of the most popular online review sites for consumers looking for information on local businesses.

Yelp’s business model is based on connecting people to businesses through their website and mobile app. Customers can search for local businesses by location or category and read customer reviews to help them make informed decisions about where to spend their money. Businesses are then able to list their services and products on Yelp’s website or app to let potential customers know what they offer.

Businesses also have the option of advertising with Yelp, which allows them to increase visibility and reach more potential customers. Advertisers pay a fee for featured placement within the search results page or other promotional spots such as banner ads. This payment model helps Yelp generate revenue while helping small businesses gain exposure and reach more customers.

History Of Yelp

Yelp has certainly come a long way since its humble beginnings in 2004. Founded by Jeremy Stoppelman and Russel Simmons, the business was created with the intention of providing online customers with reliable reviews. The idea was simple: connect customers to local businesses and give them an honest review of the services they were looking for.

It wasn’t until 2008 that Yelp really took off. With over 6 million reviews from more than 12 million users, the website had become a popular destination for businesses and customers alike. Business owners could now post their own reviews about their services, giving potential customers an even better idea of what to expect.

From there, Yelp continued to grow and develop, introducing new features like “check-ins” and discounts for positive reviews. Today, Yelp is one of the world’s largest review websites with over 87 million monthly visitors, making it an invaluable resource for businesses and consumers alike.

Bullet point list of 4 items in markdown format:

  • Founded by Jeremy Stoppelman and Russel Simmons in 2004
  • Over 6 million reviews from more than 12 million users by 2008
  • Features like “check-ins” and discounts for positive reviews
  • 87 million monthly visitors today

Yelp’s Business Model

Yelp’s business model is based on monetizing its platform through both advertisements and transaction services. This two-pronged approach has enabled Yelp to become one of the largest local search engines in the world. It uses a combination of content, including user reviews, photos, and editorial content, to drive traffic to businesses which are then able to purchase a range of products from Yelp.

Advertising is a major source of revenue for Yelp. Businesses can purchase ads on the platform that appear when users search for related items or services. Ads are targeted based on location and can be customized with different time frames, budgets and geographic areas. Additionally, Yelp offers businesses the ability to pay for premium listings that appear higher up in search results as well as featured placements at the top of their categories’ pages.

Transaction services are another way Yelp makes money. Through its partnership with Grubhub, Yelp provides customers with an easy way to order food delivery or takeout directly from restaurants listed in its directory. Additionally, Yelp has partnered with other third-party vendors to provide customers with discounts on certain products and services such as travel plans or home improvement projects. By providing these transactions services, Yelp is able to generate additional revenue from businesses who use its platform as part of their sales process.

Yelp’s business model leverages its platform as an effective way for businesses to advertise their products and services while also providing customers with access to discounted goods and services through transaction services. This strategy has allowed it to become one of the most successful local search engines in the world today and continues to generate significant revenue for the company each year.

Advertising And Promotion

Yelp’s business model has been highly successful, having achieved a market capitalization of over $5 billion. But what makes it so lucrative? One of the main sources of income for Yelp comes from advertising and promotion. Through its platform, Yelp offers businesses the opportunity to advertise their services and get noticed by potential customers. This is done through sponsored listings, pay-per-click ads, and other promotional activities.

The company also offers tools such as Yelp Ads, which allow businesses to target specific regions or demographics with their advertisements. Additionally, Yelp provides businesses with analytics tools which enable them to monitor their marketing campaigns in order to optimize their performance. Furthermore, Yelp provides a review system that allows consumers to give feedback on businesses they have interacted with. This helps shape consumer opinion about different companies and increases customer loyalty for those who receive positive reviews.

Yelp is also involved in events such as “Yelp Elite” where members are invited to exclusive events hosted by local businesses in order to promote products and services available within their area. These events help build relationships between Yelp customers and local businesses while increasing brand recognition for the companies involved. Additionally, Yelp has several partnerships with other major companies such as Apple Maps and Google Maps that leverage its extensive database of reviews in order to create more comprehensive maps for users. All these efforts contribute to making Yelp a strong platform for advertising and promotion that generates significant revenue for the company.

Yelp Elite

Yelp Elite is an exclusive group of Yelp users who write a large number of reviews, attend events hosted by Yelp, and generally have a high level of activity on the platform. To join this elite group, users must have written reviews for at least five different businesses, have an up-to-date profile and photo, and demonstrate a helpful attitude to other Yelp users.

Members of the Yelp Elite get special access to exclusive events as well as discounts from businesses in their area. They also receive an official Elite badge on their profile that serves as recognition for their commitment to the platform. By joining this select group, members can gain access to additional perks that are not available to regular users such as:

  • Invitations to exclusive events
  • Access to special prizes and rewards
  • The opportunity to provide feedback on local businesses

The Yelp Elite program provides great benefits to active reviewers while also providing valuable feedback for businesses. This helps create an inclusive community where everyone is able to contribute and benefit from each other’s experiences in the local area.

Local Business Partnerships

Yelp’s business model is largely based on local partnerships with businesses in the area. Businesses pay Yelp to be included in the directory and access a range of services and features, such as customer reviews, photos, discounts and more. Yelp also offers advertising solutions for businesses to increase their visibility on the platform.

Yelp’s SWOT analysis reveals that its strength lies in its network of local partners. This network provides Yelp with an established base for continued expansion, allowing it to offer more services to customers at a lower cost than competitors. On top of that, Yelp’s reputation as a reliable source of information gives it an edge in terms of credibility and trustworthiness among users.

The main challenge that Yelp faces is keeping up with changing consumer preferences and technology trends. To stay ahead of the curve, Yelp must continually develop new products and services while maintaining its core offering. Additionally, they need to ensure that their local partners are satisfied with their service so they can continue to rely on them for growth and success in the future.

Swot Analysis

Now that we have discussed the Yelp business model, it’s time to take a closer look at their strengths, weaknesses, opportunities, and threats. First of all, there are several strengths that help Yelp make money. They have a strong brand presence with millions of reviews and ratings from customers. Additionally, they have large user base that provides high-quality content for their platform. Furthermore, they have a good reputation in the industry and are well known for providing reliable information.

The main weakness of Yelp is that it relies heavily on organic search engine optimization (SEO) to drive traffic to its website. Additionally, its revenue is largely dependent on local advertising which can be volatile depending on the economy. Moreover, there is the potential for competitors to overtake them in terms of market share if they don’t continue to innovate.

Yelp has several opportunities for growth including expansion into new markets and further developing its mobile presence. There is also potential for more partnerships with other companies as well as more strategic use of data analytics in order to optimize its services and increase profitability. At the same time, there are some threats facing Yelp such as increased competition from other review sites or potential regulation changes that could hamper its operations.

Overall, Yelp has many advantages that allow it to make money but also faces some challenges going forward. With thoughtful planning and execution of strategies such as SEO optimization and data-driven decisions, it should be able to remain competitive in the digital marketplace while continuing to generate profits long into the future.


Yelp’s business model is centered on providing users with information about businesses and services, and subsequently monetizing that information. This model allows them to capitalize on their massive user base, as well as their vast database of reviews. In terms of their strengths, Yelp has several advantages:

  1. Trustworthy reviews: While word-of-mouth recommendations are still the most trusted source for finding a new service or business, Yelp’s reviews come in a close second. Users can easily read through reviews for businesses before deciding whether or not to visit them.
  2. Consumer engagement: Yelp provides an alternative to traditional marketing methods by allowing businesses to interact with consumers directly through their platform. Businesses can post updates and respond to customer inquiries, as well as access analytics data to better understand consumer behavior.
  3. Monetization opportunities: Yelp offers several avenues for businesses to monetize their presence on the platform, such as sponsored posts, advertising campaigns, and subscription services. These features provide additional revenue streams that can be used to grow the business or expand its services.

Yelp’s model empowers both users and businesses alike by providing valuable information and tools that would otherwise be unavailable or too costly to obtain. With its established user base, comprehensive database of reviews, consumer engagement features, and monetization opportunities, it is no surprise that Yelp is one of the most successful companies in the industry today.


Yelp’s weaknesses are of particular importance to consider when assessing the business model. Firstly, its reliance on user-generated content can be a double-edged sword. On one hand, it increases the content available to users on the platform and helps keep costs low; however, it can also lead to unreliable reviews or complaints that may not be accurate representations of businesses. Secondly, Yelp is highly dependent on search engine optimization (SEO). If Google or other search engines change their algorithms in a way that negatively impacts Yelp’s SEO ranking, this could have a significant impact on its ability to generate revenue from advertising and subscription fees. Finally, given that Yelp is primarily a U.S.-based business, its growth potential outside of North America is limited by language barriers and cultural differences between markets. In order for Yelp to expand into new markets and increase its overall market share it must overcome these challenges by providing localized content tailored to different countries and regions around the world. To do this successfully will likely require significant investments in resources such as localization expertise and translation services.

Opportunities And Threats

Yelp’s business model offers numerous opportunities for growth and expansion. The platform allows small businesses to take advantage of the growing number of customers who use the website, boosting their visibility and increasing their profits. Additionally, Yelp can also use its user base as a source of data on consumer trends and behaviors, which it can then monetize through targeted advertisement campaigns. Its large user base also provides an opportunity for Yelp to expand into new markets, allowing it to diversify its revenue streams.

However, Yelp faces several threats in its current business model. Chief among these is competition from other businesses providing similar services such as Google reviews and Facebook pages. Additionally, Yelp’s reliance on ad-revenue means that any significant changes in consumer behavior or preferences will have a drastic effect on their income levels. Similarly, if consumer trust in online review websites decreases, this could significantly reduce the amount of traffic to the website.

Yelp also faces risks associated with potential legal action resulting from complaints about reviews or other content posted on the website. In order to protect itself against these risks, Yelp has implemented various measures including automated filters and user-level moderation tools designed to ensure the accuracy and integrity of the content posted on its platform.


In conclusion, Yelp has experienced a great deal of success since its inception, due to its unique business model. By offering services such as advertising and promotions, as well as their exclusive Yelp Elite program, Yelp has been able to stay ahead of the competition and make money. Although Yelp does face some threats and weaknesses in the marketplace, their strengths have allowed them to remain profitable and maintain their market share. With continued improvements in technology, it looks like Yelp will continue to be a major player in the online review space for years to come.