Yelp reported mixed earnings on Wednesday as wider than expected losses tempered strong revenue growth in the fourth quarter. The reviews site brought in $41.2 million during the quarter, taking its annual revenue to 137.6 million for 2012. The overwhelming majority of its revenue growth came on the backs of local advertisers as brand spending remained flat on a year-over-year basis.
During an earnings’ call on Wednesday, CEO Jeremy Stoppelman announced that Yelp had hit 100 million unique visitors for desktops, tablets, and smartphones, with 30% of that traffic coming from the mobile web. In addition, the company also saw the number of unique devices interacting with its app jump to 9.2 million in the fourth quarter, a rise from 8.2 million in the third quarter.
In November, Yelp began to roll out advertising to mobile devices, which accounted for a quarter of all displayed impressions in the fourth quarter. One of the interesting notes here is that Yelp has decided to not differentiate between mobile and desktop inventory when selling to advertisers. The impressions included as part of the company’s subscription products, which account for the lion’s share of its revenue, can now go to mobile as well as desktop inventory.
“With local search, at the end of the day if I’m searching for a mattress to buy, it probably doesn’t matter if [I'm] searching through a smartphone, table or PC, because I’m just looking for a mattress. The ROI is going to be the same across devices,” said COO Geoff Donaker, defending the practice. Later in the call, he lauded the strategic advantage of the approach, saying that the its fulfill ability through mobile channels put the company in “a very strong position.”
It’s a tricky distinction for Yelp to avoid. Given that most marketers tend to think and spend differently on mobile than on desktop inventory, we could very well see increased pressure on the company to differentiate ads by platform as local business owners become familiar with marketing on mobile devices.
In addition to mobile, Yelp’s other big initiatives have included international expansion. The company arrived in 26 new cities last year, bringing its business to 97 markets across 20 countries. That push was accelerated in October with the acquisition of Qype, its biggest European rival, for $50 million.
The looming question for Yelp is whether its existing revenue model will apply to European markets. Donaker stressed that the company does not plan to adjust its product or the pricing it has developed in the United States and Canada to fit European markets. Given Groupon’s disastrous run on the Continent, a blunt approach could lead Yelp into similar difficulties.
Steven Jacobs is deputy editor at Street Fight.